Yup. USPS and Canada Post have an agreement and you don't pay brokerage fees. Even if you have to pay GST/HST, Canada Post will do it for you and charge a minimal handling fee on top of the actual GST value ($8.50).

http://reviews.ebay.ca/Shipping-to-Canada-via-the-United-States-Postal-Service?ugid=10000000000084869

... so you can't actually compare the two because the GPU miners have that headstart. So they can't be screwed. Perhaps the GPU miners that just jumped into mining ...

I'm actually agreeing with you. Perhaps the fact that I'm using an expression (apples to apples) that is usually used to disagree with someone's statement is confusing. I apologize for that.

If you read the Bobitza, Lisa and Danny example, just imagine Danny's fishing net broke again at the end and he had to buy a new one ... 10 times in a row. At the end, all money will belong to the bank as profits from interest payments. Next time Danny makes a loan, Bobitza will have no money to buy the fish thus Danny will have to default.

That's exactly what I understood. And that's the reason you're not comparing apples with apples. GPU miners were the early adopters and had an "unfair" advantage that ASIC miners will never be able to catch up with.

ASIC manufacturers going exclusively into mining is like the 51% attack. While completely possible, very less probable because of the negative impact. It will be more profitable for them to play it fair (aka sell to the public) than trying to go at it themselves.

Yes, the example given does explain how loans and interest can work ... in that very scenario. Lol, couldn't help but notice that with multiple loans like that, Lisa's bank come to hold all currency and Bobitza and Danny will have 0.

Here's what you might be missing. Same scenario but Bobitza doesn't like fish and has a farm that provides enough food for him and his wife Lisa. Unless Lisa accepts 10 units worth of fish in the 11th week, Danny can't make the final payment. Sorry but I can't get over the fact that 101 != 100.

I understand that money will circulate and the borrower will sell products indirectly to the loaner thus making somehow the interest payments possible because people don't hoard the currency. And with a few loans, that is going to work. However the more loans are made, the more interest payments will become a bigger part of the whole money supply and for example, at some point in time, all the money in existence will become interest payments. I still think somebody has to default to erase some of that interests payments that are now banks profits.

And speaking of "the people don't hoard the currency" pre-requisite ... what was the percentage of Bitcoins being hoarded? 78%?


I do share the view that multiple currencies can be the solution. In fact I shared a link to the Digital coin video that touches upon this subject ... was hoping to get some comments from the people here.

But then, we acknowledge the fact that Bitcoin on its own can't be the solution for a new, international currency because it needs other currencies?

What confuses me is that if I apply simple mathematics, there is no way for the system to work. You can't pay back $101 (principal + 1% interest) if there are only $100 in existence. With BTC this is obvious because there will only be a maximum 21 million in existence and no other way to create them. It's a zero sum game. For me to repay the extra $1 is for others to "lose" that $1.

I guess moon hinted already in his/her response. Any interest based loans system (currency being fiat, BTC, whatever) is built for or is based on defaults. For the system to work, someone has to default at some point.

Here's one: Market forces. If there is a profit to be made, another company will emerge that will decide to build and sell ASICs to the public. This "invisible force" will work in both directions: will bring companies in the market and will also keep them out.

I believe with the arrival of ASICs, the mining will become more decentralized from the number of miners perspective. BTC mining will no longer be the exclusive domain of hardware geeks that have a basement available and can build BPU farms with linux based host PCs. Anyone can buy a jalapeno and connect it via USB to their computer. No heat, no noise, no linux.

As with the GPU farms, there will be ASIC farms that have a lot of hashing power but I wouldn't say BTC becomes more centralized because of that (note that I'm excluding the scenario that ASIC producers will cease to sell to the public and become THE mining giants that you all fear). And here's a last argument for that: should this happen, I will lose trust in BTC as a fair option, I will exchange all my BTCs for fiat and get out. And I believe more of you will think the same, driving BTC prices down and leaving the greedy ASIC manufacturers with hundred of thousands of dollars tied into hardware that has a worthless output.

A couple of comments on the IOUs, warehouse receipts, customer deposits and loans in a BTC economy.

First. With the current system, the IOU that you get from the bank is indistinguishable from the currency. Say you deposit 100 USD in BoA account, the bank will show that you have 100 USD, not 100 BoAD that are redeemable 1 on 1 with USD. So, that's a big difference because that will mean we need another form of currency to make BTC currency work, right? Name it banks' IOUs, vouchers, litecoins, etc.

Second. There is no such thing as customer deposits and loans with BTC because BTC is built for transactions; you cannot "deposit" in a BTC bank because it's not like you will share the private key of your account with them or they will share it with you and you can check your BTC account from time to time. You will "buy" an IOU from the bank that says you can get 1 on 1 BTCs for it (like the current system). So we go back to the first point.

I still don't understand how a loans with interest system will work in a BTC based economy. Knowing that BTC can not be created by banks via "credit expansion" and that there is a limited number of them in existence, how will the interest be paid back? With what BTCs?

I know the example is a poor one because you can just sit on your bitcoins and get the 5% appreciation with 0 risk involved;, but I chose it to show that the current way of thinking about interest on loans does not apply to a deflationary currency.

So basically, nobody will loan money to low risk projects?

And if you beat the average, you also get the extra limited something edition

Re: how you measure prices in Bitcoin? For now, like others mentioned, measure them in fiat and use some currency exchange site rate to calculate prices in BTC.

I guess the alternative is to find some goods and services that you use and you can buy in BTC. Make a common sense comparison between their perceived value to your product perceived value and the ratio should help you price your goods directly in BTC. Like going back to the basics and how all currencies started ... back in the days when Anton the bread maker issued 1 voucher (aka BTC) that said it was good for 1 bread. Since Anton was trustworthy, the voucher was also accepted by Claire the shoe maker, but on a different ratio (you needed 20 bread vouchers to pay for a pair of shoes).

Exactly. If loans can still theoretically be made and fractional reserve banking and interest can still be part of the loaning process, the fact that there is no last lender and the fact that it is a well know fact that there is a known total maximum amount of coins make banks run risks very high.

I still have a question on loans as a way of generating credit. Will there be an interest in BTC loans? I know interest can be regarded as a measure of risk and as a measure of inflation protection. With a deflationary currency, how would interest be calculated? I.e. - this project has low risk of 4% and BTC appreciates on average 5% per year ... therefore your loan interest will be -1%?!

Here's a thing to think about it ...

If everybody thinks the same, then everybody will double the hash power, then you need to double your hash power just to stay at the same level of BTC gained.

You're not comparing apples with apples here.

Very well said!

I guess the only counter argument is that a $ today is worth more than a $ in the future (the first thing they teach you in economics schools). In other words if I want to start a project today and I can either a) borrow the money or b) save for 1 year ... if I choose a) and assuming the project's return rate is greater than whatever interest I need to pay on the loan, I will be better off by starting the project today and not delaying for one year.

However, not everything goes well with all the projects and growing with credit borrowed from future savings doesn't always end well (aka look around in Europe, U.S., etc.). Or like Adrian put it:

How would you call it ?

With your 1.98% example, aren't you contradicting yourself? Doubling your hash power does not double your earnings because a) 1.98% is not the same as 2.00% and b) the difficulty will increase to "match" the new total network hash rate.


I fast read / misread this as "When the reward is halved, ..." and gave a response to that question. It just happened that the correct answer is also Yes, but for different reasons.

No it won't. Assuming you're mining in a pool, double-ing your hash rate will only double your earnings if someone else takes the same amount of power offline in order for the total hashrate to remain constant. Think of it like this: in a day your total BTC = YourHashrate / TotalHashRate x daily mined BTCs. Since the daily mined BTCs are pretty much constant ... you got the idea. This happens because the difficulty adjusts to total hashrate.


Yes. I would phrase it like this: half as many BTC can be mined in a given time period (i.e. 24h). There will be some variation until difficulty adjusts to the ASICs, but once the diff stabilizes ... you got the idea.

Do you know what type of improvements are we looking at? Double Gh/W from the best (future) existing ratio?

Please contribute with something or post your wise a$$ comments elsewhere. Nobody likes a troll.


Thanks, that makes a lot of sense and to be frank, the whole post has been done from a devil's advocate perspective. I had someone asked me that question (how can Bitcoin work if you can't get credit/loan to grow) and I couldn't answer and I wish I would have a good answer to defend Bitcoin. I was hoping to start a discussion where I could find answers on the subject.