Bitcoin Forum

There has been much talk about the deflatory nature of Bitcoin (limited final mas). Outsiders i.e. economists mostly argue it is a major drawback. 1-2% inflation is supposed to be healthy for any currency. Without it people become motivated to be passive (hold on to currency, not make transactions, not take loans, not do business). Bitcoin supporters often claim that all of this is irrelevant, since Bitcoin is just a payment instrument, not a national currency, it isn't tied to any actual economy.

In my opinion Bitcoin does have a problem, it is its considerable and perhaps growing volatility. As I see this, it is directly related to deflatory nature of the currency. Even if at the time I write this the cumulative amount of Bitcoins is still growing, people already seem to behave with the final limited amount in mind. By that I mean that a substantial portion of wallets is used as a high risk investment, rather than a means for making payments i.e. transactions. This leads to demand surpassing supply, causing short term growth which stimulates such behavior even further. Exponential growth leads to a degenerate situation when the currency becomes stale as the majority of Bitcoin owners delay all their transactions to make considerable short term gains during these bursts. When people start trying to cash in their quick gains and make the transactions they have postponed, we see the opposite process - a swift decline of value accompanied by large transaction volumes. At this point I see no reason for this trend of volatility to stop, I even predict it might become more problematic.

Now to the possible solution; we simply need to motivate the majority of people to make transactions ASAP, not trying to make opportunistic short term gains by delaying them. And yes, the only apparent solution seems to be mild inflation. But how to achieve this by not completely changing the otherwise amazing basic Bitcoin principles, its magic formula? The answer I propose are variable transaction fees. The variable percentage of these fees would be proportional to the duration an individual has held on to the Bitcoins in his or her wallet. These fees would of course have to be minimal, calculated at 10 minute intervals (minimal transaction time), amounting to perhaps no more that 1% per year (0.00002% per 10 minutes holding period). If we would want to further stabilize the currency, a 'chairman of Bitcoin reserve' could make minor periodic adjustments to this rate depending on the market conditions. I think this could stabilize the market and preserve the basic nature of the Bitcoin, minimal transaction fees are being mentioned as a possibility from the start. I think that by introducing an instrument to mitigate the volatility, Bitcoin could only benefit and become stronger.

PS
I'm not suggesting inflation (rising prices of goods i.e. decreasing value of currency) as a goal! I'm suggesting a variable transaction fee with the goal to make the prices stable.

Go and make a coin that has 1% - 2% inflation instead of trying to change a deflationary one for your own ends :P

I'm suggesting a solution to Bitcoins problems (mainly volatility). I don't seen any way how I would personally benefit from such a change.

I challenge you to make any of your theory make sense using the equation of exchange, or a modified form of it with a logical proof of why the iteration makes sense.

At a words-level: the oldest deflationary good there is — land — continues to be traded and recommended for investment, even by those who cannot grasp the actual ways that a system like Bitcoin will interact with the remaining economy. Justify that, also, please. (As an investment, meaning you are not using it, merely "hoarding" it, as most land is held, and all is claimed. For most of us, land is the ultimate in an analogy to a 100% pre-mined coin. But its uniqueness is undeniable. This, BTW, is a useful fact for the "ponzi by early adopters / too late to invest" arguments.)

Also, permanent-inflation coins exist. If they are superior to commerce, by virtue of some variable to the equation of exchange that has thus far eluded me, I am confident the market will adopt one or more. Also, the existence of alt-coins themselves permits the market to modify the *global* M, thereby creating inflation in the global P. While Bitcoin is not inflationary (and neither is it inherently deflationary; some prefer to say it is because it is expected that humans will lose coins and we also assume the population of humans using Bitcoin will be increasing for the duration of Bitcoin's use, but Bitcoin itself is algorithmically inflationary with an inverse logarithm dictating its inflation, until the limit is reached at the neutral projection of the year 2140, at which point it becomes static) the global economy of decentralized currencies is as inflationary, or static, or deflationary, as the market chooses it to be. Solving this within Bitcoin is solving a nonexistent problem, if for no other reason than it is already solved, if it is indeed a problem.

No? So for you personally, the volatility is not an issue? I assume you also will not be disadvantaged by your proposed change?

If so, then, why is there a problem at all? Either you believe you are not an average user, but that average users are disadvantaged by volatility; or, you are an average user, and therefore there is no problem because average users are not disadvantaged.

Are you an average user, or a special user? And please justify why.

As Lethn stated, go make your own currency with inflation (or use an alt-coin with it) and a central "chairman of the Bitcoin reserve" if you think it is better.  Then you can see what people will use, and what they won't.  Perhaps you are right, and everyone wants an electronic version of fiat currency that is continually losing value due to inflation with some central authority figure to control it in which case if you start this, you'll have the opportunity to have a lot of early coins.

Anyway, to propose a having a "chairman of the Bitcoin reserve" seems to show a complete lack of understanding of the nature and benefits of a peer to peer distributed network without a central corruptible authority figure.

OK, here we go; M*V=P*Q (M=mass, V=revolving velocity, P=price, Q=trading quant.). If we observe the market as it is now, we see that mass is stable and all other variables are very unstable. Price fluctuates and so does trading volume. Most of the time we have low trading volume, with occasional spikes (positive and negative) in price accompanied with much higher volumes. So we can conclude we have low and unstable velocity of money, which I think is pretty bad. The goal should be exactly the opposite, a high and stable velocity, supported by stable prices and constant high trading volumes.

When you compare Bitcoin to land, there is one huge difference; land is a resource that provides yield (rent, crops, ...). Bitcoin is just money, it can only provide profit when traded.

The only bright future I see is when a currency becomes relevant. Many small coexisting currencies are doomed to also be irrelevant. Bitcoin is now on a good path. For it to succeed completely, it needs a stable price which will allow more and more goods to be sold for Bitcoins directly. Otherwise it will remain more or less a bubble, even if deflatory in nature.

I see many people defending the deflatory nature per se. Why??? The goal should be for it to be strong, globally relevant and foremost useful to as many people as possible.

You should do some reading about the blockchain and other uses for bitcoin before you make statements like the ones above about it being "just money."

Regarding "deflationary nature," (presuming that is what you mean by "deflatory"), most people disagree with the need for inflation (except for statist economists) and see bitcoin as stable alternative.  As others have said if you want inflation and think that it is required to succeed, use an alt-coin or start one.  If inflation is needed to "be strong, globally relevant and foremost useful to as many people as possible", your alt-coin will take off like wild fire and you'll be a hero.

"Stable price" in WHAT term??? Dollars, Yen, Euro, Yuan?  They are all inflating away value every day.  If by "stable price" you mean stable value, that means no inflation.

Again, I'm not advocating inflation. I'm proposing a variable transaction fee to compensate for negative effects of inherent deflation.

All major currencies are far more stable than Bitcoin. Bitcoin prices swing over 10% each and every trading day, when was the last time USD did that?

This would be a hard fork and you would likely get very few people to switch to something that guarantees they will lose a certain amount of value each year.  However, you are certainly welcome to fork bitcoin with the changes you propose and then you can see how many people agree that this is what is holding bitcoin back.  Instead of trying to convince us here, just grab the code, make the changes (it seems pretty simple to add code to calculate the fee as you propose based on coin age), announce that as of a certain date, FeeCoin will start, using the bitcoin blockchain as of that date (or make an alt and start over).  If this is really what will hold bitcoin back in the future, it should be easy to get a critical mass of users of bitcoin to switch to your fork.  You'll be the bitcoin savior.  If a majority switch, it might even adopt the name Bitcoin 2.0. 

The real way to find out if it is a good idea or not is to put it out there for people to use and see what people choose freely.  My opinion is that people won't choose to use something where they are guaranteed to lose value.  People here won't be able to determine that by talking.  ;-)

Anyway, just because someone calls something that acts just like inflation - eating away the value of savings each year - something else doesn't change its nature.  You assume several things too: first that bitcoin is and will remain deflationary when it has an expanding monetary base and second that a currency with an eventual stable number of units will be deflationary.

The nature and value of bitcoin do not depend on the exchange value for fiat currencies.  If you read more about bitcoin, you will see that it is more than a currency, providing value (like land as someone said above) and that the exchanges are merely an entry point for non-miners.  Changing the bitcoin protocol to do something to promote exchange stability is outside of the bitcoin idea since that would inherently cause inflation in bitcoin due to the inflationary nature of all fiat currencies when controlled by a central bank.  E.g. if you want to essentially try to peg bitcoin to the Euro or Dollar, you will be importing their inflation and that is a bad idea.

:-)

As for people losing money within the system I'm proposing; either you are deliberately oversimplifying or you just don't understand economics. Given the fixed final amount of Bitcoins on one side and the ever growing world economy, Bitcoin is bound to be at least slightly gaining value, prices of goods in Bitcoins are bound to be going down and exchange rates to other currencies are bound to constantly rise. If the yearly fee rate would be smaller or equal to the appreciation rate, nobody would lose their money.

Assume I have 10 bitcoins today. Ten years from now I go to spend them and have the 2% annual "fee" taken. I can only spend 8 bitcoins. I have lost twenty percent of the bitcoins I owned. That is a loss of value.  If, as you stated, bitcoin is only a currency the exchange rate is irrelevant.

Anyway, I'll be interested in seeing how this alt-coin turns out. I dare say that most people will look at the calculation above and do it the same way and stick with the real bitcoin, not this proposed fork.

Good luck forcing the majority of the network to do so if they disagree with a fee that erodes the number of bitcoins they own over time like inflation does whether or not the fiat value increases or not.

i guess there is already one  :o

I was going to be polite but I can't let that kind of arrogance slide, economics is simple, neo-keynesian economists ( those who are most in the public eye now, like Paul Krugman ) overcomplicate economics to the point that they even make up words and phrases to hide what they're actually doing, you know Quantitative Easing? That's called money printing and interest rate fixing, what you're proposing by putting in inflation is money printing, adding to the money supply, all that would do is cause the currency involved to lose value and make it more expensive for people to buy everyday things.

People like you are the product of almost a century of brainwashing to believe in one extremely wrong economic theory that ignores basic mathematics.


There is actually you're right, stuff like Freicoin is already out there, I don't understand why people like him just don't go over to that coin instead of trying to ruin another more successful coin.

I find it odd max even finds it necessary to leak information, though this could be big news and a price rise.

There is an alternate way to address volatility in bitcoins.  That is to use it as a promissory note.

For example, I may work at the local food co-op.  I will sell bitcoins to our customers at a certain price, such as $750 / BTC.  I know which of the bitcoins I sold to them, and they will of course segregate those bitcoins into an "account" with the name "food co-op"

When they come in to purchase, if they pay from an address that had our address as the input, that coin is credited at $750 / BTC in the purchase.

Everywhere else, this bitcoin is just an ordinary bitcoin.  If the price starts to rise, our customer can spend the bitcoins where-ever they wish.  If the price falls, they are protected from the volatility.  We are also protected, since we sold them at that price in the first place.

1) Wrong thread? Lol

2) As long as he has it from a true source, it's exactly the purpose of journalism. The longer the information is floating around in secret circles but not in public, the more "insiders" can buy before the public does. The sooner to real-time we find things out, the better off we are, and the less "insider-like trading" can occur at our loss (well, perhaps our decreased gain). So unless it is false, it really doesn't matter why Keiser said it.

This is exactly what my company does, except for an initial fee. Thus people are protected against negative volatility, we make a modest profit (we also offer many other things, most of which are also modestly profitable), and the world is happy.

You guys have successfully convinced me to find some more in depth economics books and classes locally. Thanks. I think education can never be too good when dealing with money.

Fixed that for you.
-- Prof Mac

What is your good/service area?
Have you modified a client to help you with tracking this?

All purpose financial services, kind of like a bank, but like a bank was back when their purpose was to safeguard assets from loss. In 2014 I include "manipulation and unnatural devaluation" in "loss". It's been thus far somewhat of a private deal, in that it was exclusively word of mouth. I keep meaning to take it further but I have been too busy with my research. (That may be changing; I just committed to a project not two hours ago, so the recruiting effort begins shortly.) Anyway, yeah, actual insured asset vault storage like art and gold bullion, as well as an automated "fiat-decoupled" bitcoin exchange (not like Coinbase, but not real-time either; all funds are in cold storage), secured loans, etc. On the promissory-like functionality side, we promise your funds will never be worth less than the 5-day EMA. There are a couple other "account" types but that's the most popular.

My modified client is really a protocol-compliant custom client that runs on a board comprised of mostly an old Stratix III. One here, and a duplicate cloaked in Japan with a special sync method and a dead man switch to release funds if I croak or something. At one point last year I'd developed a "hardware exchange" after that NY startup (I think) started talking about developing a "millisecond" exchange. Figured I'd beat them by writing everything in hardware on FPGAs, and then also be basically impervious to normal hacking, but around 85% I got dragged into the real world for a while.

Did you have some insight / ideas? What is your specialty, btw? The new project I mentioned is going to require some software skills, and I'm mainly a HW guy. I can't do all this realistically on an FPGA.

I don't get it. You buy bitcoin from the market let's say at $950, then you sell at your customer for $1000.
Your customer can spend their bitcoin freely or spend them to your "store" for a $1000 value.
Let's say the price goes down to $500, customers see an advantage now at spending $1000 in your "store" and you get the BTC back.
Now, are you protected from the volatility?

Lost opportunity (the new chance at a gain from $500 to ??) is not the same as liability or loss. As long as whatever I'm holding to maintain their $ at its promised value should they choose to "return" the BTC is not losing value, and dependent on the confidence that Bitcoin will eventually rise above their purchase price.

Ok so it's all based on the fact that you believe that "Bitcoin will eventually rise above their purchase price". You invest capital, you borrow it in another form (BTC) and you hope for the best. In the meantime you use the new capital to make some profit somehow and decrease the possibility to have a loss. Is that what you are saying?

I am not sure where you learned math, but if I have $1000 today and in 10 years, you take $200 as a fee and I have $800, I have lost $200 in value. I have lost 2% per year (not compounded).  Same for bitcoin.  Saying that is "Wrong!" is at such odds with math that you clearly need to review it.  I started with 10, you took 2, I ended up with 8.   That is a loss.

Where I come from 2 BTC is not "nominal".  Right now it is nearly $2000.  Hardly a nominal amount.  Also, there is no guarantee that it will appreciate so you can't say, but in fiat terms you are still ahead.  Finally you assume that I intend to cash my bitcoin out for an inflating currency to buy a car.  Why would you assume that someone wouldn't just sell me a car for BTC?

Here is my final thought on this since you are having serious problems having a civil discussion:  if you don't like Bitcoin, go to freicoin or fork bitcoin with a rule that will steal 1-2% of their bitcions each year.  Or start an alt-coin.   If you think this is a brilliant idea that will save bitcoin from itself, put up your time where your mouth is.  Instead of arguing here, fork bitcoin and see if you can get people to follow you.  You should have no problem since this is such a wonderful idea.

My customers are protected from the volatility.  I am not.  From my point of view, it is the same as if I held them in a cold wallet.  I also don't pre-load any fees.
Here's the timeline:

0.  I borrow $2500 from somewhere.
1.  I pay $970 for inventory, lights, and labor (grocery stores operate on about 3% margin)
2.  I pay $1000 for 1 BTC.
status:  <$2,500>; $530 cash on hand, operations stocked, 1 BTC held (exchange value $950)

3.  They pay me $1,000 for 1 BTC.
4.  Bitcoin drops to $500
5.  They buy a whole winter's supply of granola, yogurt, and roasted almonds, their retail bill comes to $1,000
6.  They pay me in the store BTC.
status:  <$2,500 in debt>,  $1,530 on hand, no inventory, 1 BTC (exchange value $500)

7.  I pay $970 for inventory, lights, and labor
status:  <$2,500 in debt> $560 cash on hand, operations stocked, 1 BTC held (exchange value $500)

I understand but if you are not protected, what's the point? Also you said before


Are you protected or not?

Also it's not like a cold wallet because if the price goes up your customer will not use that bitcoin at your shop and you will never see it again

I'm a semi-retired analytical chemistry professor.  This means I have worked a bit in electronics design, repair, troubleshooting, and day-to-day usage.  I have also worked a long time with some "early adopter" software, primarily the N. Wirth languages.  I have programmed embedded systems where everything in the system was software that I wrote.  I have looked at some of N. Wirth's hardware languages for programming FPGAs, but I never have bought a board and done anything hands on with it.

At this point, I'm trying to figure out what it will mean for bitcoin to be adopted as a currency, and produce some software or systems that will be needed then.  I am especially trying to figure out what this would mean in the small town of Morris, MN, where there are 1,800 full time college students in a town of about 5,000 population.  I think if I can define a healthy bitcoin ecosystem here, the lessons learned will be very helpful to bitcoin everywhere.  I especially want to know how to make income from bitcoin separate from mining, or trading on price volatility.

There seem to people that believe that an appreciating currency is a good Idea
I would like to invite those people to come live and work in Greece, Over the past 4 years Euro is appreciating:
Wages down by 40% Consumer Prices up by 20%, Land value down by 60%. A Paradise.

Now that we have established what the problem, lets propose a solution that will solve many problems at the same time
while the parameters can be tweaked the basic idea is:

A. Block reward is maintained at a constant bonus
B. A rolling invalidation of blocks starting from the genesis block occures

So there is a Block Window of valid transactions. The size of the window determines the total number of Bitcoins in existence.


Now for the window part

C. The rate of invalitations and block creation is unrelated
C. A link between the economy growth/recesion and the block window size is somehow* created


*As I am opposed to create rules that act as forces of nature and rather trust individual and collective human judgement,
I would like to have that parameter not hardcoded but open to negotiation and discussion.

So why not making another coin you may ask?
Because if Bitcoin fails the whole experiment of p2p cryptocurencies will fail and all we will have left with will be Bankster issued virtual currencies

EDIT:
Maybe Invalidation threshold/rate can be decided by a de'facto concessus between the independent private Invalidation threshold/rate that miners choose.

Sounds pretty good actually but I doubt it'll get accepted, nor do I think it should be. BTC is fine as it is. Do it with an alt coin if you believe in it.

WTF? Are you out of your friggin mind? The thought alone is disgusting enough.

AND fucking halt.

I continue to be amazed by the new sources of confusion. They almost always seem to come down to someone basically choosing to define a standard term, with their own definition. This, in fact, may be Bitcoin's greatest weakness: Assuming the general public is smart enough to understand their own native language.

What you described is the opposite of the Euro appreciating for you: If wages are down and consumer goods are up, your buying power is decreasing. It's appreciating against you. And the Euro is not appreciating, as a whole, when compared to the world, so Greece is mega-screwed.

Land, being a bit like a commodity with extremely low V, and one which subjects its owner to the above, derives a great portion of its value from its location, and the majority economy there. A bit like small alts derive their value from the overall BTC / crypto economy.

Now that we have established the problem is you lacking a dictionary, perhaps we can move on.

Well English is not my native language so please. When I mean Euro in Greece is appreciating, I mean Euro's value is appreciating against Greece's average household (given that most people own their house). What does euro "appreciating for me" means?

so the higher the holding period the higher the transaction fee? that's an incentive to hold the coins further. it seems me flawed. The only way to simulate inflation (or counterbalance deflation) would be property tax on hoarding, indipendently from actual transactions. Or maybe there are other ways to this feat... first of all we are already experiencing a way out to price deflation: there is plenty of coins borning everyday.
 I wonder when the "austrians" will finally get that cryptocurrencies are the most keynesian item ever conceived. LOL!

The probs in greece is not due to current euro deflation, it's due to greece borrowing too much in the past and greece can't pay it back because the econ is unproductive.

If you find Btc deflation objectionable use an alt coin with built in inflation. Btc doesn't have the built in problems of the euro yet because there in min debt in Btc.

Btc works because it is the coin that most people prefer right now.

The part about greece is oversimplification but Im not going to argue about it.
As long as I have the option of not beeing forced to trade my assets for bitcoins in the future I will be happy, but can you make that guarantie?

Simple, no one forces anyone to use Btc unlike the Euro and other Fiat currencies.  You don't like it, you move it to something else - end of story.

Viva la BTC revolution
https://lh5.googleusercontent.com/-XFgl3vzqTMo/UsrkumVziII/AAAAAAAAAEc/u33zWrJufu0/w506-h379/Untitled-1.jpg
_{credits Nick74}

We certainly cannot guarantee that a country with a history of enforcing poor decisions and removing choice by mandate, will not ever do so with a completely free system like Bitcoin. Greece can do as it pleases.

Also, re: above, Austrians and Keynesians are both wrong, though Keynesians much more so because they have corrupted and ran with flawed iterations of Keynes' work. Much like Marx would shudder at the attempts to create a collectivist society, Keynes, who was raised in an age where the aristocracy was benevolent and generous, would be appalled.

The reasons come down to a quote by a personal hero, and one which I have spotted recently around the community. It is the truth, and the guiding principle of Bitcoin, whether users know it or not (which is the beauty and the point), and it is the answer to why I can care about politics and not vote, and why I spend all my time considering solutions and none of it lobbying. It was said by an amazing man, and a probable fellow DEC2 mutant:

You can never change things by fighting the existing reality. To change things, build a new model that makes the existing model obsolete. —R. Buckminster Fuller

Well then listen to your personal hero before you usher the world into a new Feudal age. You think deflation is moving forward? there is a perfectly good reason deflative economies don't exist: evolution

but no one noticed that litecoin provides millions extracoins to the economy? how can you really belive that cryptocurrencies as a whole colud turn out to be actually deflationary? you'd better start thinking about it: what if litecoin succeds?

Most cryptocurrencies that I know reward early miners disproportionaly, that is one problem independent of deflation or, and promote aristocracy which can cause serious political problems, which is why I propose a "Rolling" Blockchain

Deflation, or Inflation can be induced this way now by stretching or shrinking the Valid Blockchain Window. Maybe Invalidation threshold can be decided by a de'facto concessus between the Independent Private Invalidation Threshold that miners choose.

EXACTLY THIS. Interestingly enough, without the power of a central regulatory agency, the market can and will decide exactly how inflationary or deflationary it wants its cryptocurrency ecosystem to be. Just as I said, oh, 50 posts back before we entered this flagellation.

Also, I'm about two pixels from ignoring thaaanos, which is something I *rarely* do.

Sorry but this is not an issue that market can "decide". Currency market is not like stock market's beauty contest, it follows the gresham's law so the ecosystem will be strongly inflationary given the infinite supply of "bad coins". Very difficult to guess what all this will eventually bring, but not deflation as it would be in a only bitcoin environment. Thaanaos, I'm interested in your rolling model, probably similar to my present thoughts. Could you expose some details? I'm a newbie so i'm just starting to think about it, having recently discarded the awful (to me, as an european) deflationary hypotesis.

look up here
https://bitcointalk.org/index.php?topic=398389.msg4348065#msg4348065

now what did I do that you feed the Troll inside me? :P

No. This is not correct.  Btc rewards early miners who spend their btcs when btcs reach a level that makes them feel wealthy. Over time, Btc distribution will become fairer. Anyway, Btc market is only $10 B for goodness sakes!

Credit money increases the gap between rich and poor because fiat is being devalued via asset price inflation.  This is the real problem causing inequality and the loss of social cohesion.

As mentioned before, take the rolling blockchain idea and build your own coin and see how many people use your inflationary coin. Not many will I suspect.

Don't try to fix what ain't broke.

Please don't mix the issues here:
The rolling blockchain achieves 2 things
1: Justice (and don't naysay me period)
2: Discourages hoarding, will increase utility hence survivability
3: Act as recycling mechanism or a rolling reboot of the economy

A further improvement by decoupling invalidation and creation rates can provide
1: Control over inflating/deflating the economy the beauty here is that every miner can at this point play the role of a central banker by a tiny bit
 

Oh puhleassse, spare us.   Go build your own effing coin and prove to us it's better.  

What justice?  According to you?  Every single person who owns bitcoins CHOSE to use bitcoins. It's the ultimate democratic currency.  

As a Greek, you should have some idea about that instead of trying to ram your ideas down our throats.

i was thinking a very similar model. il' think again. At a first glance yours seems very reasonable and self sustaining.

Well then look again.
His pros and cons are pulled out of his rear and he wants to "trust individual and collective human judgement" to decide the who gets to lose his coins.

ok who pays after the last satoshi is mined for the blockchain manteinance? transaction fees. But why should this be big enough? why do not let the transactions free and remine the coins?

Big enough for what?
Free transactions means blockchain spam.
What does remine mean?

the cost of transactions is equally divided in all existing bitcoins, as a deposit and manteinace cost. I do not think there will be spam, but if you please we can keep a very low transaction fee.

If you're still alive in 2140, you can worry about this problem.  By that stage I think 1 Btc should be worth more than $1 Million in today's dollars.

Therefore, transaction fees will be plenty enough for low energy ASIC systems.

if there will be an alt coin with 0 transaction fees, there will be no bitcoin in 2140.

In that case GTFO and go build your 0 transaction fee alt coin.  What are you waiting for?

Quick question on the "rolling window" ideas:  what prevents me from simply periodically moving my hoarded coins to a new set of addresses?

No in my idea bitcoins aquire a dimension of Age. Every time the Earliest mined bitcoins (the block that gets invalidated) are no longer a valid output so all transactions rooted to them get also invalidated when that block phases out.
The decision of inflating or deflating the economy is decoupled from the distribution or invalidation of the bitcoins


as I said above the "moving" transaction will be invalid because it's inputs will be invalidated if they are rooted to a block that got off the rolling window.

That window is neccecary be small it can be say 49 years, so hopefully the bitcoins that will be invalidated are sufficiently diffused so no single person will feel the hit, Unless he is  hoarding of course. Essentially this gives greater value to freshed mined coins (they will last longer) and gives equall opportunities even to late adopters.

For those who like to keep bitcoin deflationary (for the right reasons - other than milking the Cash Cow) note that this way if the rate of invalidations=rate of mining the number of bitcoins can stay constant.

Well if you find *Just* the fact that one can live off without working by spending diminishing fractions of this stash, then maybe we could all do it then and see what happens... Can I choose that?

Choice? Really? just as you have a choice of not using Google or Microsoft or Facebook? Sure I still have a choice to live in a hut in the woods hunting vermins.

I'm sorry but the idea is just bad, it's a non-starter. Aside from the disgusting central planning, a) this can still hit just one person who sold a house, b) people can still "launder" their coins by sending them to mixing services and exchanges, having other people share or take up the whole loss. Or people would value newer coins higher and make them non-fungible.

Yes, really. Choices have consequences and most of the time you don't get to change them.

Seriously, with your mindset, I wonder what you'd even want with bitcoin. You seem like you should be perfectly happy with fiat. You have your trusted individuals and collective judgement that do the right thing™ for the economy! And you even have lots of inflation coming, isn't that what you want?

Thanks! You just reminded me why I hate the economics forum and every stupid thread about "fixing" Bitcoin.  You do not have the slightest clue as to how the Bitcoin protocol works or how Bitcoin transactions work or how your idea will never work.

One more thing before I go back to the technical discussions where I belong:  all this talk about "changing Bitcoin" is a total joke.  Any substantial change to Bitcoin is a new coin by design.  You cannot change Bitcoin in any substantial way.  You are discussing alt coins:  InflatoCoin, TaxCoin, TheftCoin, MagicVanishCoin, or whatever.  You are not discussing Bitcoin.  The only changes that will ever be made to Bitcoin are small technical improvement that can be done within the established protocol.

EDIT:  Darn, I screwed up my edit and lost some text.  Something like "Good bye and good luck, etc."
  

mark your post. bitcoin is just like myspace, in no way you can pretend technology stops from improving. litecoin is ALREADY ramping with very good volumes. Or you think it will fail? why should it fail?

I never said that all alts will fail, some may do ok, most are still born - especially all the ideas in this thread.  I said I am betting on Bitcoin and you can bet on whatever alt you choose.

We have variable transaction fees but this is the exact opposite to the relationship established for them.  So you don't keep sending tiny amounts to yourself in order to make Bitcoin unusable, there is a minimal time you need to hold on to the coins before you can spend them without a fee for amounts under a certain minimum amount.

See the wiki article on bitcoin transaction fees.  https://en.bitcoin.it/wiki/Transaction_fees

If you do implement the idea in an altcoin I can save by sending the coin to myself.  Your idea is impossible unless you link real identity to private keys, and if you need to do that you no longer can have a decentralized computer application.

sdp

no transaction fees (every other means of payment iscrewed in no time) finite quantity of coins, every wallet looses some coins, in percentage to the holdings, that go to miners: they actually "remine" the coins. Just an embryonal idea. The miners "steal" from steady accounts, but they do not "steal" for transaction fees. A very liquidity premium.

Think you meant "Deflationary" OP

Where in my proposal you see Central Planning? Are you having halucinations?
a) So maybe he would choose freshly minted coins on his contract? or a basket of mixed age coins?
b) People are going to *trade* older coins for newer coins at market rates in the exchanges
c) Idealy the loss would be shared accross all wallets, given sufficient diffusion over a timeframe of say 42 ;) years.

So yeah ok I still have faith in human judgement, I don't want my life to be dictated by an algorithm. Me Bad. I don't see any inflation coming my way, I could use a couple of points.

IMO Anything can be changed
But before you go just please tell me if my proposal is technically feasible within bitcoins codebase, if not why? and I promise not to plague you in the techical forums :P

Yes you bad. Take a look around the world and take a hint.

There are strict tecnical protocol reasons why the changes you are proposing cannot be done "to Bitcoin" because by design if you make these types of changes you automatically create what is called a hard fork in the blockchain.  This hard fork creates two different block chains with two different coins:  the original Bitcoins and the new alt coins.  No matter how loud or how often you try to call the new alt coins "Bitcoins" it is not true and everyone who continues to support the original chain will know it is a lie.

All of the miners and clients that continue to support the Bitcoin way of doing things will not accept the alt coins you have just created.  All of the miners and clients that support your changes and accept the alt coin will accept the old Bitcoins untill they are all spent on your new alt chain.

Now on to your question:

Let's say I have a vigin block of 50 BTC that was mined in January of 2009.
At some point in January 2010 I sent 1 BTC to a buddy, sending the change to a new address
Now Yesterday I wanted to spend 95 BTC to buy a new Tesla S from a car dealer

The transaction is as follow:

    49 BTC from the change from the 2010 transaction
    25 BTC from a brand new freshly minted block
    25 BTC from a block that was minted in 2013

Outputs:

    95 BTC to the dealer for the car
    4 BTC to a change address

Now you want to kill the BTC from from the Jany 2009 block.  How would you do it?

You basically described Freicoin and how it is implement, though it has transaction fees to avoid spamming as with BTC, but because of continual 'remining' as you call it the network never relies on transaction fees as a revenue source for miners, it is always intended to remain trivial.  Ideally their would be no transaction fee if a technical solution could be found to transaction spamming.

Check out our forums or IRC channel to learn more (links in my sig)

What if everyone agrees? what if Satoshi steps out of nowhere and tells hey guys I think thaaanos is onto something lets do as he says :P

Ok What would the effect be is suddendly everyone decided that the genesis block is one past the one of Jan 2009 you mined

That's not Central planning, what shatoshi did was central planning

Shit even Borgs dont work this way.
So you find no moral hazard in decoupling a decision from the stakeholders and a few decades?

very similar indeed. Anyway i do notimmediatly get why such a demurrage shold prevent from interest borrowing. In my opinion interest borrowing should remain. Thanx i think i'll buy some.

Just in case anyone has any remaining doubts about your complete and total lack of understanding of what bitcoin is and how it works, can you please post some more?

With a moving genesis block, you have total chaos.  New nodes would not sync to the rest of the network because they would quickly find transactions that refer to past transactions that no longer exist.  They would see everything as invalid: transactions, blocks, everything.

You can't, in general, undo the start of a linked list without throwing the whole thing out.

Now if you kept the old chain, but decided that transactions that referenced it were merely invalid in the future, you end up with the situation that BurtW is trying to ask you about.  That you can't see it is, uh, informative.

Keep in mind that we do not trace transactions backwards.  When a new transaction comes in (by message or by block), we validate it against our current set, and if we accept it, we update that set to reflect the new information.  We could trace backwards, if there was some need, at a considerable cost.  I look forward to hearing how you solve that problem in your VanishCoin alt.

If your, or any, alt coin idea creates a situation where the market assigns different values to different coins as in your case of assigning different values to coins with different "ages" then we are done here.  If that is the case then your coins are not money, they are collectibles.  Money is fungible.  Collectibles require a third party to "grade" them in order to assign value.  I suggest you learn a lot more about Bitcoins, what they are, how they actually work, what makes the system unique and why so many people are inspired by it BEFORE you try to fix it.

Whatever plans Satoshi hatched were his own. There was no stake to hold. People accepted bitcoin in the state it was in.

He probably didn't think it through this far, but this is actually quite easy. Distribute it amoung the outputs.
    95 - 49*95/99 BTC to the dealer for the car
    4 - 49*4/99 BTC to a change address

Exactly, you just made my point for me.  Thanks.  You just took almost 49 BTC from the car dealer, HALF what he was paid for the car.

Because of this the VanishCoin idea is not money and is a still born alt coin concept.

Actually it works as new coins debase/obsolete the old, and yes they will not have a face value, an output it will require some *weighting*
however due to the recycling effect the actual value stored in the coin will be it's utility as exchange means, not some artificial scarcity.
On the technical side -watch me take out the duality card-
The numbers in the transaction tree will not represent number of coins but, *weights*. The leaves are where the value will lie (block age) and the trasactions simply create a weighted tree. So output "value" from scalar is vectorized, and yes now coins are semi-fungable, but thats a plus actually as I hope that this semi-fungability will lead to people trading them. That inter-trade is what I bet on to use as a stabilizer.

EDIT: BTW since this is my coin I will call it OURO ȣ

It appears that you really like your idea so I suggest you run with it and create OURO ȣ

Let us all know when it is available with a white paper, reference client code, miner code (if needed), etc.

First things first I need a mysterious persona, how do you find "Atanashi Anakatoma"?

Land is a good analogy. But same you could say about corporate shares or fonds. When they are increasing in value all the time, nobody will sell, ever! Most people tend to hoard there shares and live like a homeless guy and then on death bed they spend it.
Because: Money on the bank is much worthier than a nice TV or a trip to Thailand.

And sure, who will buy a coffee, when you can buy with that bitcoin 5% more coffee in one year?  ;D

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving propably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

There you go.   I think that is it.  That makes sense to me.  My answer was in jest.

Nowadays there is a better solution than the mattress. It's called bitcoin. It's probably an even better solution than savings.

Lets put Thaaanos' statements into perspective. Could we be dealing with a central bank stooge?

As we have said many times:  bring on your OURO ȣ alt coin and let's let the market decide.

I feel I have to apologize for my little Hodling Parrot perched on my shoulder, seems I am not feeding him enough nuts

"Squawkkk, stooge, stooge, stooge.  Squawkkk"  

The parrot only knows what the parrot sees and hears.

Money is an abstraction of barter.  You trade wealth you have for wealth you want, but the two halves of the trade don't have to happen at once, they can be spread across time and space, and with different people.

If you are holding money (saving, hoarding, whatever you want to call it), it means that you have given wealth to the world to use, but have not claimed wealth back to complete your trade.

The difference between saving and hoarding is the difference between understanding this and not understanding it.

That agrees with my own personal definition of what money actually is.  I think money is the state of an unfinished transaction.

Very, very good. Tweaked and added commentary.

And, indeed, hoarding and saving are the same. The common notion of saving in a mattress vs. saving in a bank is a conflation; a misunderstanding the difference between saving and investing. Saving is saving, investing is investing. Putting money in a bank where the contract permits them to loan and invest it, is investing -- in other humans, in the economy. This is good, and is better than simply saving, unless there is something wrong with the investment process (this is the problem!).

Right now, I can save USD, in a vault or a mattress perhaps, or even by letting it sit in BTC-e as USD: I don't think they're doing much investing with it. Really, most of it is sitting as Bitcoin, but BTC-e is absorbing the difference of appreciation as profit or loss. In fact, I frequently do this exact thing, but with RMB on BTCChina, because the CNY is appreciating against the USD at about 3% annually. This is one reason they are my primary exchange: When my funds are existing as fiat, I want to know they are in a healthy fiat.

Investing is great, too. I regularly invest in many things. BTC can't really be invested in, beyond simply saving as BTC, because Bitcoin functions, more than anything else, like a stock-commodity hybrid, and really, it is mostly a stock. You're investing in a technology, the blockchain-distributed-p2p-cryptocurrency system.

If Google was a purely supranational company with an open-source, tamper-proof, uncounterfeitable share issuance algorithm: with no regulations to prohibit such things we could pay each other in fractions of stock shares, and it would be much like Bitcoin, only our investment would also be an investment in everything else Google does, in addition to that trade mechanism.

Bitcoin, we are investing in the trade mechanism itself, and all the activities of all the humans and companies using Bitcoin. Everyone who benefits from a rise in "stock" price, that's who we invest in by buying and holding Bitcoin. In the future, I expect to be able to invest in more specific groups of humans by buying stocks valued in Bitcoin itself. That is what investing truly is, but we've come very far from being able to recognize it. Shorting of course is betting against them (or at least betting that they aren't as worthy of investment as their current trade price). Naked shorting is another day's commentary, but is very, very bad, for the same reason that money debasement is bad. Shorting Bitcoin, done properly and transparently, does help to stabilize the market, believe it or not; but the key is "properly and transparently". But really, exchanges have the same problem. We could be buying naked long positions. It's pretty obvious that at Gox, dollars are very often held as naked longs, and it's a wonder a run hasn't happened and destroyed them. Only the community's anti-state-intervention tendencies, the distance of the internet, and a little hopeful greed that the price will come true for them, has prevented this.

Since my train of thought has veered that direction, this is why a true, transparent p2p trade system MUST be created. I have been working on one for a while. The only other options are central or voluntary regulation; and people continuing to get burned. I don't like two of the three, and we're pretty far from any voluntary regulation concepts being the norm, though I do believe that is the future.

That's probably enough rambling for now...  :-[

Since the transaction is not atomic is there not a risk involved that scales with time? Where is that captured in the above definition?

I could ripost that hoarding/saving(not in a bank) then is nothing more that investing in yourself at 0% rate interest.

Wouldnt a rational player hedge the risk of his own single point of failure and pool-hoard/save with others like a savings bank?

Excellent take. Yes, or put slightly differently, you're betting that compared to your saving/hoarding, you will lose less than the places you could have invested in. It's all relative. Either that's because you didn't have access to places which could have better utilized the money (giving a higher yield) or because you really are the most amazing human ever. It couldn't be zero, though, unless you were wrong. Your savings would appreciate against whatever others did. This means you MUST be already saving in the most non-depreciative asset.

Temporarily, Bitcoin is probably this. It's as close to it as you can get. It won't be forever; eventually you'll want to invest in specific implementations of blockchains, and other ideas. And already there are stocks that yield more that Bitcoin — some of them just out of pure speculation, but others because they really are using that money superbly.

When investing, don't forget to correct for the yield of the underlying asset. As in, investing in Alibaba or Baidu, if yielding a 150% gain YoY in RMB, is actually more in USD, because the USD is -3% roughly since 2005 (annually, not -3% total).

Edit: I rather doubt China considered it this way when they began cracking down on Bitcoin, but as the country with probably the highest actual appreciation of underlying currency value in the world, they have the most to lose economically (or really, the most advantage to give away, not anything being lost technically) by allowing the free flow that is permitted with Bitcoin.

I think China is so invested in gold, and propably
A. sees bitcoin as a threat to it's gold reserves
B. Most likely thinks that since in the west there is no more gold it's propably a technological sleight of hand
to fuck them over ;)

EDIT: Especially since US tried to send them fake goldbars

Source?? I guess I wouldn't be surprised -- at least, not surprised that there are fake gold bars in vaults. That's why we can't estimate the surface gold amount to more than a full degree of magnitude in precision (i.e. there may be x surface gold, or 10x surface gold; no one is sure.)

Anyway again, the threat -- if they see it -- is that BTC can be an equalizer between currencies with unequal debasement rates. Thus, our debasement of the USD, by connection via BTC exchange, has a (small but measurable) debasing effect on the CNY, or, looked at inversely, the strength of the CNY trickles to USD (in a small but measurable amount). We're both playing games with our currencies, but the effect of BTC in the mix is to the benefit of the USD, and the detriment of CNY, albeit small (since the BTC market is incredibly small vs. the market caps of USD and CNY).

I've wondered if the interesting and unexpected response in the Senate, and the reversal of China's position since November (when BTC was covered positively on state media) are related. Possibly they fully expected us to ban the whole thing, in which case it WOULD have been a neutral or good thing for China (the currency with the least trade friction is the more attractive currency for making your reserve currency; and China appears to have aspirations of making the CNY a challenger to the USD for other countries' reserve currency).

a quick google: I think it hit the news around the time Soros decided to ditch gold, I guess he had advance warning and the news must be credible
http://www.exohuman.com/wordpress/2011/02/fake-gold-bars-sold-to-china/
Shouldnt arbitrage, especially auto-bots nullify this effect? I don't actually get what you mean here. Is there some "friction" between the triplet of USD-BTC-CNY, (that can be exploited? lol)
Maybe the Senate sees is as an alternative to gold, if they ever need to pin USD to something,
(lol can you imagine USD backed by BTC :P)
and chineese may not like the idea especially after they got in the trouble of sucking up the world's gold.

I'll have to poke around and see what I can find beyond conspiracy sites. Again, I don't doubt for a bit that there are plenty of fakes... I'd think that with the last 10 or 20 years of tech, it'd be really, really easy to spot now. If they were made 30+ years ago, they might've felt they could pull it off, but there's a half dozen inexpensive to moderately expensive ways to detect this now. Maybe that's what happened.


Arbitrage is exactly the cause of it. Because the USD is depreciating against the CNY so quickly -- 1000 USD worth of CNY in 2005 is worth $1435 now, by itself -- arbitrage, whether for this purpose or not, between USD and CNY via BTC, negates the differences, connecting them as a pair in a different way than the planners can control. Thus the USD depreciates a bit less, which also means the CNY appreciates a bit less, relative to each other. As world currencies are connected in this way, this is a good thing for the world as a whole, but I can understand why China might not want to allow this freely, at present.

I see yes, it bypasses capital controls and "fixed" rates, But wouldn't the chinesse prefer a less appreciated CNY (export-wise)? but that maybe just a matter of circumstance, the point is they both US/China lose control.
But what if BTC acts as a "Sink"/Ground sucking up any USD and CNY which may well be the dominant case, wouldnt that break Arbitrage through BTC?

It certainly won't break arbitrage; arbitrage takes advantage of temporal differences in exchange rates, and fixes that difference as quickly as the market will allow, taking into account all actual costs of exchange. The only way to "break" arbitrage is to find a way to nullify the existence of time in the equation, and to remove a fee from exchange -- in the absence of a time cost or a fee cost to exchange, you wind up dividing a part of the exchange equation by zero (literally). So a completely frictionless market is impossible, at least from our 3-dimensional perspective, unless a genius figures out how to divide by zero in a consistent way. This is not without precedent in mathematics. The concepts of zero, negatives, and then imaginary numbers all revolutionized parts of mathematics in their day, which we all take as common sense now. I'm not particularly optimistic about the dividing by zero bit, as I suspect it will really come down to "infinite sets" which already can be of different size, yet not... i.e. the set of all positive integers is infinite, yet can be considered larger than the set of all positive even integers, which is still infinite. But I digress.

It's hard to say for sure what they'd prefer: Our currencies are doing pretty much opposite things right now, yet neither is scrambling to reverse course. Our economists seem to think they can keep printing and fiddle with the numbers; theirs seem to be happy with whatever is going on also. It's possible that the players aren't all aware of all the implications of how this will play out, mathematically.

Still for it to happen isn't a 2-way flow necessary for equilibrium? if BTC acts as a sink then there is no "Communication" for USD/CNY through BTC.
Since the topic is derailed anyway...
I will claim that the time dimension and for that matter neither the space is a continuum, rather discretum, so at most you will divide
by 5.39106(32) × 10−44.
Mathematically speaking though the equation of exchange is curiusly *not* described as a Partial differential Equation, for the non-linear and wavelike properties markets exhibit, so my take is that it is a simplified version of a more complex one.
Infinity is not a number, its a place :P
I think China play chess, carefully trying to corner US, while US plays poker bluffing all the way

Is there communication through a diode?  There is.

I don't care what happens if I fail.  I won't be around to see it.

more like a transistor in this case, with BTC as Gate

Both reported as possible posting bots.

Deflation never worked well for normal currency's. Right now base on rather limited data it is hard to tell how would metacurrencys react to more excesive actions of larger groups with aim of deflation of them (if i am describing it in right way). Inflation even though look terible in long run might creat more natural environment for future meta-monetary markets.