Title: Suppose you wanted to start a geographically localised bitcoin economy Post by: fergalish on April 13, 2012, 01:39:14 PM I've been thinking about this, in the context of the European crisis, Greek local currencies, Argentinean peso collapse, etc. My question is: suppose you wanted to convince your locality to begin trade in bitcoins, eventually hoping that bitcoin would dominate the incumbent currency (e.g. you're a politician in Greece, or a popular businessman in Somalia etc.).
Well, here's a problem. As soon as bitcoins start to be accepted somewhere (let's say... Athens!), well then, there would be a large influx of bitcoins to the Athens area from all over the world as people order Athenian products, causing a general inflation. The effect on sellers would be negative, and the initial failure might even cause people to reject bitcoins. So perhaps a better way to do it would be to create "The Athenian Bitcoin Bank" TABB. This bank would obtain a reserve of bitcoins and issue a (paper?) currency, let's call it Tabbies, fully backed by their bitcoin reserve. Anyone wishing to trade, then, would have to go to that bank, cash in their bitcoins and obtain Tabbies. That way TABB could regulate the number of tabbies in the economy. As long as the bitcoins at TABB's public address don't go missing, then everyone's tabbies have a fixed bitcoin-backed value. Ok, so it's clear that it might not work out that way. Even if you think the bank is unnecessary, is it possible that initial localised adoption might trigger increased localised bitcoin velocity and therefore inflation? i.e. bitcoin has to be adopted everywhere simultaneously, or nowhere? Just thinking. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: edd on April 13, 2012, 02:00:27 PM How would an influx of bitcoins into a specific geographical location be detrimental?
The value of a bitcoin is not tied into how many your neighbor has, but how much it can be exchanged for, e.g. how many apples/widgets/dollars/drachma I can get for a bitcoin. The idea that merchants experiencing an increased number of bitcoin based sales would consider them worth less because of it doesn't make sense to me. My hometown of San Antonio has a very healthy tourist based economy. Is the dollar worth less here than in other cities just because visitors happen to leave with fewer dollars than when they arrived? On the contrary, the cost of living here is well below the national average. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Realpra on April 13, 2012, 02:45:27 PM Yeah I agree with 2nd poster, you're misunderstanding inflation - its like saying our danish crowns are worthless because we have a lot of them right here.
BTC would most likely RAISE significantly in value if a country or even a small town took up using them. This would happen even if people sold them right after usage: 1. Forced user buys BTC. Price raises to Y. 2. Uses BTC. 3. Receiver sells BTC. Price falls back down to X. This pattern is repeated by many people and as such once saturation happens someone will ALWAYS be in step 2 at a BTC value Y and to trade you will have to wait forever or buy at this higher Y rate. Now since the country would be an early adopter later generating its own huge BTC interest/price spike the central bank of that country could make a HEFTY profit. Further the country would not have to worry about trade balance as regards to its currency value anymore (here we have to worry since we are small = if too much money goes out the country and not in -> inflation/huge currency drop). With BTC the price is determined internationally. All in all unless robbing your poor populace is your goal BTC would be a great boon to any community. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: fergalish on April 13, 2012, 03:06:43 PM I understand your points. In the example given, as long as the Athenians could find a way to get bitcoins out of Athens again, then the price should stabilise.
The example of dollar tourism is different or Danish crown - those currencies are already established. Tourism providers in San Antonio use their dollars to buy stuff from elsewhere, so total dollars in San Antonio is constant. Suppose after 20 years we had a curious situation in which all bitcoins were in Athens - i.e. only Athenian shops accepted them. Then 1 bitcoin would be valued at GDP(athens)/21million, which is much lower than if bitcoins were accepted worldwide: 1BTC=GDP(world)/21million. So... an influx of bitcoins into one area, without a corresponding outflux, would probably cause bitcoin related inflation in that area. It wouldn't be stable though - it would become cheaper for Athenians to buy their products elsewhere then, so bitcoins would exit the area. My question is,... well, I'm not sure what my question is. I think BTC would increase in value for everyone else if some town/country started using them, but not necessarily in that town/country. Or at least there would be an initial bumpy period. @edd: if a merchant sees demand for bitcoin priced objects increase, he will increase his bitcoin price. Simple Supply and Demand. Value of bitcoin is not related to how many my neighbours *have*, but by how many are in circulation. If my neighbours have lots, and spend lots, then total circulation is higher, and value is lower. @Realpra: suppose someone suddenly came along and bought up half of all Danish crowns. They would suddenly be worth twice as much. Likewise, if someone suddenly floods the market with them, they become worth less. That's the basis of currency exchange. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: edd on April 13, 2012, 03:19:45 PM @edd: if a merchant sees demand for bitcoin priced objects increase, he will increase his bitcoin price. Simple Supply and Demand. Value of bitcoin is not related to how many my neighbours *have*, but by how many are in circulation. If my neighbours have lots, and spend lots, then total circulation is higher, and value is lower. You're making a jump that I don't follow. Why would more bitcoins in circulation mean a lower value? If my coffee sales skyrocket, I become wealthier. There's no reason why my store of bitcoins needs to lose its value to maintain some sort of equilibrium. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: fergalish on April 13, 2012, 03:39:36 PM @edd: if a merchant sees demand for bitcoin priced objects increase, he will increase his bitcoin price. Simple Supply and Demand. Value of bitcoin is not related to how many my neighbours *have*, but by how many are in circulation. If my neighbours have lots, and spend lots, then total circulation is higher, and value is lower. You're making a jump that I don't follow. Why would more bitcoins in circulation mean a lower value? If my coffee sales skyrocket, I become wealthier. There's no reason why my store of bitcoins needs to lose its value to maintain some sort of equilibrium. If either Velocity or MoneySupply increase, without the other decreasing to compensate, then the GDP must increase. If this is just a nominal increase and not brought about by a real increase in production, then that implies there has been inflation. If demand for a product increases, then the price also increases. It's the first law of supply and demand. It might subsequently be followed by an increase in supply and a reduction in price. But the immediate reaction is price increase = inflation. https://en.wikipedia.org/wiki/Supply_and_demand Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: JusticeForYou on April 13, 2012, 03:55:43 PM I've been thinking about this, in the context of the European crisis, Greek local currencies, Argentinean peso collapse, etc. My question is: suppose you wanted to convince your locality to begin trade in bitcoins, eventually hoping that bitcoin would dominate the incumbent currency (e.g. you're a politician in Greece, or a popular businessman in Somalia etc.). Well, here's a problem. As soon as bitcoins start to be accepted somewhere (let's say... Athens!), well then, there would be a large influx of bitcoins to the Athens area from all over the world as people order Athenian products, causing a general inflation. The effect on sellers would be negative, and the initial failure might even cause people to reject bitcoins. So perhaps a better way to do it would be to create "The Athenian Bitcoin Bank" TABB. This bank would obtain a reserve of bitcoins and issue a (paper?) currency, let's call it Tabbies, fully backed by their bitcoin reserve. Anyone wishing to trade, then, would have to go to that bank, cash in their bitcoins and obtain Tabbies. That way TABB could regulate the number of tabbies in the economy. As long as the bitcoins at TABB's public address don't go missing, then everyone's tabbies have a fixed bitcoin-backed value. Ok, so it's clear that it might not work out that way. Even if you think the bank is unnecessary, is it possible that initial localised adoption might trigger increased localised bitcoin velocity and therefore inflation? i.e. bitcoin has to be adopted everywhere simultaneously, or nowhere? Just thinking. It's possible. But here is your problem, in Greece if you convinced a town to use BTC instead, they would no longer be contributing to the 'get out of debt' problem. Which will make it even harder for them to get out of debt. The 'state' of Greece would come down on this pretty hard for businesses that used BTC. The problem with Democracy is the people are responsible for the debt. Just because they didn't pay attention to their elected officials and didn't care to think about any possible future consequences, is no excuse. However with that being said, anyone that wasn't able to vote shouldn't be held responsible for their 'stupid' greedy parents. So the young should use BTC and bypass the whole issue. Go for it. If I were to add an amendment to the Constitution, I would add one that forbids the Government from any budget or contract that requires the people to pay for more than 30 years. PERIOD. Social Security sure for 30 years. (Then it must be re-newed via a new congressional Vote). Oh, I would also get rid of the Commerce Clause. (That clause will be used to tax you on the Air you breath) Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: edd on April 13, 2012, 04:15:01 PM @edd: if a merchant sees demand for bitcoin priced objects increase, he will increase his bitcoin price. Simple Supply and Demand. Value of bitcoin is not related to how many my neighbours *have*, but by how many are in circulation. If my neighbours have lots, and spend lots, then total circulation is higher, and value is lower. You're making a jump that I don't follow. Why would more bitcoins in circulation mean a lower value? If my coffee sales skyrocket, I become wealthier. There's no reason why my store of bitcoins needs to lose its value to maintain some sort of equilibrium. If either Velocity or MoneySupply increase, without the other decreasing to compensate, then the GDP must increase. If this is just a nominal increase and not brought about by a real increase in production, then that implies there has been inflation. If demand for a product increases, then the price also increases. It's the first law of supply and demand. It might subsequently be followed by an increase in supply and a reduction in price. But the immediate reaction is price increase = inflation. https://en.wikipedia.org/wiki/Supply_and_demand I think I see the problem now. You're considering an increase in demand for products priced in bitcoins without factoring in the merchants still offering products for alternate means of payment. I was imagining a more realistic scenario where the local economy gradually converted to bitcoin, just over a shorter timescale than the rest of the world. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: fergalish on April 13, 2012, 07:16:15 PM So... to get back to the topic. What do ye think then, better to use actual bitcoins, or better to institute a bank which issues as much currency as it has bitcoins in reserve. Again, this is just to initially regulate the quantity of money in the economy. It's clear that all merchants in a locality would probably have to cooperate in order for the local economy to be successful, so maybe the semi-centralised solution above, the bank, could be discarded in favour of a self-controlling system whereby each merchant promises to limit their bitcoin intake, or to manipulate prices of goods where necessary.
The problem with Democracy is the people are responsible for the debt. Just because they didn't pay attention to their elected officials ... shouldn't be held responsible for their 'stupid' greedy parents. There are two interesting things here. People are, and should be, responsible for the debts of their elected government. BUT, not for the debts of private banks which is actually how it has worked out in many countries. The elected officials either jumped on the bandwagon and are milking the system, or else they thought the economy was too systematically dependent on the banking sector to let it collapse. Second, I'm really curious to see how things pan out in Europe where, if I understand correctly, the new EU tax treaty will allow the European Commission to dictate the budget of any member nation that can't get it's own budget under control. Now, suppose you're... let's say Spanish. Right now your economy is fairly messed up, but suppose the Spanish government messes it up even more so the Eurocrats step in and dictate tax rates, healthcare budget, education budget, the works. And suppose the Eurocrats mess it up even more. Now who pays? The Spaniards pay for the mistakes of non-elected European officials? The EU is, I think, by and large a positive thing, but this really has the potential to be a disaster. Sorry - this bit is off topic. If you want we can start a separate topic to discuss this.Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: SgtSpike on April 13, 2012, 07:41:32 PM So... to get back to the topic. What do ye think then, better to use actual bitcoins, or better to institute a bank which issues as much currency as it has bitcoins in reserve. Again, this is just to initially regulate the quantity of money in the economy. It's clear that all merchants in a locality would probably have to cooperate in order for the local economy to be successful, so maybe the semi-centralised solution above, the bank, could be discarded in favour of a self-controlling system whereby each merchant promises to limit their bitcoin intake, or to manipulate prices of goods where necessary. It would be the same difference either way, at least with respect to demand for Bitcoin.If Greece users demand 1M Bitcoins, then either: 1. The bank has to buy 1M Bitcoins to place in reserve, then issue notes in place of those Bitcoins. 2. The users have to buy 1M Bitcoins to use. Either way, 1M Bitcoins are being demanded and purchased. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: JusticeForYou on April 13, 2012, 07:42:22 PM The EU in general brings up some difficulties by utilizing a ECB in concert with Sovereign Governments. I don't know whoever thought that would be a good idea. However, the bar of entry should be high to enter and low to get kicked out. Politics, as usual, prevented and prevents the correct thing from happening. Greece should have never entered the EU but it was allowed. Once a member country fell below thresholds they should be force to comply or withdrawal. BTW: This is what is going to happen. The ECB will dictate to a Sovereign Nation what it needs to do and a Sovereign Nation is going to say: NO, and withdrawal.
This will in no doubt cause a domino effect as no one wants to be holding the hot potato in the end. If Germany were smart, and they are, they will exit first leaving the other countries that messed it up with the potato. Now as how BitCoin can be a transactional currency if EU citizens dump the EUR into BTC while the EUR inflates to worthless, the citizens could renter their new sovereign currency from the BTC with little deflation in value as compared to the EUR. That would be how I would sell it anyways. However, they can do that with USD backed accounts, Gold, etc... also. BTC could provide some portability and tax havens for many that the other ways do not. No government will want its money displaced by another. BTC however can be hard to stop. My biggest concern is the lack of ability for individual clients to mine (easily). Miners want to mine, haters want to hate, yadda yadda yadda. However if every official client could easily turn on the mining capability, they couldn't do much about it. If even to mine at a reduced rate as to not max out CPU/GPU usage. As to get totally back on topic, start it via underground, System-D, etc... Then let the seed take hold and grow. Paying people (under the table) is becoming more and more common. Funny, governments try to prevent the effect rather than cure the cause. Rather than stop the influx of underground economies, they should try to stop the cause of them. But then, they would have to look in a mirror and blame themselves. The old cliché : "Those who do not learn from history are doomed to repeat it" should say: "Study history because you are going to repeat it, Until..." </EOR> End of Rant :) Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: nybble41 on April 13, 2012, 07:42:45 PM The problem with Democracy is the people are responsible for the debt. Just because they didn't pay attention to their elected officials and didn't care to think about any possible future consequences, is no excuse. However with that being said, anyone that wasn't able to vote shouldn't be held responsible for their 'stupid' greedy parents. I agree that "didn't pay attention to their elected officials and didn't care to think about any possible future consequences, is no excuse". However, not personally choosing to borrow the money in the first place is a perfect excuse. No one who didn't vote for it--whether they weren't around yet, voted against, or simply abstained--can be held morally responsible for what others chose to borrow. One of the many problems with democracy is that it pretends that people can be held morally responsible for the choices and actions of others. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Realpra on April 14, 2012, 10:56:00 AM @Realpra: suppose someone suddenly came along and bought up half of all Danish crowns. They would suddenly be worth twice as much. Likewise, if someone suddenly floods the market with them, they become worth less. That's the basis of currency exchange. That is correct, HOWEVER unlike DKK you can NOT "flood" the market with BITCOIN. To introduce them in a region you would first have to drive up demand and buy some for your people. The only thing that COULD lower the value would be if the Athenians dumped them as soon as they got them - the BTC value would then go back to normal, not lower though. This is however unlikely to happen as BTC has a wide range of good qualities. Quote if a merchant sees demand for bitcoin priced objects increase, he will increase his bitcoin price. This is incorrect:1. The cost of converting from BTC to say EUR is pretty low. 2. A BTC merchant may thus only increase his price with the amount of that conversion cost. 3. Should he increase FURTHER people will just convert to EUR and go to his competitors. Quote So... to get back to the topic. What do ye think then, better to use actual bitcoins, or better to institute a bank which issues as much currency as it has bitcoins in reserve. Actual bitcoins, most likely on smart cards, would be best:1. Bitcoin does not hold value in the minds of REGULAR folks yet - a BTC reserve would not impress anyone into accepting the bills. 2. Gold is the go-to reserve/currency builder, in this use it may even beat BTC, at the moment anyway. Additionally, they (Greece) already hold gold! (For now) 3. A BTC backed bill could be taken off the BTC standard and inflated to pay for an oversized government, just as happened with the dollar. That said physical bills from a government might be some use, like Casascious coins on huge scale. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: FreeMoney on April 15, 2012, 09:13:50 PM If the coins are worth more other places they'll just flow to those other places. But if there are a bunch of merchants who really want coin and make it easy and/or give discounts then coins will flow in to your area.
Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: cbeast on April 15, 2012, 09:23:01 PM 1. Buy virgin blocks of bitcoin from a miner and transfer all of them to a green address
2. Create casascius style physical bitcoins. They just need to be very hard to counterfeit. 3. Develop customized hardware/software that separates your green bitcoin from "tainted" bitcoin 4. Declare the value of your green bitcoin much higher than the bitcoin market. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Etlase2 on April 16, 2012, 02:16:11 AM Shocking how few understand the velocity of money portion of a money's value.
Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Etlase2 on April 16, 2012, 02:23:31 AM There are two interesting things here. People are, and should be, responsible for the debts of their elected government. BUT, not for the debts of private banks which is actually how it has worked out in many countries. The elected officials either jumped on the bandwagon and are milking the system, or else they thought the economy was too systematically dependent on the banking sector to let it collapse. Second, I'm really curious to see how things pan out in Europe where, if I understand correctly, the new EU tax treaty will allow the European Commission to dictate the budget of any member nation that can't get it's own budget under control. Now, suppose you're... let's say Spanish. Right now your economy is fairly messed up, but suppose the Spanish government messes it up even more so the Eurocrats step in and dictate tax rates, healthcare budget, education budget, the works. And suppose the Eurocrats mess it up even more. Now who pays? The Spaniards pay for the mistakes of non-elected European officials? The EU is, I think, by and large a positive thing, but this really has the potential to be a disaster. Sorry - this bit is off topic. If you want we can start a separate topic to discuss this. If we stopped this atrociously idiotic idea that money has to be backed by debt then this would not ever be a problem. Take away more and more services that the people pay taxes for so that their taxes can go to paying interest to the wealthy elite. Right on! Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: cbeast on April 16, 2012, 03:01:35 AM Shocking how few understand the velocity of money portion of a money's value. That's because like most economic hypotheses, they are correlative, not causative relationships and do not make accurate predictions for future observations.Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Etlase2 on April 16, 2012, 03:23:47 AM That's because like most economic hypotheses, they are correlative, not causative relationships and do not make accurate predictions for future observations. They don't have to be "causative" to have significance. Correlation still matters, and there is several hundred years' worth of history to back up this correlation. Sure the US government could match everyone's salary (pretend no fractional reserve) and everyone could do absolutely nothing with that extra money and prices could remain the same. But that isn't what is going to happen. Yes this involves "printing" more money, but you can come up with more convoluted scenarios where the same dollars are used, just much more frequently. Quote Why would more bitcoins in circulation mean a lower value? you would not likely see someone ask this question with "bitcoins" being replaced with "dollars". Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: cbeast on April 16, 2012, 03:35:06 AM That's because like most economic hypotheses, they are correlative, not causative relationships and do not make accurate predictions for future observations. They don't have to be "causative" to have significance. Correlation still matters, and there is several hundred years' worth of history to back up this correlation. Sure the US government could match everyone's salary (pretend no fractional reserve) and everyone could do absolutely nothing with that extra money and prices could remain the same. But that isn't what is going to happen. Yes this involves "printing" more money, but you can come up with more convoluted scenarios where the same dollars are used, just much more frequently. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Etlase2 on April 16, 2012, 04:24:09 AM I never said that printing money is necessary to make people spend money, so I don't know what you're disagreeing with.
Too many people confuse economic theory with "predicting the future" when it reality all it does, and (honest) economists do not claim otherwise, is fit the facts into an equation. Saying it isn't scientific or is a social science is really tired. Just as with physics, the models have gotten better and the equations more complicated over time. However, in some senses, predicting what the universe will do is much easier than predicting what people will do. This, again, does not invalidate economic theory. Just like Einstein did not invalidate Newton--he made a better model. It just means that all of the variables are not obvious. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: JusticeForYou on April 16, 2012, 04:46:41 AM I never said that printing money is necessary to make people spend money, so I don't know what you're disagreeing with. Too many people confuse economic theory with "predicting the future" when it reality all it does, and (honest) economists do not claim otherwise, is fit the facts into an equation. Saying it isn't scientific or is a social science is really tired. Just as with physics, the models have gotten better and the equations more complicated over time. However, in some senses, predicting what the universe will do is much easier than predicting what people will do. This, again, does not invalidate economic theory. Just like Einstein did not invalidate Newton--he made a better model. It just means that all of the variables are not obvious. I see your points. However, there are two schools of thought on economics. Sociology is sometimes more apt than statistics. i.e. Given enough data you 'might' be able to tell me where I will spend $5 tomorrow to within a certain degree. There are to many unknown unknowns to be very precise. However, if I drop an apple from 6 feet it will hit the ground in the same amount of time when I do the same thing the next day. So comparing Economics to Newton might not appropriate in this case. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Etlase2 on April 16, 2012, 05:50:52 AM So comparing Economics to Newton might not appropriate in this case. Sure if you want to use a scenario that fits within Newtonian mechanics. But that defeats the purpose of the example, now doesn't it? Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: benjamindees on April 16, 2012, 01:58:00 PM Velocity is just a crude approximation of economic interdependence and thus complexity. It is not an end in and of itself.
Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: 3phase on April 16, 2012, 05:15:15 PM 1. Buy virgin blocks of bitcoin from a miner and transfer all of them to a green address 2. Create casascius style physical bitcoins. They just need to be very hard to counterfeit. 3. Develop customized hardware/software that separates your green bitcoin from "tainted" bitcoin 4. Declare the value of your green bitcoin much higher than the bitcoin market. Could I ask for a little more explanation? Why would they need green addresses? Would they accept only BTC coming from the green address to circulate? What happens when someone brings in BTC from somewhere else? Why should they artificially increase the value of bitcoin from their green address? Would that be an "isolated" blockchain? Could they drop the existing blockchain altogether and fork a new one, starting with a genesis block containing only the original bitcoins in the green address? How would that be different from starting another alternative cryptocurrency? I am really intrigued by these thoughts, and I've seen you mention them in another thread too. Have you written more about it anywhere else? Thanks in advance. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: cbeast on April 16, 2012, 05:44:54 PM 1. Buy virgin blocks of bitcoin from a miner and transfer all of them to a green address 2. Create casascius style physical bitcoins. They just need to be very hard to counterfeit. 3. Develop customized hardware/software that separates your green bitcoin from "tainted" bitcoin 4. Declare the value of your green bitcoin much higher than the bitcoin market. Could I ask for a little more explanation? Why would they need green addresses? If you want a local Bitcoin economy, you want to keep your island of Bitcoin separate from the rest of the network. Would they accept only BTC coming from the green address to circulate? What happens when someone brings in BTC from somewhere else? Outside Bitcoin would be like trying to spend any foreign currency within your borders. Why should they artificially increase the value of bitcoin from their green address? Because it would deter someone from spending it outside your "green zone." Would that be an "isolated" blockchain? Could they drop the existing blockchain altogether and fork a new one, starting with a genesis block containing only the original bitcoins in the green address? No. It would be the same block chain every one else uses. It would still have a globally based resistance from attack. How would that be different from starting another alternative cryptocurrency? Your country would be to weak to create a strong enough network to resist other great powers. Besides, all other cryptocurrencies are inferior to Bitcoin. I am really intrigued by these thoughts, and I've seen you mention them in another thread too. Have you written more about it anywhere else? I don't even remember all the stuff I write. I've almost responded to my own postings. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Seal on April 17, 2012, 12:59:09 AM There's a lot of good threads in this post... How did the eurozone countries eg Greece for example transition to the euro in the first place?
Would that be a good model to switch countries to bitcoins? Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: fergalish on April 17, 2012, 01:30:48 PM There's a lot of good threads in this post... How did the eurozone countries eg Greece for example transition to the euro in the first place? Would that be a good model to switch countries to bitcoins? This is exactly what I'm asking about. The Greek govt (and by proxy, the Greek people) implicitly trusted the EU not to flood Greece with worthless euros. I guess they were also hoping that all of europe wouldn't suddenly go to Greece and spend their euros there. There are no such guarantees with bitcoins. If some Greek community decides to adopt bitcoin instead of creating their own local currency, then ALL of bitcoindom could start buying there (e.g. online shops etc), and the area will be flooded with bitcoins, making it hard for regular traders to find equilibrium prices. So, my opinion, is that the switch to euro involved a trusted central bank authority. cbeasts solution is similar to what I suggested above, except he wants to continue using the electronic nature of bitcoins, whereas I suggested using 'the athenian bitcoin bank' which issues paper currency backed by its bitcoin reserves. Both systems assume that traders will honour the local bitcoin pseudo-currency, and either refuse or impede transactions with 'foreign' bitcoins. (this is what would give the 'green' bitcoins greater value - in the geographical zone of interest, more traders are willing to accept them, therefore their value increases). Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: unclescrooge on April 19, 2012, 08:21:18 PM I like this topic.
First starter, we must have easy physical payment system: bitcoin credit card system, mobile phone system, bitcoin bill? The problem with the first is that it's difficult/expensive to develop. The problem with the second if that if it uses smartphone, not everyone will be able to use it. It could be sms based, but that's not very convenient/secure Then ther's the third option. I don't find it very convenient (but i've never liked cash anyway), but that would be the best option. What d'you think? Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: hazek on April 22, 2012, 02:06:13 PM Even if you think the bank is unnecessary, is it possible that initial localised adoption might trigger increased localised bitcoin velocity and therefore inflation? Just thinking. Inflation != rising prices of goods sold for bitcoins Inflation = increase in supply of bitcoins Before you do any more thinking, you should recheck your foundation and make sure it's correct. If prices actually rose it wouldn't be bad for the merchants because they wouldn't lose money by charging more bitcoins, they'd actually increase their purchasing power. Rising prices would be bad for their potential customers holding national and other currencies because suddenly they wouldn't be able to afford those goods anymore. But even this would get solved eventually as the merchants who now charge higher bitcoin prices and are increasing their bitcoin balance sheets can pay their employees more bitcoins who can then in return afford the higher prices again. Also eventually other merchants elsewhere would see the benefit of charging in bitcoins and would start to compete with that local economy which would drive the prices back down.. The key here is there is no one out there robbing these economies by creating more bitcoins out of thin air. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: Etlase2 on April 22, 2012, 02:28:26 PM Inflation != rising prices of goods sold for bitcoins Inflation = increase in supply of bitcoins Before you do any more thinking, you should recheck your foundation and make sure it's correct. How many times is this going to appear on this board? There are two definitions. Yours is not right, they both are. It is almost always possible to determine from context to which form of inflation someone may be referring. This is so inanely pedantic and is such a waste of everyone's time to read. Title: Re: Suppose you wanted to start a geographically localised bitcoin economy Post by: cbeast on April 22, 2012, 03:30:18 PM I like this topic. Paper bitcoin bills will have a lot of flexibility to offer. For one thing, they can be complex documents. I imagine that bills will have script transactions encoded as QR. For instance, a checkbook can be created that escrows a balance to a check that is secured by a m-of-n (i.e. 2-of-3) transaction with a personal keycard. The vendor cashing the check scans the bit check and keycard, then sweeps the change to the next check in the checkbook and gives you a receipt. Your money is completely private and secure.First starter, we must have easy physical payment system: bitcoin credit card system, mobile phone system, bitcoin bill? The problem with the first is that it's difficult/expensive to develop. The problem with the second if that if it uses smartphone, not everyone will be able to use it. It could be sms based, but that's not very convenient/secure Then ther's the third option. I don't find it very convenient (but i've never liked cash anyway), but that would be the best option. What d'you think? from this thread: https://bitcointalk.org/index.php?topic=74978.0 (https://bitcointalk.org/index.php?topic=74978.0) http://farm7.staticflickr.com/6091/6891072634_fb4c03cdc4_z.jpg |