Bitcoin Forum

By classical econonic models, bitcoin has lots of weakness and is still very unmature, but if we are planning the future with a worldwide currency, every existing rules could be changed given good implementation

About the defaltion spiral topic, the human nature of thinking is: If this thing is going up in value, I'm going to hold to it and wait until it gets more valuable

So, in order to counter this kind of thinking, there could be a devaluate design, say if you hold a BTC for more than 3 month, it will disappear

In tradional economy, each money is same, but in bitcoin world, each coin is not the same. So maybe there is a way to get more coin into exchange everyday, a mechanism to encourage people spend those coins, e.g. the exchanged coin goes up in value, while those not used coin will disappear one by one

A currency is of no use if it is not used to spend/investment, it should never be a way to save for the future, for each saved currency, there is corresponding reduced spending power thus bring unefficiency to economy, I have a very simple example can prove this

Haven't you seen the massive sell-offs? Some of your claims are false.

Merchants are reporting bigger sales when Bitcoin price goes up, not when it goes down. This idea that people dont spend money when its value goes up is just a myth.

Anything remotely like that would change the rules and violate the trust that everyone has already put in the system.

So, every 2.9 months transfer your coins from desktop to laptop.

You can't really prove someone isn't 'holding': No matter how many transactions are involved, all the addresses might belong to the same person.

That's a good point, and that is also true for USD, as long as much of the USD is put into speculation, FEB must keep printing more money.

I believe this is temporary, given the nature of bitcoin supply is very limited

That's part of the picture, current system consists mostly non-business driven speculative transactions, and these kind of transaction always goes up when the price is rising (And when price crashes suddenly), could be different when the bitcoin really replaced credit card.

No. Read what I wrote. Merchants, real merchants selling stuff, are reporting increasing sales when the value of bitcoins goes up. The theory that people dont buy because the price of money goes up is a myth.

I've heard an argument like this before, but have never been able to get my hands on real data (I've asked but gotten no reply).  Can you post a link to the numbers that back this statement up?

I understand your point, but forcing people to spend their money won't improve the economy. It will drive people away from using it.

The focus should be on creating a compelling application, that people want to spend their money on.

The price of BTC is somewhat irrelevant. If a product is good enough, people will spend.

There are no official numbers. It was reported by merchants in the forum whether you want to believe them or not i sup to you. But I dont think they would report something that hurts their sales.

Also, you have data of price deflationary periods in history when investment and consumption went up.

That's a genuinely interesting point.  The only one I have heard of is 1870s US, but I don't know enough about what was going on at the time to make up my mind whether deflation contributed to these things, or whether these things happened despite the deflationary environment (don't take this as a statement either way, I genuinely don't know).  Out of context, I can't make up my mind (e.g., there are inflationary periods where investment and consumption have gone down, despite the pull of inflation in the opposite direction).  Can you point me in the right direction to learn about these episodes?

Canada during the XIX century was that way (and btw, they had no central bank and no banking panics). There are other numerous examples.

For raw data about the USA XIX century one of the best sources is the book Milton Friedman and Anna Swartz, although the book has very flawed conclussions due to their lack of valid economic theory. Rothbard's History of Money and Banking in the USA from the... is good to understand what happened.

Then you can read Lawrence White about Scotland during the XVII century or George Selgin about Canada.

Thanks for the pointers.  I'm usually deeply skeptical of Austrian economics, but I'll try and get a hold of these to see what the data and their arguments are.

Read "free banking" theory, you will be surprised. The mentioned Lawrence White and George Selgin along with Steve Horwitz are the main proponents of free banking (that I know).

OK, that could be TURE, I remember there is a theory saying that people will spend more when they FEEL they are getting richer (because of the rising value of their asset). And people will spend less when their asset is devaluating

And that could still be part of the picture, this only applies to those already have enough bitcoin, so that small amount of spending does not hurt their saving. It could indicate that there were many guys holding lots of bitcoins because of the hoarding during the early days, without hoarding happened at the first stage, this phenomenom might not be observed




 

When people discuss the deflationary bias of bitcoin, I think they're implicitly comparing it to the current inflationary-biased dollar. That's not the right way to think about it. If you imagine an economy where bitcoin *is* the currency, and we're not measuring it against the dollar or anything else, the deflation simply becomes the status-quo baseline. I don't hoard bitcoins because they're deflating; that's simply the field on which I'm playing. I try to do better than average, *against* that reference frame. This all becomes intuitive and sub-conscious if that's the world in which you've been operating for a while. ... Now, transitioning to that world does indeed have some other dynamics going on, but that's not usually the point of these theoretical-merits-of-a-deflationary-currency discussions.

You're talking theory.

But the comparison to the dollar is the real world, since we will continue to pay our mortgages and buy gas for our cars and food for our table with dollars for the foreseeable future.  So the comparison with the dollar is a necessity.

Sorry but it is a bad Idea to centrally plan bitcoin. To say people aren't using it correctly so we need and incentive to make people spend it more is pure hubris.  The same fallacy could say, computer prices HAVE to go up because if they went down no one would ever buy one.  Well we have been in an economic experiment for decades that shows that people STILL buy even though they know in 6 to 18 months the computers will provide more bang for the buck.

Bitcoin, though not perfect, is well thought out and is modeled after mining a precious mineral (unobtainium perhaps) and it behaves like that. It would not help the gold market to make gold that spoiled. One thing may be true. the inflation of modern currencies has caused too little savings.

Bitcoin is a free market currency and people will be attracted to it for it's lack of inflation. The future value will eventually be factored into prices and loan interest.

Inject capital into the market. Since there's a finite number of bitcoins, all capital added to the market raises the value.

It just seems very difficult for bitcoin to become a widely accepted currency, but it maybe much easier to become a great investment instrument and everybody's retire fund will be stored in it in the future

Housing used to play such kind of role, but it busted: It is still something that is tangible, people lost interest after getting it. Now it shifting to gold, but due to unknow produce power of the gold, difficult to say how long it can hold people's interest

Here's my fear.  The drunks in Congress will insist on continuing their wild partying and spending and will push and pull the dollar over the cliff in spite of the best efforts of freshmen in the House.  At that point, we'll be reliving Germany's Weimar Republic (http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic).

But rather than cart their money around in wheelbarrows like the Germans did in 1923 as the value continues to drop and drop, everbody that can will probably opt to keep their money in the relative stability of bitcoin.

So there.  That's a path that could result in bitcoin being widely used for currency.  And sadly, I fear it will come to pass.

I believe that we need to build the bitcoin market for it to be a success, the best way to achieve this would be having some incentive to buy/sell in bitcoins. Right now (To me at least) it seems that most people's focus is on the bitcoin's trade value for other currencies like it's a new stock exchange.

When you look at some basic arithmetic surrounding the deficit and debt numbers, it really does *seem* like that's inevitable in the relatively short term, doesn't it? The thing is, though, there's an incredible amount of inertia to the status-quo. The US can't become Weimar Germany while we're still the world's reserve currency, and it seems highly unlikely that the dollar will be unseated in that regard until China can afford to live without us. Given that they hold a few trillion in our debt, they'll probably be relatively nice to the dollar until their GDP outstrips ours and they decide to make a play. That's going to be 15-30yrs, probably. Don't get me wrong - something's gotta give eventually; I just think we're likely to experience a GDP-sucking decade or two of moderate-high inflation, high unemployment, and high taxes for quite some time before things actually crash and burn.

As far as bitcoin is concerned, that's a great environment in which to start moving into something like bitcoin anyway.

The incentive is the fact that bitcoin transactions are easy, cheap, and quick. It's just going to take time to snowball into critical mass.

Yes, while that is true (And a very good incentive indeed). There could possibly be something more promotional or exclusive associated with bitcoins that would act as a catalyst for this theoretical snowball.
Kind of like how Microsoft has exclusive software on their Xbox Live Marketplace that gets you to buy into their points system to purchase this software. (Though it really wouldn't have to be exclusively software as the drawing point)

If the bitcoin were more stable, and friendly to microtransactions ( I don't really understand fees associated with bitcoins yet, but I've heard it's a hurdle for this ) converting the Live Marketplace, or really any virtual marketplace, from points to bitcoins would be an excellent introduction for people to bitcoins.

Also: What about the physical movement of bitcoins (Like person2person in real life at stores and shit)? Is something like a cheap debit-like card that you could program your wallet address on viable?

Worldwide instant and secure payment, this is by far the best character of bitcoin

There are issues need to be improved, currently it can only be used by experienced IT people

People have to learn lots of things before they can use bitcoin, so I think it will not become a widely accepted payment method, but rather suit a fraction of the people, like SDR mostly used between IMF members

I think the most interesting character of the bitcoin is its scarcity. In today's world, almost everything can be produced limitless, there are enough advanced technology to be used to produce anything. But bitcoin put a limitation on the availability, this design makes it very unique

Of course there are something that can not be produced limitless: time and job. Time, job and bitcoin, maybe they share some thing deep inside ::)

I agree we need to have more people buying and selling services.  Miners please buy as many of the things that you need as possible with bitcoins before you sell off!
People have endlessly made this point, but the exchange of BTC is what makes the world go round.

Another thing that needs to be done is to get some publicity.

This afternoon I chanced upon a professional investor at a party and I couldn't resist--I asked him if he had ever heard of bitcoin.  He gave me the same uncertain blank look that everyone gives me when I ask.  That needs to change.



Why does it seem unlikely that the world will choose something more stable than the dollar?  I've already heard some nations are looking to standardize payments for oil in euros. 

However there seems to be growing hope that Congress will have enough spine to stop the increase in the debt limit.  Maybe they'll pull us pack from the cliff.

Get Bitcoin off the grid.

Since lots of old guys in the existing world will try their best to prevent bitcoin to be used or ignore it, bitcoin maybe first aiming to become a standard payment method in open source community

For a piece of good code, donation in bitcoin is much easy and fun to be done than paypal :)

Spend em

Including the hardware and electricity for Bitcoin. For Bitcoin to stand on its own, someone must price their Electric generation and services in Bitcoin and a hardware manufacturer must price its labor and product in bitcoin.

Up until now, bitcoin price still relies on traditional exchange, and that exchange is a centralized organization, this is not a distributed method

It will be great that there is a p2p based exchange, using similar algorithm to verify the exchange of bitcoin and other currency thus decide the exchange rate

Seems this will unavoidably touch the traditional banking area, where some form of bank account transfer can not be avoid, then it will greatly defeat the necessity of bitcoin (If I have to do this through bank account transfer, why should I use bitcoin?)

But maybe there IS a way to communicate between the bitcoin world and the banking world

I think we need more offline Bitcoin retailers, but to attract them we need to make payments from smartphones easy and fast.

No, it wont. I love when ypeople make sure everyone knows they are an idiot.

If you want a p2p exchange, trade OTC.

Exchagnes proivide significant functionality on top of fixing a price:

* They cover the counter party risk.
* They make sure you dont even have to KNOW your counter party. Buy / sell is always with the exchange. Legallyvery easy - not a ton of contracts, and for some of us mtgox means wecan sell without paying VAT (as we sell to a japanese company).
* They handle the money side. As in fiat currency. You can not exchange, effciiently, 100 USD into BTC when you have to do so with 20 wire transfers because hey, you deal with many people.

Exchanges are a perfect place to handle all the stuff that a p2p trading system just can not. Especially the financial account capabilities are hugh if you dont want to just exchange money once. Trading would never efficiently work on a p2p network unless the fiat systems would be available for that. And they wont be - and no, not using fiat is not a chnce here, exchanging BTC with BTC is king of idiotic.

I also like I dont have to dealwith the risk of the other guy not paying, dont have to set up scrow for every 0.1 BTC transfer etc.

With all due respect this Keynesians model is flawed as everyone want's something they just need to be able to pay for it.  As prices fall spending occurs since individuals can now afford the items they want or need.

The real issue with rising and falling prices with a currency is debt.  As prices fall in an economy the debt burden is increased on the debtor as he is unable to service the debt thus we all know who ends up being the biggest debtor?  Government.   So they support your method since it increases revenue if prices are constantly going up.  Our current monetary system transfers wealth from the poor and middle class to the rich, and is mathematically unsustainable thus it will collapse eventually.

It is unlikely that anyone can help you understand that you have been hoodwinked by bankers into believing this economic witchcraft.  Finally I wish you debt based monetary lovers would admit the truth... That this system is great for cheating the masses that don't understand it at the cost of being a slave to a banker at the top of the pyramid of debt.


A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear. The traitor is the plague. - Marcus Tullius Cicero

Congratulations I am proud of you if you take credit for bringing down America.

Never ascribe to malice that which is adequately explained by incompetence. -Napoleon Bonaparte

Since I do not believe you and your Keynesians kind are incompetent, I think you dam well know what you are doing damages society.


As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.
Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.
- Your economic leader

Go sell your fraud somewhere else please!

Technology gets cheeper all the time but do we hold off purchases until we die? No. Ultimately money is a means to an end and the level of savings will relate to our time preferences. Time preference for food will be high, you don't want to wait until you are close to starvation. You may put off buying a TV to get a bigger and better one later but it depends how much you want that TV now.