So true.

HONESTLY before BTC I was fucking depressed: I knew on a subconscious and later conscious level that my savings were being eaten up. Like running to stay in the same place.

Now I can look at my clown politicians and ECB fucking up and just not give a shit.

So refreshing.

50-100 years ago there was 1 million goat herders in Saudi Arabia, today they are 30+ million people, many of which live in huge buildings and drive golden cars.
This was caused by ONE thing: Energy, oil - prices didn't drop, rather today they are higher than ever along with demand.

Unless they do something radical 20-29 million of those people will likely die when they run out.

The problem with you inflationists is that you assume 10 second timeframes and perfect information. But demand follows real worlds supply of goods no matter where it goes after 5-10 years and people don't know shit - that is precisely why they need non-manipulated money and prices to go by.


As I see it, the ball is in yours, Etlase's and other inflationist's court:

1. BTC value is climbing, unless free markets are entirely devoid of any logic or reason, there must be a good reason for it. Why is NONE of the inflating crypto-currencies valued at all?
2. If deflating economies self-destruct then why are we seeing a sea of BTC-related businesses spring up?
3. If investments are impaired in deflationary economies why is GLBSE seeing any business? Why do people start BTC businesses instead of straight up buying BTC?
4. Central banks still hold gold despite it being "horrible"/"evil" money.
5. People let Pirate owe 500.000 BTC in debt before it fell apart - that's a lot of loaning right there.

But you CAN'T explain that so you do ad hominem attacks, use fancy words that mean squad, appeal to economist "expert" authority that can't predict anything, pretend WE are missing something or straight up incorrectly accuse us of using logical fallacies.

The way I see it even if you are in a generally deflationary economy there is no way to tell whether the next year it will be inflationary or if the currency is just presently overvalued and will crash some and so, humans being careful, hedge with real world investment even if on paper perhaps its not perfect given perfect information or constant dependable deflation - the world keeps spinning as they say.

You also assume all-or-nothing; what if people keep 90% of their wealth in deflationary BTC and invest 10% like there's no tomorrow? That would mean a constant ongoing investment stream in society. As long as there is A flow there would be resource allocation.

Do you guys even have ONE inflationary scheme you agree on? No, it's all "MY personal client idea or inflation model is better!".

Yes they can, that's my whole point. I will go over your arguements below.

Which will very quickly lead to economic growth, higher demand and thus normal prices.

In simple terms: If electricity prices are 0 I will build a factory taking advantage of that and grow the economy.
If energy prices are normal or high my additional factory would increase energy prices beyond the breaking point and I or another factory would fail.

The area of a medium sized country would be generating enough wind energy to satisfy world energy usage. There may be a time in the far future where the potential is used up, but we are not there yet. This goes for quite a few industries.

Wind turbine "spots" are as cheap today as farmland or Manhattan property in the stone age.

With the many unemployed people today this is hardly an issue

None of the materials are particularly rare.

China tried to make "rare earths" rare, but the truth is that there are potential mining sites for the stuff all over the world and they are booting up now due to China's shenanigans and increased demand.

Again not there yet.

No, not if westerners ate less meat and didn't feed their cars anyway, but it is a good example of how increased energy/resource supply leads directly to growth.
100 years ago I think world population was what 1 billion? Both that and the 7 billion today happened because of modern agriculture revolutions - any temporary over-supply was eaten up so to speak.

Yes, but the inflation is not neutral, it benefits some group which is almost ALWAYS a misallocation of human time and resources - there is absolutely no way to adapt to that. Wasted resources or their potential is gone.
This is because inflation usually occurs at one focal point - otherwise you are just moving commas and there's no point.

Deflation on the other hand happens system wide which is much much more neutral - whether its non-neutral effects are good or bad they are smaller!

Take the mining reward; if that continued forever and scaled up too there would be huge waste in computer cards doing unnecessary over-security at high cost.

But not all: If you have two wind turbines or two solar panels you will earn twice as much as if you only have one.

This is because A the potential is largely untapped and B more energy will not lower energy prices in the long run because more energy means more economy and more demand also.

(like more food means more people = same price for the additional food after a while)

Just lock it now since it is so pointless, but don't make blanket rules for the forum; I have seen forums die from over-zealous moderation.

Yeah its not entirely fair, but on average the economy as a whole would be self correcting.

Some might benefit unjustly, but the economy would be less wasteful than today and would still invest in viable things.

We deflationists never said it was going to be the perfect market, just no "death spirals". Perfect money would likely be money with constant value, but there is no way to achieve that. Sure you could "move the comma" for all bitcoins, but it wouldn't do anything.

As I see it inflation is a tax on the productive while deflation is a reward to producers that then save - that saves natural resources.
Deflation can't be a tax on investors because they can simply hold their money or invest in something better.

If an investor makes a mistake in an deflationary economy and makes 2% instead of the target 3%, he is still 2% richer in real terms. Why not see deflation as a buffer?

It's self-correcting:

1. Deflation is high at ~3%.
2. Nobody invests, but sit on their money.
3. Economy shrinks,  deflation goes down or becomes negative.
4. Everybody invests.
5. Economy shoots back to ~3%.

(A fun thing here is that investing in step 2 when your money is valuable and collecting returns when money is cheap in step 3/4 would be very profitable )

And repeat. Net world growth becomes ~1.5% or more, which I actually think is close to the average over the human race's history.

The true mystery is why anyone would spend or sell their BTC today!

The world real GDP is 3.6% right now:
http://www.indexmundi.com/world/gdp_real_growth_rate.html

I think a mature Bitcoin economy would be deflating about the same on average. 5% may happen, but not sustained over longer time I think.

In real terms: about 33 years to pay back the investment. (1/0.03)

Considering you are dealing with machines and buildings they will probably not last longer than 20-30 years without heavy NEW investment.

Once the 33 years were over you would only be back at square one and it would take another 33 years to double your funds.

Considering that you would either be dead of age or your machines broken down from wear and tear your investment would quite simply be a bad one in terms of helping you/the economy/the world in REAL terms.

Actually your products would be priced at the rate of inflation, so you should make 5% inflation + 3% = 8%.

Your investment would be "paid back" in just 12.5 years and you would make profit from there.

However you only made money from the factory as an inflation hedge and society lost valuable resources due to this inflation induced over consumption.
This is why inflation is dangerous.


A valid concern. Lets assume the closer to real life 3.6% deflation. As we agree deflation slows the economy a bit by killing at least bad investments so make that 3%. (while saving important natural resources mind you)

What would it take to make something viable?
Well in simple terms it would have to be better than the world average, which kind of makes sense.

After all machine/building replacement costs, running costs and other costs the investment should make about 4% at very low risk in real terms. Its slightly high I will admit that, but it can be done.

Well if you have zero competition you could theoretically roll back the entire blockchain by mining an entirely new chain going back to the genesis block.

This is commonly known as the "ledger solution" where a public ledger is created every 10-20 years or so.

This puts somewhat of a cap on the blockchains otherwise infinite growth.

If you also want huge tx levels light clients (electrum) or even later a "swarm client" becomes a must.


Store of value is definitely not enough, but trending towards larger transactions due to fees might happen until smarter clients have been developed.

With BTC you are the one that keeps the reward and you are also often the promoter - that is similar to pyramid/ponzi schemes.

Anyway this is completely off-topic as I never said BTC was a ponzi dammit only ponzi-LIKE in the way the first coins were distributed. It was just the word I chose, it could have been "IPO-like", "stock-like" or "pyramid-shaped".

But Bitcoin has a reward system that explicitly rewards earlier adopters.

I'm willing to bet that there is no reward to a person signing up on facebook first and that half the worlds gold did not become available between 1000 and 1004 AC.

I'm not saying it's a ponzi, only that the BTC minting system has a pyramid shape.

Fair enough; what are your costs then?

Normal exchanges have to deal with fiat transactions, you deal in easily transacted BTC.

I want to allow people to speculate on BTC price - daily if they want to. I need a low fee for that.

Well I guess it's like mtgox so maybe it is fine - still if I can, I will remove it somehow.

My bond would likely pay out the rate of euro inflation + 1% on top (in fiat, but transferred with BTC). So like a bank account with 4-7%. Its quite a safe low-risk investment too.
It would also be aimed at people that don't necessarily believe in BTC at all and would only invest using BTC for the sake of transacting globally.

I'm calling it: Next pirate.

FPGAs != ASICS

Keep in mind that a lot of the monetary system doesn't exist. A lot of the money "printed" by the FED is just in a computer as loans to some bank that then put it in a government bond paying ~3%.
Since THAT government also pays with loaned/"printed" money it's a completely empty/fictional system without substance. They couldn't even store a trillion dollars in bills IF they had them.

If these banks ever tried to move from their trillion dollar derivatives/junk bonds into the real world it would either cause an immediate crash or hyperinflation.

It would be like all early BTC adopters cashing out tomorrow; they know it would destroy their value so they DON'T do it.

The entire world budget for renewable energy is ~200 billion euro I think, that is 1/5 of the debt added by the USA in the past 6-12 months -the real market could never absorb all the monopoly money going around, so they just skim a little off the top and otherwise act as if its real.

If the Bitcoin economy grows "just" 1000 times we could buy that renewable energy for a year - not that small huh!

I don't know whose side you are on sunnankar, but when we can't "appeal to consequences", then we go into ga-ga-land. (I hope etlase realizes that cause-effect is like ALL of science)

Guess I can't tell my kid not to touch the hot stove either, pain is emotion right? Burns are consequences right? Can't base statements on that, no sir!!!

(oh right shoot my analogy is a strawman or "false" right? Guess etlase is always right no matter what, now that's some axiomatic logic!)

Why do you think so?

I mean if you personally hold a large part of all BTC ever to come, don't you have the largest conceivable incentive to spread the word?

Yes later adopters might disapprove of your advantage over them at some level, BUT Bitcoin is useful to everyone and hence the main barrier to adoption is that people simply haven't heard about it or understood it - at least that is my assumption.

What do you consider the greatest obstacle; information spread about BTC or lower rewards to later adopters?

Well I was thinking more of pyramid schemes where; the more suckers you can get in, the more you get yourself. Its very much similar to a ponzi though and for sure many pirate "investors" were very vocal supporters.

BTC get more valuable the more that join, which is ponzi-like, although in Bitcoin's case the value increase is legit and due to increased economic efficiency.

Minting is an English word referring to the creation of new coinage, the mining subsidy is how Bitcoin mints its initial units.

Mining however continues after the minting phase with transaction fees to secure the blockchain. They are separate concepts.

Once the crypto-currency is established I completely agree with you, but in the early stages I think its important (as long as other core functions are good as you say of course).

Take a scheme that rewards more as time passes and then drops off suddenly - this would allow most people to get a "fair" chunk of the minting-pie.
However think about that for a second: Early adopters would be relatively richer the LONGER they could keep knowledge of the currency scarce!

The longer they could delay adoption the greater a piece of the rewards they could get.

This is not so with Bitcoin where you are likely to get a significant part of the rewards early (whenever you join) and then gain the most if the VALUE of that chunk increases by you spreading the word.


So yeah, minting is trivial next to the importance of cryptocurrency, but Satoshi really did minting right - otherwise his client might actually have been outpaced by an altchain by now OR we would be in the middle of a chain war right about now!

That would also work I think. Personally I thought about dropping the reward to 1-10 satoshis then continuing that forever, just to avoid moving the decimal when coins are lost.

A good argument against it is that the whole minting phase, no matter how it is done, is basically market noise - hence the faster it is over, the better.
With a constant 50 it would take exponentially longer than for Bitcoin which will be entirely done in ~140 years.

A constant 50 at this point would double the BTC amount in the next 4 years and then again in 8 more years, with the Bitcoin scheme it will take said 140 years to do just the first doubling.

I think 140 years is a decent number because it subsidizes security in the important early phase - and then some - while still decreasing the subsidy rapidly and then ending it.

You know talking about economy I realized that deflating currencies might actually be more Keynesian than Keynesian policies today:

If the entire economy starts shrinking due to a massive crisis the normally deflating currency would either deflate less or even loose value. This would then create a system-wide incentive to invest in solving the crisis, leading to a wave of capital!

I guess what is important is the actual deflation rate and how long you can keep your dividends above that - it needs to be long enough to pay back your investment.

The funny thing is that deflation increases with sound investments in a BTC economy: If tomorrow we had twice the BTC economy, services would all earn half the amount of BTC, though those BTC would be worth twice as much also.

As a BTC investment though these services would likely loose though - basically deflating currency punishes over-spending/-investment by an economy as a whole.

(This is all assuming a somewhat constant average speed of money, which may not be correct - still looking at blockchain.info it seems to be)


An alternative I have been thinking about is if the deflating currency is unstable, in that case people might choose to panic hold a long term asset and later buy back into BTC. This would lessen their loss or increase their gain compared to dollars no matter what.

Of course that leaves a big question as to what happens when the currency is stable, but still growing at 4% in value per year.


Honestly BTC might be bad for investors in some ways, but lets see - if BTC is going crazy I guess people can still invest fiat, time and resources to get BTC.
This would spread BTC to more "needing hands" which would lower the rate once they traded for food or other essentials.