the greater fool theory states that the price of an object is determined not by its intrinsic value, but rather by irrational beliefs and expectations of market participants. a price can be justified by a rational buyer under the belief that another party is willing to pay an even higher price. in other words, one may pay a price that seems "foolishly" high because one may rationally have the expectation that the item can be resold to a "greater fool" later.
Or sold at a loss to the next buyer to prevent even bigger loss when the trend turns  This theory applies to many things, like fiat money, stocks, bonds, options, swaps, funds etc... In a word, anything that is an abstraction of value can be simply regarded as a thing that you can only dump it to the next people who accept it as payment And when majority of the people accept it, the loop will be closed and the ecosystem will be self-sustainable like fiat money |
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Their token is totally on the opposite side of the equation: They want it to lose value while bitcoin will always gain in value. Money printing is not stimulating economy but robbery, print a cryptocurrency to rob people with negative interest is still robbery  Who would be interested in a cryptocurrency that is constantly losing value through negative interest? |
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I don't think high frequency regular payments will be handled that way. Mobile operators used to operate on minute based charging, and then they found out that added transaction/billing management did not worth the effort, so they switched to another model, offering limitless call time with a fixed monthly rate, achieving even higher profit and user satisfaction
Similarly, it will be a huge pain if you need to have both party to sign the transaction in payment channel for each of millions of transactions during a day. They might come up with a better model to reduce the management overhead
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Have you watched the movie "In time"? To make time a currency, you should be able to transfer time biologically in order to extend the life of the beneficiary  |
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Fiat within itself is a paradox. Dollar is less and less valuable, it loses purchasing power since decades ago, yet, America has keep growing and developing, people still accept dollars all over the world, and it doesn't seem like its going to change anytime soon, no matter how many QE they do.
It simply because most of the people do not have any other choice than using domestic fiat money. If they have the freedom to select what type of currency they use, it will be very different, just like some countries using USD as currency due to poor domestic money In fact, when majority people's salary is received in the form of fiat money, they will even fight to protect its value. So once it is widely spread, it's impossible to stop |
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How many people from today will still be bitcoiners in 20 years? I'd say very few.
That's an intriguing question. Let's say Bitcoin is still around in 20 years, which is far from guaranteed. If you're here today that means you're taking a wild bet on the future and have a little bit of vision. Unless you get divorced or become a crack addict you'd be pretty dumb to get rid of absolutely everything. Hopefully a shred of vision should remain. We know what happened to those who sold up in the early days. Many p2p file sharing networks have been existing since 2000, and they will exist in foreseeable future. I don't think bitcoin will be any different, as long as its several major properties are intact |
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They will keep printing and buying lands and houses with printed money until they become the biggest landlord As a normal people, the only way to fight against this robbery is to raise the price of your products/services, but unless everyone is aware of this, raising your price will put you in a disadvantage in market competition. But land owners will be very easy to be united to raise their price due to limited supply |
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When a channel is created, a corresponding refund transaction is created as well, that gives back the coins. Let's say it's locked for 30 days.
Now, when a intra-channel transaction is made, it's locked for 29 days. And with every subsequent transaction the locktime is decreasing. It means that the most recent transaction has the lowest locktime, and thus will be the only one confirmed when channel is closed.
I can imagine that both Coinbase and Bitpay creating a 24 hour time locked transaction, where each party pay 1000 coins to the counterpart (The transaction have two input and two output) Then, when Alice is paying Bob 100 bitcoin, a corresponding transaction of 100 bitcoin will be reflected into this balance, thus a new transaction of Coinbase paying Bitpay 1000 bitcoin and Bitpay paying Coinbase 900 bitcoin are generated and pushed into payment channel, replacing the previous one Then if Coinbase went down following this transaction, this last transaction will make sure at the end of the day, Bitpay would still receive 100 bitcoin In order to do this, both funding address of the time locked payment must be locked and prohibit further spending from that address until the channel is closed (What if a malicious user created an extremely short time locked transaction, refuse to pay anything and close the channel immediately?) Still, someone has to push the new transaction into payment channel, and how to make sure this new transaction correctly reflect the reality is the key. Since the payment channel does not know anything about Alice or Bob's trading activity, it is the responsibility of Coinbase to push in the correct transaction, and at the same time it must inform the Bitpay to credit Bob's account with 100 bitcoin. It seems the transactions in payment channel must have some other spaces to specify the address of initial sender and final beneficiary |
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If you want to get the maximum effect of monetary deflation, you would only invest in one cryptocurrency that is most mature and widely accepted. That's the reason other coins, no matter how technology advanced, are monetarily disadvantaged, since they are essentially inflation in cryptocurrency world
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Then the question arises: If institutions still need to use the traditional way of clearing, then why do they use LN at all? They can just open an account at each other like how it is done between banks today
Because LN provides the way of doing so trustlessly -- one cannot steal funds, and in case of uncooperative behavior the channel is resolved on the blockchain. I still don't really understand how a channel works under dispute, e.g. both party claim different truth. I think that is not possible without a judge-like third party involved And the traditional approach is also trustless: Bitpay have a 1000 btc account at Coinbase, Coinbase have a 1000 btc account at Bitpay, if Bitpay run away, his account at Coinbase will belong to Coinbase, vice versa As far as I'm aware, OP_CHECKLOCKTIMEVERIFY is used to ensure that only the most recent tx is valid. In case of traditional approach, it's not trustless. Imagine that Alice on BitPay transacts 100 BTC to Bob on Coinbase. BitPay deducts Alice's balance by 100 BTC and deducts 100 BTC from Coinbase's account with it. Now Coinbase credits Bob by 100 BTC. Effectively, it means that Coinbase is being owed 100 BTC by BitPay, which is supposed to clear at the end of the day. But if BitPay runs away with money, Coinbase is short 100 BTC! Yes, that is a risk, banks must constantly watch the net exposure. I guess 1000 BTC is 1% of their funds, and 100 BTC is 0.1% of their funds, so the loss is still controllable And can you explain how such a situation will be solved in LN? |
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Then the question arises: If institutions still need to use the traditional way of clearing, then why do they use LN at all? They can just open an account at each other like how it is done between banks today
Because LN provides the way of doing so trustlessly -- one cannot steal funds, and in case of uncooperative behavior the channel is resolved on the blockchain. I still don't really understand how a channel works under dispute, e.g. both party claim different truth. I think that is not possible without a judge-like third party involved And the traditional approach is also trustless: Bitpay have a 1000 btc account at Coinbase, Coinbase have a 1000 btc account at Bitpay, if Bitpay run away, his account at Coinbase will belong to Coinbase, vice versa |
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Yes, there should not be any kind of censorship, given all the talk truly represent the opinion of a true user
However, there are many ways to affect the atmosphere of a forum by intentionally creating lots of newbie account to post pro-XT posts and it is even enough to buy out several account to post every hour to flood the forum with lobby kind of information. This is commonly practiced in chinese forums when government paying out 0.5cny/post for some people to post pro-communist-party posts and attack other opinion, so that the whole forum is flooded with communist talk
So it can be difficult to remove this kind of spam and lobby posts. It is important to not let the forum become a political playground
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A new reason to hold it: In case banks are going to remove cash from the circulation in order to effectively implement negative interest policy, the bitcoin will be used as cash
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True, LN seems to be very similar to how banks and institutions work in a closed loop. However, in legacy financial system, one weak link on the chain might trigger a systematic failure like Lehman brother's case, because the whole system have very little real money in circulation. If LN chains are widely applied, it will also have such kind of risk, and without central bank bailout
Not sure, what kind of systemic risk are you talking about? If a link fails, one simply has to wait until contract expiration. I might've missed something. Not really sure, but I guess the LN nodes might be practicing FRB by then, and the failure of one nodes will trigger a large scale of withdraw to blockchain from every nodes customer, thus collapsing them all. How to make sure an exchange does not do FRB? I suppose most of them do today If they are in fact using Fractional reserve then perhaps you do have a point. Fractional reserve banking is the equivalent of not being solvent. SO funny how banks are legally able to operate while being insolvent.  FRB is a fact, it happens on every centralized financial institution, simply because most of the funds are not moving: Suppose that a web wallet provider have 1000 customer, and each customer constantly maintain 1 bitcoin buffer in his web wallet, the total amount of coins in web wallet provider would be 1000 bitcoins. Those coins never get less as long as the customer base does not change, then it gives web wallet provider an incentive to lend out those coins to earn some interest Of course bitcoin lending are extremely risky, so today those institutions just throw those coins into a cold storage. But when the market matures, they can essentially lend out most of those coins without causing too much trouble Some of the exchanges like btcchina provide others transparent audit of its customer fund database and its cold storage, to prove that they do not do FRB, but the liquidity condition is usually a guarded secret for most of the institutions. And from risk point of view, a 50% reserve ratio can be regarded as extremely safe |
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Conducting off the blockchain transaction will sure put more pressure on centralization But I'm just wondering if that will involve another ledger to be created since i wonder how are they going to record and capture all these transactions before broadcast it to the blockchain.
I also have this question Suppose that there are 2000 transactions happened in a payment channel during a day, how could these transactions hit the payment channel and be cleared every 24 hours before the final settlement are written into blockchain? In legacy financial system, Bitpay and Coinbase would need to keep and update a common list of all their customers' address, and credit/debit each other when a payment between their customer happens. At the end of day, all the to/from payment cancel each other and the net result is written into blockchain It seems this list of all the customers would need to be maintained outside of blockchain, and the blockchain is just used as a final settlement mechanism Then the question arises: If institutions still need to use the traditional way of clearing, then why do they use LN at all? They can just open an account at each other like how it is done between banks today |
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Not really sure, but I guess the LN nodes might be practicing FRB by then, and the failure of one nodes will trigger a large scale of withdraw to blockchain from every nodes customer, thus collapsing them all. How to make sure an exchange does not do FRB? I suppose most of them do today
You can't collapse the whole system because of a the failure of a single node when it comes to LN. Essentially LN will be like a distributed network. Each channel is a payment relationship between two people. Existing payment channels, like what Streamium uses, end there. What the Lightning Network would introduce is the ability for channels to be chained together to send a payment from one person to another through any number of intermediaries.
Example:
Alice comes across Dave's wallpaper site and wants to buy one for 50 bits. Alice doesn't have a payment channel with Dave and doesn't want to set one up because this is a one off payment. Alice does have an existing channel with Bobpay, though. Bobpay has a channel with Carolbase and Carolbase has a channel with Dave. Alice and Dave can create a set of transactions that chain the channels together so Alice pays Bobpay who pays Carolbase who pays Dave.
This is taken directly from reddit. The Lightning Network does not have a single point of failure (as far as the technology itself is concerned). Although I'm not sure what exactly you're talking about? Could you elaborate and back it up with a source? The risk comes from the centralized organization, not LN in particular. If each LN payment channel is totally independent from others, then the fail of one channel would only affect two institutions. However if many channels are chained together and many channel carries third party payments, then if one of the main channel failed (for example hacking of one of the private key in Bitpay), then all the transactions are stopped due to the chain is broken |
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True, LN seems to be very similar to how banks and institutions work in a closed loop. However, in legacy financial system, one weak link on the chain might trigger a systematic failure like Lehman brother's case, because the whole system have very little real money in circulation. If LN chains are widely applied, it will also have such kind of risk, and without central bank bailout
Not sure, what kind of systemic risk are you talking about? If a link fails, one simply has to wait until contract expiration. I might've missed something. Not really sure, but I guess the LN nodes might be practicing FRB by then, and the failure of one nodes will trigger a large scale of withdraw to blockchain from every nodes customer, thus collapsing them all. How to make sure an exchange does not do FRB? I suppose most of them do today |
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Just look at the facts: Japan's debt to GDP ratio is more than 214%, Greece is only 161%, why no one is blaming Japan? Because they simply print some Japanese Yen to solve their problem. Give the Greece central bank the right to print Euro, then everything will be back to normal overnight
Because the Japan is able to pay their debt and Greece not. Even if the debt of Japan is double of that. Because Japan work and Greeks don't. Greeks cheat their Government about the money and the Japan not. It is not problem of Central Bank. If Greeks will have Central Bank they will print money without ceasing. Money that don't justify their state of economy. Because they are accustomed to cheat and lie about everything and with everything. After every crisis they will print other money continuously. Going down and down. The money cannot be paid with new printed money (which is the thing that do the Central Bank) BUT WITH WORK. Following this reasoning, ECB must get punished more than Greece people, because they never work, they just print money. Unfortunately, central banks print money, rest of the people work, that's how it works, and has been working for hundreds of years "During the Early Modern era, European monarchs would often default on their loans or arbitrarily refuse to pay them back. This generally made financiers wary of lending to the king and the finances of countries that were often at war remained extremely volatile. The creation of the first central bank in England - an institution designed to lend to the government - was initially an expedient by William III of England for the financing of his war against France. He engaged a syndicate of City traders and merchants to offer for sale an issue of government debt. This syndicate soon evolved into the Bank of England, eventually financing the wars of the Duke of Marlborough and later Imperial conquests." "The founding of the Bank of England revolutionized public finance and put an end to defaults such as the Great Stop of the Exchequer of 1672, when Charles II had suspended payments on his bills. From then on, the British Government would never fail to repay its creditors. In the following centuries, other countries in Europe and later around the world adopted similar financial institutions to manage their government debt." |
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"The war is over; let the occupation begin."
The occupation is wanted by Greeks thyself. If they didn't taken all those money (credits) without thinking that are not their money and that one day must be returned back (even with interests) now it wouldn't be in all this mess. But they wanted to make the good life without thinking to much about from where come the money which gave them this kind of life and that to make that needed work and not credits. I would tell better: let's work begin. If they work hard had chances to be free again. All the governments do this today, look at the national debt of US/Japan/Germany, they are magnitudes larger than Greece and they will never be able to repay. However all these other governments' central bank can always print new money and lend it to their government to pay back their old debt, while Greece central bank does not have this right because Euro is printed by ECB, that's the fundamental problem for Greece Japan for example has much worse debt to GDP ratio than Greece, so they have experienced slow growth for almost 20 years, but still they do not need to ask for another nation's permission to print new money to pay back the old debt Your analysis is not correct. No one of debt mentioned by you of the country above is like the Greek debt. Nor in structure and nor from where is. And nor (that is important) unsustainable like it is the Greek debt. Tell me from what country has taken money Germany or Usa and from which country they had impossibility to pay that debt (if exists). Greeks had money without worked, Greeks has cheated (with false financial data) to have that money, Greeks has cheated to enter in EU (falsified the balances and the financial data). Greeks has in its nature doing this things because is the five time that succeed this situation in its history. In the Greece half of the people don't pay the taxes of hide the financial data to not pay the taxes. Greeks had the money of the others and had voted to not give back the money to the owners. Do a search in internet and you will find all those data. Tell me which of countries mentioned by you had doing these things? Which, among others, are the countries (part of those) which have give the money to the Greeks. To help you a little I give this article about the habit of the Greeks to take the money of the others and to not want to give them back those. http://finance.yahoo.com/news/a-brief-history-of-financial-crises-in-greece-214114194.htmlDid you read that wiki article about government debt? https://en.wikipedia.org/wiki/Government_debt Let me quote this for you: "Government bonds are sometimes regarded as risk-free bonds, because national governments can raise taxes or reduce spending, and in extreme cases they can "print more money" to redeem the bond at maturity. Most developed country governments are prohibited by law from printing money directly, that function having been relegated to their central banks. However, central banks may buy government bonds in order to finance government spending, thereby monetizing the debt." Just look at the facts: Japan's debt to GDP ratio is more than 214%, Greece is only 161%, why no one is blaming Japan? Because they simply print some Japanese Yen to solve their problem. Give the Greece central bank the right to print Euro, then everything will be back to normal overnight |
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