I was thinking about the issue of lost coins last night.  I read in the FAQ the idea that lost coins aren't lost value, as the value of a lost coin will be redistributed to all other coins in the economy.  However, it also states that there is no way of distinguishing a lost coin from a coin in savings.  It follows that whatever impact the coin's "loss" had on the economy (apart from its owner) took effect as soon as it exited active circulation, not when it was lost.  It follows from that that savings have the power to increase the value of all the coins in circulation, which would motivate more savings, and... of course, what I'm describing is the deflationary spiral which has already been talked to death here.

But assuming the simplest economic model of bitcoin possible, let's follow this thought experiment through.

So everybody wants to save their bitcoins instead of spending them, because the value is increasing, and as more people start saving, that increase appears to accelerate.  However, savings as a fraction of the total bitcoin money supply will follow an S-curve; the deflation will start to decelerate as the majority of the money supply winds up in savings.

At this point, bitcoin owners will realize that they are sitting on piles of gold, but that deflation has become so slow that their savings cannot reasonably gain any more value (in this simple model).  Furthermore, if some other saver were to get the notion to start spending, the increased circulation would cut into the value of your savings.  Clearly it is imperative to be the first one to start spending, and thus maximize your buying power before everybody else jumps on the spending bandwagon!  This would start an inflationary "spiral" (though not hyperinflation, obviously, because there is an upper limit on the amount of currency in circulation).

I imagine these forces would not swing back and forth between such extremes, but would rather balance each other out somewhere around the middle.  Once new bitcoins are no longer being produced, I foresee that fairly constant ratios of coins will remain in circulation and in savings.  The inflation/deflation rate should tend to zero, excluding the very important effects of population growth, economic growth, etc.

Do others agree with this assessment?

But the difference between delaying the transaction and actually holding the pledge is that, even if you trust the site, the pledge will be held forever if the bounty is never won, which is a loss.  However, it kind of defeats the purpose of a "pledge" if people are able to cancel their pledge to get refunded.  So if the transaction itself can't be delayed, the only other option I see is to place a deadline on the bounty, after which all pledges will be refunded if the bounty is not won.

Of course!  Community credit, I've heard that's been very useful in 3rd world countries where they would have a lot of the same repayment enforcement problems that a Bitcoin bank would.

One thought, though... the incentive for repayment in both cases is the maintenance of connections / social status.  In my experience, the adage that friendship and money don't mix is a pretty good one in Western society.  With people in general here having less desperate need than in a 3rd world country, a lot of people might figure that the potential harm to a friendship of loaning money would exceed the potential benefit, especially if they charge interest.

It strikes me that most bounty-by-donation sites have the feature that donation transactions aren't actually processed until the bounty is won, so there's no loss for donating to something that turns out to be a dead-end project.  But is there even a practical way to do this with Bitcoin?

Edit:  Cool website, though!  Definitely shouldn't be ignored. 

A couple other thoughts on this.  First of all, I forgot to mention this character is pronounced "bi" (almost identical to the letter B); it seems natural that "B" could become a spoken shorthand for "Bitcoin" the same way "buck" is short for "dollar".  ("A small coffee, two packs of cigarettes, and a cruise missile.  That'll be 37 B.")

If I know anything about the Chinese blogosphere, if Bitcoin weren't to push an official Chinese version of their name, a fairly likely Chinese name to spring up spontaneously would be 网民币 - Wangminbi, "The Netizen's Currency", a pun on Renminbi, "The People's Currency".

Previously discussed formats for comparison:

币2
币1200
币37.50

2币
1200币
37.50币

37币50

Okay, here's a completely random idea for a thread that's already flooded with ideas.  What about using the Chinese character 币 or some stylized variant thereof?

币

It means "currency", and if you look, the right-hand side looks like a "b", the center part like a "T", and the bottom half like a turned "C".  I'm under the impression that a substantial portion of Bitcoin's early adopters are Chinese.

(This being said, my first instinct would be to try to get a double-stroked B identical to the logo into Unicode.  By typography-geek standards, it's sufficiently distinct from the Baht symbol.)

I was contemplating this same issue today.  I'd go into more depth if I weren't so tired at the moment, but my idea was to create a specification for a separate open distributed database like the block chain that could be used to keep track of Bitcoin credit ratings, along with a protocol to make sure it wasn't abused.

I'm not certain what that protocol would look like.  I imagine it would have to integrate the block chain itself, to make sure (for example) that a particular transaction actually took place.  Also, you would have the challenge (and distastefulness) of tying some sort of persistent identity to all of a person's addresses.

Ohh, thus:


So would the size of the stored chain in this simplified scheme be bounded?

Edit:  And on that note, would my "problem" eventually become an issue for those machines which are generating new blocks?  Specifically, is the entire chain necessary to generate a new block, and if so, is there some rough upper bound on how quickly the size of the chain might grow?

It seems silly, but the more I think about this question, the more it bothers me, and I haven't found any clear answer to it online.

Am I correct in my understanding that:
a) There is a single block chain for the whole world at all times
b) The block chain contains a record of every bitcoin transaction that has ever taken place
c) The entire block chain must be downloaded in order for a client to use bitcoin

At this point in time, the wiki notes that it can take "hours" for a client to download the block chain the first time - won't this figure just continue to grow indefinitely as the block chain grows?  Does the size of each block depend on the number of transactions it contains... if so, if bitcoin really "takes off", won't the huge volume of transactions cause the (memory) size of the block chain to grow even faster?  Already it seems to be taking up a few hundred megabytes on my computer, so it seems like this could become a point of impracticality especially for mobile devices...