Bitcoin Forum

In October 2011 World population was estimated to have surpassed the 7 billionth person. Since then world population has increased by a net growth of around 45million people (August 11 2012, about 10 months later)

The current Bitcoin block reward payout of 50 coins is scheduled to decrease to 25Btc at the 210,000 block around early to mid December. The Bitcoin network is designed to mine around 144 blocks or currently 7,200Btc a day which equals ~2,628,000Btc a year

At the current rates the world population is increasing 17x faster than the yearly payout of mined Bitcoins.

Already we have diminishing returns of mined bitcoins when measured against population growth. The way the system is designed with a hard limit of 21 million bitcoins theoretically means that eventually they will all be lost due to forgotten passwords, deleted wallets, crashed computers without backups....etc.

I propose we should change the bitcoin protocol to leave block mined rewards at 50Btc indefinitely that way there will always be a steady predetermined supply of coins, that will grow at a much slower rate than the global population

It's my opinion that this will cause slightly less hording of bitcoins knowing there is no longer a hard limit to reach on the bitcoin network causing exchange price spikes and also prevent theoretical eventual loss of all bitcoins.

Your thoughts?

No.  the very reason, IMO, that ppl invest in Bitcoin is b/c of the projected fixed supply.

Based on what evidence so far?

+1

This is the reason people buy bitcoins, because of limited supply. Look what is happening to the US dollar, when they increase the money supply, they devalue the dollar.

No, please no, not again this thread!

I voted NO.

the antithetical presentation of the asymptotical distribution of Bitcoin to the exponenetial increase of M2 is so compelling when taken in the context of the world's financial problems today that most intelligent fair minded ppl conclude they want something different, not similar.

This change has already been made, so the problem is already fixed. Just use DeVCoins or GRouPcoins instead of bitcoins, they already provide this feature.

-MarkM-

Just off the cuff, that does not sound right.  At that rate, it would take us 20 years to grow to 8 billion.  I'll see if I can find some facts to back myself up.

This is not good idea. I respect your effort, but this is what I do not support.

Let's say that you got thousands of votes here, 100% in favor of this change.  And then let's say even the group of core developers somehow lost their sanity and agreed to make this change.  It would not make any difference.

Here's why.  Come December when block 210,000 arrives, there will be a blockchain fork between those using clients that follow the original protocol (which drops the reward to 25 BTC per block) and those that have clients that follow these new rules.  Any coins starting from block 210,000 and on that are still at the reward of 50 per block (i.e., follows the new rules) are worth less because they won't be accepted in many places (i.e., only at the places that use a client that follows the new rules).

I personally won't be using any client that includes this change and as a result my client will reject any blocks mined using the new rules.  It won't even relay them.

I expect my exchange will not want to end up being the bag holder for worthless coins after people have converted the "new rules" coins to fiat and then withdrawn the funds, so they too will only run clients that do not accept these new blocks from the fork.  The same thing happens with merchants -- your new rules are not welcome there either.

Blocks mined under the original rules will continue to be mined by one or more mining operators, and their new blocks (which will by then generate coins at the rate of 25 BTC per block) will continue to propagate via others following the original rules, will successfully verify, and will continue to be used by those trading.  The blockchain under the original rules will not even see a hiccup while the fork essentially gets ignored.

So to do what you seek you don't need just a majority from users on this forum to vote +1, nor do you need even just a majority of developers onboard to successfully push through such a change.

You would need an economic majority coming from those who accept bitcoins to sign on to the change.  You need exchanges, merchants, and individual investors and traders  -- anyone who accepts bitcoins in exchange for something of value, to want to adopt the new rules.   I cannot imagine gaining their endorsement for any rule change that devalues coins.

OP, you have rehashed yet another idea that has been rehashed 2-3 times in the recent past on this forum alone, ALL of them have been shot down because they are, poorly thought out, based on FUD, and are completely uninformed about what real, sound money actually is in the real world.

You don't like Bitcoin? Fair enough, please go out there Satoshi-style, and create the next superior alternative revolutionary digital currency. Until then, shutup.

At $2/BTC:
"OH NO, CUTTING MINING IN HALF WILL CAUSE EVERYONE TO STOP MINING!"

At $4/BTC:
"OH NO, CUTTING MINING IN HALF ISN'T WORTH IT!"

At $8/BTC:
"WE CAN'T AFFORD CUTTING OUR MINING PROFIT IN HALF!"

At $11.50/BTC:
"TOO MANY PEOPLE USING BITCOIN! MINING WILL STOP IF WE KEEP HALVING THE REWARD!"

Though the answer to this question seems obvious to a bitcoin holder, miners may have a different opinion - and it's their vote that counts.
There is a tension between people who hold bitcoins and want deflation, and miners who want to earn more bitcoins.
The allure of more bitcoins per block is a delusion, but if enough miners agreed, then there is the slight possibility of a fork that could develop momentum - especially if bitcoin was floundering somewhat.
I suspect miners faced with a fork like this would simply choose to drop out and wait for low difficulty rather than pursuing an inflationary model - or maybe they'd mine both and wait for the winner.

IMO changing the block reward to continuous linear expansion wouldn't greatly affect the economics of bitcoin in the (extreme) long term, but it also wouldn't satisfy anyone's desire to have an inflating money supply either, so I don't see why anyone would want to make the change.

Once you had trillions of bitcoin in circulation, the 2 million newly minted coins a year would presumably be noise on the scale of the overall money supply, and injecting this would have no tangible impact to the "new" population created that year. This is essentially the same case we run in to (much sooner) when we start sub-dividing satoshis and block rewards of these sub-satoshis continue to accrue ad-infinitium; block rewards continue to be released forever but they become meaningless scraps for the miners to fight over, hopefully while sustaining themselves on transaction fees.

Both schemes asymptotically approach zero monetary inflation in the long run: the linear minting model approaches zero with no final maximum amount of coins and the decay growth model approaches zero more rapidly and limits the final number of coins. Both models still force us to abandon central economic planning, price stability, etc, and so I guess the argument then becomes how quickly we want to give ourselves to get over the hump into the new economic world we see before us.

As an "early adopter" of bitcoin I'd argue that the current model of debt-based money is what forces our economy to destructively grow at ever increasing rates that cause extreme economic instability and are a threat to the carrying capacity of the earth, and that we should make this transition sooner rather than later to get away from these problems. In this way I agree with the current model of bitcoin minting: get them out there quickly and then turn the tap off quickly.

I would also think that bitcoin "newcomers" that may wish an extension of the easy money that early mining rewards gave so that "they can get theirs" may want to reconsider their wish. As long as bitcoin maintains value and mining requires investment, the early adopters will always be able to invest more in mining equipment and take the majority of the block reward. It's similar to the fact that, in principal, anyone can open a bank and get in on the fractional reserve fiat money-printing game and eventually grow large enough to get access to the newly created money flowing out of the central banks. In practice the barriers to entry to this game are too high and no one that tries to do this will get very far before being bought out by the existing players.

I agree - Inflation is appealing to the people who print the money (the miners), though bitcoin's decentralized nature means that the holders will stick with the miners who support the Satoshi model.

Define "world". As a proponent of space exploration, I see things a bit differently.

Although making Bitcoin work over a one hour latency is a rather interesting task...

inb4 somebody posting a forked version of bitcoin to do just that when the block rewards reduction is up.

ENTERPRISE LEVEL TROLLING

This is crazy, miners can already merged-mine both DeVCoins and GRouPcoins alongside BiTCoins, so they can mint two of these always same number of coins per block coins right alongside their bitcoins almost free; there is thus absolutely no point whatsoever screwing around with actual bitcoins in such a way.

-MarkM-

Not really - you forget the impact of lost coins. Assuming a 0.5%/year loss rate, a permanent 10.5 million BTC per four years would amount to an ultimate fuzzy cap of 525 million coins, while Bitcoin's current strategy would peak the currency at 18.9 million in 2028 and then have it slowly come down and be all the way down to 13.6 million at the end of the century.

yes it's pointless.... but it would be sure awesome to witness the drama it would bring with it  ;D

i really object to describing Bitcoin as a "deflationary currency".  not only does it scare the avg Joe and reminds them of the Great Depression, i don't think its technically correct.  the assumption here is that there will be a mild but negligible loss of coins.

i think its more appropriate to describe what it will be in 2040 and beyond when the vast majority of coins will have been mined and we're finished with its inflationary distribution phase.  if we focus on that timeframe i think it is appropriate to describe it as a "stable currency" which is much less objectionable by the uneducated and more technically correct.

inflation, as defined by those of similar mindset to our own, is the growth of the money supply + credit.
deflation, is the decrease of money supply + credit.
clearly, Bitcoin will neither increase or decrease the supply of money + credit.

thus it is a stable currency.

edit:  "fixed supply currency" would also be acceptable.

The trolls trolling about it are full of crap anyway, they don't even bother to mine the coins that do feature the very feature they claim to favour, so they are just noise, trolls, crap, waste of bandwidth.

-MarkM-

Just imagine if there are enough idiots gullible enough to do this, it would result in a cozy low difficulty to continue mining the main fork after the block reward reduction before they give up on it.  :D

I neglect it because I don't think anyone has come up with a good way to model it yet. We're coming out of a regime where wallets have been lost because the software is immature and the coins in them are largely worthless, this clearly won't keep happening at the same rate. I also expect the loss rate to decay exponentially as people innovate in this space. But I worry about what happens when retirees are holding bitcoin and die without divulging their private keys.

Realistically the loss rate just moves around the finish line a bit, it doesn't change the nature of the race too much.

Lost coins are not really a problem, there are already so many chains all of which can be merged-mined at once that losing a few coins on each chain really doesn't amount to much, especially if you also take into account the fact that the number of chains you can merged mine at once is not yet saturated; mining a few more is still easy, we have not hit a point yet where the sheer number to merge is too many to do it practically. (We have however found that ten second block time chains are not practical to merged mine alongside more-normal blocktime chains.)

-MarkM-

Shouldn't it be possible to merge mine another bitcoin blockchain which doesn't have the blockreward reduction?
Call it TrollCoin or whatever... idk  ???

From a system level perspective anything that can inflate in an infinite manner requires regulation of some sort. But as a decentralised system it is incredibly difficult to find a single source that can reliably regulate the currency, hence it is up to the holders of Bitcoin and the market to regulate itself, (surprise surprise) .There is simply no other simple way it can be done. I think Satoshi understood that if Bitcoin were to succeed it needed to be based on a community that strongly supported it as an integral, useful, valuable tool, no more, no less. This is no bunch of suits switching numbers on a computer, nor is it regulated by an algorithm, it is the visceral market of supply and demand that regulates Bitcoin. Stop trying to fuck with it.

At least read the frikkin posts if you are gonna pretend to be responding to them. Sheesh.

-MarkM-

I did, I think my suggestion is possible and just wanted to check.
No reason to get mad.

For the umpteenth time: there are already at least two blockchains that do not reduce mining reward over time and that are merged-mine-able: DeVCoin and GRouPcoin.

-MarkM-

I didn't know that they don't reduce the block reward. Still it might be worth to do it for the laughs. And they are not bitcoin you know people tend to get somehow what they want.


The alternative is to ignore it, in which case the trolling will probably continue till it peaks just before the reduction. Worst case people actually use a patched version of BTC and try fork the blockchain. We wouldn't want that...

If you want a coin that does not reduce rewards over time, use DeVCoin and/or GRouPcoin.

Bitcoin does reduce reward over time, and has no need to change since anyone who does want rewards not to drop can simply use DeVCoin and/or GRouPcoin, without even interfering with their ability to continue mining bitcoin, namecoin, i0coin, ixcoin etc at the same time.

-MarkM-

Since chose to ignore the threat and even ignored my suggestion on how to deal with it I wish you the best in dealing with the trolls in December...

Was there any reason that the number 210,000 was chosen as the block reward reduction?

No it isn't. We're paying them by accepting coins, if they don't make them how we want them we won't accept them. It is up to us (people who serve for coins).

Closest round number to 4 years? I really don't think the reasoning was any more complicated than that.

Bitcoin is rapidly inflationary now, with decreasing inflation caused by the fact that the creation of Bitcoins is never proportional to the circulating supply and the halvings of the subsidy/reward. Keeping the block subsidy/reward steady at 50 btc just slows down the rate of inflation decline -- but both models end up in the same place -- only a trivial fraction of the circulating coins are created each year for many many years.

i understand.  but the story is much more compelling and simple with a stable, fixed supply.

http://timothyblee.com/2011/04/19/bitcoins-collusion-problem/

Tim Berners-Lee thinks that collusion will be a problem and that the protocol rules will be changed to manipulate the money supply.

Let's prove him wrong and keep the decreasing reward.

1) The fact that coins are occasionally lost is not a problem to anyone except the person who lost the coins. Increasing the rate at which coins are mined, or mining them forever at a constant rate, doesn't help the person who loses his coins. It's a non-solution to a non-issue.

2) If ever the Bitcoin community generally agreed to remove the 21m bitcoin cap and extend mining at a constant rate indefinitely, the whole experiment would collapse and fail.

3) There is absolutely no net benefit to removing the cap. Do no equate money with wealth... the fact that more money is printed doesn't mean the world is better off. Market's adjust to the supply of money - if you tinker with the supply of money, you screw up the market.

4) The growth rate of world population is entirely irrelevant when determining what the proper amount of money is. Few people understand this, but it's true.

I love the foray into the SiFi possibilities.

I once read a debate between a nobel prize winning economist and a physicist (note not the best we had).

... the economist had to retract almost every single statement and BASIC assumption.

He ended up talking about virtual castles and virtual worlds where growth could continue - which neglects computing costs/how nice the matrix is - the physicist let him limp off at this point I think.


One of the best arguments was that the planet surface would literally boil in 100-200 years if our economic/energy expansion continued.


On topic: yeah keep my BTC protocol stable, I like it that way.

2: I disagree in a way that ultimately agrees.  The great thing about FOSS is that somebod(ies) would NOT change their client protocol, and so the blockchain would fork into BTC and BTClinear.  Hacks would quickly be put in place the diverged clients don't find each other, instead of having to reject other-fork blocks.  Everybody who owned coins before the split would now own both BTC and BTClinear.  Prices between BTC and BTClinear would diverge, since BTClinear's supply increases it is likely its price goes down vs. BTC.  So everyone would go back to BTC as BTClinear becomes worthless, or both are used and BTClinear becomes an altcoin like litecoin.

What's fascinating about this process is that it might actually be used for a protocol change that has some possibility of success (IDK maybe more secure in some way), where BTC forks BTCultra and the original protocol slowly loses value against the new one.



3 & 4: so long as your currency is infinitely divisible!  And luckily for us bitcoin is highly divisible now and if needed we can add as many more zeros as needed after the decimal point via a protocol change.
 

Sure, with a client that can work with both bitcoin as well as the fork, you would then already have the new forked currency distributed widely starting out on the day the fork is introduced.  But that initial distribution would be about only thing that this fork would have in common with Bitcoin, versus any other altcoin.

just send the message through subspace

you gata watch more star trek...

 :P

Right.  ::)  The planet's surface would "literally boil" if we kept producing goods and services? It amazes me how fragile some people think the Earth is.

So strange that it's been getting colder for the past twelve years...

If there are ever major changes to be made that require a hard fork I think that is the way it has to be done. Probably if it is generally expected that nearly everyone will eventually change we'll just call the new one bitcoin also.

It would be extremely interesting if something very different decided to award units for destroying bitcoins in order to bootstrap itself. You'd be able to buy this new money essentially anonymously and very easily.

No, that would violate a basic tenant for Bitcoin and go against major principles.   What will happen is the price will go up for a nominal Bitcoin ie: 1 and that may be very very expensive in time.

What happens on the day this fork happens? What do we do?
I'd have the original client that accepts the Satoshi model and I have a new client that accepts the new fork.
Both clients register my bitcoins as intact. I have apparently doubled my bitcoins overnight but in two different forks.
Some exchanges move over to the new model. Most don't. Some allow exchange between the fork and the original.
Either way my bitcoins are intact and I can simply exchange them between the two and let the market decide.  I can hold onto both and see what happens.
Though I suspect that my bitcoins in the new wallet would tend to zero value almost immediately and I would stick with the original fork since that's where my bitcoins are worth the most. Miners would see the collapse of their fork, the difficulty would collapse with the price and people would stop mining it (give it a day or two). 
But I would still have my new Bitcoins and would be able to exchange them for real bitcoins if there were any idiot buyers out there.

Also consider that in this scenario everyone who hold any BTCs will now still hold BTCs and also grandfathered inflatoBTCs in the forked chain. I personally would immediately dump all my magically created out of nowhere inflatoBTC to the highest bidder for real BTC. It would be reasonable to assume that most rational market participants would do about the same. Care to speculate what would happen with your inflatofork and inflatoBTC exchange rates? Yep, correct! iBTC market price of exactly 0$ before long.

Hoarding (also known as saving) is good.  It is unfortunately a common misconception that there is anything wrong with saving.

Assuming Bitcoin is going to grow to over $100,000 per BTC1 I think Satoshi got it almost perfect. It would be improved if the distribution was optimised to benefit the early adopters of Bitcoin.
I am assuming we are still in the very beginning of the innovation (https://bitcointalk.org/index.php?topic=113606.0) stage of the for technology adoption curve.  The image below would help it scale BIG.
I would switch my miners in a heartbeat to this new model if it were introduced. (Obviously it would have to be intended to handle billions of transactions per day.)  

http://www.jdidesign.com/files-in/Bitcoin-Enhanced-Rate-of-Supply-2.jpg

As far as I can see, your example is less of a benefit to early adopters, compared to the current supply growth.
Why? Why should supply grow at its highest rate at some random mid-point?

With Satoshi's model of supply, we have one factor decided on from an educated guess: the halving rate (~4 years). With your model we have two such factors: 1. the mid-point (of highest monetary inflation) and 2. the growth rate before and after this point. Why not choose three factors that determine the supply, or maybe 18 factors? I think the point is that supply isn't that important, and - not the least - that each supply curve will have its advantages and disadvantages, and trying to predict these is futile. In any case I think we can spend our time improving the protocol in much more important aspects than wrt. to the supply curve.

Sure it is less, but there would still be a huge benefit and it would ensure many more early adopters and I suspect allow the network to grow bigger, spreading the overall benefit and encourage adoption over a longer period.
I suspect we are in a catch 22, growth in Bitcoin adoption will now = an increase in price of Bitcoin, that is good for savers but bad for economic growth and bad for new adopters. 

Good point, I don't know it should, but for that matter why should it start fast and fissile out in 4 year?
I think easy mining rewords encourage network growth, and adoption of Bitcoin, so I imagine the party would go on longer and provide more benefit to a larger user base.     

You may be right. I won't move from Bitcoin because I am totally invested in it, I will be sad to see it stop growing because savers are reworded by saving - by that very nature saving discourages spending and disseminating Bitcoin's. The new curve would allow a competitor to Bitcoin to start and not discourage later adoption. Alas without it I will become a victim of my own savings and continue to hoard my Bitcoin's and hope you sell your first.