If I was to lend you 1000 Bitcoin today, I would charge you a 3% rate for the deflation, so you'd have to pay me back 1000*(1+0.25%)^2 = 1005.01BTC in two months. I suppose I should be surprised that it doesn't take more to obfuscate the transaction for you, but then not many here seem to understand much about economy. This and giving credit for 2 months is exactly the same transaction. You are loaning people money for two months. If you say that the customer can pay 10 BTC now or 9.95 BTC in two months, then you have loaned them 10 BTC and only get 9.95 back. You can pretend it's different because they bought something as well, or because you also give them the option to pay in a currency that devalues, but it's not. |
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If I'm selling something for B$10, I know I won't get access to the money for 2 months, and the deflation rate is -3%/12 = -0.25%, my price is 10*(1-0.25%)^2 = $9.95
So, I would sell for $10.50 in inflationary USD and for $9.95 in deflationary BTC. If I don't, I'll either not cover my expenses, or will be under-priced by my competitor.
Sounds like a great business model. You can lend me 1000 BTC today, and I'll give back 996 BTC in two months. That way you'll even earn 1 BTC. 10.50 is obviously wrong, btw. 9.95 isn't exactly right either, but close enough for this. |
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So... what exactly is it you think I haven't understood?
What inflation is, your explanation is still wrong. As I've already suggested, you should look it up. |
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To constitute a Ponzi scheme, two premises must be fulfilled
1. the beginner and followers create no value at all;
2. what participants earned is solely depend on what followers invested.
If you think that is enough then Bitcoin is a Ponzi scheme. 1. The persons holding bitcoins may very well create something of value, but just because they have some bitcoins and you do does not entitle you to any of the value they create. They can just as well realise that value through other currencies. Bitcoins do not *create* value, at best they help you preserve value that has already been created. 2. Almost all increase in the value of bitcoins comes from the fact that more and more people are putting money in bitcoins, and only a small fraction of the coins in circulation are being sold. A lot of money has been taken out of the system and will not go back in, so if for some theoretical reason everybody suddently wanted to sell they would on average get much less than they spent. |
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The fallacy is thinking "the price is X, plus it has some additional value because it will deflate".
No, the fallacy is not taking into account that that is what "everyone" is thinking. It is not possible to set up a formula to calculate what the price "should" be, which your theoretical approach requires. |
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Logic does not agree with you. Bitcoins aren't deflationary* until 2031. At present they are inflationary (more are being minted every day).
You need to look up what inflation means before you try to contribute to the discussion. |
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There are people who understand the economics behind your points, they're just (mostly) staying out of this.
As I've said, it is trivial to understand his points, but they are also oversimplified to the point of being useless for real world use. If you think they are enough to make a valid argument you are a victim of the Dunning-Kruger effect. |
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And you are wrong when you imply that the gpu temperature has no effect on the other components on board, the heat WILL transfer on to the other components, whether it be heat transferred by airflow, or heat transferred by PCB. (The PCB is actually pretty good at transferring heat, try to put your hand on the back side of your video card, and you'll see what I mean. There is no magic to be pulled off here, things will get hot)
But then I didn't say it has no effect. Why do you have to pretend I say something different from what I do all the time? I could just as well say that by your logic, if the GPU temperature is 90C then the temperature of the entire room the computer sits in will also be 90C. |
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That's not the question. The question is why Mr. Bernanke wants it not to be money. That's not really a question either, but I digress.
Another question is why you are claiming that Bernanke doesn't want gold to be money, when he never said that. All he said is that gold is not money. Neither is salt. It has been and it could be, but it currently isn't. Your assumption is probably right though, I don't think he wants gold to be money either. The reason is that it has been tried, and found to create a lot of problems that fiat doesn't have. Some would prefer those problems over those fiat creates, either because they think they are smaller, or because they pretend they aren't actually problems. They are apparently a minority in practically every part of the world, though. |
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There will always be some irrational people with irrational beliefs who do irrational things for irrational reasons. It's hard to tell how much gold hoarding is rational and how much is irrational. But it's not because they agree with the consensus view about how much gold will go up in value. If they did, they'd hoard about as much gold as the average person does.
Talking about rational or irrational gold hoarding is meaningless, and so is talking about a consensus. There is no consensus. If there were everybody would sell because it's no use in holding on to something that has reached it's maximum price and does not pay interest. |
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(snipped your beloved "proof") People have to know it's going to increase in value to be incentivized to hoard. People don't hoard dollars, but they might go up in value. Why don't they? Because they don't expect them to go up in value.
You want to argue that we all know it will go up in value unpredictably. That's self-refuting.
So why do people hoard gold at ever-increasing prices? Your theory obviously doesn't correspond with reality. |
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To the extent that we don't expect deflation, we don't expect hoarding. To the extent we do expect deflation, we can expect the price to be bid up to discourage hoarding. It's not coincidence that they cancel out, it's simple market mechanics.
Problem is, they can't cancel each other out in the long run unless you stop population and economy from growing. As long as the bitcoin economy gets larger the value of bitcoin will continue to inflate. As long as that happens it doesn't matter what price you put on bitcoin, the fact remains that it will be even more scarce in the future. That's why I said that the only reason to think the value of bitcoin will not continue to inflate is if you think it will fail. |
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The claim is that bitcoins will deflate, that people will know that they will deflate, and will therefore hoard them. I've argued that this isn't possible. Nobody can predict the future with 100% certainty and everybody knows it, so that's just another straw man. It's enough that people assume they will inflate, which a lot of people do, so they hoard them. The only reason to assume it will not inflate is if you don't think bitcoins will be a success. Apparently enough people currently thinks that to balance out those who think it will. |
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If a Bitcoin is forecast to be worth $1,000 USD in 2015. The current value of a bitcoin will have a market lower bound of whatever the present value of $1,000 USD in 2015 is. If I said "how much would I have to pay you today to get $1,000 USD in 2015" and you said "oh, about $815", then the present value of a Bitcoin will be bid up to at least $815, since a bitcoin includes the ability to have $1,000 USD in 2015 and that alone is worth $815.
You keep repeating these trivial models, but the fact remains that your theoretical models are only good in theory. There is no universal agreement about anything, so in practice they have very little value. They only look convincing if you already believe or want to believe what they are saying. |
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Sometimes it is very useful to find a definition of something that actually explains what it is, how it works and what it does. I thought a lot about this and found that all current definitions of "money" are lacking. All definitions of all words are basically lacking if you dig deep enough. Get used to it. |
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You both are wrong. Dollars, bitcoins, and other currencies are NOT money. True money is Gold and silver (physical). Those I listed are just mediums of exchange (currency).
Don't you find that using completely different definitions from everybody else wastes a lot of time? Having to explain what you mean by all the words you use differently every time you're talking with someone new, I mean. Nope. Do you? I assume that by Nope you mean yes. Personally I just try to use words in a way other people will understand. |
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The expected deflation only happens if bitcoins are an established currency with solidly established value and declining supply. Otherwise, people would just switch to some other currency. At least you now seem to agree that bitcoin has what can be called expected deflation. Now you only need to realise the logical result of that. As Jalum said, "You are sooo close". |
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"Not because they expect them to deflate due to scarcity, because they expect the probability that the expected deflation will actually occur will increase"? Does this actually make sense to you? That's just desperate. Of course it's because they are scarce. We will seldom get closer to "expected deflation" in the real world than we have with bitcoins today, so the purely theoretical "expected inflation" you are arguing against is basically a straw man. There will never be a universal agreement about anything, and certainly not a bitcoin price, so why pretend that is what we are talking about? That does not stop people from hoarding bitcoins.
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Some people have reported their Fermi cards reaching temperatures of ~110C. I don't think AMD cards would survive that.
1. You're ignoring the leakage issue I pointed out. Like I said, the snowball effect, a negative feedback loop, is a bad thing to deal with, it's best to stay clear away from the beginning. No, I'm not. The source of the heat is not relevant, and of course staying cooler would always be safer. 3. I've seen VRM components on HD5970 cards exceed 100 degrees, if anything, it's the digital VRMs on reference high-end ATI cards that are of higher quality and higher tolerances than Fermi's cheap low cost circuitries. We weren't talking about VRMs, I'm well aware that they get much hotter. On one of my cards it's 109 right now. 4. Fermi is made from exactly the same silicon as AMD's chips, they come from the same manufacturing process, that same manufacturing process is from the very same semiconductor foundry, as far as the core goes, the only argument on your side is that Fermi is a physically larger chip and that the heat is distributed over a wider area surface, but I seriously doubt that this has much weight when put up against the other points I made. Even though silicon is generally silicon, that doesn't mean that some designs can't be more resistent to heat problems than others. The temperature measurement is for the GPU, most of the other components will have a much lower temperature.
Actually some components can be having even higher temperature than the core. Which is probably why I said *most*... Videocard coolers are not magical, they will transfer the heat away from the core, but you can't guarantee that that same heat won't be transferring directly into the other components.
Of course you can. If the component doesn't touch the heatsink or the GPU and it doesn't create a lot of heat on it's own, it will be cooler than the GPU. Wheather or not it touches the heat sink, it will be cooler the further away from GPU you get. The designers of graphics card aren't stupid, and take this into account. |
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Businesses depend on loans because they are artificially so cheap right now. No, businesses depend on loans because you have to spend money to make money. Of course, if the value of the money increase faster than most businesses can earn them then doing business will be bad business for most people who already have money. I'm sure you think you have a really good explanation for why this is a good thing too. |
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