The OP was about banks. Maybe you should read it?
It relates to banks, because it talks about fractional reserve lending, but its primary focus is not banks. Bailouts or regulatory problems have little to do with lending itself. The existance of bailouts makes lending at interest unethical for the lenders potentially profiting from these bailouts (socialize the risks). |
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Meni, thanks for your answer, got some comments... Taking a systemic view (nodes of a graph containing money with edges representing debt), lending at interest must over time concentrate the currency in the hands of a few (essentially one node in the end). I deducted: The rich will get richer, the poor will get poorer
Why must it be the rich that lend to the poor? Rich people borrow funds all the time for their ventures, which ultimately come from the public. It doesn't have to be the rich that do the lending, but in the naive view I held back then (forgetting the lender was also spending), the lenders would perpetually grow richer and if they had been poor to begin with, they would become rich over time. With lending continuing the money would keep flowing towards the "already richer" nodes, because they can/will do more lending and therefore receive more interest, until in the end, all currency is concentrated at a single node. This might also answer your later question why I considered lending at interest to be evil: all money in the hands of one (even as a tendency) just had to be unethical in some way. Also, even if the rich do lend to the poor, the net effect needn't be that money flows from the poor to the rich. Rich person lends to poor(er) person; poor person starts a business; business makes product; rich person buys product, moving funds from the rich to the poor, possibly more than the interest paid.
Yes, I ignored any other money flows in my naive view, which I retired. Since fractional reserve lending is not possible with bitcoin
What do you mean by this? All the big lenders in this forum are fractional reserve, they take deposits, keep a small fraction in reserve, and lend out the rest to create a return on investment. Fractional reserve banking, where people deposit funds for reasons other than receiving interest, and the bank does not keep it in full reserve, is obviously also possible with Bitcoin. It's just less likely to be common, because with Bitcoin there's not much need for a bank anyway. I stand corrected. After reading the wiki article on frb and bitcoin ( https://en.bitcoin.it/wiki/Fractional_Reserve_Banking_and_Bitcoin) I agree with you. Thanks for the kick. I will correct my original post to read "Since with bitcoin there is certainly no lender of last resort who can just print up more money, bitcoin-based lending/borrowing is not evil." and agree with Vitalik: And that's why I point to what I think is the highest evil in the modern monetary system: unnatural collapse prevention financed on everyone else's backs.
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Would tend to agree with your analysis with one exception:
you overlooked wealth creation. Another way to think about
this is that your graph grows over time, and therefore you
can't easily reason about its systemic properties.
You're correct, I didn't think of that, "wealth creation". So you're talking maybe about something like a new market participant entering the market (kid gets his first wallet, filled with some money by dad). This in itself doesn't make much of a difference, though, since the new node that just popped up is receiving money from existing nodes spending. It would only change something if the new node received money from the "rich lenders" (possible: the kid can sell some service or maybe sell his newly hyped-up dotcom to "rich lender", for example). So it boils back down to "rich lender" spending enough (more than his interest profit) or not (doesn't make a difference wether he spends to newly created or to old nodes). In other words: no matter how many new nodes are created, if the money doesn't come from the group of "rich lenders", my reasoning is still valid, right? After all, "wealth" (or better "monetary wealth" or "richness") isn't just created out of thin air, it's always transferred from somewhere else (even in the case of money supply increase by printing) It's even more interesting with a bitcoin-style currency:
if there is wealth creation and a finite amount of currency,
the risk the lender takes grows larger over time.
You're saying the risk grows larger over time because the remaining amount of available currency for the borrower to tap in order to pay back is decreasing over time and therefore the probability of a default increases? Interesting... can't find anything wrong with the reasoning. Actually, with a finite amount of money and interest having to be payed to - say - a single lender, who everyone borrowed all their money from, it's evident that the probability of default must reach 100% at some point. ("I want the earth plus 5 percent": http://www.relfe.com/plus_5_.html) |
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I have an engraver and will generally engrave the denomination of your choice on request at no charge.
0.9999 fine bitcointhe remainder is impurities, such as transaction fees |
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Although not evil to lend BTC, people will not borrow BTC if they expect the value of BTC will rise, they tends to borrow the thing that is dropping in value
well, people borrow BTC for whatever reason, I don't know. See this thread for example https://bitcointalk.org/index.php?topic=66802.0 |
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nefario, thanks so much for re-doing the design.
it's waaaay better!
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How I used to think about lending at interest:
Taking a systemic view (nodes of a graph containing money with edges representing debt), lending at interest must over time concentrate the currency in the hands of a few (essentially one node in the end). I deducted: The rich will get richer, the poor will get poorer and concluded: lending at interest is evil.
I deemed this view of mine validated by observing the rich actually becoming richer and the poor becoming ever poorer.
What I overlooked:
There's risk involved in lending, namely the risk of the borrower defaulting. Therefore above does not necessarily hold true, but why does it still seem to be true?
Why is it still true (that the rich get richer)?
Well, for other reasons: Mainly because these "rich" are able to lend out money they don't even have in the first place, and maybe more importantly because they are being bailed out every time a borrower has problems.
Also because at least some of them are in the business of just simply ripping people off and are able to get away with it somehow.
What I think now:
Fractional reserve lending with a lender of last resort that will bail lenders out at the expense of all other parties using the currency in question is evil.
And: stealing peoples money/assets is evil.
What I'm getting at:
Since fractional reserve lending is not possible with bitcoin and there is certainly no lender of last resort who can just print up more money, bitcoin-based lending/borrowing is not evil.
The lender is exposed to the risk: in case of default he is parted of his money, he can't be a cry-baby but has to take it like a man and just suck it up.
In a "good money"-based economy, the market will adjust the price of money (interest rate) such that lending is barely profitable and will reflect market participants needs.
any comments/corrections?
EDIT: added some strikethrough after realizing frb was possible with bitcoin.
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if you're downloading multi file torrents, there should be the ability to browse the folder already.
Yeah, but you still get charged for the files that you don't need. I guess I didn't quite take your meaning. I guess it's not possible to browse torrents in this service. There's is a torrent that contained 3 files I wanted to download - it is an archive of the complete works of Shakespeare in various productions - it is a 240GB torrent. The 3 files I wanted were maybe 4GB and I couldn't find them anywhere else. I would so have liked to have used Bitcointorrenz to download these 3 parts, but obviously I couldn't (I eventually downloaded them after a week using a standard torrent client). I'm not sure if it's even possible for users to pick the files from the torrent they want, but if it is then it would be a useful function (though I accept, it would be a rare requirement). It's not such a rare requirement. Back when I used a local torrent client, I usually "unchecked" all the file_id.diz, whatever.nfo, www.gotomysite.url and video samples so I'd only have the .mkv or whatever I wanted on no filesystem clutter. For this application, the current way bitcointorrentz handles things is totally fine, because the unneeded files are usually small and I don't have to pull them from the server. |
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Where's September?
Didn't you get the memo? September has been removed from the Gregorian Calendar by the flying spaghetti monster. Too many bad things happen in September. |
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hey guys, just joined this pool couple of days ago with my little hashpower. I like it.
What happened last night? According to the shift statistics, some 600GHash/s seems to have joined the pool for about 3 hours.
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~24 hours to go before one of my BFL singles has a new home.
1,044 tickets have been sold. Are you going to be the big winner?
wow, so you made about BTC 250 in tickets. good price to sell a bfl single for, I must say. well, to be fair, it might've gone the other way, too. |
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An interesting question. Nevertheless, unless MtGox codes become generally accepted as a payment method, there's no need to worry about FRB.
FRB is possible for Gox even without gox-codes being used as currency. They could simply use the bitcoins in deposits, so the sum of users bitcoin balances would be lower then the sum of bitcoins held by gox. That would be a kind of fractional reserve banking, right? The money would not be in circulation, but it would exist as depostis in mtgox accounts with no bitcoin backing. I doubt they would, because, quite frankly, there is no good and safe way to invest these bitcoins otherwise. |
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God, this market has become so incredibly predictable now, and profitably so. I mean, seriously, the manipulators, if indeed they even exist, have allowed their manipulations to become a very predictable and profitable venture.
hehe. interesting. so you're saying one can profit by selling above $5 and buying below $5? Well, if everyone does this... Stability! So hope and fear are feeding the "steady hands"... for now. |
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God, this market has become so incredibly predictable now, and profitably so. I mean, seriously, the manipulators, if indeed they even exist, have allowed their manipulations to become a very predictable and profitable venture.
hehe. interesting. so you're saying one can profit by selling above $5 and buying below $5? Well, if everyone does this... |
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thank you! good boy! here's some chocolate. |
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lol at krugman when Ron Paul suggests to allow currency competition (do away with legal tender laws and taxes on gold/silver): Do you really think that people use dollars bills just because the federal government isn't allowing them to use other stuff?
Oh my god, yes, Mr. Krugman, I would happily use other money that crappy inflating FIAT shit (sorry) if only I wasn't forced to pay my taxes in EUR. And I'm not alone. |
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there were some threads about that congress (ok mostly german ones it seems)
also there is a major thread which addresses the scalability criticisms.
so now everyone interested in that thread has to dig for it (20 people?) instead of just one person: YOU! ;-) |
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Oh, I misunderstood, thought you meant only bad replies come fast including this one. I get it now.
Good point: I swear I've never gotten a useful reply that quickly  I swear I've never gotten a useful reply that quickly  Interesting, I read it the second way (as intended by the author). I didn't even consider the first possibility. I wonder what exactly determines which way one reads it. I'm also astonished that I didn't even realize there was ambiguity at all until quite a few posts later. I wonder how often this happens to me? Did you guys spot this from the beginning? |
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I admit my timing was wrong but I still say this is happening...
I'm still waiting for a false flag... http://www.youtube.com/watch?v=uBXx6PCWdHs <- Ron Paul: "...there may be a flase flag incident where some ship goes down and it will be used to accelerate the next war." |
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*is there like an alarm in your head for when someone is wrong on the internet?
"Hey man." "WHAT?" "HEY MAN, YOU DEAF?" "NO, BUT I'M GOING CRAZY: GOT THIS ALARM GOING OFF IN MY HEAD WHENEVER SOMEONE SAYS SOMETHING WRONG ON THE INTERNET" "MAN, THAT'S GODDA BE LIKE... CONSTANTLY?!?" "WHAT?!?" |
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