I was thinking of the potential of Bitcoin and cryptocurrency, not it's current state. Sorry for the poor choice of words.

That's true. However, if Bitcoin can be an anonymous, decentralized, cheap to use medium of exchange then black markets will naturally gravitate towards it.

Right now it's an unfinished unproven technology, so it's anyone's guess what it's growth rate will be.

The "informal economy" and black market are pretty thoroughly interwoven to the point that I think it's pretty hard to find an economic activity that is untaxed and unregulated that is also not technically illegal. After all, in the United States you're supposed to write down all of your economic activity even if it isn't taxed.

Inflation is not the only way to fix this problem. Transaction fees can also take over if the block-size is limited. The question then becomes "how fast should the block-size increase?"
Gavin speculates 50%/yr increase is about right to keep up with technology. However, we don't want capacity to precisely fit demand, otherwise there are no funds going toward mining. Therefore, whatever the increase in block-size, it must be less than ideal.

If Gavin is correct, then we only know that the increase should be less than 50%/yr.

There is no perfect answer under the current system because any answer requires foreknowledge that cannot be known.

If Bitcoin can't stand by it's own technical merits then no amount of excellent cheerleading is going to make any difference.

I don't really follow the people you're talking about, so I can't really defend them, but if you don't like what they're saying about bitcoin, then all you can do is make a better case yourself.

The way I think about cryptocurrency is that it is the basis of defacto libertarian society if it can live up to its goals. It is a borderless country without recognizing any authoritative leaders (anarchy).

Another way to look at it is a dramatic expansion of the black market (System D), and the increase in economic freedom that comes along with it.

That's if the problems with anonymity and the blocksize limit can be resolved.

You keep making these wild assertions about how certain Bitcoiners/libertarians/"pseudo-liberals" are wrong and delusional about their "arguments". Then you don't even bother to mention what those arguments are, and then when you can be bothered to actually state the argument and what you think is wrong with it, you ignore any counterargument.

Case in point was you saying "pseudo-liberals" are crazy because they think that Bitcoin will stop all wars. I then pointed out that war is actually very tightly linked to inflation, and that bitcoin is immune to inflation, and therefore there is a case to be made that Bitcoin could make war difficult.
You, of course, don't respond to that at all.

You do understand that when people are at speaking engagements they tend to use demagoguery, hyperbole, undefended assertions, and take incredibly optimistic long positions? That doesn't say anything about the foundation of their thinking, or how they got to that position, it just stirs debate, gets people interested, and makes the speaker more fun to listen to. It's just rhetoric, not some thorough peer reviewed paper that they've taken months to consider. You seem to be perfectly happy to take a few soundbites and go off on a tirade about how crazy certain people are.

Or, perhaps you're only listening to fringe wackos that don't even represent the majority position of the people you're referring to. I can't really know, since you are anything but specific about the problems you have.

No thanks. It's important for competing miners to be able to enter to the market even (especially) in the event that it is highly centralized. Basing competition on how big of a pile of money you have can not physically be overcome by a new entrant.

In other words; Those in power can remain in power at their leisure.

Correct. It's a good thing to debate using the same kind of vocabulary as the person you're speaking with, whenever possible. If someone is arguing about fiat currency and you respond that, "That isn't a fiat currency", and then the other guy says, "Well no, this is the definition I'm working with." The correct response from that position is to just use that definition whether you like it or not, not go into a hissy fit because he refuses to use your definition unless his definition is so esoteric that no one could be reasonably expected to have a rational discussion using it.

In other words, you're totally unqualified to talk with any kind of authority about economics or language. Plus a nice little ad-hominem tacked on at the end. Classy.

If you're going to do the "argument from authority" fallacy you should at least do it right...

No, it really hasn't.

Wow, that's a challenge. I suppose they're all human and none of them are African or black.


Some people have the intellectual capacity of a goldfish.

I'm actually kind of at a loss for words, because it represents such a fundamental ignorance of history, economics, and language that I'm not sure these people actually live in the real world. Perhaps they're kind of pan-dimensional beings that just kind of accidentally step into our universe from time to time and are totally bewildered by everything they see.

I guess the best I could do is point these sorts of people toward the information they'd need;
http://www.englishclass101.com/how-to-speak-english/
http://mises.org/daily/1333
https://mises.org/books/origins_of_money.pdf
https://mises.org/books/tmc.pdf
http://mises.org/money/3s11.asp

Certainly you're not one of these people right?

NXT will do fine as long as it's run by benign technocratic overlords, like pretty much every other currency in the world.

Bitcoin is a trust-less currency, able to do the one thing PoS coins can never do; Attain a decentralized consensus among hostile parties all over the world.

If you don't want to attain a decentralized consensus, then why bother with cryptocurrency at all?

Ok, well, you're misunderstanding the effect that the cost of PoW has on the transaction price of bitcoins. It's true that PoW costs more as the price of bitcoins rise, since what is paid toward PoW is mostly tied to inflation, but once bitcoins are not inflating anymore this relationship won't be true. Also, the inflation rate is a flat %, we know exactly by how much PoW can reduce the price of bitcoins every year, ceteris paribus.

There is no reason why the price of bitcoins can't rise faster than they are being diluted due to inflation.

Now then, putting that aside and looking at PoW as if it was just a fee attached to transactions, and a constant burden on the network. This is not a constant drain on the exchange rate of bitcoins.

A better analogy would be a toll for using a bridge. Does the bridge lose value every time someone crosses it? Of course not, the exact opposite is true. The toll helps to upkeep the value of the bridge, it enhances economic output of the people that use the bridge, so they willingly consent to paying the toll.

Similarly, paying fees to support PoW does not drain away the resources of the economy until it fizzles away. Economies are not zero-sum games. PoW is necessary infrastructure so that it's users can benefit from what the system provides, in precisely the same way that people pay tolls to benefit from a bridge. You gain more value by paying a fee while using bitcoins then you lose, or else you wouldn't make the transaction.

Sure, but it can't come to a distributed consensus.

https://download.wpsoftware.net/bitcoin/pos.pdf
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2393940

Getting back to the actual topic, why do you think PoW would prevent bitcoin from reaching $5000?

From what I understand, you seem to think that a currency is like a big pile of money, and the overhead drains away all the money until the currency isn't worth anything anymore. Is that about right?

Sure, but in principle there's no reason Bitcoin should ever hard fork as long as there is no 51% attack. In principle, PoS will always struggle with consensus.

If PoS developers aren't willing to address the Nothing-at-Stake problem and pretend it isn't a problem until it is, that's their problem, and anyone that's decided to jump on the bandwagon.

I wonder if there's a good psychological term for this condition where people will try to invent a really complicated system to prop up their idea without recognizing that the underlying idea is fundamentally flawed?

It's reminiscent of the Ptolemaic system.

Edit: To be fair, the Ptolemaic system actually works in it's own strange way.

Um no. The point is specifically about Distributed Consensus, which has to do with hard forks. Because of the Nothing-at-Stake problem, PoS always runs the risk of hard forking. I'm not particularly comfortable with that.

Bitcoin checkpointing does not have anything to do with avoiding hard forks.

Because PoS cannot achieve distributed consensus, it will always be necessary for some central authorities to step in from time to time to decide how the blockchain ought to have behaved.

If you don't want distributed consensus, then why bother with all this nonsense? Go trade gold/silver, or use fiat.

Sure, Bitcoin developers have clout to make changes, but the last time they needed to actually fix a hard fork was because a mistake of the developers last year. Otherwise there's no intrinsic reason why a hard fork should happen, like there is with PoS.

I wonder how long the NXT boat will float once the developers walk away? Or any other PoS coin.

So? I'd rather pay that cost rather than have a central authority. Your mileage may vary.

It actually has everything to do with inflation. An ongoing discussion is happening right now where core developers are trying to figure out how to increase block sizes accurately without destroying all the hash-power in the network. (This has been a known problem for a long time.)

Mining is literally paid for through inflation, and eventually it will need to be paid for through transaction fees. Keeping fees high enough to reasonably cover hashing expenses is actually a very difficult problem to solve.

So you seem to be very misinformed about these costs, where they come from, what they achieve, and what's going to happen to them in the future.

Mining costs don't make Bitcoin unstable anymore than paying construction companies makes buildings unstable.