However here in bitcoin world, there is no such kind of financial responsibility. If devs push in a change which resulted in customer loss, the devs are not responsible for the damage, or to say, they don't have enough money to compensate the loss from millions of users. The users are all on their own
if they mess up bitcoin, the dev's own income and savings is also lost.. thats why they dont want to mess up. and each new release is tested. and in the result of a bug in a new release. people downgrade to previous version and the bug is gone until its sorted out for an amended new release. bitcoin is actually more secure then you think, you are not relying on 1 coders say so. there are usually 1000+ coders all using new releases before the general users even get the option to upgrade. so if there was any issue, the coders would be the first to get affected. Yes, being the stake holder in the system will prevent devs from intentionally harm the system. But still they can make mistake, and a mistake in bitcoin network will bring real financial impact, like reversed transactions, lost mining income etc... I still remember that during 2013 fork, those miners lost hundreds of coins due to they were on the wrong chain by running Gavin's new version, eventually their loss was compensated by the mining pools, so it was mining pools took the responsibility, not core devs. And that directly resulted in that almost none of the mining pools favor Gavin's code this time |
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Second, people's productivity raised by hundreds of times due to technology advancement, but their income just increased by 10 times, they indeed became richer, but their slave master became millions of times richer, that is the huge wealth gap we observe since removing of the gold standard
There is no linear dependence between productivity growth and the wealth of society. And I'm doubtful about the productivity growth in terms of hundreds of times (during the last 100 years, at least), though I understand what made you think so. Obviously, you don't know what actually moves the society to the next level of wealth. Hint, this is not productivity per se, but since you think it is, you should necessarily gauge its growth so much (given the growth in total wealth). But this is irrelevant because you obviously prefer that we were all equal in poverty (under the gold standard) rather than different in wealth (after we moved to fiat)... Are you a communist, johny, Swedish style? Are you a central banker or something? So I agree to whatever your economy belief, I will print money and you work, I'm fine with that |
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Then you have to deal with the fact that people during the last 100 years have become much richer overall, despite all the fiat floating around since then. Otherwise, you will have a hard time proving that "for more than 100 years fiat has been a parasite living off people across the world"...
Since becoming richer and better off is surely not something you would expect from the victim of a parasite
First, two world wars killed billions of people, so the rest of the people get to share a little bit more resources on the planet Billions of people, wow?! What did I miss? The world population on the eve of WWII was only slightly above 2 billions of people, and around 1.7 billion in 1914, before the First World War started. By the way, the Spanish flu of 1920 killed in one year more people than had been killed during the four years of the First World War. And just smallpox killed by far more people that all wars combined (literally billions of people throughout history)... So your argument of "a little bit more resources" is inconsequential at best You did not count those dead people's children and grand children? |
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So, as long as bitcoin scales well, the fee income for miners will never be able to rise to replace block subsidy
Although you ask a legitimate question, your argument does not prove this conclusion. Estimates will be easier to make once it becomes clear where transaction volume is going and how much volume is handled by the bitcoin blockchain itself vs. how much is being moved to something like the lightning network. This conclusion is based on the fact that the fee per block is decided by the orphan risk, and the loss from a orphaned block is decided by its subsidy. So as block subsidy goes down, the loss from a orphaned block also goes down, and the fee per block also goes down If orphan risk rises exponentially above certain threshold, for example 2MB block to take 10 minutes to broadcast to majority of nodes, then maybe fee will rise quickly to get close to block subsidy |
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No, not if you're a scientific genius, it's not. For the rest of us, yeah, it is.
Being a scientific genius is far from enough, there are so many professors financially broke because they lack of financial knowledge. In fact human all make wrong decisions, and different people have different interest, the point of bitcoin is to remove this kind of trust |
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So, bitcoin is about believing and trusting people?
Exactly, instead of trusting a group of bankers you trust a group of developers, then this is not a trust-less system The problem here is that an open source project does not take any financial responsibility At enterprise level, if a company push in a software change which resulted in customer loss, the company will have to pay the fine/compensation to customer based on the service level agreement or similar contract. So there are usually strict change and release management procedure in place to avoid such kind of loss as much as possible However here in bitcoin world, there is no such kind of financial responsibility. If devs push in a change which resulted in customer loss, the devs are not responsible for the damage, or to say, they don't have enough money to compensate the loss from millions of users. The users are all on their own Imagine that in future if pension fund and social security fund are all invested in bitcoin, and devs pushes out a change and let their bitcoin stolen, who is going to compensate for the losses caused for millions of people that relies on these funds for their retirement? Of course no one can insure against everything, there is always risk, but it is a general practice to not take drastic change in financial projects unless in a crisis, and we are far from that yet |
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You are uninformed and seem to be obsessed with that, lol. I asked you to choose the year right to check how familiar you are with the question. You failed the test, wow. One of the reasons to establish the Fed (as you may remember, in 1913, i.e. almost 60 years before 1971) was a recurrent shortage of liquidity, that is, the true dollars that were fully backed up by gold. The Fed was allowed to print its Federal Reserve notes that were required to be covered in gold only partially. In 1933 the former were abandoned altogether, and the latter became what is today known as the US dollar. Nixon had to cancel the gold content of the dollar since France (and a few other countries) demanded to exchange their dollar reserves for gold in the second half of the 60s. The US dollar had fully divorced gold long before that...
Many consider year 1933 as the end of the gold standard epoch
Anyway, no meaning in arguing over details, let's say that creating money out of nothing has been existing since 1913, then we have more reason to flee it since the scam has been going on for more than 100 years Then you have to deal with the fact that people during the last 100 years have become much richer overall, despite all the fiat floating around since then. Otherwise, you will have a hard time proving that "for more than 100 years fiat has been a parasite living off people across the world"... Since becoming richer and better off is surely not something you would expect from the victim of a parasite First, two world wars killed billions of people, so the rest of the people get to share a little bit more resources on the planet Second, people's productivity raised by hundreds of times due to technology advancement, but their income just increased by 10 times, they indeed became richer, but their slave master became millions of times richer, that is the huge wealth gap we observe since removing of the gold standard |
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Late adopters are those who have not born yet, and they are endless  |
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What you argue here (as I understand it) is that miners won't be able to 'understand' the SW patch, so they won't run it. I highly doubt both an assertion and a conclusion. I am sure it will be rolled over quite fast. But I have no real proof so we have to wait.
To migrate to a large change in infrastructure, you need to not only understand the solution, but also fully aware of the impact to the existing system and all the other systems that are dependent on them, potential security risk, evaluate its risk/reward ratio, and finally and most important, you should always be able to roll back to the old version if something went wrong A soft fork qualify the last criteria, but still, from risk/reward point of view, I don't feel it worth the effort given the risk it involves. You change to a new untested architecture, what if after 1 years when majority of the nodes were upgraded to SW and found out that there is a deadly security hole that can not be covered, thus hackers can spend anyone's coin? Bitcoin's value relies purely on its security model. Existing architecture worth a lot because it is robust and time tested for almost 7 years. It worth a little in the beginning, since there are too many possible security risk to break it apart, thus it must survive the test of time to gain its value. Now if you change to another untested architecture, it will basically reset its value to zero, and take equal long time to establish people's trust |
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Aside from added complexity, there are no downsides (yet).
For me raised level of complexity is the biggest downsides of any change. Typically in an enterprise environment such change will cause huge problem in the test lab where many test case failed due to some strange behavior they have never been designed for In this case I have asked several questions and it seems no one has been able to give any concrete answer, which is already a dangerous sign, means centralization of knowledge |
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There are many guys calling a bond bubble burst, in reality how is that going to play out?
Suppose that when interest rate rise, people all selling their bond for money, resulting a crash of the bond price, what would that impact economy? Which bond holder is going to be hurt most? Pension fund and social security fund?
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At each reward halving, to keep the miners running with same incentive, either the bitcoin price need to double or the fee income per block would compensate for the loss of the block subsidy, but it seems that the fee per block is impossible to rise in near future:
Currently the fee income per block is around 0.5 bitcoin, very little comparing with the block subsidy. So the only thing works to keep the miner's incentive is to raise the bitcoin price by 100%, otherwise miners will shutdown their operation due to unable to profit, resulting in weak security
In general, there is an extra delay when including one transaction, and that delay will increase the risk of a block being orphaned thus lose the whole block subsidy and fee income altogether. If you include 2000 transactions today (1MB block), that will add up to 1 minute delay when broadcasting to the whole network, which is about 5% risk of being orphaned (not precisely calculated from Poisson distribution, just an example, 10 minutes delay means the block will have a 50% chance of being orphaned), so 5%x25btc=1.25 btc is the cost of 1MB, divided by 2000 transactions, you get 0.000625 btc fee per transaction, which is a fee that is accepted by all the miners today, means the real cost is lower
If the cpu/network speed doubles at next reward halving, then each block can include double amount of transaction at the same opportunity cost, e.g. 4000 transactions for 5% risk of being orphaned. However, the block subsidy is 12.5 coins by then, 5%x25btc=0.625 btc will be the cost of 2MB, divided by 4000 transactions, that is 0.00015625 fee per transaction
So the fee per transaction will be cut to 1/4 at next reward halving, if bitcoin price doubled, then it means the fee is getting 1/2 cheaper for end user. If bitcoin price quadrupled, then the fee costs the same as today
Following this route, when block subsidy is cut by half, the fee per block will also be cut by half, with double amount of transaction capacity, resulting in 1/4 of the btc fee per transaction. It seems that the fee per block will stay small relative to block subsidy in foreseeable future, unless there is a fee market driven by limited transaction capacity
It is possible that during a bubble next year, the transaction per 10 minutes raised to 8000, then they will be competing for 2000 transactions per block, causing a rise in the fee dramatically. But that is a situation much more difficult to analyze, since they will also reduce the transaction frequency and even use clearing based services to avoid high fee
And this is the case that you directly use blockchain to do transaction, if you use clearing based solutions then the fee can be 0 for end user, and the real traffic on blockchain might grow even slower
So, as long as bitcoin scales well, the fee income for miners will never be able to rise to replace block subsidy
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I guess long before that, the fee will rise to a level that is enough to maintain the incentive of miners, maybe 1 bitcoin per block forever. It can be that every 4 years, the fee doubles to compensate the loss in block reward, at the same time the number of transactions per block might also doubled to keep the fee per transaction roughtly the same level
But if this happened, bitcoin will either crash, because the TX fee is so high, or bitcoin will become very very cheap to compensate for the TX fee. After further thoughts, this is a complex topic, involving several variables At each reward halving, to keep the miners running with same incentive, either the bitcoin price need to double or the fee income per block would compensate for the loss of the block reward Currently the fee income per block is around 0.5 bitcoin, very little comparing with the block reward. So the only thing works is to raise the bitcoin price by 100%, otherwise miners will shutdown their operation due to unable to profit, resulting in weak security After a couple of halving, 12.5, 6.25, 3.125, 1.5625, 0.78125, 0.390625, the block reward will become less than the fee per block today. I think that price doubles every 4 years are still guaranteed, so the incentive holds However the development of fee per block is different, this is decided by the cpu/network capacity increase and possible other scaling solutions In general, there is an extra delay when including one transaction, and that delay will increase the risk of a block being orphaned thus lose the whole block reward altogether. If you include 2000 transactions today (1MB block), that will add up to 1 minute delay when broadcasting to the whole network, which is about 5% risk of being orphaned (not precisely calculated from poisson distribution, just an example, 10 minutes delay means the block will be orphaned half of the time), so 5%x25btc=1.25 btc is the cost of 1MB, divided by 2000 transactions, you get 0.000625 btc fee per transaction, which is a fee that is accepted by all the miners today, which means the real cost is lower today If the cpu/network speed doubles at next reward halving, then each block can include double amount of transaction at the same opportunity cost today, e.g. 4000 transactions for 5% risk of being orphaned. However, the block reward is 12.5 coins by then, 5%x12.5btc=0.625 btc is the cost of 2MB, divided by 4000 transactions, that is 0.00015625 fee per transaction So the fee will be cut to 1/4 at next reward halving, if bitcoin price doubled, then it means the fee is getting 1/2 cheaper for end user. If bitcoin price quadrupled, then the fee costs the same as today Following this route, when block reward is cut by half, the fee per block will also cut by half, with double amount of transaction capacity, resulting in 1/4 of the btc fee per transaction. If bitcoin's value x4 every 4 years, then the fee per transaction will stay at current level. If bitcoin's value X8 every 4 years, the fee will double each time, still manageable for decades. It seems that the fee per block will stay small relative to block reward in foreseeable future And this is the case that you directly use blockchain to do transaction, if you use clearing based solutions then the fee can be 0 for end user, and the real traffic on blockchain might grow much slower |
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A forever expanding money supply and forever expanding debt, never be able to payback, thus everyone have some incentive to work. Debt is similar to dream, the ultimate incentive to work
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In the future when bitcoin is fully adopted, the value of a bitcoin will flatten out and the return from investment will go to 0, so nobody will invest. What will support the price then?
Even bitcoin is fully adopted by existing working people, there are still 370K new baby born every day, and every day similar amount of young people enter the labor market and begin to save for future spending or retirement, some of them will purchase bitcoin, so you will never run out of new buyers So, the exchange rate of bitcoin against fiat money will keep rising due to that these new people will have higher and higher total fiat money income each year because of inflationary monetary policy. If one day fiat money stopped printing, then bitcoin's price will stop advancing, but it is almost impossible since that means the economy must stop growing Of course the price does not develop like a clock, there will be waves of large rally and crash, even driven by credit money. But eventually bitcoin on market will become less and less and new people's fiat money income will just get more and more, so the trend is clear long term wise. The only question is why should every one purchase bitcoin instead of other capital goods, I think at least some part of the portfolio will contain bitcoin, because it has some unique properties that all the other investments do not have |
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Don't agree here. Bitcoin is a terrible choice for holding long term value due to it's historic and extreme volatility. The USD is far superior in every aspect for saving, and USD will continue to be fine for saving for the foreseeable future.
You can always deleverage if you think the risk is too high, but if you deleverage the risk of bitcoin to the same level of other financial products, you will clearly see that the return would be magnitudes higher than any other investments on this planet |
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First, income on an investment means return on capital. If you buy a bitcoin, 100 years later, you still have a bitcoin. There's been no income, and there will never be any income associated with owning a bitcoin.
That is not to be confused with capital appreciation. If you buy a bitcoin for 100 dollars, and later sell it for 200 dollars, you have realized capital appreciation. Bitcoin only affects your wealth through capital appreciation or depreciation. There is no underlying business that creates profit, like with stocks and bonds. A stock can affect your wealth through capital appreciation and through income distribution, where it pays a portion of current profits to the owners.
So no, the income from bitcoin is not much higher than any kind of stocks and bonds, because there is no income associated with bitcoin. And you can't make that argument for capital appreciation either, because bitcoin is down 67% from it's high price in 2013. Odds are that anyone who bought bitcoins any time in 2014 is still sitting on a loss.
You did not count in the purchasing power loss of fiat money, which makes all the calculations here irrelevant. I get double amount of dollars, that does not mean the purchasing power is higher than the time I purchased bitcoin, since everything else's price could have also risen against dollar by 100% All the current business calculation is based on a hidden indication that fiat money have a fixed value, which is definitely not true for anyone can see the whole picture. USD has lost most of its value in the past century and even now it is depreciating against all capital goods at an amazing speed Unless you bought exact in the bubble top, if you calculate the price of bitcoin with Ruble, you will easily see that everyone who bought bitcoin with Ruble has already returned to profit, early investors have gained hundreds of times in terms of Ruble |
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I guess long before that, the fee will rise to a level that is enough to maintain the incentive of miners, maybe 1 bitcoin per block forever. It can be that every 4 years, the fee doubles to compensate the loss in block reward, at the same time the number of transactions per block might also doubled to keep the fee per transaction roughtly the same level
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On the other hand, there aren't many merchants who accept it presently who actually hold bitcoin. Rather, they use payment processors who accept payment in bitcoin on their behalf and immediately convert the transaction into USD. The value of bitcoin is not stable enough to let businesses use it with any confidence that they won't lose money on their transactions, so it is far safer to immediately convert to fiat and pay a small fee in order to serve a niche market that wants to pay in bitcoin.
Exactly, that's the reason merchant acceptance does not affect bitcoin's value, it is mainly decided by the capital inflow, which comes from people's demand for saving. Current gentle inflation monetary policy already removed the possibility to use fiat money for saving, then this demand must find a suitable currency, which is bitcoin |
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An investment in stocks and bonds (which represent an ownership stake in a business) is not comparable to bitcoin, which has no potential to create income. It is the ownership stake in a business which gives stocks and bonds their value. Anything can have value, yes, we agree on this. But I wasn't disputing this. My point was that utility gives value, and altcoins have no utility, which is why they only go down in value. It doesn't take much to accept an altcoin as a merchant, literally just an address which you can set up in less than a minute. The reason they don't is because it's not even worth that little effort.
The income brought by bitcoin is already much higher than any kind of stocks and bonds. If the stock/bond price fall 20% while you get a 2% dividend/interest, that is a loss not income Bitcoin's biggest utility is to bring you income long term wise. Altcoin is much more risky because their function can all be done in bitcoin, and to concentrate the effect of investment, capital usually goes to the strongest network |
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