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No market is perfectly efficient.
Markets tend toward efficiency always, and never achieve perfection. Bitcoin is no different than any other market in this regard, though you could say since it's newer and more volatile, it is still in a primitive state of efficiency.
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No, there's no "pure" store of value, you still need to trade it. For example gold is a store of value, but there's tons of traders and transactions in gold, and traders
still make lots of money with buy/sell spread. There will not be shortage of transactions and fees for miners.
I second this. People will still have to trade. +1 |
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Hi,
Sorry hadn't seen this thread.
To clarify - FZB is a project by myself and Ira Miller (Bearbones). We both also work for BitInstant here in NYC.
If any responses have been unanswered, I apologize, it's just a case of too much going on. I asked Ira to check on the Paypal issue and will follow up with him on it today. For any issues with FZB, you're welcome to PM me here on the forum. Ira is usually too busy working to be on the forum much but like myself, he's doing Bitcoin stuff roughly 25 hrs per day.
Thanks for your patience and mc_lovin I'll follow up with you in the PM.
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I'm not "glad" that there are scams. However, there is a positive effect, which is inoculation of the system.
As scams happen, and businesses fail, and trust is tried and tested and broken, it builds the resolve and resiliency of the system. Just as a society never exposed to any virus may be wiped out at the first appearance of one, so too an economy never exposed to fraud/failure is more susceptible to a massive disruption when one arises.
You can also think of this in terms of natural selection. Weak businesses and people will lose their money, the strong will earn, keep, and build with it. Capital tends to move toward its best caretaker in a free market (though it's not a straight line to get there - many bumps and regressions along the way).
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I have real cash in my pocket and I don't need to pay anything to a 3rd party when give money to someone. Imagine we jumped 20 years ahead and now miners get profit only from transaction fees, so it's useless to send any coins without fee. Usual things become quite complicated and this is a problem for housewives. They don't care about technical issues, they just need to give some "cash" to a son so he could buy a dinner in the school...
Any ways to solve this problem?
It is technically not correct that the cash in your pocket carries no "fee." The production of that cash (especially issuing new cash due to wear and tear) carries a real cost. Currently that cost is socialized by the government so you don't see it, but it is there. There is always a cost for moving information or materials around. However, Bitcoin provides a manner far cheaper than anything else for moving money. |
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Bitcoin is not a deflationary currency. But, other than that, I agree with the sentiment of your post.
A non-inflationary currency will encourage investments which are indeed "hardier" because, at the margin, those which are less resiliant/profitable won't attract investment because the opportunity cost of investment is higher. And this is a very good thing.
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It is obviously far, far superior to the original old bitcoin if you are among those who believe not halving coin generation is far, far superior to the old original bitcoin's periodic halving.
-MarkM-
I am not one of those people. There is no value in allowing coins to be generated forever, not even for the miners. |
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There are a lot of flaws with bitcoins
List me the flaws, and I'll refute them. Any I can't refute, will be fixed either by an upgrade to Bitcoin software, or an entrepreneur who fills in the gap. |
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When you allow deflation to occur, the "price" of money (i.e., the amount of goods and services that must be exchanged to "buy" a particular amount of currency) increases. That price change conveys information about, e.g., the growth rate of the overall economy. In contrast, when you allow a central bank or other authority to set "stable prices" as a goal by printing money to counteract the natural process of deflation, you've effectively introduced price controls on money. Those price controls (like all price controls) interfere with the signalling and rationing functions that prices are supposed to perform. Because printing money keeps the "price" of money artificially low, the effect is to encourage money's overconsumption and thus overconsumption in general.
Beautifully said. +1 |
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I found chocolate in mine... at least it wasn't a complete waste.
LOL chocolate would be better than tungsten... that's kinda funny  |
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The price of Bitcoin is relatively volatile. It goes up and down with supply and demand. Over the long term, it has been stabilizing and will continue to do so, but in the short term it'll feel like a roller coaster for a while.
Just sit back and enjoy the ride! If you're investing for the long term, don't let the volatility scare you.
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Bad news: I just checked one of my Bitcoins. I opened it up, and inside I actually found a LiteCoin!!! This is a serious problem. I'm worried if I check my other Bitcoins the same thing will happen :/ Should I tell Gavin?
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You are ignoring all the work that man did to acquire those coins. You're looking only at a slice of time and saying he is being a bad economic participant. Plug time into the equation, and you discover the benefit he created happened in the past, and that must be factored into your equation of whether he is "useless". His holding of 100,000 BTC represents the amount of production he provided to the world in the days prior. You should thank him, not scorn him.
And indeed, if he starts spending it, it will drive up prices, making goods more scarce and more difficult (costly) for others to acquire.
So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that. Many people could learn a lesson from his life.
Owning a fixed fraction of all coins -> his "reward" for the production he provided in the past will continue to grow as the economy grows. I guess here is where I differ in valuing what he did in the past. I think if he produced 10,000 pairs of shoes for those 100,000 coins, then, if he holds them for 10 years, he should only be able to buy 10,000 shoes with them. You feel that if the economy grows, then in 10 years he should be able to buy 20,000 shoes - even though he never contributed an iota to the growth over the last 10 years. Aha, but again you are ignoring the time-value of money. The producer produced in the past, and deferred his consumption. It is from his delay of consumption that he "earns" more consumption over time. By not consuming something on each day, he enables that thing to be consumed by another market participant - by opting out of consumption, he enables others to opt-in for that same consumption at that price. If he consumed, then he'd be "taking" resources from others (by bidding up the price of those resources upon his consumption of them). Also remember that by saving that money, he is not taking one iota of wealth from anybody else. Further, everyone has the exact same opportunity to enjoy the benefits of the appreciating money. Anyone who defers his consumption will be rewarded in the exact same way, in proportion to the consumption deferred. There is no special privilege, other than the skills, work, and talents of the individual producer - and these things are bestowed by nature. If you're upset about the unfairness of nature, then take it up with nature  |
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Over time if someone is getting interest "rent", it has to come from somewhere and as evoorhees correctly said, Bitcoin is a limit asset.
In a properly functioning market, interest comes from future profits, and that's healthy. The fact that there is a limit to the number of bitcoins doesn't mean this dynamic doesn't work. 1) I loan you 10 btc for your business. Terms are you pay back 11 btc in a year. 2) You start your business, and earn back enough to pay the loan. 3) You pay the loan off, and all is well. There is no requirement for the money supply to be perpetually increasing for this to work. Yes and where did these profits come from? (agreeing with you). The extra 1 BTC you earned by getting my to see value in your service and price. You forget the element of time. Imagine I owe a debt of 100 bitcoins, but there are only 50 bitcoins in the whole world. Can I pay off that debt? Yes. I just have to produce, earn bitcoins, and pay off over time. Each single coin can pay off n amount of coin debt over time. Money moves around, it circulates. This is true. The other factor to keep in our thoughts the that Bitcoins are similar to gold in this regard, they are both wealth reserve assets. Bitcoins being even more so because you can find more gold in the ground but not more BTC. Ehhh it's probably more accurate to consider Bitcoin the same as gold in this regard. There is a set amount of gold on the earth, and there is a set amount of Bitcoins on the earth. Miners mine both of them, and it gets harder and harder to do. Until humanity figures out at way to create new gold cost effectively, it is the same as Bitcoin in its supply and production characteristics. The one difference between them is that the supply is Bitcoin is perfectly predictable, whereas the supply of gold varies somewhat year to year. |
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...
If you believe that wealth and prosperity result from consumption, you will hate Bitcoin. If, on the other hand, you believe that wealth and prosperity result from production, you will love Bitcoin.
Many will argue, "but you can't have production without consumption" and this is nonsense. I can go produce things without there being a buyer. Yet, I cannot consume things without there being a seller. Consumption is the effect - the result of - production, though unfortunately we live in a world in which people have come to believe the opposite.
@evoorhees Is it paradoxical that the value of the Bitcoin economy is created by the consumption of Bitcoins? Not sure what you mean. The value of the Bitcoin economy is created by the usefulness of the technology. |
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But there is a requirement that the money not be worth a lot more in the future. "Terms are you pay back 11 btc in a year." would never be acceptable to a borrower if bitcoin is increasing 20% a year in value. The borrower would have to make a 30% return just to break even.
If a mutually-agreed interest rate cannot be determined, then a loan will not happen. That's okay. Debt is not a prerequisite for growth and development (sometimes it can help, when used wisely, but it is not a prerequisite). There are few things more useless to the economy than a man hoarding 100,000 bitcoins.
You are ignoring all the work that man did to acquire those coins. You're looking only at a slice of time and saying he is being a bad economic participant. Plug time into the equation, and you discover the benefit he created happened in the past, and that must be factored into your equation of whether he is "useless". His holding of 100,000 BTC represents the amount of production he provided to the world in the days prior. You should thank him, not scorn him. And indeed, if he starts spending it, it will drive up prices, making goods more scarce and more difficult (costly) for others to acquire. So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that. Many people could learn a lesson from his life. |
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Over time if someone is getting interest "rent", it has to come from somewhere and as evoorhees correctly said, Bitcoin is a limit asset.
In a properly functioning market, interest comes from future profits, and that's healthy. The fact that there is a limit to the number of bitcoins doesn't mean this dynamic doesn't work. 1) I loan you 10 btc for your business. Terms are you pay back 11 btc in a year. 2) You start your business, and earn back enough to pay the loan. 3) You pay the loan off, and all is well. There is no requirement for the money supply to be perpetually increasing for this to work. Yes and where did these profits come from? (agreeing with you). The extra 1 BTC you earned by getting my to see value in your service and price. You forget the element of time. Imagine I owe a debt of 100 bitcoins, but there are only 50 bitcoins in the whole world. Can I pay off that debt? Yes. I just have to produce, earn bitcoins, and pay off over time. Each single coin can pay off n amount of coin debt over time. Money moves around, it circulates. |
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