This is just from looking at the tittle but I really wished you didn't call it delfation when it's in fact price appreciation which are not one and the same.

As explained in the goal of the video my intention was not to give a 100% correct technical explanation of how it works but to be roughly correct and yet way oversimplifying it in layman understandable terms.

I thought I achieved that, what did you think?

Nice explanation cloud9.


One minor thing though. Don't call it deflation but rather at least price deflation or price appreciation.

You know:
A superior man, in regard to what he does not know, shows a cautious reserve. If names be not correct, language is not in accordance with the truth of things. If language be not in accordance with the truth of things, affairs cannot be carried on to success. When affairs cannot be carried on to success, proprieties and music do not flourish. When proprieties and music do not flourish, punishments will not be properly awarded. When punishments are not properly awarded, the people do not know how to move hand or foot. Therefore a superior man considers it necessary that the names he uses may be spoken appropriately, and also that what he speaks may be carried out appropriately. What the superior man requires is just that in his words there may be nothing incorrect.

– Confucius

I really don't understand what you have such a big problem with for to be able to better explain it to you.

Inflation or deflation is used to describe the change in the supply of a currency. If the supply grows, the value of each unit decreases, if it falls the value of each unit increases.

Value in this case is not necessarily equal to the price. The price is always the function of supply and demand, where inflation or deflation is only used to describe the supply end of that equation.

And please do not confuse credit with supply because in a commodity currency such as Bitcoin is, fractional reserve banking is not possible. So lending cannot affect the supply of money. Also do not confuse the volatility with the supply.

I don't know what else to tell you.

Exactly. And that the beauty of the truly free market. No one is forced to do anything. If you like it, do it, if you don't, don't. But don't try to initiate force against those who disagree with you.

I don't understand how you can miss the one point I tried my best to make as clear as possible.

Inflation has nothing to do with prices. Nothing.

Oh sorry, yeah I misunderstood what it is that you don't understand. Now I get it.

Here's your problem. You believe there is a way to plan and design Bitcoin for success. Well I'm sorry to burst your bubble but there is not one person in the world who would poses such a knowledge. The best we can do is have a technologically and economically sound project and let the market figure it out, see what sticks and what doesn't.

You are of course more then welcome to start your own version of a digital currency with your own ideas, present it to the market and see if it fares better. But you cannot plan for success. If we had a person capable of such a thing I'd want them to plan for my life and be our king.

You've got to be kidding me.

FFS please read: http://forum.bitcoin.org/index.php?topic=10426.0

I was thinking of making making a video in a powerpoint presentation style while narrating with the below script and I was wondering what you think about it and whether or not I should do it? Mind you I have zero experience with making videos..

---------------------------------------------------------
Bitcoin for dummies

draft:
-goal of the video
-basic description
-basic explanation of terms
-basic explanation of how it works, security
-advantages, appealing features


Goal of the video

So there are already these countless articles out there, explaining in detail what exactly Bitcoin is and how exactly it works in the technical sense, but I still get the sense that people don't really understand it. That's why I decided to make this short Bitcoin for dummies video, where I'll explain in very simple layman terms roughly what it is and how it works and perhaps why you should research it further.

Basic description

And having said that,  lets get right to it. Now before I get into anything else I just want to clarify what Bitcoin is. And the best way to sort of describe it is by comparing it to money in a video game. Just like say gold in World of Warcraft Bitcoin is a fictional, basically made up money on the computer. It's using it's own software for generating, maintaining, securing and transferring of Bitcoins and even though you can already transfer them physically they do not exist outside of a computer chip in a physical form.

Terms:
Next I want to look at the terms that are most often used to describing Bitcoin: a decentralized digital p2p crypto-currency

Let's start with decentralized. Unlike WoW gold which you can earn while playing the game Bitcoins are not being created and regulated by a main server or a central authority. With our example WoW the central authority is Blizzard, the producer of the game, who owns the servers, which you as a player connect to when you play the game. And it is these servers that decide how much of gold there is at any point in time and how players can earn it. With Bitcoin on the other all the rules are already embedded into the client you install on your computer. These rules were preset when Bitcoin was developed and cannot change anymore. If someone connects to the network they have to use a client that obeys these rules or they'll get ignored by the rest. So the only way to ever change the rules is to have the entire network switch to your client with your new rules.

I don't want to delve into the economical or political implications of this type of a design, I just want you to be able to understand how it works.

The next term is digital, which we already covered and as we said it means it exists solely on computers just like WoW gold.

Next we have peer to peer which is what p2p stands for. This term describes how the Bitcoin network communicates. A peer is someone in the network who is running the Bitcoin client. This client acts both as a client and as a server, which means that unlike in a centrally run network like the WoW game, where the clients all connect to a central server, in the peer to peer network clients form a network by connecting to each other.

And then theres crypto which is short for cryptography which describes how Bitcoin is secured. Basically it's a way of hiding and securing data, which among other things is used with securing online banking, protecting government secret digital data, securing secure communication lines ect.

How it works:

Now that we have a basic understanding of it's main features and what Bitcoin actually is let's look at how it all ties together and why it works.
As we said Bitcoins are fictional, made up digital "coins" so you are probably asking yourself why couldn't someone just make up how many Bitcoins they have and cheat everyone else, especially if there is no central authority keeping track and keeping everyone honest. Well the reason they can't cheat lies in the next important part of it. In our WoW example it's the server which keeps track of every player's gold in it's own private database. Because Bitcoin is decentralized the database is public and a copy of it is downloaded on every single client. This in of itself does not keep everyone honest or secure but if you want to add a new entry to the database that says you received some coins, there are rules you have to follow or else when you send the new entry to the rest of the people for them to update their version of the database they'll reject it as invalid. These rules are really easy to check if they were followed and extremely hard or practically impossible to cheat. So in essence everyone is keeping everyone else honest.
In order to comply with one of those rules you have to sacrifice your processor speed for solving a difficult mathematical problem, so there is a reward system in place for those who contribute.  Anyone who wants to add a new entry to the database has to first solve that problem. It's a meaningless problem, but with our current technology can't be cheated and is very easy to verify.

The solving of this problem is what the Bitcoin community dubbed as "mining". It's something you don't have to take part in order to able to use Bitcoin for transactions only and it's actually regulated through it's rules so that the more people "mine", the harder it is to solve the problem, where right now it's not even worth the electricity unless you have a good graphics card.

This problem solving is also random which means it's impossible to know how fast someone will find a solution. The faster your computer, the less time it will take but it's still random which means someone with a way slower computer can get lucky and beat you to it. Who ever finds this solution first, can then make a new valid entry to the database and as a reward receive some Bitcoins. When a solution is found and new entry made, that entry also called a block, is then sent to everyone in the network to verify and add to their version of the database. This process is also how all the Bitcoins that will ever exists are going to get created and distributed.

Basically all these virtual fictional coins are within that database. The database is constantly updated by people who participate in the "mining" process. Every time a new entry or a block is added someone received some brand new Bitcoins. These blocks also contain all the transactions between people which happened since the last block was created.
Every coin in that database is attached to a pair of a public and private key. The person who owns a Bitcoin must have both the public key to which the Bitcoin is attached and the private key. It is these pairs of keys in a separate file on your computer called wallet.dat that determine the ownership. If you lose this pair of keys you lose your Bitcoin.

This hopefully roughly explains how Bitcoin works. Now let's look at why someone would value these "coins" and use them as money online:

- they are extremely secure and are becoming increasingly so with the growing network of Bitcoin users.
- you can store your wallet.dat file anywhere you'd like: USB stick, DVD, CD, online email account, ect ect
- they are like cash which means no chargebacks are possible, once you send them, you can't get them back unless someone sends them back voluntarily
- the supply of Bitcoins is limited to just under 21mio, so thievery through the invisible hand of monetary inflation is not possible
- unless someone gets a hold of your wallet.dat file, no one can stop you from using them
- even if all transactions are public in the distributed database there is no way for anyone to know by just looking through the database who those "coins" belong to
- with proper precautions it is possible to remain pseudo-anonymous while using Bitcoins
- the Bitcoin network is practically impossible to shutdown by anyone
- no need for middlemen gobbling up expensive fees and requiring being trusted with your personal info
- client software is open source, meaning the code is freely available to everyone and anyone can see and double check, what it does

----------------------------------------------------------

What do you think?

Oh, and feel free to give me an incentive : 1KZxnxVuvXTrspNa6zWNpPu7LwPD8VXeko

The only concern I have with dark pools is the incomplete information the market gets at all times about the supply and demand where someone might see a significantly less bids than asks and then speculated that the price is likely to drop only to get surprised by a ton of dark bids and get gobbled up by the big fish, losing their Bitcoin and seeing their price rise instead of fall.

If someone can explain to me their theory why that is good for the market I'd really appreciate it.

Please read: http://forum.bitcoin.org/index.php?topic=10426.0

Hmm why does hyperinflation happen. Well that's a really tough question.

Well actually it's not at all. All you have to is follow the current events in Belarus: http://www.zerohedge.com/article/welcome-hyperinflation-hell-following-currency-devaluation-belarus-economy-implodes-sets-blu

LOL What a bunch of horseshit. Sorry but it really is.

The farmer doesn't need to get nominally more money back with the harvest compared to how much he needed to plant the seends... I mean wtf, do we have money for the sake of having money or do we have money because it's a means to an end?

If the farmer receives less money back but the currency appreciated in the meantime, he will still be able to afford more goods and services and have a profit in real terms then he could have afforded before he bought those seeds.


Please stop making statements about stuff you didn't properly research yourself and you know no facts about.

EDIT: And judging from the rest of your posts I can see where the problem lies and it's the fact, yes fact, that you're clueless about what deflation or inflation really is. I suggest you read: http://forum.bitcoin.org/index.php?topic=10426.0

go to mises.org and search through their media database. I'm confident you'll find your answers.

Let me just add one more thing.

It is completely irrelevant what some of you believe what inflation/deflation are. They are what they are regardless of your belief (that you learned from someone else). And wishing them to be as you want them to be will not make them so.

The great Greek philosophers Socrates saw values as guides to excellence in thinking and action. In this context, values are standards which we strive to achieve. Values are practical habits that enable us as individuals to live, be successful and achieve happiness.

To be useful, values must be consciously held and be consistent (non-contradictory). Many people have conflicting values which prevent them from acting with clarity and self-confidence.

So please learn value nr.1:
1. Reality (Fact-Based)
What is, is. If we want to be better, we must act within the context of reality (the facts). People often make serious mistakes by making decisions based on what they "wish was so," or based on theories which are disconnected from reality. The foundation for quality decision making is a careful understanding of the facts.

There is a fundamental difference between the laws of nature (reality), which are immutable, and the man made. The law of gravity is the law of gravity. The existence of the law of gravity does not mean man can not create an airplane. However, an airplane must be created within the context of the law of gravity.


So please, learn the facts of inflation/deflation.

NO! Inflation simply means an increased supply of a currency. It has nothing to do with prices. I mean ffs haven't you read my OP?! You even quoted the relevant part...

And please stop listening to definitions you get from the establishment. Go to mises.org and learn.

I see it everywhere, people are terribly confused when it comes to correctly understanding the concept which we named deflation and it's counter concept which we named inflation.

In layman's words:

What is (monetary)deflation: Deflation is a decrease of the total supply of a currency.
What is (monetary)inflation: It's an increase of the total supply of a currency.

What deflation is not: An appreciating price of a currency. The appreciation in price is merely the symptom of either a lower supply of currency(monetary deflation) and/or higher demand for currency(hoarding, saving ect.).
What inflation is not: A depreciating price of a currency. That is merely the symptom of either higher supply of currency(monetary inflation) and/or lower demand for currency(increased spending trend).


Which applies to Bitcoin:

Bitcoin is currently experiencing INFLATION by 50 new BTC approx. every 10min and will continue to experience this inflation which will exponentially decrease until the total limit of almost 21mio Bitcoins are generated. After that Bitcoin will experience neither inflation nor deflation. (well not entirely true since a few Bitcoins are going to get lost so technically there will be slight deflation)

What applies to the price of Bitcoin: They are obviously appreciating because the demand is growing faster then the inflating supply. What will likely happen in the future? Well if we assume the demand isn't going to stop growing and we know the supply is, the prices of Bitcoins is going to appreciate in perpetuity. BUT as I clarified this is not deflation, it's a function of supply and demand where the supply is constant and the demand is growing.

Also a mistake is to confuse constant appreciation in price of a currency(Bitcoin) with a deflationary spiral of debt based fiat currency(dollar). While in the former we will always have the same number of Bitcoins with only their prices changing, in the later example should it come to a deflationary spiral, it's usually caused by massive liquidation of debt which because of the fractional server banking literally makes a big chunk of the existing monetary supply suddenly and unexpectedly disappear. This can never happen with Bitcoins, since fractional reserve banking isn't possible unless we start using receipts for Bitcoins instead of actual Bitcoins.




Now can everyone learn this please and stop posting all the nonsense??(feel free to sticky!)

It's irrelevant because of the implications of all the mining pools being voluntary.

hahahahaha  Oh I love internetz.

LOOOOL  This just caused me to laugh uncontrollably for like 3 minutes straight.