So basically in a long round about way your conclusion is Bitcoin will fail because all governments will outlaw it universally in all countries on earth AND be successful in that action. Ok if you believe they can accomplish that outcome then yes it will fail and there is no hope. However every other non-state alternative would also fail because this is a power of the state issue not a flaw in Bitcoin. If you really believe that then why are you here?
No, I'm not saying that Bitcoin will fail because all governments are going to prohibit it, that was not my intention at all. Though, I admit, if they do really try to outlaw Bitcoin, it will have hard times. I was considering only economical reasons that will make its fall inevitable, provided it is accepted by governments in the first place as legal tender (do you follow me?). So we have three stages that are already our past and present, and which may still be ahead for Bitcoin if that condition is satisfied and it actually starts off The first stage is known as "free banking era". Actually, it is not very important because it is a preparatory stage giving a Central Bank the clue to monopolize the emission of a currency. So, at the second stage we have a Bitcoin standard where there is some means of exchange (say, a simplified, lightweight version of BTC) issued by the Central Bank and completely backed up by Bitcoin (Bitcoin itself serving as a store of value, don't forget Gresham's law here). At this stage we begin suffering from severe economic crises due to Bitcoin's deflationary nature (yes, we have been there too). These economic shocks finally make governments abandon the Bitcoin standard, instead of which reemerges the concept of a free floating fiat currency not backed up by anything (or rather backed by all goods produced and services rendered in the economy). This is the third stage at which we are now and this will be the end of Bitcoin in case we begin anew... |
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I will probably deposit Bitcoins in a Bitcoin backed bank to receive bank script to use instead. Will some people? Maybe (if they are stupid). Will it hurt me? No because they no me will suffer the inflation and when those banks inevitably fail all that inflated money will cease to exist.
Yes, and just after those banks inevitably fail because of inflating their moneys, here comes the evil Central Bank, monopolizing the emission of Bitcoin based currency and welcome, the new Bitcoin standard and new Great Depression ahead! So we once again get into that dreadful spiral of history... |
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As far as cash not needing a third party? Are you kidding? It requires a central authority to mint and actively police the supply for counterfeits. In order for you to accept "cash" you need to trust the central authority. Are you willing to accept Zimbabwae dollars? Why not? Oh probably because you don't trust the issuing central authority. If you DID accept Zimbabwe dollars prior to hyperinflation then your trust in the central authority resulting in you losing effectively 100% of your cash wealth.
No, this is not required for confirmation. If I agree to buy and the seller agrees to sell that would be enough in reality to carry out the deal (Zimbabwean dollars or whatever). To make things simple, just exclude money from the equation and take direct barter. But even in the case of barter you could say (I am using your logic) that I may buy something counterfeit, and even then nothing is changed. The deal gets confirmed and the transaction (exchange) takes place... Though you can always declare the deal as bogus and try to reverse the transaction |
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If there is no network (I don't need a specific trusted individual I just need the network) then there is no Bitcoin to begin with and banks aren't using it as a reserve currency anyways so the experiment has failed and this is a moot point. If the network exists I don't need a trusted third party to engage in commerce.
Take the benefit of the doubt and let's agree I don't understand how Bitcoin transactions and confirmations actually work. I'm not familiar with Bitcoin protocol intricacies, so I can't say anything. Whatever, this is beyond what this thread is about... |
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Maybe you should read Satoshi whitepaper. You actually did read it right. I mean it is hard for fix something you don't understand right? There is no trusted third party confirming txs. Transactions are confirmed by a network of psuedo anonymous entities. The proof of work provides security not that you trust a particular miner.
It doesn't matter. You are playing with words trusted/untrusted when you are actually trying to confuse things. You still need someone (or rather someones) out there who would confirm your transactions. When you buy something for cash you don't need anyone to confirm your purchase. And you just said Bitcoin has no disadvantages? |
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bob logs in to internet, this transaction is now in process of being confirmed
So we already have a third party confirming the transaction between your friends. And it seems that it should get confirmed not just by one third party... How come? |
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LTC is dropping last couple days. Correction?
-26% in the last 24hours and going down. Some people are obviously changing horses while it is not too late... |
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Decentralization (or more correctly the ability to transaction without a trusted third party) is the core reason for Bitcoin. It still doesn't change the reality that transaction in gold was a complete pain in the ass. The first gold based banks didn't offer interest, depositors had to PAY to deposit gold. Gold back notes became a popular alternative to physical gold simply because gold was such a complete nightmare to use in transactions.
I thought we need at least a few confirmations to make a transaction, depending on the amount transacted. What did I get wrong? |
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Bitcoin has no such disadvantages. This isn't to say Bitcoin based bank won't be created but the massive drive for an alternative to heavy, hard to authenticate, hard to store, hard to transport gold won't exist.
And that Bitcoin based bank which has attracted some amount of coins into deposits now issues credit in virtual BTCs (backed in some part by real coins) and accepts the same virtual BTCs, so we have those virtual BTCs driving real BTCs out of circulation. And we are back to where we once were... |
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Not for large purchases by individuals or companies. Suppose you are selling a house. Would you prefer to accept BTC or a bank credit denominated in BTC? Far more likely the former. c.f. cash or even gold.
Ok, you receive your house-worth amount of BTC into your personal wallet and tomorrow your computer fails. If your wallet is actually a bank account (which most certainly would be) you are still there, not knowing if the bank really has those coins... |
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Which increased in purchasing power. Oh noes. I only have the same number of Bitcoins but now they buy 10x as much stuff and I unlike my neighbor I didn't lose everything when the wildcat bank failed. What ever will I do with all this new found wealth.
So now you press on a Bitcoin standard with the difference that there are no banks... Ok, do you know why gold standard failed? |
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I did explain the problem with your logic.
GOLD IS HARD TO USE IN TRANSACTIONS. It has significant disadvantages and cost. This is what lead to the usage of gold backed notes. Bitcoin suffer no such disadvantages. Bitcoin banks using Bitcoins as a reserve to issue private script are unlikely to be popular as simply holding real Bitcoins is easier and less risky. Unlike gold there isn't a compelling reason to take on the additional counterparty risk.
You're like that guy who insisted that decentralization was the main virtue behind Bitcoin, though this time you say it is transactions that make Bitcoin so appealing (Visa and MasterCard will be rather surprised) |
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Also without a central bank able to print infinite amounts of money and be the lender of last resort many of those banks will fail and when they fail depositors will lose everything. This will further reduce the real return. Net change in purchasing power = interest - inflation - losses.
You could just enter "free banking era" in your favorite search engine and look for yourself. Not all banks failed and not all of them inflated their "dollars". As far as I remember, only one third of them went bankrupt... |
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Simple version:
a) Bitcoins in bank = losing purchasing power daily.
b) Bitcoins not in bank = gaining purchasing power daily.
Your conclusion: The vast majority of people will knowingly opt for "a".
If the bank doesn't fail you get your bitcoins back plus interest. Without a bank there you wouldn't get anything, just saved your bitcoins... |
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And you didn't explain what was wrong with my logic regarding "free banking era". Please make yourself clear
<skipped> You just say in more detail what I didn't say in my opening post... Still don't see where my description is wrong. Or do you just think that adding more detail to someone's description makes the short version somewhat incorrect or even outright wrong? |
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But you just said there would be inflation and the inflation would be higher than the interest. I would simply keep my real Bitcoins and while the nominal number won't change the purchasing power of it will. Your system assumes everyone is stupid and opt for inflationary non-Bitcoin tokens instead of the "real thing". Even if people temporarily did that, the scenario requires them to be stupid over an extended period of time. They would need to see that year in and year out they have a decline in real purchasing power and continue to not act by taking the very easy step of taking their coins out of the bank.
Inflation would only be in some "moneys" and you never knew in advance which bank would cheat... This is not my system, I just describe what actually happened back then and show the origin of the term. Is this really so hard to understand? And I have already seen ads which promise to pay interest in BTC for investing some bitcoins... |
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Or you could just keep your gold and were immune to the inflationary effect. Of course paying with gold was difficult, keeping your gold safe was also difficult. Bitcoin however makes paying direct with Bitcoin easy. There is no need to put you Bitcoins in some bank which will issue fiat currency using it as a reserve. Of course you are free to CHOOSE to do so but others are free to not. If these fiat issued currencies end up inflationary well it will make people less likely to choose that option.
You're right, but in that case you would be losing interest which you could potentially earn by depositing your gold in the bank. The same holds true for Bitcoin... Nothing important has actually changed since those times, greed is still here!!! |
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But if you borrow BTC from a bank to make a purchase, the seller will expect to receive the actual BTC, not a BTC bank credit. So the scope for FRB is far more limited.
You won't borrow BTC from a bank, the bank will issue a credit card with which you will pay for your purchases. Whether this bank (or any other bank for that matter) actually has all the BTCs it has credited you with is another question... So, unless there is a Central Bank which has set the economy on a Bitcoin standard (with all ensuing dramatic consequences), banks will still be able to create more money (virtual BTCs) than there are bitcoins out there... If you agree with this, then the fixed supply nature of Bitcoin becomes unnecessary and detrimental here |
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It seems that you struggle to understand what decentralized means.
If a bank, an institute, an organization, a country of even me issue money then that's not a decentralized economy. Bitcoins are issued by themself. There is absolutely noone issuing them. If you can't see how revolutionary is that then i guess it can't be helped anyway.
If nobody mines bitcoins, there will be none, period. I'm not going to get into a petty argument about what decentralization means (actually you're catching at every possibility to confuse issues). Decentralization, whatever you may next mean by it, won't make Bitcoin any better, since it doesn't prevent its accumulation. Go and see its present distribution between owners... |
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Gresham's law happens when you have currencies of different value, but some idiot is accepting them both at the same value. (or some idiot nation is demanding via law that *everybody* be such an idiot).
It naturally happens that the idiots then wind up with the currency that has the lesser value, whilst all of the higher-valued currency goes elsewhere, where non-idiots will give you more stuff for it. So 'bad money drives out good' refers to a nation that demands that (say) a debased coin with half the silver content be considered 'the same' as an earlier coin that was substantially more silver. If people can get more stuff for the silver money outside of that country than they can for the debased coin, then all of the silver money is 'driven out' of the country.
Thanks for your explanation of what Gresham's law is about, but I still see no reason why Gresham's law won't be working if free flow of national and crypto currencies is allowed. If a national currency inflates (something that you would expect from a fiat currency, say, dollar) while an alternative currency deflates (such as Bitcoin) then this will be an obvious case to apply Gresham's law principle here, i.e. deflating currency (Bitcoin) will be stashed away whereas inflating currency (dollar) will be used in exchange whenever possible... And you didn't explain what was wrong with my logic regarding "free banking era". Please make yourself clear |
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