Bitcoin Forum

There's a lot of talk about the limited supply and "deflationary" model of Bitcoin.

My thought exercise is: what if the block reward were (originally) permanently set to 50BTC?  How would the conversation have changed?  It appears that a lot of people (particularly Keynesian economists) see "stable currency supply" and run screaming from the room.  It would have been nice to have them actually take a good hard look, instead of dismissing all other aspects of Bitcoin out-of-hand like a single-issue voter.  (On the other hand, many of those same people seem believe the Bitcoin network has no value.  At least, that's the implication, when they say there's no value backing the Bitcoin currency.)

The net result of a fixed 50BTC inflation rate is basically the same: over time, the inflation *percentage* asymptotically approaches zero.  But perhaps we could have avoided a lot of the red-herring (imo) discussions about deflation being the most horrible thing since Jersey Shore.

It occurs to me (and may have occurred to Satoshi) that as the value of BTC shoots up, consistent block rewards may become fantastically valuable, thereby creating an incentive for people to go insane with power consumption while chasing that mega-reward.  Once the block rewards go away in the present system, the transaction fees will automatically stabilize to being in range of the value actually being transacted (assuming miners automatically adjust transaction fees down or up as the value of BTC changes.)

Another possibility, I suppose, would have been to fix the inflation rate at a percentage; say, 2%.  But I don't have the imagination to see a method that would somehow react to market demands but wouldn't be externally manipulatable, *and* immune to differences of opinion, ala the infamous "BFL shipping before 1Apr" bet adjudication drama.

Anyone care to join me in this thought exercise?

If the block reward was forever 50, it would have radically changed the long-term calculations of all the early miners.

For example, I probably wouldn't have stopped mining and started buying instead, in August of last year.  I would almost certainly have taken a hard look at what would have been a serious first-mover advantage, and bought more hashing power.

As it is, with the block reward constantly dropping every four years or so, that first-mover advantage goes away.  Equipment costs go up.*  Different people who calculate things differently get involved.

The fact is - as I see it - the whining about 'early adopters' (no different than early miners, really) is probably less today than it would be if the block reward was immutable.

*n.b.:  I'm reasonably certain that sooner or later equipment and electrical costs will become a very tiny part of the mining calculation.  Probably sooner.  Technology marches on, and as Bitcoin gains market share smarter and better equipment designers will enter the fray.  I expect massive - and I mean massive - hashing power to be available within the next two or three years, for the cost of a decent desktop computer.

In the mid-term, I'm convinced that the most expensive part of mining will be space/property costs.

Yes, I would not be part of it.

http://blockchain.info/charts/network-deficit

Honestly, I don't see that as an argument against a fixed block reward.
It is true that hashing power will go up massively (moore's law and all that, plus there is the specialization using ASICs), but the reward is fixed (50 BTC every x minutes). It doesn't matter how much or how little hashing power is added to the network, the rate of coin generation and therefore its effect on the global market would still be capped.

I'd say the main benefit is that it would remove some of the uncertainty around transaction fees being enough. Now we are left to wonder if transaction fees will be enough to compensate for the declining block rewards. If not, it will cause hashing power to drop (because of the cost of electricity, et cetera) and if it drops too much a 51% attack might become feasible and more profitable.

It wasn't intended to be.  That's why I foot-noted it

And I wasn't arguing either for or against a fixed reward - personally, I'm with hazek:  I wouldn't be here if it was immutable.  I was only addressing the question of how I thought the conversation might be different, given that circumstance.

In the long run even if Bitcoin kept a continual 50 BTC block subsidy the inflation would fall to ~0%.  It would be effectively deflationary.   It wouldn't attract Keynesian.  Sadly Keynesian honestly believe it is absolutely essential for central banks to do what the Federal Reserve is right now.  Magic trillions upon trillions of new dollars and flood them into the economy to end the recession.  They don't think the fed is doing a bad job.  So unless you have a crypto-currency where an elected board of miners can arbitrarily add as much coins as they see fit they wouldn't be happy.  If the fed oversaw bitcoin right now seeing massive price increase of BTC:USD exchange rate they wouldn't bump the block reward to a pathetic 50 BTC?  Are you kidding me?  Maybe 500 BTC or maybe even a brief period of 50,000 BTC per block.


If the supply is "fixed" (as in the money supply can't be manipulated by those who "know best") it isn't ever going to be attractive to Keynesians.  Monetary policy (which is a nice way of saying manipulation) is a cornerstone of that school of thought.  

i think it would have been a great idea. It would have actually led to a stable money supply, as opposed to what we have now which is a decreasing money supply (at some point in the future). Think about it, if we continue to mint new blocks infinitely eventually the total supply of currency would become so great that the marginal value of coins would decrease to the point that people became less careful not to lose them resulting in more lost coins over all. As the supply contracted people would become more careful with their coins and there would be fewer losses. These two forces would balance out at some point in the future leading to a relatively stable money supply.

with bitcoins current model, at some point in the future we will have the total money supply shrinking by the day.

of course this would have scared away libertarians, which would have hindered its adoption, so when you think about it in this context i think satoshi made the right choice.

If I would design a new crypto currency, i would have this requirements:
-encourages usage of the currency and discourages hoarding (long term)
-reward early miners, but prevent early miners to get too much of the long term coin supply
-prevent price bubble in the beginning with help of high inflation which cools down the potential price bubble (in dollars)
-create a long term real inflation of 2%, which will require a higher nominal inflation than 2% because of lost wallets, hoarding and other factors. Long term nominal inflation of 3% is required.

Result:
period 0 (year 0) 1 million coins pre mined
period 1 (year 1...5) increasing inflation each year
period 2 (year 6...30) falling inflation each year down to 3%
period 3 (year 31...infinity) steady state of 3% inflation per year for infinity

The chart of the yearly inflation rate would resemble a bell curve with a long steady tail in the end

http://upload.wikimedia.org/wikipedia/commons/thumb/8/8f/Hubbert_peak_oil_plot.svg/600px-Hubbert_peak_oil_plot.svg.png
(This chart shows peak oil, my idea is that the yearly inflation rate should resemble the bell curve)

I believe some of the altcoins have properties similar to what you are saying. Freicoin comes to mind for discouraging hoarding, but I don't remember the curve on block rewards. So many altcoins, so hard to keep track!

Noobs know nothing about preminers, hoarders and lost wallets (destroyed coins)
We need a small nominal inflation of 1-5% just to keep the real inflation to 0% in the bitcoin world.

The deflationary nature of BTC really makes it interesting from an economic perspective and one of the reasons why I am here. I enjoy this experiment as written and it will be a lot of fun to discover what long term impact occurs from having a hard threshold on supply.


I do mention these factors in my course and I also have started a discussion to design a metric for the amount of "dead" coins in the supply pool. The primary concern however is that demand will always dramatically outpace supply resulting in sharp value increases per coin. I understand the divisibility argument; however, we do not have enough good transaction data to address these issues yet. It is an experiment in monetary policy.

I don't believe that any altcoins are going to make it.   Bitcoin is too big in crypo-currency space, and too small in the overall scope of the economy to fragment it.

Whatever changes you want,  you most likely are going to have to make them within bitcoin... good luck with that.

I do wish Bitcoin tied it's current mining reward to it's current trading figure with a basket of currencies,  example :

100 Euros,  150 Dollars =  Reward of 25
200 Euros, 250 Dollars = Reward of 50
50 Euros, 75 Dollars = Reward of 12

so when the price increases it automatically starts "printing more bitcoins"  to stabilize the price.   If the price drops, it "stops printing" them to increase scarcity.

That eventually would even out the price swings...  but I doubt people would jump on this as it changes the core of bitcoin.  

I still support the hard limit of 21 million bitcoins,  it's just that using my method you wouldn't know exactly when we'll reach that point (could be in a single year rather than 100 years if bitcoins jumped to 100,000 a bitcoin) or it could be 1000 years from now if it suddenly dropped to 4 dollars a bitcoin.

The end result is doing what I said above would most likely stabilize the price to about where we are today.

An alt-coin that was reliably pegged to a different currency (let's call it DollarCoin) would be a really useful thing to have. It would probably be quite useful addition to the Bitcoin ecosystem, because it would provide an intermediary step between Bitcoin and regular money.

The practical problem is how the program would get reliable information about its own exchange rate in a way that couldn't be gamed. The best way I can think of would be to have a list of public keys of trusted exchanges in the client, and have (multiple) exchanges confirm (sign) any operation that needed exchange rate information. (There wouldn't be many of these operations - you'd only need them when you wanted to create or destroy coins.) But there would be a risk that exchanges would misreport prices, and you'd have to rely on people updating their list of trusted exchanges to remove the dodgy ones. In practice this would probably mean a bit more power than we'd like for the people who maintained the client software, although the users would be able to rebel if they seemed to be abusing it.

Addendum to the GollumCoin:

-Designed to resemble golds annual real inflation rate: 2%
-Designed to have a parity of 1:1000 in the number of coins vs Gold oz mined (there is almost 1 oz/human today)
-Total number of coins shall reach 10^10 * 10^3 = 10^13 in 2100 when human population reaches 10 billion, that means 1 oz gold per human and 1000 coins per human.

Yes, I would have never participated.

In fact, I think almost every early miner would not have participated, meaning there would have been no scarcity and thus, no value. Ever.

Note that even gold has a bit of built-in flexibility to adapt the money supply to demand, because if the price of gold rises compared to things in the real world like the cost of a day's labour, people will dig more gold out of the ground.

If you're trying to make a currency work like gold you should probably let changes in the hash rate feed back, at least partially, into the rate of new money creation. Bitcoin cancels all this stuff out by adjusting the difficulty of solving a block to keep the average time between blocks and the block reward constant, but instead you should only do that partially, or make the adjustment (to keep the time between blocks constant) but then tweak the block reward to compensate.

To be realistic I think governments will create crypto currencies, and their crypto currencies will be something between gold and fiat when it comes to inflation. They don't need any miners to participate in their scheme since they have enough resources to create a secure currency with high hashrate. And they dont need to attract users, users are forced to use their coin since it is the currency where taxes can be paid and government employees get salaries.

What is wrong with deflation?

Nothing, but it makes loans more difficult and also its hard for economists who like a consumer economy to accept a money with an incentive to save built in.

A deflationary economy will probably lead to greater gap between rich and poor. Either you are born into a rich family where you inherit bitcoins that were mined by your grandfather, or you are born into a poor family where you have to work for a few satoshis.

In a inflationary economy however inherited wealth will lose value over time which is more fair for newer generations that are not born yet.

I am quite pleased with the return on the loans I give out. Currently getting 19% return compounded daily.

The way that inflation is created by government currency creates inflation for the poor and shields the wealthy from inflation.

With bitcoin the playing field is even. And an economy of savers helps to stave off the need for a safety net for everyone which helps to enslave the poor.

There would be a use case for having a system where the money supply was controlled by a central entity, but transactions were robust, decentralized, pseudonymous and censorship-resistant. Government-sponsored cash works exactly like that.

This would be a very sensible thing for governments to do, because it would be incredibly useful for commerce (all the usefulness for transactions of Bitcoin, but without the volatility which is a big old PITA) while removing any threat to the government's ability to print money.

Obviously they won't though - somebody would worry that it was going to be used by terrorists or pedophiles or something.

Cough Cough.....PPC.

I don't think Bitcoin would have even had a fraction of its current success if it was eternally inflating. Much if the attraction, especially in the beginning, was that there was only ever going to be a fixed amount. If the eventual amount was effectively infinite it would be regarded like the MMORPG currencies with the supply eternally expanding and the developers working hard to create sinks as to prevent runaway inflation :) Inflation is a much larger risk for currencies/commodities that have no physical basis than deflation, especially if there is no pre-existing basis of trust like in fiat currencies.


OTOH, the deflationary economy forces the initial adapters to eventually spend their coins (if they want any use out of them at all). In inflationary currencies it's easier to create more wealth with your wealth by loaning it out with a high % of interest, keeping the pyramid afloat.

We currently already have the biggest gap between poor and rich in recent history. All that with inflationary currencies. Do you really think it would be even worse? And there is no chance in hell (IMO) that bitcoin will overtake all of them. Both inflationary and deflationary currencies have their use. Most likely, the future will have many different currencies with different trade-offs. This makes the "which one would be best if there could be only one" argument besides the point. For a grassroots cryptocurrency, the current reward scheme is pretty optimal. For a government-mandated one it would not be.

============

As a side note: a currency with a fixed reward of 50 BTC per block would still be considered deflationary by economists. An inflationary currency would have the block reward increase over time, or at least as a fixed percentage of the current number of coins in existence.

The dilemma of cryptocurrencies: when coin X becomes too hoarded and too deflationary, coin Y will  emerge and take over, and so on for infinity til we got hundreds of crypto currencies.... Lim _{t-> infinity} f(t)=0 for all crypto currencies since there is no intrinsic value in them. All cryptocurrencies compete for the same potential computing power and user base. Cryptocurrencies are basically fiat, but we trust in hash power instead of governments.

One potential solution to the crypto dilemma: use them as IOUs instead of as fiat. The IOUs can be the promise of a certain commodity (gold, silver etc) for example. In this case the value and attraction of the cryptocurrency depends on the IOU it contains and the counterparties connected to the IOU.

Aren't you being a bit petty?

They are enough inflationary currencies if somebody want inflation should take that currency instead of bitcoin.
Alone the discussion to make bitcoin inflationary scares the investors and let the bitcoin curse go down.
So you should better propose inflation by litecoin or by feathercoin, where will be anyway 336 millions of coins.

Is being against theft petty now?

That's OK, let them run screaming from the room.  They don't want to admit that the Austrians have it right on all these points.

The great thing is we get to find out, for real!  I know which side I'm betting on.

Well, inflaton at a low rate is probably good, in my opinion should be set as %.
But good points were made about the 'pitch', " there will be a set amount of bitcoin", this is probably because fiat curreny is being printed right and left and we are FED of being robbed.

After bitcoin is u derstood and adopted i think there will be a good sense to raise this question. Would it be too late in the game to change the set limit?

People consistently confuse BTC monetary base growth with inflation.  Inflation is a change in PURCHASING POWER, and this has never been negative (outside of the crashes) for BTC after the existence of effective exchanges.  Even if the money supply was expanding 20-30% in a year back in 2010 the user base was growing sufficiently fast and the utility from that wider network as adding yet more value to mean that their was never inflation.  Their has only ever been deflation and it has averaged something like 1000% a year over the long run, well into anyone's definition of hyper-deflation.  Regardless of your opinion on inflation or deflation don't be confused as to the actual history.

there is some legitimate debate as to the meaning of inflation. Traditionally it was used to describe an expansion of the money supply. It has gradually lost this meaning and been replaced with the more politically friendly meaning of a change in purchasing power. It should be noted that we are still in the transitional period and neither meaning is "incorrect" you just need to define your terms when talking with people.

You would be correct. At some point a fiat government cryptocurrency will exist and there will be people that use it because they have to pay their taxes in it. This I do not doubt.


No, it won't. You offer no evidence of this assertion. I'll offer this bit, if you measure wealth in US dollars, the US Bitcoin hoarders are closing that gap with the 1% in the US right now, but they are doing so by refusing to use fiat as a store of wealth.


Whereas it's so much better that people are born into a rich family that obtained its wealth primarily by having its members be part of the farce that is the fiat banking system? How is one superior to the other? Only bright individiuals will mine efficiently and pay relevant attention to ROI. Only very studied analysis of Bitcoin use and a working knowledge of demand will separate the timely hoarder from the tardy one. Bitcoin isn't rich vs. poor, it's intelligent vs. foolish.


Not if you also inherit control over the banking system from your father or grandfather. The problem, as others have stated well before me, isn't the 1%, it's the .1%, the guys that control LIBOR, interest rates, lending, exchange rates, and have the power to do so simply because the entire world values the US dollar and believes that they know what is best for them. But the system is coming apart at the seams (http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425) now. The public is now on to their game.

I've never understood why people who lament the wage-gap also strongly defend the fiat dollar. The absolute worst thing you can do, if you are being oppressed, is to continue to use your oppressor's currency. Yet here you are, proudly proclaiming it as your one-day savior. You decorate your chains, quite gladly, and defend their use here. Clearly your master is wiser, you say to the freest men you've likely ever spoken to, urging them to rejoin you in your misery. Have you no shame? Aren't you the least bit embarrassed that you covet the currency of those you detest? I cast aside my shackles a year ago when I realized I didn't have to operate in fiat anymore. At least, not as a store of my wealth.

Bitcoin provides a level playing field precisely because of its limited growth. No single man or group controls the blockchain, only an algorithm and the consensus of those participating in its growth.

https://en.wikipedia.org/wiki/Inflation

Modern Definition

Austrian Inflation Definition

http://austrianeconomics.wikia.com/wiki/Inflation

Both tell us different things; however, the Austrian definition is immune to manipulation. Money supply is a fixed metric. One can make incorrect inferences from it, yet it is still objective. CPI calculation is not objective and has many critics: http://www.investopedia.com/articles/07/consumerpriceindex.asp.

My definition of inflation is the delta of money supply per capita in combination with delta of velocity of money, If a developing country doubles its population in N years it should also double the money supply in order to have price stability. Velocity of money is probably high during the growth period which means money changes hands often, which leads to some inflation in prices even if the money supply is constant. But when the economy matures by time the velocity of money will go down and the relation between money supply and population becomes more important. So when the velocity of money goes down in a mature economy the money supply must expand to fight deflation in nominal prices.

http://s24.postimg.org/3ztlh2fnp/Money_Supply_Per_Capita.png

In economy inflation refers to purchasing power. If you mean the increase in money supply, so say that, not call it inflation. Or talk about block reward, or coin creation rate. Discussions are meaningless when people put different meaning to the same word.

I have extensively describe  the problems with a deflationary cryptocurrency.

See this thread

https://bitcointalk.org/index.php?topic=12109.0

Unfortunately most bitcoin-fans are computer geeks with no knowledge in macroeconomics.
Their argument is that bitcoin attracts people because its scarce (max 21 million coins).

I love bitcoin because it enables transactions around the world 247 with low costs, and with high security and with no double spending - not because of its inflation attributes.

Most bitcoin-fans don't understand that when bitcoin becomes deflationary it will become a speculative hoarding asset instead of a medium of exchange, which will lead people to focus on other alt-coins until all alt-coins are speculative and two kind of cryptocurrencies will remain as useful:
1) IOU-coin - a proposed coin with zero value which is guaranteed with hyperinflation. it is a medium of exchange and transfer values via IOUs
2) LowInflation-Coin - a proposed coin with low inflation for ever, something like gold (1% inflation over time), its scarce but is still possible to mine gold if you have right equipment and resources (labor and energy).

Agree with you there. Check out my alt-coin here: https://bitcointalk.org/index.php?topic=181488.0

There's a problem with a constant block reward and the problem is that the currency will eventually become deflationary because the inflation rate will be insignificant and the amount of new blocks created will be less than the amount of coins lost.  Plus, as inflation rate approaches 0, the profits of miners will decrease, thus the network hash will grow.

I would work with you in creating a crypto.

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation ;). You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

Forking is bad for a couple of reasons.
1) People who hold bitcoins may not be interested in an inflationary cryptocurrency, therefore they will suppress the price of that currency until all of their coins are sold.
2) There's the possibility of manipulation by accumulating bitcoins prefork, and selling them after the fork.

Both of these reasons are negatives on the adoption of a cryptocurrency based on a bitcoin fork.


A crypto based on a constant block reward will not work.  I'm pretty sure of that.

I will only support a crypto with an inflation rate of 2% or higher.

Impaler and I are basically having this same fight in another thread. I don't subscribe to the 'purchasing power' definition.

But yes, I absolutely wouldn't be involved in bitcoin if didn't have a limited supply. That's it's primary selling point ingeneral. In specific I'm fascinated to watch as the whole thing unfolds and we'll all get to see if this idea can really free the world from perpetual debt based thinking.

Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount...

That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year).

I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin.

You know that it takes energy to discover blocks?  It's not like printing fiat out of thin air.  Those coins
support miners who secure the system.

Much like gold requires energy to mine.  So what you're saying that gold loses value over time because more gold is mined?

unfortunately your premise is deeply flawed.

Flaw 1. You're depending on moores law to continue unchanged... it is in fact expected to slow near the end of 2013... the projections say another doubling will occur over the following 3 years. . . after that it's in doubt if it will continue at this rate at all. The reason being that we're fast approaching the physical limits of size involved with silicon. I believe that the limit is in the 3 to 4 nanometer range... and once we're hard up against that it will become impossible for moores law to continue as it has for the last 50 years (quantum computing will break this barrier and may infact cause moores law to remain true when it become practical).

Flaw 2. The issue of 'loss of coins' and the idea that the amount of bitcoin in circulation decreases over time is completely irrelevant. The accepted solution to this is an increase in price and an associated extension of the decimal places to allow smaller and smaller transactions will keep this from ever being an issue.

Flaw 3. Your assumption that the value of a bitcoin is somehow related to the hashrate or security of the network as a whole. While this sounds good in theory, once you become aware of the hard limit imposed by silicon's molecular size and the issues involved in quantum computing... this same 'wall' in technology that will slow and stop moores law will effectively prevent this from being an issue until we get into quantum computing. once bitcoin hashing acis are in the same nano-meter range as the final stages of other asic technology there's nowhere else to go relative to computer power increases for cost... and we're in the exact same boat we're in now... enough money spent on hash power could cripple the network - but once asics are profitable and there's any sort of 'asic arms race'  this concern almost vanishes. What you're describing is the non-adoption scenario... where bitcoins don't gain enough transaction velocity to compensate for the lack of a block rewards.  While this could possibly happen. Supporters of bitcoin believe it will achieve 'adoption' before then and manage to sustain itself.

If gold was being used as a currency it would be losing more value over time as more was mined...

Gold is used as a store of value rather than as a currency. But it's value does decrease as more is mined, that however is not a net lever on the value of gold because it's value relative to fiat is increasing by a much larger amount - due to rampant inflation on the fiat side. This effect has been noticed ever since nations abandoned gold as a backing for fiat. I believe that using it to back fiat was actually holding the price of gold down over this time... and you can see evidence of this by looking at the price of gold from 1970 to 1973 in the USA.

The only reason you want to manipulate the money supply is that you want the price level to stay relatively stable. Other than this goal,  all the other money supply scheme, be it constant or limited, are the same: You have unstable price level

No one has tried a limited supply, so it is worth trying. Even set the transaction fee to be 0.005, the transaction fee in each block might bypass block reward after 4 years

Why make it a thought exercise?  Make a currency that does this, and see what happens.

Yes you would as it is easy to fork Bitcoin. If no-one would have forked the imaginary KeynesianCoin (which i highly doubt) I would have.

In part, because I think the fixed-supply model is stronger.

In part, because to most users, this isn't noticeably distinct from the current Bitcoin model.

In part, because I don't think a lot of cryptocurrency competition is necessarily good, this early in the game.  If there's one clear winner, it's more likely to spur public adoption.  For example, the a big "Blu-Ray vs HD-DVD" fight delayed (or at least reduced) general adoption of HD media by years.  Or if you don't like that example, find 100 people on the street and (attempt to) explain the difference between Bitcoin and Litecoin.  Now, ask them if having to make that choice makes them *more* or *less* likely to adopt one.

How to explain the difference?  I would tell them litecoin is a little less ponzi than bitcoin. I would also tell them that if they want a medium for exchange of value, and not for speculation, they have to wait. So contrary to your line of argument, new coins and experimentation are required for general adaption to take place.

"A little less Ponzi"?  ... Wow.  Um.  I'm not going to engage you on that point.
I know I couched my argument in terms of user adoption, but the thing we need more than anything else right now is merchant adoption (which is the "wait" in your "they have to wait.")  And getting merchants to adopt one shockingly new and different currency will be a huge challenge; asking them to select one (or more) out of several or dozens will generally result in them adopting none.

So, I don't mind that there's one big dog in the market right now.

Anyway, my answer to your OP qustion, A permanent 50 BTC reward would have been much better. It  would demonstrate more than a game of beeing in early.

I agree with the the sentiment, I don't believe it's very helpful if a dozen other coins started pushing for mainstream adoption. But it could be extremely valuable re:media coverage if we could turn the focus from "is bitcoin a good idea" to "which crypto should you choose".

I don't worry so much about vendor adoption for 2 reasons. Companies like bitpay are out there growing like crazy... and if a business owner is asked by enough customers 'when are you going to accept bitcoins?' the business owner will want to start accepting them. Also I see the primary feature for vendors is 'no chargebacks' which is a huge issue for most retail businesses and seem to be an instant selling point to me.

Bitcoin has already found growth in the online services sector. Online Gambling, web hosting, etc and adoption by companies like wordpress and reddit.  So while we could as a community push for big existing companies to adopt, it seems to me that this is already happening and will continue to happen in cases where bitcoin makes sense for existing companies to use.

Eventually, someone is going to have to throw big money at some sort of hardware wallet and point of sale system to get that off the ground - if someone like a major pharmacy or chain store (7-11) were to start OTC bitcoin trades using a POS system provided by some bitcoin based company... that right there would solve all these problems.

Another potential route is to push content delivery systems (steam, origins whatever) to use bitcoin because of the drastically reduced fees... imo this is more likely the easiest route to go. Even something like zynga taking it as payment might be all it would need to everyone to start taking it.

But I think when it comes right down to it... there's nothing more important than the getting individual users to start using bitcoin (and asking the people they do business with to start accepting it also). In this vein I think it would be very interesting to see some numbers on the actual 'buying power' of bitcoin users as a whole. If we could show a vendor that basically "there's 10million geeks, potential customers who'll come look at your store / products if you accept bitcoin" that might be enough to get them to do it right there... even without some sort of POS system.

I have reconsidered your idea and I believe that the two properties that you have proposed may make an adoption or a fork less frictional.  The reason being is that the fork will allow current bitcoiners to more easily participate in the network.  The second thing that is beneficial is that since you have proposed to change block reward to 200 coins is basically nullifies the existing early adopter advantage and allows for a wider adoption of the future currency.  

Where we diverge in opinion is in the fact that I believe that there needs to be a point where inflation is controlled at a rate similar to that of Gold inflation, which is 2%.

Well, remember that the 200 coin block reward fork will create a inflation starting with 100% the first year. It will take 50 years before it reach 2%. I think we need not worry to much about what happens after that.

I understand that and it is a problem.  There are ways to make a fork reach the 2% threshold faster, like bitcoin does.