You would think that if you had that many bitcoins you could throw the miners a small bone.  But no.  0 fees on all of them.

Just wondering where everyone went.  We were having a great discussion and then everyone just dropped it Is anyone working on this?  Did the discussion move to PM?  I think this is a very cool idea and would like to be involved if anyone else would like to work on it.

It is a pretty broad project so maybe everyone thinks it is too much effort?

Perhaps a white paper is the best place to start.  I could consolidate all the discussions so far into a wiki page if everyone thinks that is the next step.

Have we reached general agreement on the main issues?

Why does every thread in this forum have to deteriorate into people calling each other trolls?  I have been enjoining this thread up to this point because it is one of the more civil threads I have participated in so please keep it that way.  You two shake hands and cut the crap and let's prove that we can have a clean thread for once.

That was one of my first posts to this thread.  If you read on you will find that I have learned how to make finer distinctions of definition and would now say that lending does not increase the money supply until the debt instruments themselves are generally accepted as payment for goods and services.

I think that is a great example!  Anybody remember the passbook savings account from my childhood?  I had an actual physical book and when I deposited my earning from my paper route into the account they would take the book from me and run it through a machine and it would print the deposit amount and the new total right there in the book.  This was an interest bearing account.  Now I could have tried to take the passbook to the comic book store to buy some comics but we all know how well that would have worked.

I had to go to the bank, ask for some cash, they would run the book through a machine that would deduct the amount I requested and print the new amount right there in the book.

I could not directly access and spend the money in the passbook savings account.  I had to first go and get the cash.  Therfore the money in that passbook was not spendable and according to the "spendable" definition it would not be considered part of the current money supply.

Once I left the bank with my comic book money in my pocket that money was ready to soon be spent and was therefore part of the current money supply.

First off my name is Burt Wagner, not Bruce Wagner.  Burt Wagner = electrical engineer, Bruce Wagner = possible scammer and hated personality in the Bitcoin community.

Now here is what I have learned from LM:

The standard economics 101 textbook definition of the money supply is cash plus demand deposits.
The more accurate economics 201 definition of the money supply is all the money that is available to be immediately spent on goods and services.

For dollars these two definitions are basically the same and lead to the same number, for Bitcoins the two definitions do not lead to the same number.

To simplify let’s just look at checking accounts as an example.

Now a check for $100 is not exactly $100.  If you accept a check for $100 you know you do not have the $100 yet.  You have to cash it.  However checks for $100 are generally accepted as payment for goods and services.  This general acceptance of checks for goods and services makes the money in a checking account spendable and therefore part of the money supply.

Therefore for dollars the money supply is cash plus checking accounts and both definitions are accurate because checks are accepted as payment for goods and services.

Now if you have Bitcoins at Mt. Gox and you could spend them using Bitcoin checks and Bitcoin checks drawn on a Mt. Gox checking account were generally acceptable as payment for goods and services then this money in your Mt. Gox account would be counted as part of the money supply under both definitions.

But Mt. Gox checks do not exists yet.  Now I will bet you a few BTC that if people could write checks on their Mt. Gox accounts and these checks were generally accepted then LM would count them in the money supply.  So his point really is that not only do Bitcoin checking accounts not exist but that it is highly unlikely that the concept of Bitcoin checks will ever exist due to the ease of movement from your demand deposit account to your cash wallet.

So what it boils down to is there is a difference between dollars and Bitcoins.

Dollars: you can write a check, get your goods and services with it, and then the seller can convert your check to dollars at a later time.  In other words you don’t always have to go an ATM and get cash before you can buy something.

Bitcoins:  you must first get your Bitcoins into your wallet and then you can spend them, there is no ability so spend first then convert later.  In other words you must always “go to the ATM” first and get cash before you can spend BTC.

Finally and this is just simple math given what I just said:  until there is a way to buy goods and services with something denominated in BTC other than the actual BTC in a wallet (BTC checks for example) the maximum number of BTC units available to be spent at any given time on goods and services can never be more than the total number of BTC that exist.

I don't know if you have see this but check out http://ecdsa.org/stats.html

If you take your cursor and run it across the graph from left to right is animates BTC movemment.

If you take your cursor all the way to the right and then pick a point in time, let say one year ago, and then calculate the blue area from day one through the day one year ago I think we can safely take all those BTC from the money supply calculation since this blue area would represent all BTC that have not moved in over one year (lost, destroyed, saved/hoarded).

Notice the large number of BTC that were created in the first year that have never moved.  I believe that in that time when BTC was just a "toy" some (many?) people ran their CPU miners, got bored with it and then deleted the program (lost forever), others collected a bunch when they were basically free and are sitting on them, etc.

At first I thought that lonelyminer was just being a "religious fanatic", just spouting dogma over and over but now I am starting to think (to complete the metaphor) he has the patience of a saint.  He has finally won me over with this comment:


This hit home with me as an electrical engineer who is constantly explaining things like electricity, physics, math, cryptograph (including Bitcoins) to my very inquisitive 5 year old.

It got me to thinking that hey, maybe I am not as well informed on this subject as I could be.  After all I am an electrical engineer, not an economist.

I think what he is saying is that when you measure the money supply in order to measure, calculate and predict other things like inflation etc. you want to measure the "live" money and you really do not care about the "dead" money.  The dead money is sitting there doing nothing for the economy at the moment.  Isn’t the BTC economy actually a perfect case in point?  If you look at all the BTC a lot (most?) of it is dead lifeless money sitting in accounts.

In fact here is what got me over to the "dark side":  consider all the BTC that are sitting on public addresses where the owner has lost the private key.  Should this money be counted in the money supply?  I think the answer is obviously no.  This money is truly dead and will always be.  It will never contribute again.  Now think of the money sitting in accounts that has been there since it was created and has never moved.  We all know that all this money may someday contribute to the economy but it currently is not.

Again, I admit I don’t really know what I am talking about here but it seems to me that in the BTC economy removing money sitting in deposit accounts like Mt. Gox from the accounting of the money supply may not go far enough in this attempt to measure “live” versus “dead” money.  In the BTC economy we would have to estimate and remove all the actual BTC that have been destroyed through lost public keys, or destroyed on purpose by sending them to addresses like http://firstbits.com/1bitcoin (what a shame, I wish they had sent them to me instead!)  Also when calculating the money supply it seems to me you would also have to take into account and remove all the “early adopter money” that is not dead but is more like zombie money, it just sits there and sits there as long term savings/hoarding.

So my suggestion for the wiki is that we start out with a paragraph something like the original explanation that we all know and love and then add a second section that further refines the explanation taking these further distinctions of definition into account.

Interesting.  That particular address and public key pair is just the test pair from the wiki here:  https://en.bitcoin.it/wiki/Mini_private_key_format


So, it is not any of my personal addresses or public keys (whew).  But it interesting that it showed up.  My guess is that Mt. Gox may be using that test pair for testing and somehow their testing went astray?

Just bought $100 worth of BTC from Al.  At about the same time I also bought $100 worth at Mt. Gox.  Let's see:

From Al I got a discount, at Mt. Gox they charged me a commision.  Guess where I got more for my dollar?

Well I do have to figure in the cost of that stamp I used to send the cash to Canada 

Great customer service, great price, will purchase more soon.

Again that is one definition, how about all these others:

I think he said exactly what he said:  If I were to agree with your definition of money money supply then you are correct.  The subtext in his quote is that he does not agree with your definition.

lonelyminer et al agree with themselves, authors that agree with them and definitions that agree with them.  Others agree with the definitions they like.  How about this definition from here http://www.thefreedictionary.com/money


So I have found a definition on the internet that agrees that any "readily liquefiable account" is money.

Arguing about definitions is pointless.  AGREE on definition and then discuss from that starting point.

The above bolded statement is the crux of this thread.  If you agree with it you are on one side, if you disagree with it you are on the other.  The first side, those that agree, are defining money as having only one use case - as a medium of exchange.  The other side, those that disagree with the statement are defining money as having two use cases:  1) as a medium of exchange and 2) as a way to store value.

If you believe that money is a way to store value then you believe your deposits are money.  Those that disagree are saying that deposits are not money or more specifically static deposits are not counted as part of the money supply.

Great!  So we all agree:  debt instruments denominated in BTC are not, in fact, BTC.  To the extent these instruments are used as money, lending increases the supply of BTC denominated money.

OK, so Steve and others do not like everyone else's definition of the phrase "money supply" so they make up their own.  There are already several definitions of money and money supply so I guess a few more will not hurt anything.  However, I have done my best and I personally am done arguing over the definition of a phrase that was ambiguous to begin with.

With that username you almost have to

As a noob to this discussion it appears to me that everyone here is pretty much in violent agreement.  It appears that everyone agrees that:

A BTC bank could be formed, right?  There are no regulations preventing anyone from doing that.

However you do not need a bank, an "evil" central bank, or even a banking system at all in order to "increase the money supply" without "increasing the money base" all you need is for people to lend BTC to each other.

The number of BTC that exists is finite and known - something everyone must agree on or we will get nowhere

Take the case of three people:  A, B and C

Person A has 100 BTC, person B has zero, person C has zero.
Person A lends their 100 BTC to person B
Person B buys a product from or the labor of person C for the 100 BTC he borrowed from person A

At this point:

Person A rightfully claims a 100 BTC asset/contract in that person B owes him 100 BTC.
Person C rightfully claims the ownership (and possession) of the same 100 BTC since he sold a product or his labor for them.
Now person C can loan his BTC to person D, etc.  Loan, rinse, repeat!

Therefore the number of BTC that exists is finite but the number of legitimate claims of ownership to this finite pool of BTC is unlimited as long as you allow lending - and how can you stop the act of lending and the practice of loan contract creation?  The answer is that you cannot.  If I posses BTC I have every right to create a contract and lend them out.

Now we all agree that the original 100 BTC currently possessed by person C are in fact BTC and to the degree we agree BTC is money they are money.  Person C possesses them, they own them, and they can spend them or lend them out.
 
But what about the contract held by person A? What is it worth?  Well assuming he can find someone willing to give him 100 BTC worth of goods and/or services for the contract then it is also worth 100 BTC!  Since all these contracts created by the lending process can be used to purchase goods and services then everyone must agree that to some extent and under at least some definition of money the contracts themselves are money.  There is also no way you can stop people from selling debt contracts once they are created.

So there you have it, once people start lending BTC the BTC denominated money supply will inevitably be larger than the number of BTC that exist even without the creation of a BTC banking system.

D and T are you saying you agree with the original version of the wiki or the modified version.  I am not sure.

This is probably totally naive but I see no difference beteen having my dollars at a bank and having my BTC at Mt. Gox.  I go to my account page at Mt. Gox and they promise they have 100 BTC reserved for me somewhere in their accounts.  If I ask for it they give it to me.  However since not everyone will ask for all the BTC at the same time they could find it "safe" to loan out some of the BTC on account.  As long as they keep enough in their accounts to cover any requests for BTC from their depositors they are good to go.  Isn't that the definition of fractional reserve?

The other way I look at it is that the second that Mt. Gox loans money to someone and puts the loan into an account for them they have increased the number of people claiming ownership of the same BTC.  This is an increase in the "money".

I have 100 BTC on deposit - I can ask for it to be sent to me at any time so I can spend it
Keeping 10% in reserve the borrower would have 90 BTC on deposit - and they can ask that it be sent to THEM at any time so they can spend it

But in fact there are only 100 BTC to cover both claims.

As far as I know this is the definition of fractional reserve and it would operate the same as the dollar.

EDIT:  I would add that there is one big difference between dollars and BTC in the event of a bank run.  With dollars each bank that runs low on dollars during a run can simply go back to the central bank and borrow more.  The central bank can just loan them newly created dollars - hence the term fiat. With BTC if everyone want their BTC from the fractional reserve bank or banking system at once they are totally screwed - there may not even be enough BTC in existence to cover all the deposits.