Except that rising prices is called inflation.


Except that falling prices is called deflation.

This message board is the only place in the world that has a different definition because of one misinterpreted quote by Milton Friedman.

It really is not very becoming.

Personally, I think it universally makes more sense that inflation and deflation refer to prices unless you say "monetary inflation/deflation."

Considering that Friedman did not even mean that inflating the money supply equals price inflation, it is about as faux-pedantic as you can get.

But even though deflation is universally used to mean price levels in bitcoin, that is ok?

This is such a silly distinction made by one person, a monetarist, that leads to "an aggravating spew of stupid arguments about one man's eccentric definition of a word on this message board phenomenon."

To transfer it to a future, better cryptocurrency, if such a thing could possibly exist. The only reason I brought that up was because of the issue you had with the energy waste. A future cryptocurrency could use essentially zero energy by not allowing currency creation and only bringing in currency over from destroyed Decrits currency. That is if the economy ever got to a reasonable steady state. I think it still would bring back the issue of manipulation, but perhaps at that point we'll have a Star Trekkian utopia. I don't really want to go off on a tangent about it. Yes energy gets used, the same is true for every currency and everything in production. It can't be avoided without introducing some kind of central authority that distributes the currency--and of course even then you go back to security, etc. ad nauseum. The argument compared to bitcoin and traditional fiat is moot. Decrits will be far more energy efficient.

The point was to move value to another currency if one so desired--there is no actual destruction of value. Bitcoin can accomplish the same thing with an address like 1111 or whatever like you said, but this was just a way to sanction it as well as remove the record of that currency from existence instead of leaving it sitting around in an inaccessible account.


In earlier versions of the Encoin proposals such a thing existed--destroying unrefunded transaction fees. However, Red originally brought up the idea of arbitrage, killerstorm mentioned it in this thread, and I think it makes sense. If the trade value of the currency is typically below its cost to produce, it presents an opportunity for arbitrage. People will want the currency simply because they know it would cost more to create it than they can buy it for. This is something bitcoin cannot defend against, because there is no mechanism for finding the true cost to create currency. In effect, I am willing to wager that bitcoin is more likely to experience extended periods of gross inflation than decrits. Like say, 1600% in a few months.

Now if there is a collapse of credibility, that is a different story and one that cannot be solved by destroying currency or whatever else. Every currency can suffer from this problem. Every single one. There isn't much you can do to fix it except hope that it rarely happens (or isn't permanent) by making the foundation for the currency solid. If the cryptography behind bitcoin or decrits is broken, that's it, game over. Destroying currency won't help.

Relax, brother. It is obviously unrealistic to tie this to an exact real-world scenario, but I am giving a similar parable to the person I quoted. You are derailing that.


This is all completely irrelevant to the example I provided.


This is where you are exceptionally wrong. Those manipulating the economy know precisely what is happening, and how best to take advantage of it. See the ENTIRE HISTORY OF MONEY.

The instability of other currencies did not cause the gold spike in the late 70s, speculation of the instability of other currencies did. As it turned out, the sky was not falling.


This is exactly the situation that Decrits can handle so easily though. "Decrits is so stable while all this other crap sucks! BUY ALL THE DECRITS!" And then currency production ramps up and keeps the price/value relatively stable, at least over time. What would eventually happen is that Decrits would become worth more vs. fiat currencies because nobody wants fiat anymore, but this would not affect the price of a loaf of bread in Decrits.


Many people make the argument that bitcoin is not energy-inefficient because of all the energy wasted storing, transferring, securing fiat. I don't really buy it, but the same argument applies here but divided by 10 for creating currency, and divided by almost zero in securing the currency. I think Friedman estimated that gold production at one point was around 0.5% of the US's GDP. If the world economy can ever reach a steady state (which might be a lot more likely with a stable currency), then very little energy is needed. Efficiency gains in old products can cause natural deflation while new products soak up the difference and allow everyone to be wealthier.

In my consciousness stream notes I mention a special transaction that destroys currency so this can be used as proof to transfer it to a new currency. The new currency could accept Decrits destruction for some time, but then eventually sever ties. This new currency could be without any form of money creation at all.

I don't know how you could possibly argue that the opposite is true unless you think that bittorrent traffic impedes other traffic, which is possible I suppose.

But ISPs have most definitely attempted to throttle bittorrent traffic.

http://torrentfreak.com/bittorrent-throttling-internet-providers-exposed-111020/

While your argument is correct, it leaves out some subtleties. Let's say in the bitcoin scenario the value of a bitcoin has increased solely because of increased value in the economy, and this value is 10%.

If person X has 10,000 bitcoins, he now effectively has 11,000 bitcoins, a real increase worth 1,000 (original) bitcoins in value.
If person Y has 100 bitcoins, he now effectively has 110 bitcoins, a real increase worth 10 bitcoins in value.

While this may be slightly more fair than the way fiat works (this is not necessarily true because of the issues of employment when it comes to deflation; factoring in deflation into the economy is still upsetting to the economy and probably more so than inflation), it still isn't that much different. It is not the people producing the new value that benefit, it is those that have control of the wealth in currency (banks mostly). And if it is money from the banks that is being lent to produce this new wealth, it is doubly advantageous for the banks because not only do they get the lion's share of the new wealth, but they also earn interest on it. A situation that is remarkably similar to fiat.

But the worst part is that Bitcoin doesn't know if new value has been added to the economy or if the velocity of money has reduced (equation of exchange). It has no way of knowing, and the wealthy can spend/loan less to make it seem like new value has entered into the economy, when in reality it is just manipulation of the supply. So while no new value has entered the system, person X still has 11,000 effective bitcoins and person Y has 110 effective bitcoins, but 1,000 bitcoins buys a lot more existing value than 10. And once those 1,000 effective bitcoins get into the economy and increases the velocity of money, person X has more real world value than he traded for in bitcoins.

This is a semi-valid argument. The top and bottom lines on the gold graph are inflation-adjusted values though. The problem with "inflation-adjusted" is that this is based on the consumer price index (CPI) which many people will argue is a flawed way to measure the inflation rate, but it's really the only thing we've got, and it is accurate enough.


The example I used with the encoin proposals is was something along the lines of "If a loaf of bread costs 1 encoin in 2012, then a loaf of bread will cost 1 encoin in 2050, assuming the production costs of bread have not changed." But such a thing is insanely hard to accomplish, and a more accurate description for Decrits would add something like, "unless the cost of currency production has changed, in which case if a loaf of bread costs 2 decrits in 2050, a coin saved from 2012 will now be 2 about coins (because of the coin multiplier)." Many of the risks (and incentives) added to creating coins is intended to make such a situation as unlikely as possible, but I can't guarantee it, so instead I guarantee you "free money" to make up for it. I suppose I should add something like this to the abstract.


BTC does not have this because the cost of creating currency generally follows what the currency is valued at. If demand for BTC is high and the value increases, demand for creating currency by mining is increased as well, and anyone who mines receives less currency for their mining efforts. Energy/hardware costs increase to meet the value of BTC whereas the value of decrits would decrease to meet the energy/hardware costs, resulting in much more stable price levels, and the inability for the wealthy/banks to manipulate the supply in order to make themselves even more wealthy.


I also spent much more time on technical details rather than economic details with the Decrits proposal, mostly because few believed what I said could be possible for Encoin, so I set to prove them wrong.



This leads to the currency being a poor store of value. I want Decrits to be both a fantastic transaction medium as well as a great store of value. Bitcoin is a great store of value, but not such a great transaction medium.

What you should argue is, if you are going to make the change, make the change smart. Doubling the size of every integer in the block chain so that you can go to 30 zeroes seems a bit odd from that standpoint. I wonder why satoshi didn't just go to 11 decimals though since that wouldn't have changed anything.

No one has made an effort to stop bittorrent that I know of, only throttle it. And there are many legitimate uses for torrents. I don't see why one would be particularly easier or harder than the other to block.

Banks usually lend money.

A 64 bit int can hold the entire supply (8 decimals in all) in one integer, 8,700 times over. 4 more decimals could be added and still almost hold the entire supply in one int64 (18.5 vs 21 with a bunch of zeroes). If you limit the left hand side, you could go much further than 4 more decimals.

Ugh I can't remember his name exactly, but there's an established cryptographer with a name like Hiroshi Osaka or something ridiculously similar to Satoshi's name. Quite a bit more relevant than this connection. Can't really give too much meaning to similar looking anglicanized Japanese names.

What do you think would happen if, for example, Satoshi actually does control 1-2 million BTC and starts a banking empire? (I'm asking your opinion, not giving a leading question.)

I disagree. See signature.

It does, actually, because encrypting the traffic does not hide the obvious patterns of that traffic. Encrypted bitcoin traffic will look much different from encrypted SSL bank traffic, and it will be pretty obvious until people start focusing their efforts on steganography and/or protocol obfuscation. Not simple tasks, and not efficient uses of bandwidth either.

Never has a more rage-inducing sentence been written. Block rewards that don't halve would be an example of disinflation, which will almost certainly still lead to price deflation or general instability in price levels.


This is not historically correct. If we want to take gold, for example:

http://upload.wikimedia.org/wikipedia/commons/thumb/9/9c/Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg/800px-Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg.png

There are many more factors at play than just having a large total value. And that is just speculative change--that doesn't address actual, economic change. Like, for example, the business cycle. Something that is oft-argued by bitcoin proponents to be something that bitcoin will address, which I wholeheartedly disagree with. I've used the term "BitStreet" to describe the manipulation that I think will absolutely occur has already occurred with a limited commodity currency. Without the ability to create new currency as needed, banks will hold disproportionate power over the economy. Power = Wealth² rather than simply Power = Wealth. Wealth, value, and productivity will once again trickle up the chain and there will be nothing that the people can do about it (except ditch bitcoin in bitcoin's case). Begin economic depression, wealth buys up durable goods, middle and poor lose years of productivity; rinse repeat same scenario as modern fiat.


The process doesn't need to be sped up, the process needs to react to economic activity in a sane manner. Drastic currency appreciation is not a sane route because it incentivizes manipulation and runaway deflation until powerful actors decide they can't pass up the opportunity to flood the market either via lending (rinse, repeat) or via fiat exchange; either way causing currency depreciation. A cycle, if you will, rather than anything close to an orderly expansion. And this cycle will happen every time the bitcoin market expands--there isn't even the potential for a gold rush as that possibility has come and gone and increasing production towards currency creation bears no fruit other than increasing currency appreciation even more.

The Decrits proposal, economically, is not anything remotely close to the same thing as BTC without the award halve.

Not with pruning.


It won't be several megabytes though, it will still be huge. Spent inputs are what gets pruned, that's it.