Now that I hear they are being confiscated, I totally want one.  Too bad they are going for 2-5x melt value on ebay. 

The concept of price inflation as a thing only exists for people that think prices are supposed to be fixed.  For everyone else, it is just a consequence of something else, usually (monetary) inflation.


I said higher interest rate, as in the difference between the interest rate with the insurance and the interest rate without it.


I keep saying time-preference.  Why do you keep acting as if I had said "now-preference"?  Also, the utility of a liter of milk in a year doesn't include your ability to trade it now.


I said no such thing (see above).  I also said explicitly that rot doesn't apply here because you were talking about money..  Oh, and yes, bakers might very well be better off letting their bread rot, because you might be willing to pay more for (different) bread tomorrow when you are hungrier than you are today.


So, lenders won't include demurrage in their calculations when deciding what interest rate to charge?  How do you expect to make this happen?

Also, read your post from July again.  In it, you are very close to the Eureka! moment.  You understand that we use peculiar mechanisms for economic policy, but then you direct your criticisms towards neutral concepts rather than the implementation.

Wait, if he can push up the price, why bother with the first part?

Buying a better rate on Gox isn't practical, because it costs more than it gains*.  So why dilute the gains from manipulating the market by first doing something that is a certain loss?  Wouldn't it make more sense to skip straight to manipulating the market?

* - This might not be true under certain rare circumstances, and depending on the exact way the discount calculation is coded by the exchange.

There is only one kind of inflation.  If you want to call it monetary inflation, feel free.

A moment's thought should convince you that an insurance premium is exactly the same as a higher interest rate.

Time preference is indeed applicable to all things.  The only way it couldn't is if you assume it only goes in one direction at all times and for all things.

The island story doesn't remove prejudices, it just tries to replace them.  Also, it doesn't apply here, because you were talking about money.

I suppose I should also point out that inflation is indistinguishable from currency demurrage, in practice.

Gosh.  I bet this thread would be completely different if only we could find three people to put this theory into some sort of historical context.

The short version is that a transaction output is created by signing part of the transaction with the hash of a public key (from the address).  The transaction signature is random, meaning that it can be anything.  Usually, it just looks like garbage, but it could, by random chance, turn out to be an ASCII text string.  So, the block must store arbitrary bit strings, because literally any sequence of bits is potentially valid.

So, if you want to embed text into the block chain, all you need to do is keep creating keys and transactions until you find one that just by chance has a signature that just happens to be the ASCII text you want.

Or, you can do it in the other order: just put your text in as the signature, and then go looking for the key so that you can redeem it later.

Excellent analysis.  Now add in inflation, risk, and time-preference.

Everything that you wrote was garbage.  Absolute nonsense.

But this one made me chuckle.  I'm not sure where you live, but around here, the government is funded by taxes, and taxes are paid under threat of men with guns coming around to toss you in jail.

So, we are considering two organizations with a primary goal of making money off me.  Thank you very much, but I prefer the one that doesn't threaten violence to get me to pay for things that I don't want.

Sorry, this is wrong.  Actually, thinking of this sort doesn't even relate enough to reality to be merely wrong.

The exchange rate does not drive difficulty.  However, the difficulty also does not drive price.

Price, difficulty and a bunch of other factors form a complicated system of non-linear differential equations.  In short, they all drive each other in a chaotic way.  And I'm using chaotic in the technical sense here, meaning deterministic but unpredictable, like the weather.

A quick glance at a difficulty chart and an exchange price chart should make it perfectly obvious that there is no simple relationship between the two, so I can't imagine why people keep insisting that one causes the other.

References that you should probably read before replying:

Chaos theory
Newton's Method for finding roots of equations.  A ridiculously simple system that is often totally unpredictable.
Lotka Volterra a very simple model with only two equations.  Pay attention when you get to the part about the atto-fox.

He is drawing the parallel between your post and the financial concepts of alpha and beta.

Neither of these will help.

Increasing the difficulty of a share is the only thing that will help.  You can also check on Luke-Jr, he is working on some changes to the mining protocol, but I don't think it will help much in this situation.

Finding a cheap colo or a better internet connection seems like the best answer.  Or, and I hate to even suggest it, but maybe mining isn't ever going to be practical where he is.

Can you explain this?  I know what all of the words in your post mean, but I have no idea what you are trying to say.

Nothing, just the larger market.

Zoinks!   

Just don't be disappointed.  Floating point operations have been an implicit part of the definition of a supercomputer for like 45 years now.

Your questions seem to come from a misunderstanding of the way this all works.  Don't feel bad, it is a big system and hard to get your head around.

There are no coins.

A transaction redeems one or more previous transactions, and has one or more outputs.  Redeemed transactions are redeemed as a whole, never in parts.  If the redeemed transactions have more value than the combined value of the outputs, the difference is a mining fee.

There is a safe way to discard old transactions, and that is to delete transactions that were redeemed more than X blocks in the past, where X is large enough that you feel confident that the chain can't be reverted that deeply.  Recent reports suggest that around 75% of old transactions could be pruned in this way.

If that isn't good enough, and some miners want to discard old transactions that haven't been redeemed yet, those miners will see transactions that attempt to redeem them as invalid and won't include them in new blocks.  This practice is unlikely to become dominant though, because they will be missing out on potential fees when those transactions are eventually redeemed, so other miners will have even more inventive to keep them.  Actually, I doubt that even a single miner will ever do unsafe pruning for that reason.

And yes, if you send your balance to a new wallet, the new wallet will have a newly created and verified transaction.  In that sense, the "coins" will be new.  In the other sense, either the coins still don't exist, or they are just as old as before.

I'm pretty sure the Guinness people aren't interested in what we could do, but only in what we actually do do.  The right approach would probably be to ask them to consider adding a category that we do fit into.

Meh, I don't really know Ron Paul's official stance on these things, but the hostility of government towards religion is hardly imaginary.  One can hardly rely on a blog called "no god zone" for an objective commentary.  The facts appear to be correct, but all of the subjective conclusions go in one particular direction.  For a bigger view, I suggest that you research state churches in the colonies, and after that the quirks in the first clause of the first amendment to the Constitution will make a lot more sense.  In essence, the constitution codified an antidisestablishmentarian position before it was even a word.

The founders are generally considered to have been largely deists and theists, neither of which is exactly common today, so a larger context is pretty much necessary to understand their statements.  Also, Christianity back then was very different from the way it is today.  You would hardly recognize it; the reformation was still young, and the seeds planted by it wouldn't germinate into the structures that we know today for another hundred years or so.

It's been a while since I studied any of the founders in detail, so I might be thinking of the wrong guy here, but my recollection of Jefferson's religious views was that he thought of God as a non-anthropomorphic deity (the creator in the Declaration of Independence), and Jesus as a non-divine prophet.  No one back then had access to Q or the Dead Sea Scrolls, so we can't be sure how they would have felt if they'd had access to Jesus's life and sayings, uncorrupted by the editors at the First Council of Nicaea.

As for abortion, I avoid discussing it, both on the internet and in real life.  As far as I can tell, neither side is really interested in debating the other side honestly.  They both prefer to just set up straw men composed of what they imagine the other side to be "really thinking", and knock those down instead of listening.

Anyhow, back to Ron Paul.  I don't believe him to be a religious nut bent on imposing his view on everyone else.  I would be totally willing to revise that view if some decent evidence was presented.  Even so, I would still consider him to be a good thing, overall, because in his attempt to push his view, he would be naturally opposed to everyone else currently pushing their views.

My old chemistry teacher would say that there is no chlorine in table salt.  The chloride ion is a totally different species, with totally different properties (as you point out).  There really isn't any sodium either, but this is less obvious because we call table salt "sodium chloride" with the ionization state implied, rather than "Natrous chloride" which makes it explicit.  I guess we can blame the chemists for not isolating sodium as an element until 1807, far too late to get a 'real' Latin name and a tradition of calling the lowest ionization state by the -ous suffix like ferrous and stannous.

At any rate, the covalent chlorine in tap water is harmless.

Unimportant.  They still pay off eventually, so the income stream is not their only value.  Of course, if you only ever hold them for a few days or months hoping the interest rate will go down, and you consider the face value to be as good as cash (because you can easily use it for a loan), then it gets really easy to see the coupon as the fundamental item and ignore the actual purpose and reality of the bond.

I had previously typed up a post about how speculators learn to see the tiny wart that they operate on as the fundamental thing and ignore the face behind it.  I kinda wish now that I had posted it.  No offense meant to you, but I bet that if we were talking about futures markets, your comments would reveal an internal view of them as cash machines that grudgingly tolerate producers and consumers only because they are easy marks for fleecing.


Did I miss something?  The first time that the money markets fell below parity, it was huge news.  I haven't heard peep since then, so I don't think they could possibly be worse off now.