HA! very nice point. such statements could very possibly be libel... but that would be up to a court to decide. :p

As I said, I don't agree that DGM pays all miners fairly. It by design excludes pool hoppers from fair payments for hashes generated. I really do not understand this idea that hopping somehow hurts other miners on the pool or damages the pool somehow. The only exception to this would the pool being unable to handle the increased traffic and it amounting to a ddos attack that prevented other miners from getting work - I think stratum has gone a long way to mitigate this as a concern.

as for pps pools having a risk of the pool going broke... yes, I understand that... I'm not denying that DGM is less risky for the pool. I'm simply not seeing the advantage of it as a miner.

I just wanted to wrap this thread up by pointing out that moores law will break down at some point once we can't make smaller silicon... or at least change to a different time frame. Once bitcoin asics are at the practical limits of silicon's molecular size (is it 4 or 5 nano meters?) we're dead in the water on this issue until quantum computing... at which point we'll have to change the proof of work anyway.

Moore said it himself: the following an extracted from this transcript  http://ftp://download.intel.com/museum/Moores_Law/Video-Transcripts/Excepts_A_Conversation_with_Gordon_Moore.pdf  in 2005.

Interviewer: How long can it continue?

Gordon Moore: I think Moore’s Law will continue as long as Moore does anyhow! Ha ha ha... I’m periodically amazed at how we’re able to make progress. Several times along the way, I thought we reached the end of the line, things taper off, and our creative engineers come up with ways around them. I can think of at least 3-4 things that seemed like formidable barriers that we just blew past without any hesitation and in fact, the board meeting we came up I saw pictures that go a couple of generations beyond anything I had seen previously in regards to the highest transistors we can build... so I think we’ve got quite a bit of life yet. I’ve  ever been able to see beyond the next three generations of technology. Three generations of technology is about 6-8 years and I can see that far now, things haven’t really changed. Eventually they’re going to have to. Materials are made of atoms, and we’re getting suspiciously close to some of the atomic dimensions with these new structures, but I’m sure we’ll find ways to squeeze even further than we think we presently can.

It isn't.

Here's the thing about this discussion. It may work on a small scale, but right now the easy to access exchanged (markets) would make a very bad experience if some large payroll company started doing this on the last day of every month. . . there would be an immediate spike in the price due to them buying up supplies of btc and the employees would lose out on the deal because those close to the start of the list would get more btc and the ones near the next would be near the end of the micro bubble and get less.

Then once the price settles, employee #1 would have 10 btc, and employee #20000 would have less (maybe 9 or or less depending on how big the payroll company was. In any event, the farther down the list the less number of btc the employee would end up with... and would effectively be absorbing the instability caused by the payroll company in the first place.

The alternatives to this are limited, but doable:

1. payroll company accumulates bitcoins slowly over time - then pays employees with them on 'pay day' --- here the payroll company exposes itself to risk re:bitcoin exchange rate changes between purchase of bitcoin and payment to employees.

2. payroll company load balances paydays over the course of a month between everyone it pays (your payday is the 1st, mine is the 2nd, his is the 3rd, etc) to mitigate the 'payday spike' on the exchanges. in this scenario, most of the risk is given to the employee rather than the company.

3. payday goes away and each employee is paid each day for his work that day in btc - this would mitigate the risk of the payroll company because they'd be holding btc only long enough to send it to the employee, and avoid exchanges being 'spiked' in the way I've described, but it would make it even harder on the employee because getting such micro payments exposes him to even more market rate issues since now he's forced to hold enough on an exchange or wallet somewhere before he can feasibly 'cash it out'

~

of course all these go out the window if you were able to purchase all of your needs with bitcoin.

~

personally, I would probably favor a job that paid me min wage + some other amount in btc. But that would be purely for tax evasion purposes.

If gold was being used as a currency it would be losing more value over time as more was mined...

Gold is used as a store of value rather than as a currency. But it's value does decrease as more is mined, that however is not a net lever on the value of gold because it's value relative to fiat is increasing by a much larger amount - due to rampant inflation on the fiat side. This effect has been noticed ever since nations abandoned gold as a backing for fiat. I believe that using it to back fiat was actually holding the price of gold down over this time... and you can see evidence of this by looking at the price of gold from 1970 to 1973 in the USA.

unfortunately your premise is deeply flawed.

Flaw 1. You're depending on moores law to continue unchanged... it is in fact expected to slow near the end of 2013... the projections say another doubling will occur over the following 3 years. . . after that it's in doubt if it will continue at this rate at all. The reason being that we're fast approaching the physical limits of size involved with silicon. I believe that the limit is in the 3 to 4 nanometer range... and once we're hard up against that it will become impossible for moores law to continue as it has for the last 50 years (quantum computing will break this barrier and may infact cause moores law to remain true when it become practical).

Flaw 2. The issue of 'loss of coins' and the idea that the amount of bitcoin in circulation decreases over time is completely irrelevant. The accepted solution to this is an increase in price and an associated extension of the decimal places to allow smaller and smaller transactions will keep this from ever being an issue.

Flaw 3. Your assumption that the value of a bitcoin is somehow related to the hashrate or security of the network as a whole. While this sounds good in theory, once you become aware of the hard limit imposed by silicon's molecular size and the issues involved in quantum computing... this same 'wall' in technology that will slow and stop moores law will effectively prevent this from being an issue until we get into quantum computing. once bitcoin hashing acis are in the same nano-meter range as the final stages of other asic technology there's nowhere else to go relative to computer power increases for cost... and we're in the exact same boat we're in now... enough money spent on hash power could cripple the network - but once asics are profitable and there's any sort of 'asic arms race'  this concern almost vanishes. What you're describing is the non-adoption scenario... where bitcoins don't gain enough transaction velocity to compensate for the lack of a block rewards.  While this could possibly happen. Supporters of bitcoin believe it will achieve 'adoption' before then and manage to sustain itself.

Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount...

That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year).

Impaler and I are basically having this same fight in another thread. I don't subscribe to the 'purchasing power' definition.

But yes, I absolutely wouldn't be involved in bitcoin if didn't have a limited supply. That's it's primary selling point ingeneral. In specific I'm fascinated to watch as the whole thing unfolds and we'll all get to see if this idea can really free the world from perpetual debt based thinking.

Come to think of it mudflation might actually be the best thing to have studied when it comes to bitcoin.

The problems that the most educated 'economists' seem to have when it comes to bitcoin are many, I'll just point out a couple that frustrate me to no end.

1. DEFLATION IS BAD. This is based on not understanding that all the economic 'laws' and principles they've learned have been only been proven in an inflationary (debt based) currency. They will not always apply inversely with an deflationary currency. It doesn't completely invalidate these effects and in most cases something that somewhat resembles the inverse may probably applies, but there will be important differences.

2. OMG HOARDING. This comes from not really understanding the lack of a causal relationship between deflation of a deflationary currency and economic contraction. Causally this link simply isn't there. It's is however causally linked when we're talking about fiat (or any debt based currency).

3-8. The next 5 points I won't really go into, but they all involve not understanding that a deflationary currency will require much more agility on the part of financial institutions and businesses in general. This is by design. Bitcoin is much much faster than the existing banking system and we see evidence of this in how business is conducted with bitcoin (stocks dividends being paid on a weekly basis). The common mistake is a free market won't be able to compensate for this and business in general will breakdown.

To this silliness I say "pfft", I don't care if a business or even a sector of business goes out of business... the void will swiftly be filled by newer and more agile entities who will want to provide those missing goods and services. Sure it may ruin some people, but on average and over time things will get better for everyone.

9. BITCOIN WILL FAIL BECAUSE... I can't even really explain this one, but latching onto one issue and claiming it will kill bitcoin is just stupid in the extreme... in anything we should evaluate the good and the bad and weigh them against each other. My response is, "hey your agenda is showing'. I chalk this one up to fear mostly... and a clinging to old ideas rather than evaluating bitcoin for what it is... rather than 'what it could do' (which is kill financial institutions as we know them - end monetary oppression on a global scale - etc).

Glad you got it worked out - incase anyone else was wondering for USD the best way is through dwolla.

At some point (this will be the signal that we've achieved 'adoption' and that bitcoin will never fail) one of the big-boys (payment processors) will jump on the bitcoin bandwagon. . . It would be great if it were Western Union. They could retool their entire network to use bitcoins on the backend while at the same time reducing equipment costs and increasing profits (nobody is going to bat an eyelash at paying their standard fees for moving fiat to btc or vice versa). It would also open a new line of business for them when integrating bitcoin into their billpay and other features.

The block-chain would effectively replace their own server costs for actually conducting transactions. Maybe they could slightly lower their feels across the board and be even more competitive on price (due to btc transfers being so cheap to conduct). If they also offered wallet services they would eventually cross the line from being a payment processor into effectively being the largest bank in the world (at some point) and almost immediately the largest exchange.

One of the payment processors will do this eventually... but it's up to them to decide who.

I should point out that a very simple solution to this is to maintain several accounts in local banks in different nations and use various exchanges who deal in that fiat.

Alternately, you could simply choose to pay your income tax according to local law anytime you need to cash out bitcoin. I don't believe there is any law that would allow revenue canada to tax earnings 'in another country' (please point me at the code if I'm misinformed) that never enter canada... and in that case whats the prevent you from buying good or services using euro and having them delivered to canada... maybe some customs fees, import duties etc... but probably that would already be added into your cost of purchase.

I agreed with the quoted post. My experience has been the same with coinabul. The fault here is with the buying 'changing his mind' - coinabul is being very gracious even offering the OP the buyback option, if I had been the seller I would have shipped the gold and simply told the buying 'I'm sorry, it's already been shipped'

I'm thinking gox still processes dwolla transactions by hand... if that's AML stuff then they only work weekdays... I know that it's not much better on the out side... usually takes 4 or 5 days to hit dwolla.

Actually I just did negotiate a $175 reduction in my rent. I just showed him the list of of things I'd repaired in the last year without bothering him and he was smart enough to give me the adjustment I wanted.

You keep saying wages are a fixed cost. Labor costs are constantly being renegotiated... if you're paying too much in wages for a position, you have the choice of a pay cut, 'right-sizing' the position away and then rehiring at a lower rate or other cost savings methods (for example adjustments to benefits packages, reduction of job perks, etc). Another fun cost savings thing is actually promoting people to a salaried position (which most employees will jump at because it takes all the variance out of their paychecks)... which lets you re-negotiate without having to smack anyone around. The end result is you get a more dedicated employee who actually does more work for just about the same pay (aka slight increase in pay for large increase in workload).

So no. You are clearly choosing to remain delusional when it comes to the topics being discussed here. It's quite clear that if you ever do end up in business management you'll probably bankrupt the company swiftly... simply because you obviously aren't very good at forward thinking when it comes to resource or asset management. God help any employees you happen to find...

This is exactly why diversification of production occurs, because deflation (and inflation too) affect all sectors of the economy.


No. Deflation is a stronger valuation of a currency - and completely non-causal when it comes to 'general economic' trends (like slumps). If anything deflation causes more transactions.


No. 'fixed costs' are rarely set in stone. Part of managing any business is being willing to adjust such costs as needed. Contracts likewise aren't set in stone. In the scenario of deflation, with currency being worth more there are going to be lots of contract re-negotiations.


You're assuming 100% efficiency in the economy as a whole. That's extremely unlikely (I hesitate to say impossible). When have you ever known a business to lower prices more than they were forced to? Prime example, gas or lux tax increases by 25cents and prices at the pump go up 45 cents.

Also you seem to be stuck thinking of "price point" as a specific number. If you're 'price point' is 1 dollar and your dollar suddenly becomes worth half what it was before... your new 'price point' becomes 2 dollars, it's not about the amount (aka the number) of currency collected but the valuation of it.


It sounds like you're still confused between the valuation of the currency and amount being exchanged. Velocity as a metric doesn't apply to bitcoin in economic terms, since we aren't anywhere near the soft limit of a satoshi being over-valued to the point that nobody can spend it. This is one of the design strengths of bitcoin, we can divide it to whatever decimal place we need to.


'never before seen upward deflation spiral' Man you get points for comedy with that one. You're so used to evaluating everything economics related in terms of debt based currency and the assumption that inflation over time is normal... that a deflationary effect scares you. The same economic 'laws' do not apply inversely to a free market using deflationary currency. They may apply in some way, but those haven't really been well defined yet.

Try to get over the knee-jerk response of 'deflation means i make less money' --- while technically true it doesn't mean what you think it means. As the value of a currency goes up - the real value being exchanged will increase as well as allow an increase in the value people are able to save (what you call hoarding) - it won't cause any of the bad effect you associate with it as long as it's easy to cut into smaller and smaller pieces (which bitcoin is). It will in the short term cause some portion of businesses who aren't willing to adapt to go out of business... but the beauty of a free market is that this market space will then be filled by other companies providing whatever good or service was needed.



 

Personally I don't agree. I think BFL should intentionally flood the market with hundreds of units a day for some period of time, at least long enough to catch up on pre-orders. Sure it might crash the exchange rate, but most miners aren't going to be profit taking immediately after they get their rigs up and running... they'll do what they always do, quietly accumulate bitcoins, selling off barely enough to offset power costs and wait for a nice bubble to sell into. After the last speculative bubble I'm not too worried about the price dropping to single digits, there's enough support to keep it 'high enough' and avalon has already increased the hash-rate to the point that we'd probably only see one quick difficulty adjustment instead of the the 3 that were originally projected. and extra 3600 hundred coins for a couple days... not much at all really.

God bless this troll in particular. Had a lovely laugh reading that.

Listen, no company owes it's customers such transparency. What could you possibly sue them for "failing to produce a cutting edge product in the time we thought it should be finished" ? Secondly, selling pre-orders on a product that doesn't exist isn't in any way illegal, games aren't "regulated as a security" and people pre-purchase them all the time. In addition to that nobody lied to you, it was well understood that said product didn't exist and would be developed when the pre-orders were sold. In addition to that, you've always had the option of getting a refund if you requested one (although legally you agreed at time of purchase that BFL wasn't obligated to provide a refund). Also, the simple fact that they've refunded folks who've asked should indicate that they didn't infact use the pre-order money for development of the product... and now that they're shipping it's proven to not be 'a scam'.

So while i'm cranky at the delay of the singles and rigs... and that avalon shipped first... I can't blame BFL for being what they are... what we all knew they were from their business practices in the fpga market... a well intending start-up that lacked real world experience in product development, assembly and delivery.

Hopefully they'll get the process ironed out start shipping a couple thousand units a week... then you can find something else to whine about instead of this.

... adoption rates?

Not strictly speaking, but I'm sure it's a large factor.

You can call it anything you like...

But it doesn't affect the correctness of what I've said. Nobody producing a product when faced with 'the price they get for their goods is declining AND volume sold is going down' the company either diversifies what they produce (either through innovation of opening another line of business) or they do what you're suggesting... which is scaling back production which eventually results in their going out of business.

The reaction you're assuming is the expected response to a general economic slump (aka decrease of demand due to lack of funds) not the response you'd expect during deflation. During deflation you have currency that's owned growing in value and this actually encourages people to spend some portion of it that they wouldn't have before. It creates it's own added economic stimulus in this way. Persons are able to at the same time save more value and also spend more value because what they already have is increasing in value.

All that said - the idea that deflation is going to somehow make the 'price they get for their goods decline' is silly - that price isn't going to change just because the currency is worth more. Now someone may lower the price to stay competative, but if the currency is worth more... that's a neutral move on the part of the company not a loss.

What you really should consider is this bad idea that deflation is going to encourage hoarding. It doesn't and it won't. If someone suddenly made everything cost half the current price... how would a typical consumer act? They'd buy more/nicer stuff with some portion of their income and probably end up saving (or paying down debt) with the other portion. Both of those are good for any economy.