Bitcoin Forum

http://undergroundeconomist.tumblr.com/post/1528511369

I say bollocks due to time preference theory.

Regardless of deflation or inflation, there will be a need to buy food OR DIE.

I agree. People usually want to enjoy life and spend their money before they die.

I like economics. You can always prove by either buying or short selling that your predictions are not just trolling.

It is bollocks only if there are going to be goods and services available that people desire for bitcoins.

What is happening now is just a bubble and a result of speculation just as I have said in the other thread, if this is not changed it is going to burst, make bitcoin almost worthless, make a bunch of people angry and bitcoin will eventually die.

This is not good situation, we need to encourage/create *useful and valuable* services, these are going to be the backing of bitcoin then ... and no, casino games, ponzi schemes and buying bitcoin for the sake of making profit is not useful nor valuable ;)

Those who hold large amounts of bitcoins would do well investing in such services as that's going to make their coins much more valuable and actually sellable because right now if they tried to sell, they would find very quickly that they simply can't and most of the coins are just worthless and the price on mt. gox meaningless.

No one is going to die from bitcoin, dude.

The offers on mtgox are legit you can accept them and it goes through instantly. They are not guaranteed to be there forever if that's what you are talking about.

It is becoming an annoyance if Macho keep polluting economic threads with his anti-speculation worldviews, anti-gambling worldviews.

I propose we should move all Macho anti-speculation posts into his own little thread.

Most of what is said here could ne said about any fixed aggregate money, such as gold.

I guess this guy also thinks gold is useless and will never be used as money.

I'm not saying anybody is going to die LOL I was saying bitcoin is going to die as a result of massive lost of confidence when the bubble bursts.

I'm also not saying the offers are not legit, I'm saying there is no demand for bitcoin ... just look how shallow the market is, you would sell few thousand bitcoins at most and then the price starts to plummet. If anybody holds near 100,000 bitcoins I would say that most of them can not be sold and are therefore worthless ... but that's a tip, it may be 100,000 or 200,000 ... who knows. But the price is definitively inflated, don't you think? It is hard to say how much but it's clear from the fact that there is hardly $1,000,000 worth of assets in bitcoin economy heh :)

Agreed, the article is bollocks. The greatest threat to the current bitcoin economy is probably a parallel (or forked) bitcoin economy where large block issuers align themselves somehow to issue bitcoin which is convertible to a predetermined amount of gold from the outset. This will bridge the link to the physical world via 24/7 convertibility (using exchangers and even gold ATMs now in some places).  Additionally, it would benefit from the relative stability of gold that everyone understands.

By delinking the medium of exchange function from the store of value function,this strategy would also exploit the "scarcity" token feature of bitcoin in a positive way (because, yes scarcity is different on the Internet). Prepare for parallel bitcoin economies.

That's what I have been thinking from the beginning.  The main use of bitcoin will be to exchange gold.

I doubt however that it would require a fork of bitcoin.  It's much easier to use the mainstream bitcoin block chain.


I mean, say I own 1 Kg of gold.  If I trust bitcoin to be in a fixed amount, then I can ensure the convertibility of 1kg of gold into the whole bitcoin stocks.

That would price a gram of gold to 21,000 BTC.

If someone thinks the same but owns 10 Kg, the price of the gram will be 2,100 BTC.

Eventually, the price of gold will be the total amount of bitcoins, divided by the maximum amount of gold owned by someone who is willing to use bitcoin as an exchange tool for his gold.

I confess that I'm not so sure about that right now.  I still have to think this more thorously.  But it's my opinion right now.

The reason that I think a fork may be required is that there are already so many bitcoin issued without a value injection (other than gen time and power). We wouldn't value paper dollars based on the amount of paper and ink utilized. Bitcoin is not "legal tender" fiat by decree.

I am referring to a stable rate of x bitcoin to x grams (just like the Chinese Yuan to the USD or other dollar pegs). This would allow bitcoin valuation to take place in an expression other than USD and one would not need to go through the USD for valuation and/or two-way convertibility. A pegged link would then allow bitcoin to also take on the "unit of account" function of money in addition to the "medium of exchange" function.

I think we don't need value injection.  Right now bitcoins are generated without any relation to gold, but it doesn't mean a fixed rate can not be reached in the future.

I personnaly like to compare bitcoin to silver.  There is no "official" price of gold in silver.  Those two metals are not convertible into one another.  And yet, there is a more or less constant ratio in price.  It's only due to their relative constant scarcity.

Same would apply to bitcoin, imo.  Even if bitcoin is generated with no value injection, as you say, it is anyway in fixed amount, and therefore can be used as the unit of account you are hoping for.

Grondilu, we are in agreement, especially regarding your comment on token representation.  My point is that a pegged rate to gold will provide bitcoin with stable value representation (and put an end to the crying deflationistas and inflationistas). A floating rate to gold is what exists now but you still have to go through someone like Mt. Gox where the quoted exchange rate is dollar-based to get the expression in USD. I understand the irony here because a gold peg seemingly would overlay a centralized structure from those providing the gold-backing, but it doesn't have to be centralized if the bitcoin forks grow with the injected amount of gold.  The gold peg can be software-established in the same way that the 21 million threshold is established. This would therefore be distributed because it is a distributed system of bitcoin exchangers worldwide providing the backing at generation.

I will remain open about the forked block in bitcoin being unnecessary, but I don't see how a stable bitcoin is feasible without parallel bitcoin economies having the option to provide the convertibility function.

Well, I have just started an auction for a 1g gold on the marketplace forum.  Direct bitcoin to gold market.  Not mtgox nor dollars involved.

http://bitcointalk.org/index.php?topic=1730.0

If it doesn't float, there has to be a peg? And who picks the peg price?

 

It has to float.  At least a bit.  Because the total amount of bitcoins can not be perfectly controlled.  Nor can be the total amount of gold.

Wallets can be destroyed.  Gold can be lost (in the ocean for instance).

Therefore it's better to let the market fix the price of gold.  But it will likely be more or less constant.

Anyone can start their own block chain and genesis block. The question is would people adopt it or not.

Im of the opinion that this is going to happen as soon as bitcoin becomes popular and the people realise they can setup their own currency. There might be endless crappy wanna be bitcoin chains in existence at that point each with their own rules. After all why struggle to generate on the existing network when you can be your own bitmagnate lol. There may even be proprietary ones that companies set up and promise to back at a certain rate.

I may be wrong of course.
 

Agreed.  This will happen.  I wouldn't be surprised if big companies such as Google or Apple started their own block chain.  In this perspective, cryptocurrencies could be used as a replacement for equities.  I think it would be a great improvment for equity market, and more generally for capitalism.

Also, some people will want different versions of cryptocurrencies.  For instance one with a non-fixed aggregate.

The market will have to decide which of all these currency will have more value.  Personnaly, I'll stick to bitcoins.  But I may buy a few GoogleCoin if this appears.

The possible problem with this is that if parallel currencies are created on the same principles as bitcoin then the currency with the most hashing power can easily overtake the currency with lower one if they collectively decide to do so. So the big one can "eat up" all of the smaller currencies.

I don't know if people would be capable or willing to cooperate to such an end but it is a possibility.

No that is impossible. With a separate genesis block the chains would be separate entities.

Not possible. Different chains can never collide or join together.
This is pure FUD.

I know. But once you have enough people with enough hashing power they can just one day decide to switch to use that power to overtake another similar system as a group. Like if there was a different bitcoin-like currency right now with 100x less hashing power, you could just modify the client to compute hashes for that system 1/100 of the time it is running and you can absorb it if bitcoin users would adopt it. Easy way to knock out competition if you for example see that it is gaining popularity and could surpass ours :)

Of course that requires enough people willing to do that ... but once they are united under one economy with common interest (and common threats of competing currencies) it's much easier to do that than if you tried to get enough people to overtake bitcoin right now for instance.

I'm not saying they would collide "by accident" lol but by conscious action of enough people from different competing crypto-currency

The block chain with its transaction history is unique to each cryptocurrency. You could say it is the block chain dna.

See the post above ... if you have cryptocurrency used by 100,000 people and another one is gaining popularity fast with 5,000 members, the 100,000 can easily knock it down if they see it as a threat and can coordinate. All it takes is a simple modification of the client they're using (so it computes hashes for the other blockchain) and enough people adopting it ... which is much easier to do if those people believe the new currency is a threat to their dominance (and therefore their money).

Doesn't make much sense.  Hashing power doesn't hurt a cryptocurrency.  On the contrary, it enforces it.  I just don't understand what you mean by "dominate" or "surpass".

The thing is that doing that cost them money (electricity and the lost of oportunity to use the computer in something else). So going from network to network breaking them down is a game that they can not sustain for a long time as it would bankrupt them. I am sure they could not do that very long without a major part of the participants breaking the consensus and thus breaking the group.

You are used to see this kind of abusive behaviour in present days, but it is because most corporations are protected by government regulations. Therefore they dont have to suffer strong competition.

Bitcoin is a true free-market currency, a voluntary currency and is not subject to regulations, so corporations or any strong player will have a really hard time taking over and loosing a lot of money. And if it has to do it several times it will just give up. The crony capitalists realized long time ago that they need regulations, government help, to avoid competition in the market.

There are all kinds of problems with it ... but it is a possibility and it is feasible. So I think hard to do but certainly not impossible ... if many people's investment is at stake they just might try to do it. If they would succeed is the million dollar question ... I guess we'll have to just wait and see.

Nah, i still don't think what You're saying is possible.
Thousands people will not just jump from one currency to another, because the other one has more hashing power ????

No, this makes no sense.
Bitcoin is popular and it has worth, because people trust satoshi, satoshi's implementation of bitcoin. Trust is not something that you can gain overnight... So many people jumping instantly from one currency to another because the other one is getting more popular or something... Nah, not possible.

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Also, i don't think You understand properly how bitcoin works, and this is the source of your hilarious ideas.

No, you are misunderstanding me ... I'm not saying they would "jump the ship" and start using other cryptocurency ... that would not be a bad thing at all anyway.

I mean they could corrupt the block chain because they have the hashing power to do so. Overpowering the hashing power of honest hashers gives them the ability to tamper with block chain, doesn't it? So I'm not sure were exactly are you suggesting I could be mistaken. You could break bitcoin right now if you could get enough people to cooperate and overpower the computing power of honest nodes. The problem with that is that you are not going to convince enough people to do that, why would they do it? There is no incentive ... "let's break things" just doesn't cut it. But if you have other cryptocurrency at competition with bitcoin (or some other) and people invested in it, they have the incentive to protect it and act in tandem as a group against perceived threat aka weaker cryptocurrency.

Is it clearer what I mean? It's the same as someone belligerent having more computing power than all of the bitcoin nodes together and used it to disrupt it. Except nobody has the incentive and means to do it ... more powerful competing cryptocurrency has both. If they decide to use it, they can break weaker currencies (provided they manage to convince its user-base that it is a good idea)

Corrupt the blockchain? Is that possible at all? Or you mean extend it in their own branch?

As long as we are using the default client, I don't see how that could hurt any bitcoin user (unless they exploit some bug, of course). If they use massive power and create the longer hash using the last block hard referenced in the default client and growing from there... why don't they just generate the coins to start with?

To control bitcoins, you don't just need to control the hash, you need to control the client as the rules are coded there and it is distributed in a way each client can say 'aye' or 'ney' to any block. If, however, these entities use some social engineering trick to force upon all of us the use of their client (better, cleaner, not so open sourced) and then change the rules under our noses... that's a different story.

I already said that if they would be working on another currency and another block chain, there is no way to use that chain to corrupt our chain. The different chains cannot mix or join or whatever. You do not understand how bitcoin works. EDIT: The only thing that can be done is to use tremendous computing power to produce > 50% blocks in the network, and make those FAKE blocks - this should allow double-spending some transactions under some circumstances. But still, that won't hurt the bitcoins You already have in Your wallet.

There is actually no way for now to corrupt the whole current chain, as there are in-code checkpoints/checksums that make sure that only the official satoshi's client is used.

It would be interesting to get a rough estimate of what it would cost to do that. I imagine the numbers would be so large it would boggle the mind.

OK, but how does it relate to the topic ?

So how many coins have you got so far?  :D





If the government creates a block chain no doubt they will inflate the hell out of it.

I'm not much of a money expert, but this guy seems like he has no idea what he's talking about.
We talked alot about hoarding and why it isn't that bad for our bitcoin economy, as long as businesses see bitcoin as a (widely accepted) currency and not as a commodity.

Yeah, the guy is clueless ... money as a medium of exchange exists exactly for the purpose of being exchanged for goods and services, that's its purpose, duh. If you hoard it that means you can not buy anything for it ... so tumblr can feel free to live in a cave with 1,000,000 bitcoins being happy that he has cool numbers on his account rather than real things like house, car, computer, food etc. If you do not plan to buy anything for it, what's the point of having it? It is clearly an oxymoron. So if you hoard it and never spend it, nobody cares ... if you do spend it, cool more liquidity into the market ... where is the danger again?

tumblr is a blogging platform.

haha ... I remembered someone posting here with some similar nick (if I'm not mistaken) so I thought it's his private blog, anyway ... he is still clueless whoever he is :)