Also, because of financialization of economy, a lot of finance is in the shadow bank industry. So for example swaps on bitfinex is shadow banking. So even when QE gets injected into the banking system the money gets routed to speculative activity and not routed to the "real economy". Lending does occur but not for startup or job creation. This is one reason why stock market has had bull run
This type of activity is the result of people moving down both the risk curve and the time to maturity curve. In other words people are taking more risks with their capital, which leads to higher asset prices, which leads to people feeling like they have more money, which hopefully leads to people spending more money, thus stimulating the economy. I would certainly agree that people are taking on more risk as a result of QE, and asset prices certainly have gone up significantly, but it does not appear that people are spending more money as a result of this newly created wealth. |
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No. Bitcoin uses ECDSA which is a digital signature algorithm not an encryption algorithm. You could use another algorithm which supports encryption however Bitcoin address is not a Public Key it is a hash of the public key. If you need to use a third party algorithm, third party software, and exchange keys directly well you might as well use something that was designed for this purpose like PGP.
But could you first unhash the bitcoin address, and then use it as a public key in some encryption algorithm to encrypt my statement: "This is a test of my new system" - resulting in the only person able to decrypt it is the guy with the private key - which happens to be the same private key used to sign bitcoin transactions? Would that work? When you use any kind of encryption system the public key is some kind of derivative of the private key. You should be able to easily tell what your public key is based on your private key, but it should be difficult to tell what your private key is based on your public key. As discussed above the relationship between a bitcoin public key and a bitcoin private key is one that is not able to encrypt messages. |
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money doesn't need any use value.
money is just a bunch of standardized tokens which people agree to use for trade.
its important that no one could create tokens out of thin air (like governments do with fiat) or else the creator could rob all the other users of the system.
Money needs to be widely accepted as a standard measure of value in order for it to work properly. |
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I assume everybody now understands that money printing effectively is the money printers skimming value from all holders of money.
People are contempt with a small yearly rise in prices. We adjust for it almost without thinking. When you negotiate your salary, you just assume that an inflation adjustment is accepted, the question is what more. The same with prices. The traders offering prices, more or less automatically adjust for inflation first, then he thinks about should he go more or less whatever he thinks the market can take.
The inflation is internalized.
Measuring inflation is fundamentally impossible. Since the goal of all activity is consumption, only consumer goods and services are included. Traditionally a basket of goods were bought, and then prices compared year on year. But as the world changes, some of the wares in that basket will be irrelevant, and important new goods has to be included. So after a number of years, the basket has to be changed. Then there is the individual preferences, each person sees the the price changes of the goods he tends to buy.
The inflation is thus not really measurable.
The public does not understand what is the input parameters to the value of money. They think it has something to do with the strong innovation, a great country, a strong military, hard working people, or whatever. In reality it is the supply of money, and the demand to hold money that decides the value.
The public will always underestimate future inflation.
Since inflation is internalized, it stops working. There is therefore room to accelerate it. And since it is unmeasurable, there is the possibility to hide it in fake indexes. Eventually they see that they personally can buy less. They do not understand why, and therefore they might think that prices may go down. Therefore, the inflation will always increase, and the public will always be surprised.
This is the psychology of inflation. This is seen in historical hyperinflation episodes.
Refer to "When money dies" by Adam Ferguson. I was pointed at the book somewher on this forum (have not finished reading it).
Why does changing the basket of goods to keep it updated mean that inflation is unmeasurable? Isn't that logical? you compare different things. Was your granddad richer than you? Maybe he had horses. How do yo compare his horses to your car? But it's gradual and you can compare lots of different things. Plus there's things like gold which are always going to be the same. Do you think the inflation rate of the US dollar in the last hundred years that is commonly quoted is wildly inaccurate? You can only make an estimate. Yeah, but at least you have a good general idea of what the rate of inflation has been. Plus you can see with your own eyes how things are getting expensive in your day to day life. So it's nice to have a good estimate to go with what you're already seeing anyway. Over the long run you are able to measure the rate of inflation. There are many financial products that are linked to the inflation rate. |
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"You can only save from money taken from your household earnings (you won't save from loans), that is money which you would otherwise spend on consumption. Please try to explain how this can be any good for the economy in the long"
How can it not be good? Where do you think your consumption comes from, if not someone has produced them? How can you get it, without producing something of comparable value and trade? The savings in money and investments from prudent producers is the root of increased productivity, that benefits all.
Sorry, but I don't understand how what you say is related to what I am talking about. Yes, someone has produced what I consume, so if I decide not to consume (but prefer to save instead), there is overproduction (as simple as that). We are not talking here about producers' investments. There can never be overproduction in the free market. When one individual produces, sells his product and saves money, prices will decrease and others will be able to buy more. Saving is letting others in front of you in the consumption queue. Overproduction and under supply can happen in free market. Planning and mis-allocating capital can go horrible wrong even in the total decentralized system. Over production happens when more is produced then what can reasonably be consumed. A merchant can only sell so many products before there is no demand for the product anymore and merchants often have a time limit to how soon something much sell either because of seasons or because a specific product will "go bad" after a certain time |
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Bitcoin will be a heck of inflationary for the next 5 years as is.
it's interesting that many people think short-term (what the price in fiat USD will be next month, next year at most), but at the same time look many years ahead to a far-away cap of 21 million, forgetting that Bitcoin has a double-digit yearly inflation right now and will continue to have it for the next 5 years. The brain conveniently suggests ideas to believe that they can be most comfortable with.
This is true bitcoin is very inflationary For a few more halvings at least https://en.bitcoin.it/wiki/Controlled_supplyBitcoin is technically inflationary while the block subsidies are still in place. However it will often act in a deflationary way as holders of bitcoin generally expect it's value to rise in the future. |
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I agree with the 'can't buy knowledge' part. Internet has made the cost of most knowledge almost free or next to nothing, something that people in the pre-internet era couldn't dream of. Hopefully these large amounts of knowledge available can bring some quality changes.
Free knowledge mostly benefit 3rd world. But that is causing havoc back in the 1st world country as most resources went into research and development, and now being given away for free. You are wrong, 3rd world has no internet or is highly filtered. Many 3rd world countries do have some level of internet access, but the quality (speed/latency) is not very good. The cost of internet access is also high when compared to average earnings. |
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1.04 to the power of 40 or 4% interest over 40 years is alot of growth = 480% I think
I assume if I take it as a decline in value compounded, then 4% less each year or 0.96^40 results in 20% left after 40 years.
Every time they give your gains, they exclude inflation usually. If you ever wondered why you arent getting any richer, thats probably it. Hence constant wage increases are demanded by unions which can lead to labour disputes and strikes, production disruption because a company doesnt necessarily have the money just because the workers need it and are poorer.
Wages tend to rise faster then inflation, this is one reason why the Social Security trust fund is in the shape that it is in because it gives recipients raises in terms of wage growth instead of purchasing power (inflation). So someone who received social security 10 years ago will have started with a monthly award that had less purchasing power then their monthly award today. Majority make higher wages as they compete in the workplace for promotions. Then they invest in real estate or retirement accounts. Most people dont care about mild deflation, they care about employment. If you are talking about too much inflation or stagflation then thats a different discussion I don't buy the arguments here for deflation. Too much assumption about a static economy when in fact economies are dynamic This is exactly why that mild inflation is not necessarily a bad thing. Another point to make for savers/investors is that most asset prices increase faster then the rate of inflation (including dividends and similar payments). Why punish workers who save cash? This would not punish people who save cash, as generally people can earn more with their bank account from interest then inflation would reduce the buying power. |
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Stability doesn't have anything to do with market cap, but the distribution of coins.
If the market cap is 1 trillion, but there are still whales with considerable amount of btc then they will be able to crash the markets.
I wouldn't say it doesn't have anything to do with market cap, but that both things are issues related to stability. The larger the market cap the more money it's going to take to move the market on a day to day basis. But yes, someone who holds a large percentage of coins will have the ability to crash the market in most cases unless the buy support is incredibly large. But when the market cap is higher, people who have the ability to manipulate the price will have less of an incentive to do so as they have more to lose. Also people who have existing amounts of bitcoin would have less incentives to try to crash the price as they now have a lot more to lose. |
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As more people use it, demand for a bitcoin will be higher. Since it has a finite supply, price per unit will naturally rise.
Deppends. If people use bitcoin to receive payment then dump the bitcoins for fiat, the price won't change. Its deppends more about the hodlers. But people who receive payment will not necessarily sell all the bitcoin they receive for their goods/services, and the people that purchase bitcoin will not necessarily spend all of their bitcoin. |
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It is a free market in which price is controlled by supply/demand. Someone who want to buy even 1 million BTC will drive price to the sky.
I was going to suggest that such a buyer could buy small amounts at a time. But then I realized that in order to accumulate 1M BTC in a reasonable amount of time, he/she would probably end up increasing the daily volume of multiple exchanges by 5-10% or more. That would certainly add a lot of buoyancy to the market. Buying all of the bitcoin outstanding would actually decrease the value of bitcoin for the new owner as part of the reason bitcoin has the value that it has is because it is used for trade, if only one person owns all the bitcoin then it can no longer be used for trade (you can't trade with yourself). |
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Now that Califorina has legalized Bitcoin, it will not plummet in price.
It is still not a legal tender though. Federal government can no longer stop companies from accepting bitcoin in California. This doesn't make bitcoin into a legal tender yet. You won't be able to pay, for example, taxes or public charges and duties with it. Don't let yourself get fooled about it. In order for something to be legal tender, any company must be forced to accept it for payment. In the US this is only true for the Dollar as it is "Legal tender for all debts, public and private" |
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It is not right to penalise those who worked hard and save up for retirement, over those who spend every penny they earn.
Funny thing is, I've spoken with people who regard savers as selfish pricks that are hoarding money instead of spending it and helping to keep others employed. The person commenting is usually young, without any savings, and with huge debts for rapidly value depreciating products. These people are generally very liberal and will come to expect that everything will be paid for by the government and the successful. |
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MCXNow, Crypsy, BTCT, BTC-E?
I'm conducting a survey to determine the actual profitability of the popular exchanges.
Does anyone have any idea of what the volume is for these exchanges? What these exchanges make weekly or monthly and how we could find out?
I presume you are assuming that the profit that is garnered has no morals? MXCNOW has shown (as an example) to not care about their users and profit supersedes anything else. I'd say it is quite profitable. Most scams I would guess are profitable. BTC-e as a long standing exchange is likely very profitable. I've had little issues with their platform but they seem to have a huge following of users that continue to use their exchange. Mcxnow and his admin realsolid is the perfect example of a not seriously business, an exchange runned by one person and probably a non trusted user. Any reason lead to this believe? I have never even heard of MXCnow outside of this specific thread. |
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gold is worse since you have to kept them safe, everyone can robb you the gold.
And bitcoin can't be stolen, right?  Both bitcoin and gold can be stolen, however it is much easier to secure bitcoin then it is to secure gold. Not only that but if you know that your gold is close to being compromised then if you try to move your gold your chances of it being stolen are higher while if your bitcoin was close to being stolen then you could likely solve move attacks by simply moving your bitcoin to another address; both scenarios assume that you are aware of the pending attack. |
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As the concentration of power in the hand of few is not proved in a free market (quote me one company that ever got enough capital for mass scale coercion), it has been already been proved in democratic (and non democratic) government.
Large U.S. oil companies have significant influence on the government and many wars were ignited by them in last 20 years. None of the wars were fought because of oil companies in the last 20 years. Some wars were fought over oil, but not the companies themselves. |
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Over time as the number of transactions increases as bitcoin become more widely adopted the amount of TX fees per block will increase, while the TX fee per transaction will likely stay the same or decline.
If we had the number of transactions of VISA (~4K/s) at 0.01 $ per transaction, it would be 40$/s or around 1.261 billions $/year going to the mining industry. If we count the transactions in other systems (Bancomat, etc.) we could probably double or triple this amount easily. If new uses arise allowing more payments to be made, maybe we could have 10x of the number of transactions of VISA. Currently, the network mine around 1.5 millions bitcoin/year (around 1 billion $ at the current exchange). In my opinion, a global payment network with its monetary system must have at least 10x of the current hashing power to be safe enough against any type of attack (safe enough to discourage attacks from hostile powerful entities). If the network is unable to grow a revenue stream for the miners large enough with a ~0.01 $ fee, maybe doubling or tripling the fee will be necessary. A market based approach, with the right incentives, should be able to build a revenue stream large enough to make the blockchain safe from attacks. At $40/s then miners would make, on average ~$24,000 per block (600 seconds), or ~38.7 BTC per block (with BTC trading at $620). Your assumptions include an average of $0.01 per TX, however the standard TX fee is ~$0.06 per Kb today (.0001 BTC) |
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Re: bitcoin and money laundering
Money are never dirty, and can therefore not be laundered. Money are always divine.
This is not always true, as if you acquired money in an illegitimate manor, or if the specific money can link you to a specific crime, then it is considered to be "dirty" |
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I think the FED uses the term "sequestered". They are expanding the money supply, but basically only banks get access to it.
The banks get the expanded money supply that is supplied by the Fed. The hope is that banks will increase lending so that more people will borrow money, stimulating the economy. |
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Inflation drives debt, and create long term bubbles. Deflation drives savings, and investment.
You got it backwards. Inflation & deflation don't drive anything they are symptoms of the economy. Booms & busts happen as business cycles. The question is how do you deal w inflation & deflation? ... you're playing at semantics. You reiterated what I said. One "deals with" inflation by going in to debt. You "deal with" deflation by saving. When any entity holds the keys to the printing press of a fiat currency, inflation is the cause. Inflation is the increase in the monetary base. Devaluation of the unit of currency is the symptom. Its not semantics. Market forces are very difficult to manipulate. Inflation/ deflation are measurements. They are symptoms not causes. Saving or spending can be reactive. But how do you mandate that? Can't force people to save or spend if they don't want to. The only thing the Fed can do is raise/lower interest rates. Govt can save or spend if Congress approves budget Look up "semantics". I didn't say anything about forcing behavior. I said individuals deal with inflation by taking on debt. Look how many people take out long term debt in bitcoin? No one that expects to pay it back! The Fed does more than just manipulate interest rates. They buy debt that no one would, for prices that no one would pay. That's equivalent to printing money and distributing it to banks. That is direct inflation of the monetary base. The devaluation of currency is the symptom. The inflation is the cause. The last audit also showed huge loans to many well connected banks without repayment. More direct inflation. Even if there ever is a repayment, any loan the Fed creates is inflation. The deflation comes when it's repaid. Buying bitcoin =/= taking out long term debt. Taking on debt means borrowing The Fed has been doing QE for a while. Last time I check no inflation. They want inflation but its just not happening You have so little understanding of economics. Your theoretical basis is wrong and you ignore what is actually happening in reality. They can print as money as they want but if the money is stuck in the financial sector and never reaches the real economy then no inflation is going to happen. There has been little/no inflation throughout QE because the economy was so bad that without QE there would likely have been deflation (negative inflation), so QE did in effect did raise the inflation rate. |
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