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The wall at $30 is eroding like the wall at $20 did.
Was 13k a few hours ago, now 11k
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This is intended as a gentle question to those in the know. It is prompted because bitcoin is going from strength to strength, but at the same time, it is recognized that improvements to the opensource which support it are necessary for its long-term success. Not all improvements can be fully backwards compatible. The transition method of using block version numbers and a super-majority for determining finality is extremely fair and clever. It would seem a good prototype for all future changes which are significant enough to affect backward compatibility. The table below is a nice illustration of this transition in progress: http://blockorigin.pfoe.be/top.phpSo, I am trying to find out now whether this transition method is likely to succeed for bitcoin. |
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My prediction for what will happen if we DON'T increase the block size limit:
At some point in the future (this year probably), the block size limit will be reached. People will start noticing that their transactions don't get confirmations, and they start increasing transaction fees.
It would be nice if this is true, but bitcoin will hit the limit like a train hitting the buffers and there will be widespread chaos. Right now the price on mtgox has hit silver parity. This is big news and will accelerate wider adoption. Yes, SD could be throttled back to give breathing space, but only a few weeks. At the very least the 1Mb limit should be decoupled from block-readers, and soon, so that only block-writers are constrained. They don't? Users of mtgox can send each other bitcoins off blockchain, so can users of most other exchanges, hell Coinbase is even built with this being it's primary goal..
I defer to your deeper knowledge on this... |
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Holliday, I was just looking at the same charts
Bitcoin is effectively at silver parity. Incredible!
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Competing centralised services built atop of Bitcoin to cater for micro payments will not only be more efficient and cheaper ...
These services do not exist yet. It is the root of the problem because the 1Mb limit will cripple bitcoin (later this year) before such services can take over micro-transactions (several years away). The limit needs to be flexible enough to allow bitcoin to work as it does now, until/if synergistic competing services develop on their own merits. |
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bye bye silver, welcome BTC in the precius "metal"
There is no chance in hell silver as money can be replaced with bitcoin. You see, gold and silver are money and have always been because of their physical properties which make them perfectly suited for being money. Gold and silver are durable, divisible, convenient, fungible and has intrinsic value. Bitcoin does not: it is just internet cash, useful but no more. Please read this to see why bitcoin is "virtual" gold http://dev.economicsofbitcoin.com/mastersthesis/mastersthesis-surda-2012-11-19b.pdf |
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So basically for the Roman Empire the far away coins lost a great deal of their value because they are away from the issuer (Which made a value claim harder), but they were around and used as play chips and such. As you get closer to the borders of the Empire the coins are more and more used as a medium of exchange.
Iophie, you mention Rome, which is insightful, because the fate of the Roman Empire was driven by its currency. If you have the time I recommend this fascinating transcript of a lecture on how inflation wrecked the Roman economy and its political and military systems. http://www.marketoracle.co.uk/Article12831.htmlThe parallels with the economic problems in Western countries today are compelling. |
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$1.16 trillion in circulation as of February 6, 2013. Thats just USD
Just counting cash (M0) the world monetary base is around $10-12 trillion. As 11m bitcoins are issued now that works out at a cool $1,000,000 each. Because Fractional Reserve Banking will disappear in a bitcoin economy then the requirement for cash equivalents may be 10x to 100x the current level of M0. So BTC *might* theoretically reach $10m to $100m each (even without growth in the world economy until that future date). The top agenda item for the G8 a few days ago was "Currency Wars". As they are only good a jawboning, then expect the Currency Wars to rage until fiat blows up. |
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Great posts from Mike and Gavin in this thread. There's indeed no reason to panic over "too much centralization". Actually, setting an arbitrary limit (or an arbitrary formula to set the limit) is the very definition of "central planning", while letting it get spontaneously set is the very definition of "decentralized order". Also, having fewer participants in a market because these participants are good enough to keep aspiring competitors at bay is not a bad thing. The problem arises when barriers of entry are artificial (legal, bureaucratic etc), not when they're part of the business itself. Barriers of entry as part of the business means that the current market's participants are so advanced that everybody else wanting to enter will have to get at least as good as the current participants for a start. Removing the block cap means a hard fork, and once we decided to do that we may as well throw in some "no brainer" upgrades as well, like supporting ed25519 which is orders of magnitude faster than ECDSA+secp256k1. Then a single strong machine can go up to hundreds of thousands of transactions per second.
That's cool. Please core devs, consider studying what other hard fork changes would be interesting to put in, because we risk hitting the 1Mb limit quite soon. +1 Fully agree. Further. In the OP an example of slow bandwidth for a political reason was given. We can't let bitcoin be handicapped because of local problems affecting just a small part of the network. It can't operate like a kindergarten going only at the speed of the slowest pupil. |
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Don't get too comfortable, we are just letting a few bears off the bus.
The bears are being stretchered off!  |
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In a bitcoin system the central bank would not be able to print bitcoin and would have to source it, from tax revenues perhaps. This is the inflexible part of the BTC monetary base.
There is no central bank. That's the point, decentralization. In that aspect, Bitcoin is inflexible I suppose but that is by design. Oh. Absolutely. I was thinking of the existing CBs struggling on in a bitcoin economy. The irony is that CBs would wind up killing FRB because they would not want to backstop retail banks with real, hard-earned money! So they would raise reserve ratios from 10% to 100% so that banks could only lend out 1BTC for each 1BTC of capital. This is the inflexible ideal for banking. |
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Acording to this pic from 2012 we are way ahead of the schedule.
Is there an update of that pic using prices up to feb 2013? |
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OK. This question has intrigued me too. As when I first learned about bitcoin I just assumed that FRB would work. The problem for me now is I just can't see any money-multiplier effect possible.
In FRB 90% of a deposit from person X at Bank A can become a loan to person Y at bank A.
Person Y can then deposit his borrowed money at Bank B. So there are now two deposit accounts with the "same" fiat money. With bitcoin, when a loan is made to person Y the bitcoins follow him to Bank B. Bank A no longer has the bitcoins.
Now you might say that Bank A can pretend to still have the bitcoins just as it would "pretend" to still have the fiat in the form a loan account in a fiat system. However, the latter case works as the FRB system is backed by central banks who can print fiat to supply to Bank A if depositor X wants his money back while the loan to person Y is still outstanding.
In a bitcoin system the central bank would not be able to print bitcoin and would have to source it, from tax revenues perhaps. This is the inflexible part of the BTC monetary base.
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The simplest answer is that bitcoin cannot be debased by Fractional Reserve Banking. It is the same in this respect to gold. You cannot have a purely gold-based FRB.
This was not the question: the question was how can the money loaned from a bank account be the same and yet not the same as the money from which it was loaned. This is a bitcoin forum so I am pointing out that bitcoin makes FRB obsolete, which makes this question moot. FRB enables the duplication of currency (within reserve limits which prove to be a mirage because of central banking which is the achilles heel of fiat systems). |
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The simplest answer is that bitcoin cannot be debased by Fractional Reserve Banking. It is the same in this respect to gold. You cannot have a purely gold-based FRB.
It is however, possible to build a paper system on top, where loans are made in paper, but the banks retain deposited gold or bitcoins. This is how paper money started in England in the 1600s as gold deposit receipts were used in commercial trade as paper money.
However, the only reason to have a paper (or an electronic) system is to facilitate fast, easy payments (gold is heavy and a hassle to trade with). Electronic systems are needed for remote payments which are essential in a modern economy. This is IMHO why gold will always remain at the sidelines of the world economy, because it is useless for remote payments and probably 99% of the world's payments (by value) are remotely transacted.
Bitcoin on the other hand is excellent at both functions, unable to be debased yet available for fast and remote payments. So the FRB system is unnecessary in a bitcoin economy. Questions of FRB about which piece of paper is "original money" disappear. Gold will always have some value in case of a total systemic collapse, where modern civilization is wrecked. This is very unlikely, so in a bitcoin economy gold will become very much viewed as an industrial commodity like silver is today.
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OK, let me give my analysis: Price stops moving=nobody wants to buy/sell=nobody is using/wants to use Bitcoins, so it's a bearish signal, SELL!!  LOL - or it's just sunday.  Edit: And just a question, what is the rationale behind trying to keep the price artifically high ? At the moment, the wall at 7.15 is being eroded, and some bot or person is buying for 0.01 at the highest ask. Apart from being a bull and wanting the price to look higher than it actually is, what would be the advantage ? It might be an attempt to spark a surge in momentum, becoming self-fulfilling by being seen and attracting increasing numbers of buyers. Probably a futile exercise. One thing about markets is that they take all the time they want to consolidate before deciding where the trend goes. |
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