The lucky number is the first 2 bytes of the HMAC-SHA512 of the transaction ID and the daily secret. It would be stunning if they weren't evenly distributed.

And, equally importantly, the longer you postpone the house's win, the more the house wins. (Because with every wager you place, the house's expected profit goes up.)

Strictly speaking, it doesn't need to be. It will get reduced modulo the generatororder anyway.

In this case, it doesn't matter at all. But for every value greater than the generatororder, there's an equivalent one less than the generatororder. You just don't want to waste time testing both.

Yes. You are correct all around.

Don't worry about it, since predictable, long-term deflation of bitcoins is essentially impossible. Predictable, long-term deflation of bitcoins would mean that at some point, rational people would rather have 100 bitcoins next year than 100 bitcoins today. But 100 bitcoins today *includes* the ability to have 100 bitcoins next year. So it cannot possibly be worth less.

Whatever the value of 100 bitcoins today is, it necessarily includes almost all of the present, expected value of 100 bitcoins next year.

To the precise extent expected deflation makes a person want to horde bitcoins to gain the benefit of that deflation, it precisely equally makes other people want to induce that person to part with those bitcoins, so that the other person can obtain that same benefit.

"My bitcoins are going up in value, so I don't want to part with them" is perfectly met with "Your bitcoins are going up in value, so I'll give you more to get them from you". It cancels out. (Not perfectly, of course, but to a first approximation.)

*Unpredictable* deflation, however, is very bad. But then, almost anything unpredictable is bad for an economy.

The fact that you could wait and get a better computer for less is already built into the prices you pay for computers. This fact makes a computer worth less, and as a result, someone has to charge less to get you to buy one. What people forget is that future value and future changes, to the extent they are predictable, are already baked into today's market. That's why when a company announces an increase in earnings, but it's less than expected, their stock price drops.

I explained why this makes no sense -- he takes a 10% loss on the borrowing, takes extra risk in case the price of Bitcoins goes up, and gains no benefit by doing so because he could get the same protection on downside risk (without the unlimited upside risk) just by short selling. It's completely irrational.

You *are* essentially arguing that he's paying 10% to short, taking extra risk in the bargain, and losing 100% of the upside potential of an increase in the value of the coins he holds. That makes no sense.

The thread says he's shorting Bitcoins.

The thread says:

1) He borrows Bitcoins.

2) He sells them.

3) Later, he buys Bitcoins to pay back those he borrowed from.

That is basically the definition of shorting.

http://en.wikipedia.org/wiki/Short_%28finance%29

Effectively, you're saying that it's a huge gamble that the price of Bitcoin will go way down. He wants to sell people's coins today and pay them back with coins tomorrow, when he expects that they'll be worth less. But that doesn't work for two reasons:

1) It incurs huge, needless risk. If he's holding lots of investors' coins and the price of Bitcoin goes way up, all those profits belong to his investors, not him. If he holds 15,000 Bitcoins that have been invested and the price of Bitcoins doubles, he's much worse off. He now has to acquire Bitcoins to pay back withdrawals at twice the price. You don't hedge by holding an asset.

2) You don't need to pay 10%/month to short Bitcoins.

Because he pays people their interest in coins. So he must, on net, *acquire* coins. I have tried to imagine how such a system could work where he obtains his investment in coins and also pays out interest in coins. I couldn't do it. If you have an idea, please share.

The burden is on the claimant to show possibility. But for one thing, Jesus died a long time ago.

If deflation is predictable, then speculation is almost always possible. (And, in fact, automatic. You don't need to do anything for it to happen. The reason there's deflation is because people already value the currency more highly.) If it's unpredictable, of course it's bad. But to say a system will definitely suffer from unpredictable deflation is self-refuting.

I'm pretty sure you're joking. But of course I can't imagine any way that could be possible. If you're trying to suggest a possibility, you have to explain how it is in fact possible.

The issue is not proof or disprove of the truth of the claim. The issue is proof that the thing claimed is possible.

I never said that he was a Ponzi. What I did say is that I don't know of anything else it could possibly be. I freely admit that that means it could be something I don't know of or can't think of. I've invited others to make suggestions in this thread, people have, and I've explained why none of those suggestions actually make any sense. (Did you somewhere mention something other than a Ponzi that it could possibly be? If so, I missed it. Please, I'd love to hear any other theories you have.)

I honestly believe it is more likely that it is something other than a Ponzi, that I cannot think of or do not know of, then that it is a Ponzi. But what this means is that it is impossible to estimate the risk. I submit that anyone who invests in something where the risk cannot possibly be estimated is an idiot. Further, they are an immoral idiot because they have no idea what the consequence of their actions are -- they don't know what they're funding.

If you want to cite specific claims I've made that I've failed to support, feel free to do so. But you've just made a list of claims I haven't made and then claimed that this somehow refutes the arguments I did make.

Right, but deflation won't depress trade. The argument that it will is patent nonsense. To the extent deflation encourages hoarding (which makes consumers prefer to hold their money than spend it for goods), it precisely equally encourages discounting (which makes consumers prefer to acquire goods than hold their money). These effects just mean that prices go down -- which was the definition of deflation anyway.

The more my dollars will be worth in the future, the more people will be willing to give me to get them from me, thus the more likely they'll succeed in getting me to part with them.

Yes, exactly. When a person makes a claim and doesn't support it , the claim is invalid unless we already have some support for it. Since we have no support for it already, the claim is in fact limited by our myopia.


I'm arguing against this claim:

And my point is that I know of no way it could be true. The person making the claim can, of course, explain some way it can be true. But until then, it's implausible because we know of no way it could be true. It implicitly assumes there is a simple way that requires less effort, but doesn't explain any such way.

"I know of a secret way that I won't tell you" doesn't cut it. It's possible, perhaps even likely, that this secret way is also implausible. You can keep your ideas secret, but then you can't present their existence as evidence to bolster your arguments.

I'm sorry, I can't just take your word for it. It's entirely possible that I can shoot every suggestion you make full of holes. Or it's possible some of your suggestions are solid. But "I have secret knowledge that shows you're wrong" is basically worthless. I know of no explanation simpler than a Ponzi scheme. Essentially, a Ponzi is the least effort because all you have to do is find investors and keep them happy to run a Ponzi. Every other scheme requires at least that, plus you actually have to make money. (With a Ponzi, all you do is take loss. You never have to make anything.)

I honestly can't conceive of anything simpler than a Ponzi scheme.

Also, their inventories dropping in price mean they want to hold inventory for less time, which forces them to focus on products that customers actually want. For 'niche' products, it encourages them to form more efficient distribution channels so that they can still provide those products without having to hold them in inventory. That is, it encourages efficiency all around.

The only alternatives to a Ponzi are a legitimate business or some other illegitimate business. Of those three possibilities, a Ponzi probably takes the least effort and provides him the highest potential reward. I would love to hear what you think would be an alternative explanation to a Ponzi scheme that takes less effort.

Why would you want to reduce risk when you're in it for the long haul because you have infrastructure to pay off and the odds are strictly in your favor? Progressive bettors are *great* for Satoshidice. They drastically increase the total amount wagered and the expected house profit depends heavily on the total amount wagered. Even better, they tend to place larger bets than casual betters, which increases the house's advantage because larger bets are cheaper to pay off compared to the expected house profit.

Exactly. If you can't estimate risk, don't invest.