Gold is one of the heavier metals around, 19,3 tons per cubic meter. Lead for an instance is just 11,34 tons.
Yes. And that's a good thing. I can put the value of a house in a backpack and carry it easily. What happens to gold is that it's high valuable per gram, unlike lead which is cheap - not by "intrinsic value" (since there's no such a thing and if we measure it by usability, copper or silver (as it is the best electrical conductor) would be the most expensive and even lead would be more worthy than gold, which only good property is to be immune to erosion).
Why gold never drop to 0? Because it was seconded by the other metals market, gold alone would be a huge problem, as due to its value you would need nano-chips of gold to buy a coffee, would become useless for daily life, up to speculation and would make the market hang without a reliable and usable currency. And this is a problem with btc, we've ONLY gold.
Ok, so you are agreeing with me, that it is not the best suited for small transactions. But you do realize BTC can be split up 6 more decimal places? Right now it makes no sense (who buys something for 1/1000th of a cent?), but if the value goes up, we shift the decimal in the client, and boom goes the dynamite. If we shift the decimal all the way over, and the smallest purchase that makes sense is still too large, then making a "silver" that is just an extra few decimal places makes great sense. But by then, a trivial purchase (say $.01 in today's market) would need to be the smallest Bitcoin value (.00000001BTC). So if Bitcoins ever are worth $1,000,000 each, I am all for Silver BTC! |
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The difficulty is limited by the price because most people will only mine when it is profitable. A large amount of hashing power was added to the network after the rise in price by people who turned there miners back on because it was profitable to mine again. (sorry that's a bit of a run on) I'm rather surprised someone else didn't mention this when discussing the problem with the rising difficulty. I agree that to many people are using bitcoin as a get rich quick scam (who really knows what other people are thinking) but I know many people are mining because they really believe in bitcoins.
Electricity costs are such a minor part of the equation, though. The price needs to get super low or the difficulty super high for the best rigs to be unprofitable just looking at electricity. The cost is the rig itself, which is difficult to recoup the investment from (it takes a while to generate enough coins to make back that investment). In the mean time, you could have bought Bitcoins up front, and had them all go up, rather than fight to get them against increasing difficulty. But if you already have most of the hardware and it's sitting idle, buying a few cards can be a good idea. It's a lot easier to recoup a $300 graphics card than a $3000 rig. |
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Just my own story. I bought my first bitcoin mining rig and got it mining on April 1st. 2x5970's, system cost me $1500. In April it made just under 500 bitcoins for me. I sold them when bitcoins hit $3.80 shortly before coinpal went down. I made enough money in one month to pay for the machine and the electricity it used. So yes, building a mining rig right now is still very profitable.
mtGox price on Apr 1- $.70 $1500/ .70 = 2142.86BTC mtGox price now - $3.205 2142.86 * 3.205 = $6867 Total Profit: $5367.86 vs. Total Profit of $0 (your numbers). Fantastic decision! |
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I think it will be some time before any government tries to outright ban the use of Bitcoin, if at all. By the time that happens, I think it will have little effect, just as attempts to prevent use of bittorrent have had little effect.
Torrents are not illegal, just certain content is illegal to share. But if you were selling torrent files in a store, you can bet your ass you would get shut down quickly. This is why the torrent sites are located in places that are more friendly. If you can sell things without being able to be identified, yeah, they will have a harder time. |
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Governments are a huge potential threat to BitCoin. If your legitimate business can be shut down for accepting Bitcoins, they certainly can harm you. Unless you are able to have a transaction where they couldn't shut you down of course.
The value would be much lower if they are banned in places, and much higher if use is widespread. Most people will obey their governments, so it would certainly lower the usage, and lower their value.
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My theory is that the cause of the volatility and strong deflation seen recently is that many newcomers are buying into BTC attracted to the notion that it is "scarce". I am not alone in this, many have posted similar sentiments on various threads. This phenomena is driven by recent press coverage and the fact the idea really clever. Any move to increase the supply of such bitcoins will tend to dampen this source of investment demand and stabilize prices.
I agree we need more merchants and more real economy, and I believe that would also create sell side pressure and stabilize the market, and have posted such previously.
Now some facts would be interesting:
You stated "few users". How many users are there?
You state "huge speculation" and "super thin market". Please point me to some market depth and trade data that supports this.
Of course having it scarce makes it valuable. That's kind of the point. Scarcity is pretty important for a currency to work. It's not the only thing, though. No idea how many users, but my guess is under 10,000. mtgox.com. Market cap ~$20M. You can buy all the coins on the market for under $30k (at least last time I checked before they went down). That jumps the price tremendously. Try to sell 20k bitcoins, and the price drops tremendously. Try selling $30K of any stock on a major index. See what happens to the price. Try buying $30k of stock, see what happens to the price. It barely moves. Because the market is well-traded. How would this create "sell side pressure"? It would make people try to spend them to get rid of whatever they could by making them worthless? Perhaps. Try to actually explain your arguments instead of state assertions. |
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Ever wonder why people stop using gold for trade? Well one point BTC doesn't have, is that it's heavy, but mostly due to its high value. It's the so called "too good currency = bad currency". This is what is happening to BTC, it is becoming "gold", a currency "so good" that nobody will expend it once it triples the value in a week. - Eventually, as no economy develops out of it and it gets stuck in a money exchange without anything else it will suddenly drop to... zero.
But back on the why "not gold", people started to use other "currencies", "worse currencies", and when they did it, gold hasn't lost its value, nor gold was put out of business, simply was moved to "big deals".
Gold is too heavy? Are you kidding? The currency is too good? I can buy a house out of gold I could carry in a backpack with ease. It's not that heavy. If anything, it's too light, as it's hard to do small transactions with it because you start dealing with tiny specs of it. That's the biggest drawback to gold IMO, is small transactions. Which is why silver was useful. People used other currencies when their governments mandated they had to. Strange, I didn't know Gold's value dropped to 0 because it was so awesome at money. You learn something every day, I guess. Turns funny to see the fear of another "mining pool", this resembles so much the old pre-Fed/Central Banks fractional and distributed reserves. Normally a banker or even an economist would be doing the math and tell everyone to run away, but these "miners", "exchangers" and "speculators" aren't either of them, so they will fall to the very same mistakes they did on the past believing to come out "unscratched".
I have no idea what you are saying. So, that's it, you already get a currency for speculation, this BTC; in order to do two things, very important things, create an economy and actually stabilize and strengthen bitcoin, you need a "worse" bitcoin, and can't be this one already, as this one is already "bullion". Also can't be "forked out" btc, because that wouldn't be creating an "alternative lesser-valued bitcoin" but another concurrent bitcoin as whole. "The sharks" that are pushing btc up already have their pool, this one, the other can fly under the radar for a while... until a yet lesser may be need, in total 3 or 4 block chains can keep up the supply and the different kinds of business.
It could be even created over 3 separate GUI's, 1 dealing with "Au" only, other with both and yet another for Ag only.
Well no shit it's just speculation. There is nothing to buy. It takes time to get there. It's a chicken and egg problem. No one uses it, therefore no one sells anything with it, therefore no one uses it. Until it has a market where it is forced to be used, or it is advantageous to use it (black markets), why use it? As for fixed vs floating, I expect already huge resistance from the current miners (even if they're more part of the problem than the solution), and would expect more if it was somehow fixed or regulated. It doesn't quite matters if today you need 1000 silver to 1 gold, and tomorrow 10,000 Ag:1Au, as long as the prices of Ag doesn't spike and come back, let the Au handle speculation and "investors".
You're not, in this process, make the community bigger or smaller, just making it usable.
Sure, if you say so buddy. |
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A lot to chew on here, so I am not going to even try to quote anyone!
First, I am not a miner and don't intend to be. But even if I was, if I can mine Ag so can you (probably better than me). That is not the reason for proposing a second chain.
The problem I am trying to solve is how to get bitcoin to grow a real economy behind it. Remember that tulips were a great investment vehicle, right up until they weren't. Right now bitcoin is primarily an investment vehicle because there is demand for something like it. That demand could be channeled into driving the growth of real economy, rather than waiting for the inevitable bursting.
In order to get a real economy growing, merchants and consumers need to increase their confidence in BTC as a trade currency. I believe that the price instability, especially the very high volatility of the last four weeks, is a detriment to that goal. I would be equally worried about severe inflation, in fact even more so than deflation. For this reason I do not want to get too wrapped around discussion on the merits of deflation. A moderate amount of steady deflation might be fine, but that is not what we are seeing.
A lot has been said about 8 decimal points and it is hard to deny that the micropayments could be solved. But I am trying to address human psychology for casual users. I went on some web sites yesterday and noticed they had not updated their BTC prices so it was much cheaper in USD. Casual consumers would just use dollars. We know the right thing is to go to MtGox sell your BTC and use the USD to pay, this closing the arbitrage gap. But average people couldn't be bothered most of the time. I have a friend that runs a major ecommerce site and she goes on for hours about how you get a higher take rate if you place the radio button on the left compared to the middle depending on country. That is the reality.
Similarly merchants will not know the arbitrage has taken place and after a while just take down the BTC becau,se nobody is using it. Also human nature. Yes their are cool solutions to automatically get quote feeds from MtGox but those are just more hurdles for people.
In sumary I strongly believe that stable prices are necessary. One solution would be to convince everybody to increase the 21M limit and increase the mining rate, but knowing human psychology that pig is not going to fly. Hence I propose a second chain.
I can see both sides of fixed vs floating Ag:Au rate. You should not need a central bank but I admit I do not have all the details worked out. The idea is to use market arbitrage forces to perform that function, similar to the way ETFs use arbitrage to keep their trading price close to the NAV. SOMETHING will have to be set arbitrarily in the system, such as the eventual Ag cap and mining rates. The people that willingly download the AgAu console will all mutually accept those arbitrary settings.
I am very interested to hear opinions on how the floating rate would work, and what the arbitrage is.
I keep hearing this argument, but it's just assertions. "We need stability". Ok, I understand. Economy needs to grow for that to happen. "So we fork the code and make more bitcoins and make the economy smaller". WAT? It makes no sense. Please for the love of God try to explain how having either more Bitcoins or similar Bitcoins makes things MORE stable. If anything, it would make prices fluctuate more and make things unstable. If you think otherwise, at least try to put forth your thought process so I can show you why you are wrong. Prices are not stable because there is huge speculation and it is a super thin market (meaning there aren't that many coins traded close to market price, so any significant order moves the market big time). Propose something that actually solves that issue. I also disagree that merchants are not taking things because prices are unstable. They aren't getting involved because the amount of work needed does not justify the increase in business they might get. There are only a few users, most have access to USD or GBP or EUR or wahtever, and using cash or credit cards is less costly for them than going in and out of relatively small number of bitcoins. If you want to fix things, make them useful for something! Start your own store. Have people pay in them. Start trading them to people in person. Expose more people to them so the economy grows. Do not splinter an already tiny community any further. Unless you can somehow show me how splitting up into two currencies somehow is helpful. But I hear a lot of rambling and not any actual arguments. |
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I think what matters more than whether monetary inflation or deflation is occurring is whether it is predictable. If so, businesses and investors can include it in their calculations to more accurately determine profitability. Otherwise, they will follow the false signals created by artificial pressure on the supply of money and malinvestments occur.
Predictability is great. But counterfeiting is not cool. Those who are last to get the counterfeited money will suffer at the expense of those who are the first to get it. However, if it's open, like mining, where anyone can enter if there becomes too much of a gap between price and cost to extract, everything evens out. If it's too easy to mine for what you get, then lots of people enter, more mining happens, the price goes down. If it gets too hard to mine, then people stop mining, price goes up, people start mining more. The problem is when one person can benefit at the expense of others. |
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Would it a lot of extra trouble to sell smaller lots?
Not a lot of extra trouble, but the fixed cost for shipping might make it not worth it. I'm guessing my next auction will be for a $25 gift certificate, but it will be good for 25 bitcoins as described above, so it will actually be a BIGGER lot than the $50 certificate I'm selling now. I want some carrots. |
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inflation does NOT exists with real money (see Gold/Silver/BTC) .. period ... it simply doesn't ..
Maybe it doesn't exist anymore, but it did. For example, after the discovery of America, when ships full of gold came to Europe. Even with a fixed money supply, we can have inflation if there's a negative growth. Have you heard about falling EROI or peak oil? Even now it does. I think the supply of gold increases by 1-2% per year. |
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Wrong answer. Until very recently, there was only one currency. Gold. Wrong! Prior to printed money you'd Silver, Bronze, Tin, Copper... even Iron in Sparta. Gold was an asset, used mostly for savings nobody was carrying gold along, unless was completely insane. Again I'm NOT a miner... nor have equipment to compete with those miners. Yes the AgBTC will start to be worthless... so was AuBTC... and yes, people will make Bronze, tin, copper... until they find one suitable for goods and services, one that is what BTC isn't: expendable. As this one ain't and probably Silver will have too much value, thus less than Au (not 50-50 market), within some time. Up to this point, and even if at the beginning we'd some btc business enthusiasm with those pizzas, hosting, domains, etc , now all it resumes to Mt Gox, trading money for money. If you don't realize how hazardous is to keep trading money for money and that will render no more than yet another Ponzi (maybe the reason why the creator of BTC jumped of), than there's nothing I can do, enjoy it. I keep saying that while BTC resumes to this, it's a threat and you'll find it out somewhat soon, nothing is being generated the only "business" is "mining", what you call "trading" is selling "mining". Maybe some drug dealers or people dealing with CP are adding value to this, I don't know, it may give it high value or justify its present value, but for the rest no added value is being given to BTC economy. Well, yeah, back before people interacted with each other. Eventually all of those metals lost. Of course trading money for money and that's it would not be a successful economy. I haven't denied that once. The bitcoin economy needs to grow to become useful. However, going in and out of money might be sufficient for some economies (mainly black markets). Most of the value now is speculation, that it will be useful for something down the road. If it does, it's severely undervalued now. If it's not, it's severely overvalued now. That's why it is moving so much. People are placing their bets. |
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This is an interesting option to say the least. Gaming currency exchanges that can accept bitcoins like this one may be the one answer to decentralizing our current usd/btc exchange a bit by leveraging the liquidity of SLL and it's exchanges.
It's strange I had an idea like this the other day and nearly forgot about it. I was going to make a game that was legitimate and accepts cash or bitcoins to play. I wanted to make this game anyway. Then you get game credits. You can then sell game credits for bitcoins if you want. Seems like a good idea. I would make the game so playing you can't gain credits (was hoping to maybe allow that, but I could make a second type of credit that you cannot transfer or sell and can only be used on the game) so it doesn't come under scrutiny for gambling. The game needs to be legit or else it would be too easy to have PayPal or whoever funds it to say "oh this is just a currency exchange". |
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It might be useful to discuss ways that we could improve the availability of getting Bitcoins to new people. I think that's a pretty high priority.
I've seen the following methods, and have feedback about them:
1) Coinpal - shut down. Great for getting started.
2) OTC trading - I haven't used this, heard good things, but a bit daunting for a new user. I'm curious how the transfers are done here? Are a lot on PayPal? If so, it seems like playing with fire.
3) Cash/check by mail. If you can trust the guy, seems good, a bit slow, but tolerable.
4) In person trades. Somewhat sketchy, time consuming, hard to find people.
5) Directly send money to exchanges - works for large orders, not wroth it for small ones.
I think the high volume traders can use the exchanges, and that works great for them. However, bringing the little guy into the marketplace is what needs to be pursued.
In person trades are going to be the best way to avoid any trouble, scams, and frozen accounts. It seems superior to me in the speed, although trading by mail could supplement this.
Traders are going to have to charge decent fees to make it worth their while, but I don't think we have much of a choice. As far as I can tell, there is nothing illegal about this, although maybe for large volumes there are regulations to worry about? Need legal advice on this one. If you keep it small, it probably is not an issue.
There are other PayPal like services out there, but most people don't use them so it's hard to go too much in that direction.
Gift certificates on Ebay are also an interesting way to do things too. I'd like to see if that takes off.
Anyone got any other creative ideas? While that trade network website is good, it would be cool to get some feedback mechanism in there, possibly with web of trust in there as well. That would be pretty cool to have.
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Governments do not like inflationary currencies (they loose power from them and they know it) .. they're just to stupid to know what real money is anymore .. they .. like most people are brainwashed idiots that don't want to think.
How do they lose power from them? It's the greatest thing ever to be able to spend counterfeited money first. Simple .. people hate inflation .. they hate their labour and skills having no value .. they hate having to earn more for less and they (rightfully) blame it on the governments .. and no longer obey it ... so the governments loose power ............... when the people are happy with a government (see Alexander the Great outlawing Fiat for Gold/Silver/Bronse) they obey the governments commands with less resistance .. the government gets more power, and a stronger nation. People hate taxes more. And most people are oblivious to small levels of inflation, or accept it as natural. Sure, if you go overboard, you can destroy the government. You have to steal just enough that no one cares what you are stealing. Take a few pennies from a lot of people and you become rich. |
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So I'm brand new to this bitcoin thing, but it really intrigued me, so I decided to try to get my hands on some. It seems I've chosen a bad time to do this. I tried to buy bitcoins with paypal various ways, but it looks like they've all been blocked. I looked into using Liberty Dollars on Mt Gox, but it seems I have to sign up for yet another service just to fund Liberty Dollars.
It's sad, but I'm thinking the best way to get Bitcoins will be to mine them. Am I missing something, or just have bad timing? Is there an easy way I can get some without having to mail cash/checks through snail mail?
How much you looking to buy? I agree it's a problem for small amounts, though. I have a feeling it will continue to be difficult for a while. I have a feeling that in person for cash is going to be the best way in the future. |
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Governments do not like inflationary currencies (they loose power from them and they know it) .. they're just to stupid to know what real money is anymore .. they .. like most people are brainwashed idiots that don't want to think.
How do they lose power from them? It's the greatest thing ever to be able to spend counterfeited money first. |
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No, Tom, ever wonder why we've so many forms of currency around? A: Diversity.
Wrong answer. Until very recently, there was only one currency. Gold. This happened because it was the best currency, and it destroyed all competitors. Governments finally changed this when they realized they couldn't print gold and realized the power of devaluing their own currency. At this moment bitcoin is a failure on its main purpose, it's impossible to conduct micropayments with it, as 1 cent worth already 0.03 USD+ and this will probably go up.
Actually incorrect. You can certainly do less. And there is the power to do MUCH less (but having nano-transactions overhwelms the network and serves no purpose). The secondary bitcoin, which can be done within a dual-bitcoin holder (this and the other) - create a "fork" or a fork alone to deal with that secondary BTC would render just a concurrent currency. If some or a lot sticks to this BTC and refuse the other, fair enough, I don't see how to enforce people to accept this one, so I wouldn't see a reason or how to enforce people to accept the other.
You have two options and only two. An independent concurrent currency (that may be integrated into the client or not, doesn't matter), or some additional fixed rate currency (which means you just expand the number of Bitcoins, and give the new ones funny names). Doing the first is possible. Go for it! The second one will crash Bitcoin to $0 (or would just be rejected by anyone who knows anything). I see an issue into force a conversion rate, as it would need some sort of "Central Banking" to enforce and control the supply of AgBTC... not quite possible within the BTC decentralization. But if a group decides to put that idea forward... as long as they've both sorts of BTC enough to hold it as so. But I believe for practical terms it will need to float in the market.
As for the "new mining rush", you must see it as a way to get more people to join BTC, not as "oh sh**! I'm f**ng greedy with the BTC I generated in 2010 and I'll not allow anybody else to touch it". Your AuBTC is safe, don't bother with it... you let some new folks mint their 50 AgBTC and get more supporters - thus some old miners may interest in mint Ag at the beginning making it less time-spawning as AuBTC in the beginning.
So fork teh code and create AgBTC. Everyone will ignore your useless currency and you will see for yourself. Or some people will flock to it, half people will use regular BTC, half will use AgBTC, and the value of each will be cut in half, until someone makes Bronze, Iron, Zinc, etc... As for getting new people to join it, if there is free money, the people who are in best position to get to it will get to it. New people aren't going to mine some random valueless currency at a greater rate than the people already involved in Bitcoin. If it's easy to mine, it's because it's valueless. If it becomes valueable, then people will just switch. It seems your main complaint is "it's too hard to mine". Well no shit, it's supposed to be hard to mine. No one is supposed to get rich mining except maybe the early adopters who were just gambling anyway. People should focus on getting Bitcoins by either buying them from people or by offering goods and services for them. Mining is not adding much value to the Bitcoin economy. If all we did was mine, it would be as pointless as http://progressquest.com (mining has value as a transaction logger, but if there were no transactions, it becomes pointless). You claim you want stability and predictability in the value. Why suggest things that would do the exact opposite. Although adding new currencies that people are forced to redeem at a fixed rate would give stability and preditability- it would make the value 0. |
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I'm not sure we're on the same page regarding what it means to fix "x" where AgBTC:AuBTC = x:1 exchange rate.
The direction that people chose to exchange should be a function of which is easier to mine. I am not sure that a fixed rate is practical, but let me restate the idea so that it can be examined.
The price of AuBTC and AgBTC in fiat currencies, say USD, would fluctuate independently according to the market. This is necessary since they are separate chains and can be transacted independently. Initially the quantity of AgBTC would be small helping to support a high price, plus it would be easy to mine. This would attract miners away from spending their CPU cycles on Au and into Ag mining since it is more profitable in USD. Clearly there is an arbitrage opportunity if AgBTC/USD:AuBTC/USD < x people would sell AgBTC for USD and then buy AuBTC and then use the fixed rate x:1 to convert back to AgBTC. This would force prices back to a ratio of x:1. However even afer the arbitrage closes the gap, miners would still be attracted to AgBTC because it is less than 1/x times as costly at first. Eventually the cost of mining AgBTC would increase just above 1/x times AuBTC as more miners come in, and miners would switch back to AuBTC.
It seems that it would be intuitive to set the mining rate of Ag and the limit at x times Au. But I cannot think of why it has to be so. Can you?
Another interesting question is this: Undoubtedly some Au enthusiasts will not want to deal in Ag. That is their choice. Can an Ag-Au system co-exist nicely with a smaller Au-only system?
The quantity being small doesn't make a high price. There is a small quantity of my turds that are framed, yet the price is strangely not high. No one wants them. If you had a fixed exchange rate, this means someone has to be forced to accept one kind of currency in place of the other. Would the client force this to happen? In that case, you really just have one currency and you created more Bitcoins. If this were to happen, it would render Bitcoins valueless. If you can arbitrarily add more and more Bitcoins at any point, it completely defeats the point, and the price would go to $0. There would be no point in using it. But if you let things float, sure, it could happen. The market is so small, some people would go off looking at AgCoins and try to get in early on it. But they wouldn't be worth much. The Bitcoin price would also drop some due to uncertainty and having competition. This is the biggest natural threat to BitCoin (you can make arbitrarily as many identical clones of it as possible, no longer making it scarce). But again, what is the point of this? Do you just want to artificially lower the price? Get in on a second mining boom? What problem with Bitcoin is actually being solved by forking/forcing the main client to deal with a fork? |
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You should join one of the small pools.
Big/Small, doesn't really matter. Unless the big ones rip you off worse with fees. |
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