Just a thought, do miners sell BTC for less FIAT than it costs them to generate each BTC?

Every 100 new dollars that are put into circulation merely represent 100 new rows in the dollar block chain; just like the inclusion of additional 100 base units in every bitcoin would amount to 100x21MM new rows in the bitcoin block chain. The only difference is that new dollars are put into circulation through borrowing, and not through adjustments to an algorithm.

Problem is not with hoarding per se, but with hoarding by miners (a.k.a. the central banks of bitcoin economy). It's everyday people who make a currency what it is, by using it to track the daily exchange of goods and services between themselves. Miners' only responsibility (aside from keeping the block chain alive and intact) is to seed enough bitcoins into circulation in order to grease enough of those daily exchange transactions between people.



But are you charging in fiat-based prices, or BTC-based prices? By that I mean, are you relying on speculative exchange rates when setting your prices?

You can do that with bitcoin, provided you have the majority of the hashing power... Think "base units" per bitcoin (see "Output value"). This is only a hint, not an explanation.

The only problem with your logic is that bitcoin represents "bad" money. Question is will it ever be used as legal tender? Because, if you had not noticed, in order for Gresham's Law to take effect both forms of money must be represented as legal tender, at equal value.

I'm surprised that no one, even remotely, considers the possibility that fiat currencies may eventually be run on a protocol similar to bitcoin, with the government mining pool representing more than 51% of the hashing power of such block chain.

How do you get the smartest people to work on the next technological breakthrough?... You let them run amok with bitcoin!  

Had an inspiring conversation today, with a Colombian. As it turns out, Colombia isn't as dangerous as the US media and Hollywood love to paint it. People there are very welcoming to travelers... In fact, I could draw plenty parallels between life in Colombia and life in Russia, my home country.

Here's what that conversation had triggered... Could travel to Colombia and other countries become an effective way for this community to promote the use of BTC as money? Imagine a service that provides "curated trips" to the most interesting and fun spots around the world? The best part is that the service would bill strictly in BTC. Would anyone be interested in using such service and take a "curated trip" to a foreign country like Colombia?

Would you look at that, I am already on the list... or at least I think I am. 

What would be the end goal of this show?... Entertainment for the bitcointalk community?

Personally, I think this show would be more fun than watching the GOLD 2.0 bees buzz all day.

You might be right. Or perhaps there is the concept of yin-yang at play here? Either way, it's important that the miners look beyond the debit card use of bitcoin. Let's put it this way, does a debit card or a business that issues it (Mt.Gox et al.) gets to make a profit? (An please, remember, everything I have been saying so far is to be interpreted strictly as hints; it's up to each individual to do their own hacking around the hints.)



For those who are not yet paralyzed by the GOLD 2.0 bug, spend some time contemplating about the above two lines (thanks Stephen for summarizing it so neatly), then look at 1) the market cap, 2) the average volume of bitcoins being traded at Mt.Gox et al., 3) the average bitcoins sent per hour, and finally, look at 4) the total number of mined bitcoins. And if you are among the lucky few bitcoin miners who suddenly get the aha moment from this little brainstorming exercise, please take advantage of the receding bid orders.

Pretty much all types of currencies have that phenomena (as a store of value function)... I'm just trying to point out that there are two types of hoarding: "hoarding by money users" and "hoarding by central banks" (the issuers of that money). The former serves as a confirmation that a store of value function is present and working well within a currency, the latter destroys all three functions of money. Now, you seem to be in favor of the latter... What gives?

Look to "incentive can transition entirely to transaction fees" as a clue.

What made you think that I'm not aware of 21MM supply of bitcoins?

I know, it is unfair to ask everyone to read between the lines.

But I need the GOLD 2.0 mania to last a little longer.

But it is limitless!... Unfortunately, at this point, most would have to read between the lines in order to confirm for themselves the existence of that hidden gem, as I am still in the very early stages of negotiations with the miners cartel (a.k.a. the central banks of bitcoin economy). If the terms we agree on are favorable to both consumers and merchants, the bitcoin debit card business will continue as usual, unless of course it becomes a hindrance, once again.

If anyone wants to form a foundation around this — one that would speak on behalf of bitcoin consumers and businesses — please send me a PM. And if you are a writer, please state so in advance and let me know your rates in BTC (just say how much you would like to get per "published" article vs. blog post). The sooner we can persuade the miners that there's more to bitcoin than for it to be used as a debit card, the sooner we can all enjoy using BTC as money.

Let's face it, if you were a "non speculative" bitcoin miner, would you entrust your most prized possession in the hands of those who will treat it as nothing more but yet another GOLD 2.0 fix (sorry for the drugs analogy, couldn't resist)? So, doing away with the GOLD 2.0 mania throughout the bitcoin community (through education on the inner workings of BTC currency) is the first step to getting the miners to start putting into circulation more batches of bitcoins.

Now, did $100 moved into Paypal remained $100 until being spent or moved out? The bitcoin block chain, on the other hand, keeps count of what's moving through it, not what's stored in it. Notice the difference? The former is setup as a temporary storage, the latter is merely an accounting ledger.

High consumption and waste of resources steams from misappropriation of money. I'm not even remotely trying to suggest that miners go loose with their spending sprees and start financing government projects that the central banks are so in love with. The beauty of bitcoin is that those with the mining power behind them get to decide which projects to finance, be it all-inclusive resorts in the Bahamas, a lemonade stand on every 10 mile block along the favorite bike route, or a nanotechnology breakthrough.

Yet the values of both are still driven by spending: one slowly looses its value as the money supply increases (i.e. more currency units in circulation), the other slowly gains its value as the money supply increases (i.e. more bitcoin base units in circulation; bitcoin base units are not to be confused with bitcoins — currently, there are 100,000,000 base units per each bitcoin).

Given what goes behind the scenes, when relying on accounting principles instead of speculation for price discovery, your suggestion would chip away at BTC's value, whereas "save a little, spend a little more" would add to BTC's value. Try to play around with those two alternative approaches in your head, see if you can figure out why I tend to hold a different view regarding the BTC price discovery mechanism. This is still only a hint — not meant as an explanation.

That's precisely what's happening... It's a matter of bookkeeping activity, where as more BTC-based transactions take place the equity associated with each bitcoin in circulation (a.k.a. a line item in the general ledger) begins to pile up, since every party to a transaction would want to exchange their BTCs for something more valuable than what they had given up in order to acquire those BTCs. So, if the accounting books are never opened to record new transactions, no additional value hits the books — empty rows remain as empty rows.

Please treat the above only as a hint, and not as an explanation of what goes behind the curtain. As was stated in the OP, at this point I'm only interested in people reading between the lines, so not to cause a panic prematurely... There's still hope that miners would hear my plea for them to start spending while the exchange rates are still rather tasty.

There's no need to invent a catchy name as there's already one in existence.

It makes no difference whether you ask someone to pay you 1 BTC or 100,000,000 satoshies.

Perhaps one day no one will know that there is such thing as a BTC, as everyone would use satoshies.

I’ll be honest, the hoarding mania has got to go if bitcoin protocol is ever to support a fully fledged BTC currency.

Don’t get me wrong, I do agree that speculators are an essential part in building a bitcoin-based economy, but can we really rely on this trigger-happy group to provide our beloved BTC with the key functions of money: a medium of exchange, a unit of account, and a store of value?

Think about it for a minute, how do the key functions of money ever come into existence — what makes them tick, so to speak? In particular, what groups of money users are responsible for sparking and sustaining each of these functions? For example, would BTC have a “unit of account” function if it wasn’t for the miners keeping the block chain alive and intact?

It seems to me, the parties responsible for infusing BTC with the key functions of money are:

• Unit of account is a product of miners contribution;
• Medium of exchange is a product of consumers contribution;
• Store of value is a product of merchants contribution.

But what about the speculators, you may ask? Well, as it turns out, speculators merely help to grease the fourth function of money for the money changers (Mt.Gox et al.): a standard of deferred payment. However, as you may have already come to your own realization, when it comes to BTC, that particular function of money would soon be irrelevant, since BTC is truly a global currency. So, unless some of you (and especially miners) are planning on establishing trading agreements with the aliens any time soon, the money changers and their highly speculative worker bees shouldn't be your main focus.

So, let's use our speculator-driven bubbles wisely, shall we?... Update a mining equipment, bootstrap a new product/service, etc... BTC is meant to be spent, not hoarded! It's what makes it a real currency. I also hope that some of you will find time to read between the lines, as I wouldn't want a panic to ensue, if you know what I mean... Godspeed!