Adding liquidity to markets, which speculators do, is not zero-sum.


Let me explain the value of liquidity then, but first establish that you agree capitalism is a good thing? I would imagine you do. I also imagine you believe legitimate goods and service producing businesses are a good thing, both economically and for the world in general. If this is also true then the stock market, with its intended function of providing capital to promote business opportunity, is also a good thing.

Let's use as example Starbuck's coffee. Starbuck's utilized the stock market to grow a good local idea and establish a worldwide presence. In fact, one of their incentives for employees is owning stock in the company.

Starbuck's stock was hit hard by the economic downturn as the belief was people in recession would scoff at $5 coffee.

Imagine the majority of stock was held by mom and pop investors and speculation didn't exist at all. The likely result would have probably been a total crash of the stock's price as sellers wouldn't find any buyers. Many amateur investors would be wiped out with little chance of recovering their investment.

While investors do accept some risk of loss by investing in stocks, such harsh market conditions would likely scare off most mom and pop types. Such a market would be more rigid, less friendly and appealing, and therefore smaller.

Speculators, on the other hand, look for such pricing opportunities. Speculators would (and did) help establish a floor to the falling share price by offering a 'buy' side. Starbuck's stock has not only recovered but is now at all time highs.

This is a real world example of how speculators' liquidity can allow the stock market to be more appealing, and therefore larger. That's not zero-sum.

Could the world and market get along without speculators? Certainly, but that wasn't the question. Your argument is only having a "positive-effect" on the world, and that speculators do.

note: currently the stock market does not operate in true free market and is distorted by artificial money inflation, which reduces the need for speculators' liquidity.


Would being the (smarter) side with better bombs and assault rifles be considered preferable and world-improving if they are used to stop a Hitler?

Zhou,

I think you contributed more to Bitcoin than you know. Remember the recent Reuter's article Bitcoin, the City traders' anarchic new toy? That story was re-brodcast by other new outlets like RT and HuffPo and seen by who knows how many new non-bitcoin people.

The journalist, researching largely on this forum, was looking for an angle to portray Bitcoin. I believe Bitcoinica, mentioned prominently in the article, largely influenced the positive coverage and gave Bitcoin credibility (look at the financial industry it already has!), so people could associate it with something other than Silk Road. That's big positive momentum IMO  

Thanks, and best of luck!

Not sure I get the gist of that jest.

I would think so, but he had two choices: 1) Ensure no discussion, and no debate, and hope it's enough for everyone to act. 2) In the attempt to get agreement, allow discussion with risk of many differing views confusing everyone.

He locked the thread because the coordinated time to switch can't be subject to debate if it has any chance of working. (not that it has much chance anyway)

He's talking about moving the decimal to automatically and immediately increase relative BTC value.

Right now there is a fledgling economy where real goods and services are bought for bitcoins. Because these are also bought in other currencies like the dollar there can be established an exchange rate between bitcoins and other currencies. Right now that exchange rate, according to Mt.Gox is about 1 BTC per 5 USD.

However, there is no hard fast rule about what the exchange quantities should be. This is why the OP talks about "PUTCALL-SPLIT". Puts and calls are terms related to stock options, but the OP really means a "stock-split".

Stock holders generally favor these with little reason to be against them because net worth doesn't go down (it often goes up). If I own 500 shares of GOOGLE and the company does a 2 for 1 stock split then I now own 1000 shares of GOOGLE. I don't own any more of the company because the company also doubles the amount of shares it has total. Meanwhile, in the stock market if the price was $500 per share it will likely drop immediately to $250 per share. I've lost no net worth, but the cool thing about stock splits is for strong companies (like Google) the price per share usually returns to its pre-split levels.

The concept to take away from this is that subjective value can be changed by adjusting ownership quantities with no ill-effect to owners.

Remembering goods and services are now traded for bitcoin: let's say it takes 1 BTC to buy 1 pack of socks, or 10 btc to secure the cheapest thing from Silk Road (I wouldn't know  ). If everyone, at least a good majority, decided to move the decimal 2 places to the left for every BTC transaction they would lose no value, and the sellers of these items would either refuse the change or go out of business, for BTC at least.

The move would have to be coordinated where everybody switched at the same time to catch on. If they did sellers would likely lose no value either because the exchange rate between USD and BTC, like stock splits, would slowly return to the pre-shift level. The difference would be that every BTC holder would have 10 times the unit quantity value-wise (100 BTC would be equivalent to 10,000 BTC).

The OP suggests 05/11/2012 12:00h Greenwich (UK.time) as the coordinated time to switch.

Of course, if the move isn't coordinated it leads to much head scratching and many canceled transactions.

Hi Kris,

I talked about the need for a PayPal version of Bitcoin in a post/eBook I did called How to Grow Bitcoin. I'll touch on the key points.

A simple person-to-person pay service I think will come about naturally, and is essential. The root network/blockchain is NOT how the majority of transactions should take place. It's too cumbersome, slow, and won't scale to handle the majority of transactions for the world anyway. Transactions should be done by updating the rows of a database somewhere. Simple.

Such a service should look and behave pretty much exactly like PayPal, except be for Bitcoin. Anyone with an email address can send payment to anyone else with an email address. They log in, enter the address to send to, and the transfer happens instantly. Simple.

Depositing money into a user's "BitPal" type account is done by the blockchain, as are withdrawals. Other deposit/withdrawal options such as integration with exchanges like Mt.Gox can exist for convenience too. But withdrawals and deposits won't happen often because the majority of the Bitcoin ecosystem uses "BitPal" for transactions.

Two more crucial points: all transfers are completely free. Profit can instead come from premium services such as merchant features, and or advertising. Also, such a service is NOT a bank, and might limit number of bitcoins stored to say 1,000, simply to keep things simple, secure, and focused on transactions.

I think WalleBit could become this type of service. I'm sure such a system will come about at some point either way. I had even considered the undertaking myself, to ensure it comes about.

Some people would debate that...

But let's say you're right. Okay, then there is no need to live in houses, drive cars, fly planes or explore space either.

The only thing humans need is food, water, and shelter, all of which can be accommodated at an extremely rudimentary level.

Non sequitur.

Humans do many things animals do not, like climb Mount Everest and produce sculptures.

True, and this is the one consideration I had when I said the world is not ready for such a system. The majority of the world is not well educated. Even in the U.S., the most advanced country the world has ever seen, literacy an education are shockingly lower than most would expect. But even so, some people simply believe in large families.


That depends on when you started passing out the food and houses   If you did it now you'd certainly get a jack-rabbit effect.


Yes, we could maximize our existing capacity. But there is still a limit, somewhere.


Very true. Humans also uniquely appreciate the value of occasional solitude and independence.


And your proof for this is? Some of the smartest people in the world are from the U.S., a country that has certainly tested boundaries. Children are certainly encouraged to be free and explore. You're confusing us with China.


I'm not sure you are the person to say what is or is not the goal of humanity.


Sure, many would rather not be idle if they are free to pick what they are to do, but that is not work. How many would work voluntarily doing something they would rather not without being compensated?


Like I said, there is a limit on number of people. The simple fact is the more people after the same resources the higher chance of tension. It's human/animal nature. Sorry.


Yes, but how rapidly, effectively, and thoroughly will you educate? Will it be through forced indoctrination or freedom of choice? Even now under good circumstances we see high drop out rates, drug usage, and crime in the US. Removing money from society doesn't guarantee a fundamental change in human nature.


In case  you haven't noticed, capitalism is not communism, socialism, or facism. And it's capitalism that has largely been responsible for the technological innovation we see to date.

While I was gathering my thoughts for reply to @LightRider's automated moneyless robotic society I read @BladeMcCool's reply which touched on some of my points.

@LightRider - Since the idea sounds noble I tried to extrapolate it using best case scenarios. There are problems.

TL;DR: the world is not ready for it; even if it was the results are not pleasant due to limited resources.

So the idea is to switch from competition to cooperation, right? And utilize our technology and intelligence to freely sustain all. In a way, the Earth is like a giant petri dish, and humans take part in an elaborate experiment. What happens when humans (or any organism) are freely given conditions to survive and procreate? That is what they do.

Do you know why there are always poor and starving people? It's because the poor and starving continue to procreate. But now robots will gather food and build houses to freely give humans as fast as they come into existence... The world population would then explode, unless you take a Chinese-like policy of limiting by force procreation (including murdering newborns). But surely such an egalitarian society would be pro-life.

Would cultures like the Chinese, who are way ahead in population, then begin competing to ensure their own cultural dominance, possibly out-breed the rest? Language and culture are, after all, as important as money for influence on society.

Putting aside that issue, what about quality of life? In a money-less, free society nobody owns, but rather shares everything, right? Since nobody has to work I imagine people would opt to take lots of leisure time. Places like beaches, parks, and forests would likely be popular, perhaps too popular? Since our population is now rapidly increasing I imagine overcrowding would go from noticeable, to annoying, to intolerable, everywhere. And how is geographical preference divvied up, anyway? I imagine very few would volunteer to live in Antarctica, while warmer more temperate land space would be in high demand. But, alas, everywhere would soon feel the overcrowding, even with a clever turn-based system implemented.

It becomes apparent to me mankind would have to expand beyond Earth to continue this model. But now where to go? The next best planet for humans to inhabit is Mars which has only about 15-25% of the natural living comfort of Earth, even if we figured out how to get there in less than 5 years. What we would need is another Earth-like planet, really Earth-like for habitability, so we'd have to search beyond our solar system. Getting to the next closest star is a monumental challenge, even for such an advanced civilization, and even then there is no guarantee of finding something like Earth, which is quite a jewel as far as planets go. And moving from interstellar to intergalactic travel? Forget it.

No, we're pretty much limited to Earth.

But this means all these different cultures, interests, and aspirations have to get along in an increasingly confined space. And what about religion? Does this society respect people's freedom of religion, or impose some subjective higher morality? A good deal of the population still believe, and are willing to die for their religious beliefs, which can be anathema to others and don't always synchronize with modernization.

And what about others, as @BladeMcCool talked about, who simply don't agree with that approach. They might look to sabotage robots and otherwise disrupt the system. How would enforcement/protection of society work?

The thing about Capitalism is that it works, effectively divides and allocates resources, and is fair. And Capitalism, as I noted, does not prevent gifting, sharing, and cooperation. People may want to pin the problems of humanity on it, but that's being naive.

@the joint - regarding your quote "Money is what a GOVERNMENT says it is."

Actually, that is what fiat money is, not necessarily real money. The only time you get real money is when the free market picks what it is. If the government doesn't pick what the free market would then the declared money is artificial, and will eventually self-destruct as has happened throughout history because governments can't resist debasing it, whether we are talking about Romans and diluted metals, paper currency (Zimbabwe, Argentina, etc.), or tally sticks. For thousands of years the free market has determined commodities like gold and silver, for example, are real money and return to these upon failure of the artificial money. We are once again in the early stages of this cycle, but unfortunately it's worldwide this time.

You are right, however, that @MarketNeutral missed one, actually the main, characteristic of money which is it is what people AGREE to accept as money. That is the only time you get money, and why fiat money is usually dangerously artificial.

My next post will deal with @LightRider's view about robots and automation etc. for a money-less society.

I agree.


You haven't talked with many (naive supporters) from the Occupy movement.

I agree. I didn't say I thought gifting could come even close to achieving what capitalism does, only what @jago25_98 meant by it.

@evoorhees - I think you are misunderstanding what is meant by "gifting". The fact that it's a gift makes it the opposite of a trade. To give a gift means you don't expect anything in return.

That is what @jago25_98 says is more natural, not that I agree.

What people have to realize is that capitalism does not prohibit gifting.

That is a strawman.

First, removing NASA from world history would not have removed starvation from it.

Second, I'd much rather it was Thomas Edison (or similar) that made our moon landing possible. Entrepreneurship appears to be the way we are going for our first landing on Mars.

I totally agree with this for the most part, especially the last paragraph.

But you have to understand that the right environment must first exist for such opportunities to flourish. Basic needs must be taken care of;  your surrounding and personal circumstances cannot be of concern. For example, would you ever expect a Linus Torvalds to have come from Iraq?

Politics (which includes monetary policy) is just how humans organize themselves to live together.

Well now. My kind of thread on a Saturday morning.  

First, on human (animal) psychology/hard-wiring:

Humans (animals) consume. If you don't consume you die. Period. I won't delve into the subject of being born greedy, but instead explain the fact that humans are hard-wired to survive. Put any human in a situation where they begin to die from lack of something needed to survive (like food, oxygen, etc.) and they will begin behaving more instinctively and animal-like. For example, life guards are trained to know drowning victims will instinctively pull them underwater in effort to push themselves up.

The only way/reason gifting type economies work is when basic human needs are otherwise always provided for. See what kind of hospitality you get when the society around you is food-less.

The second thing to understand is that resources on Earth are finite. That's not to say they can't sustain a very large population, just not an infinitely large one.

The third thing to understand is that humans/animals are also born to procreate. This is intrinsically hard-wired as second priority after basic survival needs are taken care of.

The fourth thing to understand is humans/animals are hard-wired to, in general, be lazy. I suspect due to physics... The Law of Conservation of Energy; and an object at rest tends to stay at rest (Newton's 1st law). This is not to say all humans were destined to be sloths, only to explain their physical tendency when unmotivated.

Taking all this into consideration it should be easily seen why a capitalist society (when done right) is logical for many reasons and fair.


Exactly, @Kettenmonster.

As for the reflective quote by Lakota Sage Lame Deer, such a moneyless society/culture is nice I'd agree, but doesn't lend itself much to advancement. For example, an entrepreneur/inventor or dreamer among them might imagine escaping the gravitational pull of the Earth and reaching the beautiful glowing orb that presented itself every night, but the fact is such an undertaking requires many things including, primarily, capital. The naysayers and the uninterested couldn't block such a visionary in a capitalistic society.
 

Looks good.