Bitcoin Forum

It seems the issue of inflation vs. deflation is pretty controversial, so I thought it would be interesting to see where the majority is, and how strong it is.

Bitcoin _is_ a system with controlled inflation.
And it will keep being so for about next 100 years.

http://upload.wikimedia.org/wikipedia/en/thumb/5/54/Total_bitcoins_over_time.png/740px-Total_bitcoins_over_time.png

So you are asking the wrong question.

I think that the question you want to ask is "Would you support moving to a fiat-like electronic decentralized currency system".

EDIT:
The question for you is:
What or who will "control" the inflation in your idea ?

Controlled Inflation is controlled resource use.

Do you want someone telling you how much food to eat, gas to use, power to use, clothing to own, etc... ?

And if even possible, people would create a "Black Market" to get around it. Make their own clothes, their own food, etc...


BitCoin is not controlled inflation. It is a constant quantity used for Money. You can't print more, preventing Quantitative Easing.

Inflation would still occur, instead of 10 Bitcoins for a Widget, when people want more Widgets with declining Widget production, the Widget will cost 20 Bitcoins.  <--Inflation

I think the question they want to ask is "Would you support moving to a system with constant inflation?"

(Not constant as a fraction of the money supply, though.)

It'd be worthwhile at least discussing how the economic future of Bitcoin would look different if the mining bounty were to remain at 50 BTC forever...

Would you move your money to an inflationary currency?

I think the answer is....

"NO"

It's one thing to support another idea, it's quite another to actually use it.

I think there are two outspoken opinions:

• (continued) increase of monetary mass is bad
• A certain % of newly injected money is useful (eg. 2%/year)

In the first case, I'd expect you to favor a system where block_reward eventually becomes 0.

In the second case, I'd expect you to favor a system where block_reward eventually becomes 1/2650000 of BTC mined so far at that point in time (causing 2% increase per year).

I'd like to know what reason there is to want 50 BTC forever.

There is nothing more fiat-like about the system he proposes than the current system. I actually think it would be better his proposed way because it would better promote mining, which is necessary to ensure network security. The rate of inflation would still be gradually decreasing, because 50BTC becomes less and less meaningful as time goes on.

Staying at 50BTC reward per block would mean the inflation rate would approach 0% as time went on but never actually get to 0.

Under the current system, the world will still be mining more gold long after the last BTC is mined.

Devil's advocate here, but I think the one thing that might motivate people to move their currency to an inflationary currency would be if the "inflationary" fact somehow gave them more confidence in the currency being useful and capable of supporting a flourishing economy.  The economic future of Bitcoin is still unclear, in no small part because it is treading new economic ground.  Though I'm not pessimistic personally, most people will stick with systems like the ones they know until they understand enough such that making the change is something they can do with confidence.

Bitcoin is an inflationary currency right now. Very highly inflationary.
The difference of opinion is only on how fast to cut back on inflation in the coming decades.

That is a relative term.

The inflation in Bitcoin is predefined and "controlled" by mathematical algorithm that is known to all parties in advance.
So it is "controlled" in a way.

Bitcoin is inflationary, and it will stay so until the last coin is mined (for another 100 years or so). Of course, the inflation decreases over time.

Keeping the block reward at 50 BTC would continue to encourage mining forever, which might improve network security. It would be a "tax" on all coins, used to keep the network secure.

I don't think this is necessary, though.

Perhaps there are other better threads to hash this out, but I have some doubts that transaction fees will ever be big enough to be an adequate mining incentive alone.

I foresee a future where each miner will want to include as many fee-paying transactions in his or her blocks as possible, so they will set their minimum transaction fee to the smallest nonzero unit (currently .01 BTC). Any miner setting their transaction fee threshold to .02 or higher will skip over all the .01BTC transaction fees and end up losing money.

People sending transactions will know this and not ever set their fees to above .01.

But I could be wrong. It's difficult to predict human actions.

I would say YES, I'd support 50 BTC forever, for the following reasons.

1. It pops the legitimate argument that "early adopters" are being unfairly rewarded.  Right now, 25% of the BTC have been passed out, but to less than 0.000001% of the world population.  We are all "early adopter elite".  That fosters a risk that an inrush of popularity will come in, all agree that it's not fair that the select few as we know each other are profiting handsomely at their expense, and start canvassing the idea of a new block chain.

2. Even with 50 BTC given forever, the inflation still tends to zero (since it's a ratio of new minting divided by the total BTC out there, which tends to infinity)

3. I am not convinced that the "transaction fees for mining" is a sustainable equilibrium that will sustain the network.  The incentives are in the wrong place.  I see a massive negative feedback loop.  The real control at stake here is the maximum block size acceptable to the network, something that is somewhat "centrally administered" in the source code.

Miners are always going to be incentivized to accept the maximum number of coins that they can jam into a block.  Miners will collectively never have any leverage to enforce a certain transaction fee, all of the control lies with the payers.  The higher the fee being paid, the more miners that will start mining, at least some of which will not be enforcing any minimums, which enables payers to pay as low a fee as they would like, which will make mining less or non worthwhile.  This is what I mean by negative feedback loop.

You'll have miners incented to waste available space in blocks - that's about the only way they'll be able to exert influence on the price payers pay.  Nowhere do I see an incentive for the mining community at large to throw as great a sum as possible of GPU power at the network.

The 50 BTC forever will disincentivize early adopters from promoting the currency. Not to mention that will disincentive saving, which is the basis of capital in the economy. Currency competition will eventually move all saving to a more stable currency putting the light out of the 50 BTC forever currency.

People propose them but they can't brother to do it in practice.

OT: Is it possible to fork the chain in such a way that, even though the official bitcoin chain doesn't recognize post-fork transactions in the secondary chain, both the official and secondary chains continue growing and continue recognizing pre-fork transactions?  What would that even look like?  If the secondary chain became longer, would it "become" the official chain?

Wait until a million people show up, all competing for a slice of 500,000 active BTC being circulated, at which point they start asking each other, where's the other millions of BTC?  Suppose at this time there's 7 million BTC out there.

The million people who show up will start asking one another, where's the other 13/14ths of the Bitcoin economy?

If they collectively become convinced that we as "early adopters" are holding it for profit at their expense, just watch how fast they "bother do to it in practice".  They don't want 13/14 of their BTC wealth to potentially disappear on a whim, and you don't think they will be strongly motivated then?

Even with 50 BTC forever, inflation tends to zero.  It just removes a major incentive to speculate at Bitcoin's most vulnerable time: the startup period while it is trying to convince the public to adopt it.  We ARE going to have people questioning the unfairness favoring early adopters.

If not 50 BTC forever, then at the very least, something that substantially pacifies this concern.  Even on the Wiki "Myths" page, under the question "doesn't Bitcoin unfairly favor the early adopters?", the response given is essentially, "nothing in life is fair".  That does nothing to quell the "myth", it only purports to validate the concern as legitimate!  The public CAN do something about this, especially with a Google or some other corporation pushing for it... they can start a new block chain with majority support (their majority, not ours), which would effectively reduce the value of every one of today's BTC to zero.

The bitcoin code is open source. Anyone can setup their own genesis block and start a currency. I dont see how an inflatacoin is any different. 2% is probably the optimum amount and is a form of tax to ensure miners are incentivised. Who knows , you might be able to keep most transactions essentially free because there will always be blocks to mine so no one will have to include tx fees at all.

Be interesting to see how many miners switch and what the exchange value between them would be. Essentially people would be saving the majority of their wealth in bitcoins and spending inflatacoins.

This topic quite naturally brings out lots of comment from the libertarian/anarcho-capitalist perspective but as I don't fall into those categories myself just thought I'd chime in.

I have no particular philosophical investment in the deflationary model, but I think it would be very difficult to get traction for a digital currency system with no clear upper limit.  Yes, in a mathematical sense the percentage of bitcoins being issued becomes smaller and smaller; however in practice the presence of an infinite progression makes the value of something much more difficult to intuitively quantify.  As the system currently stands the total quantity of bitcoins is a simple to understand amount, being distributed predictably over a decent period of time.

Regarding the "fairness of distribution" issue there seems to be a lot of misunderstanding on this point which we would do well to address internally as a community so that we don't keep presenting a confusing perspective to newcomers.  I'm not personally much of a capitalist in perspective so I'm not overly concerned with a profit incentive for early adoption:  for me the real incentive is the possibility of what Bitcoin might become in regards to enabling a microtransaction economy and democratizing access to financial services around the world.  But what people have to understand is that in a successful currency initial distribution is virtually irrelevant in comparison to the overall activity of the economy.

For example, a typical US one dollar bill changes hands 15-20 times or more a year and lasts 4 years in circulation.  Thus the total amount of economic activity it's involved in ($60-$80) dwarfs the economic activity of its actual production (a few cents) and even the impact of its introduction into the money supply ($1).  Digital currencies are likely to have even higher velocity (http://en.wikipedia.org/wiki/Velocity_of_money) and bitcoin in particular is much more efficient at the ratio of investment in production (electricity, hardware, and time for mining) to the face value of the currency.  So there is a much higher ratio of economic activity to the actual gain that someone receives for being an early adopter.  It is this economic activity as a whole that adds value to the early adopter's coins--the amount "paid" by any future user of bitcoin to the early miners and purchasers is tiny even if the currency becomes wildly successful.

As another way to understand this, consider the scenario of an early Google investor.  Because of the increase in the company's value that person has made a massive amount of money (for an individual) off their initial investment.  But look at the overall impact of the company.  Millions or even billions of people have used Google's search engine, webmail, advertising, and other services.  Because of the scale of digital computing and the internet there is a very tiny margin on any given transaction with the company--be it in time spent looking at or clicking on ads, or fees paid for Google AdWords--compared to the benefits people have received from being able to search the web, use email online, advertise cheaply to a wider range of customers, etc.  This is why the company was so successful--because the value proposition was fantastic! Yet that tiny margin has funded all the activities of the company, and after subtracting out the considerable expense of actually running an internet giant, paying its staff, etc. it is only a portion thereof that ends up as company profit; and it is only a portion of that value (and the market valuation of being able to hold shares in it) which is ultimately returned to that investor as a gain in value.  The percentage return is indeed impressive when we see what they had then vs what they have now.  But those gains are distributed across the whole range of Google's activities and economic impact.  The result?  We all wish that we were early Google investors, but we don't grumble about the unfairness of not being one every time we click 'search (http://www.google.com)'.  The truth is, that at the time we had a chance to get in it took a lot of foresight to see what Google would become.  There was risk, and uncertainty, and no guarantees.  So your average Google user doesn't rant about the "unfairness" of initial stock distribution leaving them out.

Bitcoin is the same story.  Yes, early adopters (especially very early adopters) stand to gain significant amounts if bitcoin ultimately becomes successful.  But the whole reason for this is that a year ago, or even now no one had any real idea whether it would be successful or not.  If success was always such a sure thing the value would have been very high for bitcoins right from the get-go, mining competition would have been intense, and no particular individual would have gained massive percentages on their original return between then and now except possibly the miners of the very first blocks.

If bitcoin is even moderately successful its overall benefit to mankind will dwarf any gains people make by being in it earlier than others.  Joe Schmoe User won't care a twit how the coins were initially distributed.  They'll wish and dream that they had put a thousand dollars into Bitcoins when they were worth .05 cents US each, but they won't rant and abandon the system any more than we would stop using Google because we didn't buy shares at the IPO.

tl;dr:  Stop confusing new adopters of bitcoin with all these silly bickerings and particulars over distribution schemes and how mining should be done and generally transmitting the mistaken belief that distribution/mining has anything to do with the ways or reasons that people should actually use Bitcoin.

Bitcoin is cash.  You get it the way get cash--by exchanging other cash, working or selling something.  It's secure, easy-to-use and moves with the speed and reach of the internet.  And that's awesome, because nothing like it has ever existed before.  Get on board.  That is all.

Keeping the current generation rate will ensure that lost bitcoins are effectively replaced forever.

If the bitcoin economy fails to at least double in the period of 2012-2016, keeping the generation rate at 50 BTC/block will cause inflation, but wouldn't a bigger issue be with the lack of growth in the economy at that point?

I voted yes even though I dislike inflation. I like the idea of a stable currency that is neither deflationary nor inflationary in the long run, where I can expect to buy the same product with one bitcoin today or next year. That's what a "store of value" is.

If we believe that the economy will grow exponentially, as it always has in the past, then a linear growth in the number of bitcoins is not even stable, let alone inflationary: in the long run, it is quite deflationary. An asymptotically constant number of bitcoins is wildly deflationary.

(And if we don't believe the economy will grow exponentially in the future, we have far bigger problems than inflation and should be dropping all this Bitcoin stuff to go solve them.)

That said, when compared with exponential growth the difference between "linear" and "constant" is really unimportant by comparison, so it's not that big a deal.

That kind of currency (50 BTC block reward forever) would also be very deflationary in practice while inflationary by design, exactly as Bitcoin.
That is because the number of goods & services offered for it would rise faster than the number of coins minted (assuming it became popular).

So it would be very similiar to Bitcoin, but simply worse (because of weaker practical deflation) and IMHO people would quickly abolish it.

Pointless. Strong No.

Wait, did you just tell me that 50 BTC per block forever is worse because it leads to slower deflation?

Not because it's inflationary, but because it's deflationary-but-less-so?

So either (a) we should be looking for modifications that will increase deflation even more, like going from 50 - 25 - 12.5 to 50 - 5 - 0.5, or (b) wonder of wonders, Satoshi has gotten it exactly right on attempt #1. What luck!

Making a 50 BTC reward for ever is easy.  Basically you just have to comment one line in the code.

There is a saying among programmers.
"If it works, don't change anything. Chances are you may break something".

Seriously, what every currency needs is stability.
I would say that following the rules set by somebody way smarter than you (satoshi) is very reasonable, and leads to the most stable situation for the currency.

So unless another genius comes along, i don't see any point of changing something that works nicely.

Shortly, I will follow the one who I know is smarter than me, not some random guy i spotted on a forum.
Current deflation rate is the best because Satoshi said so. That is good enough for me.

Wow,

Do you bow down at the shrine and pray? What day is the day of worship?




Don't follow people that are "smarter" than you. Smart is a relative term and a matter of perspective.

Satoshi says delfation rate is good.

Satoshi says day of rest on Wednesday.

Satoshi says Give the BitCoin to Ceasar, Give the Credit to the one.

 ;D ;D ;D

Well, I do have portable ceremonial shrines... 99,99 BTC if you are interested too.
But this is a special offer that is valid only today !

+1

Was in an attempt to deal with this issue and also the need to eventually grow the block size limit that I once proposed this (http://bitcointalk.org/index.php?topic=1865.0).

If, for example, at each difficult factor adjustment, the block size limit also gets adjusted to, say, 110% or 105% of the average size of the last X blocks, we not only allow the network to grow to suit demand, but we also create an artificial scarcity of block space that may drive fees up.

I think it's fair to say that an important control that WILL need to be tweaked at some point is that maximum block size or else growth is unsustainable - there is no "free market" control on that number, something has to be done about it eventually.  Shall we procrastinate it until it becomes a huge problem?

This is not an economic problem, it is a technical problem partly tied to economics.  There exists no rational economic incentive to continue mining beyond the minting of new coins, because miners have no way to compel payers to pay a fee that makes mining worthwhile.  There is no way to achieve equilibrium.  All it takes is a few anonymous miners who will accept transactions at any fee to drive the transaction fee to near zero and ruin mining for everybody else, which will make them leave, which will make the network weak.  The only real control on the transaction fee is the maximum block size, which has no free-market economic controls - it is hardcoded into the software.  Changing it will require consensus on what change is right.  If finding consensus is hard now, just wait until the technical crap hits the fan!

A situation where the selfish acts of one individual give a greater gain to that individual in spite of long-term harm to the community is a textbook tragedy of the commons (http://en.wikipedia.org/wiki/Tragedy_of_the_commons), not the free market at work.  Since mining is pretty much anonymous, it's practically guaranteed to be an issue.

Not really.  If 10% of the computational power drops it's fee requirement, then yes you can send free transactions, but you have to wait (on average) 10 times as long for it to be included in a block.  This is a big problem for a lot of uses.

Haven't read the entire thread yet and don't really have time to explain my ideas in detail, but I feel they're important enough for me to at least give you my conclusion ASAP:
If we move to an inflationary model with miners always getting 50btc for solving a block, this will lead to a single interest controlling the majority of the network. If that interest proves at all hostile or even unscrupulous, it could prove to be the end of bitcoins. At least with the current model we're rewarding the people who put the hard work in to get the ball rolling in the first place.

Any uses in particular you can name?

It is pretty well established that long term, Bitcoin won't be able to sustain the volume of handling microtransactions, and that those will need to go through a BTC "bank" like mybitcoin.com.

And without a BTC "bank", Bitcoin can't offer instant confirmation of any payment, as might be needed at point of sale.  Aside from that, what kind of transaction is acceptable with an average 5 minute wait that would not be acceptable with a 50 minute wait, and will this type of transaction be the most common on the network?  Someone who needs rapid confirmation (like a point-of-sale merchant) would use a BTC bank anyway, which could offer an instant confirmation regardless of the mining environment.

Is there any particular reason for this conclusion?

The problem is that miners can't make anybody pay it, and if they don't pay it, operating profitably is not a choice.  Their only choices are to operate non-profitably, or to stop operating.


Bitcoin's block chain won't be suitable for snack machines or micropayments long term.  It's simply not resource effective.  You don't have a kilobyte of disk space or internet bandwidth to dedicate to each pack of gum sold everywhere in the world, let alone every snack.  A billion people probably buy a snack every day... that's a terabyte per day every full Bitcoin client must download and dedicate just to storing snack transactions.  So considerations made towards speeding up confirmations on the block chain are just preparation for something that won't happen because it's impossible on its face.  Only a "mybitcoin"-type bank can enable snack machine transactions and micropayments, by accounting for them internally, isolating them from the block chain except in the aggregate as wholesale settlement transactions.

I have a second, so I'll go into a little more detail:
With miners getting 50btc per block ad infinitum we end up creating an exponential earnings curve. Whoever is ahead on that curve will eventually see their lead greatly exaggerated such that the majority of bitcoins created each day will be created by their cluster. This will be accompanied by their overshadowing the power of the rest of the network. They will comprise over 50% of the total network's computing power which, as I understand, is all that is necessary to create a hostile takeover.

Okay, girlfriend is pulling me away. Let me know if I'm barking up the wrong tree here.

Thanks!

CoinPal is one such use.  A 10 minute confirmation is fine.  However, if a transaction misses a block, I get customer support emails asking "where are my coins?"  I've considered paying transaction fees because they're far cheaper than my customer support time.

CoinCard customers are another case.  Many of them want their PayPal payment immediately.  If their transaction doesn't make it into the next block, they email asking what's happened.  So far, all those with large (size) transactions have been happy to pay a transaction fee the next time.

Dealing with customers in day-to-day business has persuaded me that transaction fees will work great in the long run.

Too many outside variables to know if this would actually happen.

They don't have to make anyone pay it.  There will be those who are willing to pay it for the advantages that it holds.  The 'free' section of the block is very limited, and in a successful future, very few people will be willing to wait for those free transactions to process, as they could take weeks in a future that Bitcoin processes at a rate comparable to Visa.

Bitcoin is actually pretty crappy for micropayments, but variations on the online wallet service isn't the only way to do instant small value sales.  The double spend attack is relatively difficult to pull of, due to timing issues, so it's very unlikely that anyone is going to attempt it for a free soda and a bag of chips.  Even so, a vending machine client can reduce it's own exposure to such an attack in a couple of different ways.  Blockchain confirmations aren't even important in this context, as the transaction (once verified for validity) can be accepted at face value with as much confidence as it can accept a quarter dropped in the change slot isn't a slug.  Honestly, it's just a machine, and can't know; but the vending owner includes a risk premium to cover his own backside.

I personally know someone who owns a number of vending machines and video games at a few local bars, I need to have a talk with him about Bitcoin.  It might be time to put theory into action.

What kind of outside variables are there? Mining scales exponentially. Furthermore, we've seen this sort of action happen in the free market before. First there was IBM, then there was Microsoft. They own well over half the market share. If we want to keep the network from falling under the control of a single person or a small cabal, we will have to take steps to ensure that a Microsoft or IBM never emerges in the bitcoin network. The problem would be even more insidious for us because there would be only one product and no for clusters to differentiate themselves. The various products of mining clusters are qualitatively the same. There would be no room for a cluster with a sustainable competitive advantage to emerge. It's good that the incentive for an individual to own a large cluster will slowly diminish. The ideal network model would consist of a large number of small clusters working together to create a secure network. A system that encourages monolithic clusters would only hurt us.

I think that if we stick to a deflationary model, transaction fees will prove to be profitable enough. There still exists the potential for an exponential earnings curve there, but growth from transaction fees will likely be so gradual that it shouldn't matter much. If it turns out that transaction fees aren't enough to keep people mining, then we come back to the concept of security audits. If an audit shows that the network is vulnerable to a cluster that likely exists, then it will be up to those with the most to lose (i.e, those with the most bitcoins) to allocate boxes to "mining." (Though at that point the term "mining" will be a misnomer.)

I honestly think that the cause of keeping our currency network safe will be compelling enough to attract a sufficient number of miners, especially if the data on our network's security is easily accessible. There are massive networks dedicated to such tasks as searching for extraterrestrial life and folding proteins whose participants receive no incentive beyond the knowledge that their idle cycles are being used to make the world a somewhat better place.

An inflationary model just seems rather unattractive to me. If given the choice between holding a currency in an inflationary trend or holding a currency in a deflationary trend, I would rather hold the latter. If we succeed in our goals, the early adopters will end up spending their bitcoins. Yes, they will be fabulously wealthy, but I have a hard time seeing that as a good reason for decreasing the wealth of the community as a whole via inflation.

Just my 2btc. What do you think?

LOL, there exists no incentive given that EVEN NOW people are paying fees even if THEY DON'T HAVE TO ? I call bullshit.

I think that you are saying this only because you have certain interest in saying so.

Bitcoin was created exactly because of there is practical inflation in all normal (fiat) currencies, and now you are telling me that we should bring back the same shit we just escaped from  ?
Sorry, I don't think this is going to happen.

I also think the poll results clearly show what is the public opinion on this.

Please just take this inflationary bullshit with you and make a damn fork - we shall see what people choose. I will surely choose a currency that promises that tomorrow's bread will be always cheaper than today's bread. I don't see a point in my money being taxed.

----
This discussion itself is bullshit. Just create the damn fork and let the market decide. That is better option than making a poll.

+10

Well said, ShadowOfHarbinger, to that and all I omitted. Whether or not casascius has ulterior motives (a definite possibility), their arguments fold in on themselves.

As for me, I am not so cynical as to believe people are naturally selfish to the point of self-harm. (For neglecting the network would amount to self-harm.) Such people do exist, but the majority are not like that. It's this assumption that Satoshi's system is based on. I think it's a good call.

I strongly disagree. I think it's pretty clear from the poll that the majority is for keeping the current system, so there's really no point in forking the blockchain. One thing we really don't want to do is to fragment the community.

However, I don't see why we shouldn't discuss it? I find this discussion pretty interesting, and we're going to have to have it at one point or another as bitcoin becomes more popular. I find your insistence not to have this discussion pretty disturbing to say the least.

I don't know, I think that in this case a fork would be the only way the inflationary minority could try out their system. Discussing it is fine, obviously. I think ShadowOfHarbinger is just frustrated. If you have anything new to add to the discussion, say it. I don't think arguing for the trunk to go inflationary is going to get anywhere, though. As was said before, the deflationary model is a great attraction for a lot of the people here.

1. There is completely no problem in creating a fork. If you are on this forum, you should be a believer in free market rules. So I am saying free market is the thing that will decide who is right in the quickest, most obvious way.
Also, it will only fragment the community for a short time, but after that, when all doubts will be resolved, Bitcoin will be stronger than ever.
"Things that don't kill you, make you stronger".


2. The discussion is simply not an effective way to decide who is right. The free market decides who is right.

Free software organisations are not democratic.  When someone doesn't agree with the majority, he doesn't have to "obey".  He can just fork the sotfware.  Democracy is not freedom, it's dictatorship of the majority towards minority.   Fortunately it doesn't prevail in FOSS.

Haven't read every post but some numbers I've been watching and pondering separately may add to the discussion:

Current coins in circulation 5.7mill, average 24hr transactions around 200-250K ... or about 1500BTC per block.
http://www.bitcoinwatch.com/
with current exchange rates to "real world" monies that people use to buy mining gear and electricity with it is currently profitable on 50 BTC per block.

So extrapolating out to 21mill BTC in circulation, with similar money velocity as now, is about 800-850K per 24hr, or about 5700 BTC per block on a rolling average. Interestingly, if you assume a sensible round number average fee of 1% you get 57BTC per block for fees in the mature bitcoin economy .... hmmmm.

Recall that due to the deflationary nature of the beast, and the divisibility (2.1e15 satoshis), 800K BTC per day in transactions could represent the combined wealth transfers and economic activity of who knows how many millions of people. So that even a 0.01% average fee (6BTC per block) may easily incentivise quite substantial future mining rigs.

The Democracy point you make is apropos, True Democracy is anarchy, in the process of forming groups before an inevitable separation.

Republics are a better system for unity. Democracy promotes individuals, which degrade into several groups, the group with the most power rules. It is in essence minority rule, until the ruling party pisses off a majority of the other groups.

Your point about forking the software is just the process of creating other groups within democracy. The rules for forking the software are still there, there is a process that must be followed. However, there is a feeling of freedom that has been lost IRL. And it does feel Good and Right.

Humans are a herd animal.  The concept of a true democracy is impossible, because even if everyone truly could have an equal vote, there is always a significant minority of the voting public that seeks an alpha male.

There is no complicated process to follow, really.  In case of bitcoin, if someone wants to create a version of bitcoin with a constant reward for miners, all he has to do is to comment one line in the code:

In main.cpp, replace:


by:



That's all.  Then all what one has to do is to run this and hope that other people will be interested in running the same thing.

If that is all that is done, the two sets of clients will each be trying to claim the current blockchain for their own after the reward drops to 25 BTC.  This will force an ongoing blockchain split, causing other network problems.  If anyone wants to do this, they need to build a separate network like 'testnet' is now.  Otherwise, I would be more than willing to participate in a direct attack of nodes that used the 'other' client.

Maybe I am missing something but the code is exactly the same.

You are indeed missing something.  One line is commented in the second version.

Ahh... OK.

Oh, right.  I'm the boogey man!

Maybe it is because I want the value of all my coins to go down?

Or maybe I am waiting in the bushes with a fist full of a zillion USD in wait to buy yours when I make yours go down?

Maybe I am really just the USA government, trying to infiltrate you "terrorists" who want nothing more than to "destroy freedom".  LOL

Let's stay realistic.  Jeez.

Others have argued that this is a "good" thing, which will eventually work itself out and force a consensus.

(Not that I believe that however)

For the crowd who's saying "fork the project or shut up", I can't imagine that that would be a good idea.  Given the poll, clearly I do not have the majority support and wouldn't get very far, and for the time being, I pretty much give up.

Those few of us who are tooting the "early adopter" horn aren't the majority.  We are just saying that the next million people who arrive here might conclude what we're saying, and then they will be the majority, and might ditch our block chain for us.

If anyone would like to guess where my interests lie, I have purchased and mined a good deal of BTC that I couldn't possibly spend at the moment (not enough goods and services for sale that would be useful to me, you can only do so many drugs, look at so much porn, wear so many alpaca socks and get online through so many VPN's)... I would not like to see them vanish in value if the public decides to overthrow the block chain because my BTC claims their goods and services in a vastly greater proportion than what I paid for them and diminishes the value of theirs as I cash them in.

While what you say is correct, grondilu, it is also wrong. Since it still uses the same genesis block and the same network it will enter in conflict with everyone else.
I mean, sure if they mine a block they could say the block before them also got 50 BTC while the majority says he has 25. It would still need some tweaking in other parts.

As of FOSS goes, go ahead and create your own version that constantly inflates. No one is going to stop you, however that doesn't mean you will get support.

You will always win when you save bitcoin. Any savers who comes later are just less fortunate.

Even if there is an inflationary cryptocurrency, they would just convert their inflatecoin into bitcoin for long term storage or just use bitcoin outright.

Inflatecoin supporter: I'll pay you in inflatecoin?

Merchant: Ok!

Merchant then turn inflatecoin into bitcoin.

I'm not sure what to think about this early adopters guilt, remorse thing we got going on around here .... it truly stands in stark contrast to the antics of the banksters who have just bust existing fiat monetary systems and lined straight up at the tax-payer trough to draw bonuses from the dosh that was fire-hosed over them to prop up their failed enterprises. they were waving notes out the window to protesters in London, they have no shame, remorse, regret just entitlement.

Think of big money center banks as being the early adopters of fiat currency, they get access to cheaper money from e.g., the Fed. Res., than everybody else. It is why fiat/fractional reserve banking is such a racket, and a rigged game, that shovels wealth around in an unfair, undeserved, inefficient manner. They are a parasitical force that are a drag on society, causing progress and net wealth creation to be sub-optimal, call it sub-prime if you like. This is a broken, dysfunctional monetary system that the market is puking up.

Now contrast this with a group of basically technologists who have come up with a clearing system that performs this wealth-transfer, price-discovery payment-clearing, etc  function of money in a more efficient and we hope robust manner. Do you think the banksters would be trying to figure out a way of building into the system something that does them out of the benefit from being an early adopter?

You could just go and donate whole chunk of BTC to bitcoin faucet so that later adopters get a bigger slice to play with, or start up your own faucet that will dosh out even more in increasing amounts to later adopters ... I know how well that will go.

At present, the system is working and providing incentives in the right places for it to grow, quite rapidly in the bigger scheme. Supplementary businesses are springing up so that you can cash in and out of the bitcoin economy, if you cash out now to pay for something real, boat, car, land, shares that will put more into BTC circulation for the current adopters in the way of cheaper BTC. Money flows where it is needs to in an unfettered free market, amazingly efficiently as scholars have noted for centuries.

I say, be thankful that you are alive in such an "interesting time" where dangers and opportunities abound. Great fortunes are being made and lost, the wealth power is shifting ... and just don't forget that you can't take your BTC with you. They are just a nice token that are of this world but a great idea to leave behind for future generations who were staring down the bankster's barrel of indebted servitude for decades, imho.

Being an early adopter is only a benefit if Bitcoin actually succeeds. What you're calling "guilt" is actually concern that Bitcoin won't actually succeed with the current model, if potential adopters are turned off by the fact that most of the wealth is already spoken for.

Anyway, as I said, the difference between 'linear vs. exponential' and 'asymptotically constant vs. exponential' is really not worth concerning myself with. In the long run, ordinary and "inflationary" bitcoin will be nearly equally deflationary. I think 50 BTC forever would be better in several ways (simplicity of calculation, simplicity of understanding for newcomers, increased incentive to contribute to the network) but I think the system in place now is good enough and forking the project at such an early stage would just cause problems.

Please stop spreading this misconception, fellow bitcoiners.  The vast majority of bitcoins are yet to be issued--there is still plenty of time to be an early adopter.  The fact that we have a 12,000 view video on youtube, plenty of exchanges to buy coins at, ample instruction on how to run a bitcoin miner, great community members who will explain parts that you don't understand, etc. adds up to a pretty fair opportunity for people to get involved.

Yeah, yeah, everybody wishes they bought thousands of BTC at .06 cents just like they wish they bought shares in Google.  I certainly do (in both cases).  But there's no reason here for any potential adopter to cry foul--only to get on board.  If Bitcoin takes off there will be a much higher valuation of bitcoins in the future than there is now, and anybody who buys in now will be sitting quite pretty.  My frequent advice to friends and relatives is to put a small amount you're completely willing to lose into bitcoins NOW.  Most of them take me up on it.  None of them complain that they didn't get to buy in 9 months ago.

I'm not talking about now. Obviously most of the bitcoins are not yet spoken for.

In 2014, most of the bitcoins will be mined, but "mined" is not "spoken for." There will still be an easy way of getting them: perform a service and charge for it. I'm not talking about what is really going on, I'm talking about perceptions. Speaking for myself, I only started looking at Bitcoin because of the potential near-term gain from mining. This is far from the most useful thing about it, but a point that draws people in is not a point to ignore.

Here is another way to put it:  Would you want to buy a penny stock promoted by pump-n-dumpers?  Of course not.  You know you'll lose money.

You'll lose money because the pump-n-dumpers possess most of the outstanding stock.  That stock sits somewhere, so as their victims buy in, the price goes up.  As soon as they dump, they make off with all the money brought in, and the price quickly drops through the floor.

While a penny stock can't be sent through the Internet like a BTC can, and can't be used to buy socks like a BTC can, one can get ripped off the same way with both.

It's not that I think one of us early adopters will intentionally set out to crash the BTC.  But when only a small fraction of the currency is circulating, it doesn't take a rogue pump-n-dump villain, just takes a couple regular people wanting to cash out.

It's not that I want a "second chance" to buy BTC at 6 cents.  It's that I want to hold BTC that has an honest value, whatever that is, rather than one that is propped up merely by speculators anticipating a 100000% return and which may pop at a moment's notice.

Right now, selling 10,000 BTC (0.2% of the whole BTC circulation) will bring MtGox down to 0.60 USD based on open orders, and erode 25% of the total value of Bitcoins in a flash.  How is that much better than suffering a few percent of inflation per year at the hands of Bernanke?

No matter what, wealth distribution follows a power law.

Changing BTC to inflationary model will not fix this.
BTC with constant block reward will be also very deflationary in practice, and the situations you described can happen as well.
"Inflacoin" would be suspectible to the "early adopter" problem in the same way as BTC is, because that always happens with a rising currency - there are few people who invest in the currency first and they get the most out of it later - you can't avoid that.

And i still think that you have some hidden motive in supporting this.

Yes you can.  All you need is a bunch of bureaucrats who will decide for everyone what money should be used from now on.  Just like we did in Europe with euro.

I think he meant "constant inflation".  But you make a good point.

The reason why I think it would fix it is because it would eliminate the disparity between the community size and the circulation.  Right now, 25% of the BTC is in play, but only <0.1% of its community is at the table.  That fact allows one group of people (those here) to grossly exploit those who aren't here yet.  And we all (well not me) seem to be happy with the idea that we're "entitled" to do so, for taking the "risk" (whatever that was), or for being the first (as though that means anything) to get their hands on something that is purported to be more fair than the dollar.  What a lie!  Either we are entitled to grossly enrich ourselves with Bitcoin at newcomers expense, or Bitcoin is "fiat but fair".  It can't be both.  If there were a constant block reward, or at least the length extended to keep the community size in proportion to the total percent circulated, this disparity would be greatly lessened.


Since we're on the topic, would you care to narrow it down?  Otherwise it is just a weak ad hominem... don't like the message, attack the messenger?

I also support helping new people mine, which bothers other self-interested people looking for the biggest profit, and seems inconsistent with the rational self interest of someone who is trying to gain something from mining (which you probably know by now I am).  Could my hidden motive be the overall success of Bitcoin?  I mean, why would a miner want to help other miners?  Same deal.

Problem is that nobody would by a constant inflation currency.  I wouldn't anyway.

Nobody forces anyone to buy bitcoins.   I started to buy bitcoins when it was around 0.2$/BTC.  So according to you I was exploited by people who bought at 0.1$/BTC.   And yet I don't complain.  I decided to buy those coins.  On the contrary, I am thankful to satoshi and other bitcoin pioneers.

I would probably agree with that, the way things are looking


The exploiting I'm talking about hasn't happened yet.

Hopefully those newcomers don't decide en masse to start another block chain, that's all I hope!

That wouldn't bother me, really.  At all.  I'd buy some of this new currency too.

First, BitCoins are not like stocks, they don't split.

Second, if in 1900 you saved your $20 bill hoping for it to increase in value, you lost over 90% of your buying power. Paper Money has no value, it will not increase in value over time because the things you buy with it go up in value not down.

Since BitCoin has no system of saving to offset inflationary pressures, the flow of it is more valuable than just saving it.

Use it or Loose it.

I'm sick of this debate anyway.   Again:  just create a inflacoin, if you want.  It is just one line to comment in bitcoin's source code.

Not only that.

You also need to switch to another network, like testnet.
Changing the code you wrote now and running modified client in normal Bitcoin network, should be treated as an actual attack on the network.

Inflationists: Go fork and create your own network. It is just few lines of code.

As far as I'm concerned, the fact that I intend to wait for a far more fertile opportunity to do so should not be construed as a concession to the idea that I'm not willing to put my effort where my mouth is.  After all, the recipe has all but been handed to me - but to be done right, more changes should be made (either a fork, or this'll really annoy some of ya: a patch to the mainline Bitcoin client that allows it to participate in a different network with different rules without needing a fork, either with a command line switch, or by being compiled with different compiler flags).

I believe the more times the BTC price takes a huge plummet coming down off highs, the closer that time will be, the draw will be a reduction in volatility.

Troll much? But I'll bite. Adding permainflation to our currency won't help stabilize it. The way I see it, it'll just turn the overall upward value trend into an overall downward trend.

I don't doubt your motives are good and genuine casacius. Interested to know why you think the current programmed inflation method is contributing to destabilising bitcoin valuations? Is there something you have noticed that can draw a link?

First, it's not the inflation method.  I am not calling for perma inflation.  Just a corrective action to deal with the disparity between 25% of the coins being out there for a community that is only less than 0.1% arrived, a disparity that can be exploited the same way scammers exploit a pump-n-dump penny stock.

Second, the most obvious sign I'd point to is how the price of the BTC jumps and falls with such little volume.  What held BTC over the dollar mark temporarily was volume well under 100kBTC, or less than 2% of the entire circulation.

The next most obvious sign is the thinness of the market.  If 0.1% of the BTC gets sold on the open market today, the value crashes to nothing, and the person doing the selling walks away with all the money on the market.  The disparity provides an opportunity for the holders of the 5M+ BTC to do that repeatedly - or as is more likely to happen - incrementally so it's not so obvious.  Not a good thing for longevity and, under such circumstances, certainly not a better place to put wealth than Bernanke Bucks.

The value of the BTC today is more tightly bound to how much it is being hoarded - an artificially scarce supply - rather than the true demand versus supply if it weren't manipulated.  This is part of why I have encouraged so much mining - to grease the free market a little, by putting bitcoins in the hands of people who are more likely tol move or sell them, and less in the hands of those who collectively have millions of them stashed away.

If fewer people were holding tightly to BTC in hopes of getting an outrageous return, more BTC would be flowing freely in the market.  The end result I would expect would be a much lower BTC price, but a far more consistent one.

Look....the fact is...nobody want to use inflatecoin. All your rational fore why inflatecoin is a good thing is bunk if you can't get self-interested individuals to move to your new-fanged currency.

Even new people don't want to use inflatecoin.

You can't make people hoard or not hoard BTC. It is not your call.
Hoarding does happen and it will happen. Some people may hoard for very long time, and you cannot do anything about it really.

I like the market the way it is now. Sure, there will be ups and downs, but more inflation will not fix anything.
If you create new "Inflacoin" and start from scratch, the effects will be exactly the same. The early adopters will start their rigs first, acquiring 70% of the currency before it becomes popular enough so that other miners will want to risk joining.

So what you are proposing does not fix Bitcoin childhood problems at all.  And at the moment we are experiencing childhood of the currency, so instability is expected.

You cannot fix instability with more inflation !

well, i think the main point is this:

now that current bitcoin exists, nobody in his right mind would trade current-bitcoins for inflata-coins, because they know that current-bitcoin ultimately has a limited supply, and is likely to increase in value, while the new inflata-coin will not.

so... nobody stops you from creating inflata-coin - it is a simple change of about 5 lines of code in the current bitcoin client, and you're off to the races with your new inflata-coin block chain. (well, that and you have to create a new genesis block). if you inflata-coin supporters want to get together and jump onto the inflata-coin block chain, nobody's stopping you, give it a go, and see what happens.

that's what satoshi did - rather than arguing about deflata-coin (current bitcoin :) ), he just came out and did it to see what happens, in an experimental fashion. so do the same.

my prediction, however, is that you'll have a hard time attracting significant mining power.

If I was gonna do it, then I probably would set it up with the following parameters.

Same 21 million just like Bitcoin.  There is nothing wrong with this number.  But instead of 50 coins for the first 210000 blocks, I would make the reward try to mimic an objective measure of the community size with a formula.

Here is an example formula (BTC per block) for that: B * (ln(difficulty)² / 4)  where B is a percentage of coins not yet distributed (1 for 21 million, 0.5 for 10.5 million, 0 when they're all distributed).

This would result in 50 coins being given out per block once the difficulty reached 2.3 million.  Current difficulty of about 70000 would pay about 30 coins.  If I fired up just my own GPU's (eight 5970's), the difficulty would be about 700 and the payout would be about 9.50 per block.

Then I would correlate the maximum block size with the difficulty.

Okay, I see. You are not proposing inflatacoin as others are saying and I didn't think so. Basically, you are proposing that instead of the block mining payout drops (every 4 years) to be a smooth transition over time and to be more loaded to the mature network than the immature network. What about keeping an incentive for mining after the 21million BTC have been distributed? Still have fees?

Yep, but have some sort of minimum network-mandated fee that allowed both miners and payers to exert some sort of force on the going rate so as to permit an equilibrium to form.  Some random ideas:

1 - A default recommended fee generated by the system is one that would be based both on the blocksize and difficulty, such that it would pay the same as B=100% when exactly filling a block, but the minimum fee should be no more than 1% of a transaction.

2 - A minimum fee imposed by the system MOST of the time would be a function of what minimum fees have been accepted by MOST miners in the last 100 blocks that were at least half full.  That way, the majority of miners can exert upward pressure on the fees, but not by refusing to process transactions at large.

3 - Special case, if someone is willing to generate a block whose own SHA256 hash ends in 00, the current block may be exempt from minimum fees imposed by the system.  Maybe such a block can get a special name, like a sludge block.  These blocks would serve as exceptions to the minimums.  This block would allow miners to exert significant downward pressure on the price, but would be 4 times as difficult for them to create.

So transactions with no or insufficient fees have a chance as to when they might eventually get through.  So if the mining community at large is pushing for a fee that's too high, payers can start offering lower transaction fees.  If enough low-fee transactions start piling up and look desirable, someone can start mining for sludge blocks - which will have 4 times the difficulty, but might be more profitable if payers are both unwilling to pay the minimum fee and willing to wait for the next sludge block to be mined to make a point of it.

Why this might work:

* people can still get free or name-your-price transactions but will be forced by the network to wait a while
* miners of normal blocks can optionally exert upward pressure on the transaction price, but too high of such a price will incentivize sludge mining
* sludge mining would exert a downward force on the minimum transaction fee and would be a windfall for sludge miners, but only when the normal miners are asking too much so as to make it worthwhile and the payers are willing to vote for that with how long they wait for transactions.

I think you're about 10 posts behind.  A quick Cliffs Notes summary of my various points: the disparity between coins issued (25%) and community at the table (0.1%) is a danger to public acceptance and compromises the "fairness" that Bitcoin supposedly promotes.  Several solutions exist, one of which is permanent 50BTC (eliminates the 25% aspect), but is by far not the only solution.  Read carefully and look for the forest between the trees: I am not advocating for a perma-inflation currency, just any solution that makes any progress at bringing those two percentages close together for as long as sustainable.

Isn't that like a "terrorist attack", but using nice language?  You know, how they went from "Immigration and Naturalization Service" to "Department of Homeland Security"?  It sounds so much more, you know, homely, when the word "home" or "community" is slapped in the middle of it.

Though, I'm interested in hearing a plausible scenario as to what "in my favour" could be.  Kind of like, fill in the blanks:  I am a ___A___ who will be ___B___ if the suggestions I'm proposing were accepted by the community.

A) waiting in the bushes with a fistful of cash, B) eager to see BTC at 0.06 so I can buy it up?

A) someone with lots of BTC, B) happy to see it drop in value?

A) ??? B) ???

Hang on, how do we tell the difference between "Community Infiltration Attack" ... and someone merely proposing ways to improve bitcoin?

Changing the very foundations on which a currency was built is an attack, no matter what.

That's what the government says when you challenge the status quo and start proposing ideas that ruin whatever good shell game they got goin' on.

http://en.wikipedia.org/wiki/Suppression_of_dissent

While we're talking about my interests, what about yours (not addressed to anyone in particular)?  How many BTC do you have, and how much mining are you doing?  It would just help with perspective.

Full disclosure, I have about 26,000 BTC and have eight 5970's mining full time.

The government doesn’t encourage you to make your own system if you don’t like theirs. They want to force it upon you.

I want you to make your own blockchain instead of tampering with Bitcoin. If you ever damage Bitcoin’s trust in this way, I can assure you they will be worthless the next day.

My Bitcoin wealth is private, but I have enough to be concerned. Still I appreciate your input, because now I’m pretty sure that inflacoin wouldn’t succeed.

Me damage Bitcoin's trust?  Trust with whom?

This wouldn't sound so ironic if, for example, Bitcoin.org would stop using a self-signed certificate on its website even though I have brought it up repeatedly over the past four months.


Am I proposing inflacoin?  I thought I made it pretty clear that I'm not, really.  Read posts 106 and 109 in detail, just in case it's not clear exactly what I am proposing.

Okay, how do we tell what is "changing the very foundations" and what isn't? I'm not trying to be funny here, you are proposing some kind of subjective boundaries about what can and cannot be discussed in "polite" bitcoin company ... correct?

There are probably unknown unknowns type weaknesses being let into the protocol every time a change is made but who's not talking about that?

PS: I'm partial to any formula with a natural log function in it, so I might be biased.

I’m talking about changing any of this (http://en.wikipedia.org/wiki/File:Total_bitcoins_over_time.png). If you use Bitcoin, you agree to it.

I can assure you that any changes to it would destroy Bitcoin due to enormous panic sells and very little demand. Also, it would make it impossible for me to trust any future currency of this kind – and I’m sure I’m not alone.

Casascius, whatever you are proposing, please just do it.

It would be quite a relief if we could redirect people complaining about the constant final amount of bitcoins.

Not per the license agreement.  Bitcoin is free to use, copy, modify, merge, publish, distribute, sublicense, and/or sell, without deference to the chart.


Where would all that demand go?  Does that demand even exist at the current price?  It can't be both ways.

I could personally clean out all the open visible buy orders at MtGox three times over with my BTC, and I'm one guy, with 0.5% of the total BTC out there.  In a panic, where would the other 99.5% of the BTC in circulation get sold?

Yeah, but my goal is to create a sustainable medium of exchange, not get rich into the stratosphere by mining coins and having them go up in value exponentially.

There is nothing wrong with a coin being worth 2 cents if that's it's value as determined by uninhibited supply and demand.

Actually if you use any currency you agree to its definitions, by definition. If you're so titchy about changes in software you might be more heavily invested than you should be, it does still say BETA on the front page of the thing.

The whole thing sounds kind of ironic coming from guy with pyramid scheme offers in his signature. Easy come, easy go.

It is not so easy to become rich by hoarding or even cornering a commodity.  First, there is a competition between hoarders.  The less greedy gets his profit first, and reduces the price of the commodity, and thus destroys any hope for others to get rich.

Second, even if you manage to corner the commodity, your profit is not guaranted.   See the story of the Hunt brothers with silver.

I dare you to try anyway.  You'll see it's not that easy.

I don't know what your goal is, but whatever you want to do, do it separately from the current network.
If your actions will start supplying invalid blocks to the current network, then that may be seen as an attack on Bitcoin by some people (me included).

BTW,
I don't recall any situation in history where increasing inflation would solve any problem, especially currency stability.
So i still don't understand what are your motives in this.

I too, have also devoted some thought to the probability of success with the use of BitCoin. For short term transactions, in and out of the market, the BitCoin provides some attraction for use. However, we will not be able to get away from our nature and reasoning of the system.

People will want to "stuff their mattresses" with BitCoin. This is not possible. There is no physical representation of the BitCoin, a lack of security and accountability. If someone steals your BitCoin, you may never reacquire it. If someone steals your IRL wallet, you have a chance of recovery. (someone to look for and/or towards)

People deal in the physical, we want to touch, feel, and see objects of worth. However, we also like the private. We like to conduct transactions in private.

So, I see the BitCoin as becoming a transitory monetary system into and out of the physical. We will buy bitcoins to make a transaction, use them, and then get out of the market.

This will give the advantage to the Exchanges. The first exchange able to extend the privacy of transactions will succeed.

For physical money there is nothing but gold.

so, not inflata-coin, just a different block bounty distribution over time, i see.
the idea of indexing it to the difficulty is actually quite an interesting one, i think.

as long as you keep the chain separate from the main block chain (so that the mainchain clients don't have to deal with the extra traffic from your fork that would be treated as invalid), i see nothing wrong with you giving it a try to see what happens.

i still foresee some difficulty in attracting miners away from the main bitcoin chain and into the new one. early adopters need to be able to expect a higher compensation than the later adopters, in order to be convinced to put their effort in, at a time when the risk is highest. on this metric, main bitcoin still has you beat. but compared to inflata-coin, it's a lot better in this respect :)

if, while you are at it, you also put in some other improvements (or things that some people would perceive as improvements), e.g., more decimal places of divisibility, etc., it may have some future.

Silver, copper? 

Steel, aluminum, etc.

Paladium, Titanium, Molybdenum, Plutonium, Uranium, etc

;)

Try to put a significative amount of wealth with copper or even silver in your pocket.

Some people might find these commodities unacceptable as stores of value as they have built-in inflation imposed by nature due to their half-life.  ;D

You mean deflation, right?

I personnally prefer not to store any radioactive element.


There is an article here (http://www.npr.org/blogs/money/2011/02/15/131430755/a-chemist-explains-why-gold-beat-out-lithium-osmium-einsteinium) where a chemist explains why gold beats other elements as a form of money.

Okay....

Done.

Now what?

Some people are easily confused.

No, I mean that your value is slowly being eroded and dwindles to zero, which is more like inflation than deflation.

Now I'm confused.

If/When a true thorium fuel cycle is established in India, thorium coins become a viable alternative because thorium isn't very dangerous and the energy content provides for the most basic of use values.  Honestly, I'd be kind of surprised if someone like the Hunt or Koch brothers don't already have thorium bullion waiting for the shift.  Thorium is radioactive, but it's half-life is so long it was only theoretical for 100+ years until it could be observed.  99% would still be here when the Sun overtook the Earth as a red giant.

Divisibility isn't really an issue, because these days we can encapsulate metals down to grains.  So you could use thorium coins struck down to dimes, and anything smaller coudld be sealed into clear Pyrex glass.  Sure, one would have to destroy the glass case in order to audit the mint, but that would still be a workable solution.  On some level, metal coins still require some level of trust that the mint that produced it is honest, and isn't trying to pull a fast one by wrapping a depeleted uranium coin i na 2 mm layer in gold; and the only way to know is to occasionally cut such a coin in half.  Granted, Bitcoins are much more divisable and much easier to audit, which is why bitcoins make such a great currency.  But bitcoins are not a money, and probably make a poor store of value in the long run.

Perhaps I should have said that it wasn't an insurmountable issue.

Correct, there is an energy content in attaining the divisibility of gold, which can btw be beaten into wafers that are on order of angstroms thick.

Bitcoin has very little energy content (work done) required for divisibility, so yes better in that sense.

I like to think that long term the value of BTC and gold will be closely correlated, but not sure just yet.

A Gold-BTC global hawala would have good prospects, transmitter puts gold into merchant at one end, they bitcoin it across to other side of globe to another merchant and receiving guy on other side gets gold out.

EDIT: Actually hawalla merchants may be a very receptive target market for bitcoin, has anybody approached them? Ready made exchanges, right around the world.

IRL Money is divisible, just not in the ways people think of it.

The amount of money in circulation must be proportional to the resources it can purchase. But it get more complex based on the number of people using it. In other words, as population grows money grows, as population dwindles money dwindles, but in relation to inflation of resources.

How ever, it might not be feasible to divide a troy oz of gold, one can switch the unit based on available need. If the divisibility required is more than the amount of gold necessary, switch to the sea shell, bird feathers, sand (we're in trouble then).

But Gold has shown its ability to withhold the pressures of population growth and inflation, it should not be discounted so lightly.

Divisibility is proportional to population, that won't be a problem for long.

Granted there are problems with supply of Gold, but when/and if it hits the fan. There will be two classes of people. Those with Gold, those without. Whom do you think will have an easier time until a new system gets set up.

I wish I owned a lot of Gold. No, I don't hold any substantial value in Gold. But if I could, I would. I tend to think, others would too. Yea, we work with in established monetary systems but "WE" like gold.

I guess the test would be this, if you have the option to receive a $1000 Dollars in Paper or Gold, which option would you take. I would be willing to state that at least >80% would take the gold as change.

I'd prefer $1000 in silver or copper myself. 

I see your point, but not withstanding the extra step in redeeming the Gold, it tends to be safer, although currently slower.

I like: http://www.apmex.com/  for Xchange in precious metals. Suisse Gold is serialized and tracked in sealed containers.
Divisibility is not really a problem, I.E. 24K, 22K, 18K, 10K, etc... on and on.

I can see it being a viable investment in a decently managed Portfolio, but so are many Penny Stocks exchanged OTC. The possibility for growth is there, just as the possibility for loss. So sure, one can choose to invest in it.

I would state that buying a 100 BitCoin has the possibility to gain 20% or slightly more within a reasonable amount of time, weight against the possibility of a 100% loss.  Unlike stocks, there are no assets to sell to get some wealth back to the stock holders. As a purely ForEx investment, there is no guarantee against a 100% loss.

One thing you have to worry about with a FIXED monetary supply is to compare with England. Most of the wealth in the country is controlled by a very few powerful families who were able to amass sums of land early on. Land is an asset and the way bitcoin is structured is an asset.

This is similar to early bitcoin adopters. While its worthwhile for early adopters to benefit, many people would argue that the British system of 'old money' is not desirable in a robust economy. To grow the bitcoin economy you have to allow late adopters to get on-board and participate, without becoming serfs.

If you want just a store of wealth, like gold, and not a growing economy, thats fine. But remember that gold had a very poor return for decades. And very few people can participate with gold.