I am not so sure. If bitcoin becomes widespread in use, then I would think that there would be a spreading around of bitcoins more than anything else. So if right now there are 10000 people with an average of 200 bitcoins each (just to pick some numbers), then if bitcoin becomes very popular then there might be 1000000 people with on average 2 bitcoins each. Now there are many, many more opportunities for people to lose bitcoins. We can see that even today with a high value of ~$20 per bitcoin, some people lose them due to carelessness (the recent heist because a person didn't bother to encrypt their wallet file comes to mind), and even web sites that were pretty much printing money (mtgox) don't do a good job of securing their coins and (possibly - hopefully!) killed their goose that was laying golden eggs.
So clearly just because bitcoins are valuable, it doesn't mean that there won't be careless people who lose them. And if you spread the bitcoins around, there will be less value to lose per individual 'wallet', but many more wallets. I personally think it's kind of a wash, and I would expect a constant rate of loss that actually exceeds that of paper money since digital currency like bitcoins is so much easier to destroy (with a single keystroke you can destroy a large quantity of bitcoins instantly; with paper money you'd probably have to throw a big suitcase into the ocean or something, which takes alot more effort).
bji has it one hundred percent correct. If the value of Bitcoins is to rise, it will be due to increased adoption, and more likely, widespread adoption. Remember, the increasing value today is due to speculation that they will become a useful vehicle for commerce, not because they are currently a useful vehicle for commerce. Widespread adoption will result in increased value, but as bji says, it will not likely result in a decreased rate of loss. In the far future, widespread use might mean hundreds of millions, or billions of users. Regardless of increased value, due to diminishing numbers in circulation, the increased user base will cause any one wallet to likely have a relatively constant average value, based on external economic factors. This wallet value will be no different than average values of checking accounts and wallets in use today. Increased valuations of Bitcoins is unlikely to mean that any one wallet in existence is protected at a security level greater than a wallet today. The widespread use, if it comes to fruition, will mean exposure all across the world at a high density level, and even the Solar System, if we are talking about the far future. Bitcoins will be subject to all the same accidents that can befall physical objects today, such as natural disasters (how many Bitcoins were lost in the recent Japanese tsunami?), but Bitcoins are also subject to loss via mechanisms that usually aren't an issue with normal physical objects: hardware failure of the hosting device, software viruses, accidental deletion, malicious deletion, and so on. I contend that the most likely vector for Bitcoins to gain widespread use will be if they supplant the unstable currencies of the Third World, usable on smartphones, allowing near instant commerce between the citizens of the Third World, across state lines. This is the exact scenario which creates a situation ripe for loss, but is also likely the only real hope Bitcoins have for mass adoption. If Bitcoins fall out of favor, either due to competing currencies, the increasing uncertainty that has been described here, or actually fail to gain widespread use, then the speculation which attaches an increasing value to them today will not guarantee a high valuation for them in the future,. |
|
|
|
No, the root of the problem that you are trying to find and cure would be divisibility.
It's amazing how many people insist I think divisibility is an issue. |
|
|
|
You assume that bitcoin has a problem with availability or granularity.
It's really annoying to have someone say that I assume something, when I have clearly stated the opposite. You only undermine your own reputation, and undermine it further by claiming the importance of tenure. And you wonder why I don't care how long someone has been around. Content matters. Don't hide behind tenure. I would accord equal respect to any member based upon what they are saying, not how long they have been around. |
|
|
|
You have been around for a week, maybe some humility would help?
Not when people like you come in and start talking about divisibility. Read the thread. It has been stated numerous times that divisibility has nothing to do with it. |
|
|
|
No, this is not logical. This is an error in your thinking. Just because something becomes less and less, doesn't mean it will eventually become zero. This is a little tricky to grasp for the non-mathematician, but is nevertheless true and important.
Oh, I see now! I'm not a mathematician, therefore, I can't grasp the concept fully. First of all, it does not need to become zero for the problem to exist. Secondly, the key point is "approach zero". I shall now use the same intonation as your post above: I realize this is tricky for you to grasp, therefore, I suggest that instead of trying to sideline the argument into whether the supply will reach zero or some quantity that is not exactly zero, which is a wrong assumption on your part anyway, that you reconsider the real premise put forth in this thread, and find a means to object to it, instead. That is, if it's not too tricky for you.  |
|
|
|
Awww... it was just getting good. You were going to explain to me how people could tell which coins were saved and which ones were lost.
I was? If you'd bother to read what you have been encouraged to read, you'd realize that's why the uncertainty becomes greater in the future. At this point, I could point you to the dictionary's definition of obtuse, but you just sound like a troll. |
|
|
|
|
You have this thread and the one I linked to earlier in this thread. Read. I'm done.
|
|
|
|
Can you tell me how many are in circulation right now? 'cause I don't have this magical market-vision all the people in the future are going to have.
Do you see the three words underneath your cat picture? |
|
|
|
Make a lot of money?
Only if you sell them. And sell them before someone else who thinks like you. And maybe everyone will think like you, thus the valuation won't be as high as you hoped. In fact, suppose everyone walks around with this currency of which there's only apparently 1,000 in circulation, but they all assume there's 21 million out there. Not much of a currency then, is it? Not a lot to go around, but everyone operates under the assumption that there might be 21 million out there. That's exactly the point. You see 1,000 in circulation, but have to assume that 21 thousand times that number could be dumped into the market. That clearly is a different set of dynamics than today's market in Bitcoins. Thank you for clarifying my point by indicating your need to assume that 21 thousand times the number of Bitcoins could exist than what are in circulation in such circumstances. |
|
|
|
You seem to be trying to convince me that being rich is a bad thing.
No. I am not. You can go back and read my entries again if you wish to continue. |
|
|
|
Check your premises.
If the rest of the world assumes that there are 1000 Bitcoins out there, and I assume that there are 21 million, Prices would be lower than my expectations. I would be able to buy even more than I expected with the bitcoins I had.
I was referring to the value of Bitcoins. You're referring to the price of goods. |
|
|
|
Not if they assume there are always 21 million in circulation. Let's say it's the far future and you have a lot of Bitcoins and you're one of the ones who assumes that. However, it appears that most others don't assume that. As a result, the price is really high as compared to your assumptions. Logically, what would you do? The point is, you can't impose your assumptions on the market. You can assume all you want, but that doesn't change the dynamics of the market, which will be different in the future. |
|
|
|
|
Welcome to the Wild West. Roll the dice and see what happens. Or wait until Bitcoins have established infrastructure. It's your choice. True opportunities look risky. When it's a sure thing, it's too late.
|
|
|
|
Yes, That's the way the world works. We can't know the specifics of the future with any certainty.
No, no, no. That's not what I mean by uncertainty in the future. What I mean is that the current state of Bitcoins in the present has a certain amount of uncertainty associated with it based on the dynamics of its supply. To individuals in the far future, which will be their present, they will view Bitcoins with a much greater degree of uncertainty than we do, again due to Bitcoins built in rules. |
|
|
|
Perhaps it would be best to assume that there are always 21,000,000 in circulation, for just this reason.
Sure, and you can even assume that others are assuming that you are assuming that. Bottom line, the numerical boundaries on the possibilities are more undefined the further into the future you go. And with larger numerical boundaries on the possibilities, one's assumptions just aren't as good. |
|
|
|
The difference is, You see a problem with that.
Yeah, I do. I'd rather a system that, when it appears that 1,000 Bitcoins are in circulation, we know that the balance is lost. More certain valuations, and less fear in general, and as a result, the holders of those 1,000 Bitcoins continue to choose to hold them, as opposed to cashing them out. |
|
|
|
It would be similar to someone finding a 2000 year old pottery and someone willing to pay $1m for it due to its presumed rarity. However, if a year later some finds a site with thousands more of those same pottery, the presumed value would drop significantly, even though the amount produced hasn't changed at all, only the ones in circulation.
My point exactly. |
|
|
|
The Bitcoin currency was designed to be deflationary. Most other fiat currencies are inflationary. What that means is with Bitcoins, the longer you save, the more valuable it would become, so long as the currency succeeds and people trust it. With most other currencies that aren't backed by anything but trust, they can print as much money out of thin air as they want, so long as trust is maintained. However, saving money with these inflationary currencies means you'll lose money the longer you save. Right now many worldwide fiats are becoming more fragile and trust is gradually being lost as countries try to print more money to bail out the rich people, allowing them to maintain their wealth with the newly printed money while everyone else gets devalued money in return. The disparity between rich and not rich has widened at a greatly accelerated rate since the economic collapse.
jollyjim, Could someone dump 6 billion Bitcoins on the market right now? You and I both know the answer to that. In the far future, when for many years, it appears that only 1,000 Bitcoins are in circulation, the rest presumed lost, could someone dump a million Bitcoins on the market? |
|
|
|
This problem is being analyzed in depth in another thread right now. There seems to be some contention among the users here as to the ultimate ramifications of this. I contend that increasing uncertainty will creep into the Bitcoin market as result of Bitcoin loss over time, ultimately rendering the entire system to be not as robust as it could've been. This may take some significant portion of eternity, but I think it's an indisputable fact. Please read the thread, and contribute, if you will. Pay attention to the discussion further into the thread about ratios and increasing uncertainty. And please, don't bring up the fact that Bitcoins are nearly infinitely divisible. That's not relevant to the discussion. Here's the thread: http://forum.bitcoin.org/index.php?topic=20799.0 |
|
|
|
No, they are not. That is why I showed you the geometric series, which is an infinite series of positive values that add up to a constant, even if you keep adding FOREVER.
Saying that more and more bitcoins get lost does NOT mean that the number or ratio of bitcoins still in circulation goes towards zero! Not at all. That is the point. It might mean that, but in all probability it does not mean that. If fact, as I have pointed out above, the yearly ratio of bitcoins lost is bound to converge toward zero very fast, which implies that the number of bitcoins still in circulation will remain above a large constant, say 10 million, FOREVER. That is why your problem will never be a problem.
I never stated that a constant or near constant number of Bitcoins would be lost per year or per unit time. What I said was this: M = total number of Bitcoins ever minted C = total number of Bitcoins not lost L = total number of Bitcoins truly lost t = time Per any unit of time you wish to use, L at t + 1 will be >= L at t. Logically, then, L will get bigger over time. From that, it follows L will eventually approach M. Let's assume that you agree that a certain percentage of unlost Bitcoins will be lost every year. Is that not an unreasonable assumption? No matter what number you choose, if you continue with the following calculation, the end result is the same: C at t = M C at t + 1 = (C at t) * x where x = some constant number less than 1. |
|
|
|
|
Show Posts
