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Ancient Egypt had two forms of money: one was gold and silver, and the other was grain.
Wheat would be grown by the people, then they'd deposit it in the store house and get a receipt for it. They would then take those receipts and use them as money in the market place to buy whatever they needed such as food, clothing, tools, etc. These receipts would depreciate in value because the grain had a shelf life due to spoilage, rats, and priests who would eat it in return for running the whole system. It's a direct analogy to the proposal in the OP. This type of money system wasn't inflationary, rather it was a flexible system that allowed anyone in society to create money themselves without fighting it out of the hands of rich people. It was a currency for the benefit of society.
On the other side of things, there was gold and silver. This wasn't traded in the marketplace, but rather used as a store of wealth and exchanged for things like land, homes, it was taken on journeys, and used entirely differently than the first type of money. Both of these systems coexisted and were used by people for different purposes.
If you were raising a family, you probably relied mostly on the wheat system because with each person born in the family, gold would be diluted. With the wheat system, there was a constant source of money that automatically adjusted itself based on the population. Decaying coins are slightly different in that they won't become more numerous, but they will have the effect of not concentrating money in the hands of the old, with the young being at a disadvantage. This is important for currency to do it's job. On the other hand, if you desire to store your wealth, something like gold is a lot more appropriate, and it doesn't restrict currency from flowing around in the economy.
Therefore, what we really need is a dual system. Those who want to store wealth for the long term can fight over the limited supply of the first type of money, and those who just want to buy stuff can use the other form. For example, lets say you get your paycheck. You put 75% of your paycheck in the decaying money because it's cheaper and easier to get and you're going to be spending it anyways. The other 25% of your check you put into the scarce money for long-term savings.
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What would happen if every newly minted bitcoin had an expiration date, after which it would be rejected by the system?
Lets say the total number of bitcoins in circulation remains true to the current chart, but the difference is that eventually old coins are being destroyed at the same rate as new coins are being created.
This would shift the entire system from being highly deflationary into some other category. Old coins which have had their keys lost would eventually be recycled.
The issue of early adopters getting extremely rich would be diminished somewhat. They'd still get rich but the price would have to increase fast enough, not simply rise in price over a very long period of time. Older coins wouldn't be worth quite as much as newer coins.
The block chain would not forever increase in size, because every coin has a definite beginning and a definite end. Old addresses with dust in them would have a limited lifespan.
The reduction in value as coins age would ensure a minimum level of money velocity, and transaction fees and other factors would set the maximum money velocity.
It would more closely mirror wheat receipts in ancient egypt as opposed to mirroring gold as it does now.
There are a lot of interesting possibilities here.
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Internet technology has a history of dramatically reducing capital costs associated with certain activities and enterprises, which brings wide availability to the people.
For example, today anyone can publish a book, create a video channel, set up a website, blog, online store, or get a project funded without all the overhead of inventing and maintaining these complex systems.
As the technology spreads and becomes available to anyone, the old organizations which used to be the biggest and most efficient can no longer compete because their core infastructure has become commoditiezed. For example, the music industry's distribution ability and production studios are slowly becoming commodities. Newspapers and broadcast television is no longer the only source for news.
Bitcoin is doing this to the banking industry. The system of trust, bank transfer protocols, and exchanges are becoming commodities. All that overhead isn't fundamentally needed anymore.
But I don't believe bitcoin will replace the current system as a singular competitor, because that's never what happens when entire industries become commodities.
What will happen is that anyone will be able to start a crypto currency just like anyone can now start a youtube channel - the difference being we're talking about governments and corporations rather than individual people.
All that is required is that payment for employees and raw materials be paid for in one's currency, and one accepts one's currency in exchange for whatever goods are produced.
For example, we could have usacoin in which the US government requires taxes to be paid in it, and it uses it to pay for government employees and other expenses. There could be cokecoin which Coca Cola uses to pay it's employees and expenses, and which it accepts for Coke products. There could be amazoncoin, fordcoin, etc.
The value of any one of these coins would depend on how many there are and the total gdp of whatever the sponsoring entity is.
This would solve a number of issues. The money supply would be flexible because anyone could create their own currency as needed, as long as they had something of value to offer. The issue of early adopters getting very rich simply so people could gain access to bitcoin would be solved because there would be no singular deflationary currency. The entire system would self-regulate because every unit of currency would represent some sponsoring group producing a real product. There wouldn't be an artificial need for a reserve currency simply so two producing entities could trade with one another.
Loans would no longer be needed to start new enterprises. The debt-based model would yield to the intrinsic money model based on goods, services, and credit. Investors would buy the coins early, and if a successful business is created, those coins would become much more valuable. If there is a default, assets would be liquidated and bid upon by whoever holds the coins.
Fractional reserve banking, loans with interest, debt-based money, and central monetary policy to balance money supply with economic activity would all become a thing of the past. None of that will be needed anymore for the simple reason that money will no longer be limited by monopolies, interest rates, or physical supply. Rather, it will be directly proportional to credit and economic activity.
Note that strictly speaking none of these would be currencies, but rather they would be money. Currencies do need to compete in the market since they are simply a medium of exchange, but money doesn't compete with other money since it has or represents value. Another difference is the inflationary or deflationary aspect. It might be ok for money to be deflationary, but there could be issues with a currency being deflationary.
I'm hoping we can get some experts (economic, monetary, technical) to analyze things from this perspective to determine if this is realistic, and if so, what the implications are.
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In addition to the fees, another issue is that you'd want to have large amounts of cash at multiple exchanges. Seeing as how exchanges have been going offline at a pretty frequent rate lately, it would be risky to keep that much money sitting at each exchange.
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I've got a specific thread I've written which I'd like to discuss in the Economics subforum. It basically (potentially) addresses the use of crypto currencies as a money instead of a currency, and it potentially solves the deflationary and money supply regulation issues. I'd like to post it immediately, but I'm not sure if I'll be able to get the 4 hours in today though. And I do own bitcoins and understand a lot of the basic ideas, strengths, weaknesses, and current adoption. I wouldn't say I'm an expert though...that's why I'm here.
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So how long is the timeout that kicks in to stop the 4 hr count-down?
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Something that automatically generated a new address, and then once it got a deposit, transferred it to the main address would be very convenient.
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Doing some searching, I haven't seen that great of reviews about coinabul. I'm not sure about agrimetals.
I recommend people petition apmex to look into accepting btc. But that doesn't help you right now.
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