I don't read LRC or refer others to LRC, myself, for that reason. However, I find that sites such as Mises.org are able to present these same ideas in a way which can be communicated effectively to mainstreamers without coming across as "kooky" or "loony".

Nice; perhaps it's only necessary to immediately flush transactions that are "self-originated"; i.e. if you spent or received some money?

But it would go up less if you were the one with the fast client and everyone else had "normal" clients. If you distributed such a fast client to everyone, then yes, the benefit would cancel out.

^^^

+ complete server/client seperation, and an independent way of storing BTCs for the purposes of importing and exporting. I've also read that if someone has 50 BTCs, exports them, and then spends 1 BTC, then ALL 50 BTCs backed up are no longer valid. The backup tool should therefore ideally have a good way of visualizing this.

I also agree with this. I've brought up the point in the past; the question is likely developer resources. If you guys are willing, go ahead and start working on this; I'm sure satoshi won't refuse the help

On my desktop, I have a dual boot between Ubuntu and Windows 7. The SSE2 build brings Windows 7 speeds up to around the same as the Ubuntu build.

If you are a merchant, you will be your own server, no? Now if your own server gets hacked somehow with a dummy placed in between, this could be a problem...

Yep, Babylon is referring to a credit boom which eventually leads to a credit bust. He is right that it is "bad" when things bust, but he must also then recognize that the "bad" began when credit was extended too easily in the first place, driving up prices in the first place.

Without such easily available credit, prices wouldn't go as high in the beginning, and it would be easier to save up and purchase goods with savings instead of credit. The problem with a credit bubble is that as prices go higher, more credit is required to purchase the assets, which drives up the prices, which requires yet more credit.

Under sound money, credit would be limited by savings and investment, and the nature of sound money means that as society gets wealthier and goods get cheaper in real terms, they also get cheaper in nominal terms as well. Price deflation is a good thing whether you're a creditor or debtor. If you borrow money and prices get cheaper due to an increase in total wealth, it means that your share of the pie is fixed. You borrow 1% of the pie, you pay back 1% of the pie. You don't start out owing 1% of the pie and end up having to pay 10% of the pie.

This is instead a problem of monetary deflation. If the supply of money decreases while the total wealth in society remains fixed (or also decreases), then what happens is that if the borrower borrowed 1% of the pie (i.e. one house), and prices declined by 90% due to a large credit bust, the borrower would end up having to pay back 10 houses to the creditor. The problem here is that the price decrease is due to a monetary contraction, not an increase in society's wealth. Therefore, he actually has to pay back 10% of the pie. This is where the imbalance comes into play.

The difference between these two forms of deflation (and the circumstances under which they arise) is where many people get tripped up. They look at Bitcoin, see that it is price deflationary, and then attribute all the problems of monetary deflation when they are talking about two different things.

There is a speedup for me, but it is not faster than the ubuntu 64-bit version. I am surprised; with SSE2 I expected it to fly :S

This is actually an interesting way that the government (or some rich dude, for that matter) could take over Bitcoin:

1) Print up a few million dollars
2) Purchase Bitcoins using grossly exaggerated bids.
3) Destroy said Bitcoins

It's expensive (and stupid), but it would distort the markets for sure.

Haha, please do

Won't this just end up with the philanthropist buying up all the Bitcoins?

I believe you are confusing monetary deflation and price deflation.

Monetary deflation: The supply of money collapses, usually because far too much money was created in the first place. This situation sucks, but is a necessary adjustment since the previous boom wasn't real. We are seeing some of this today.

Price deflation: The amount of real goods and services in the economy increases, relative to the supply of money. Therefore, you need less money to purchase these goods. This is a net win for you, and for society, because there is more real wealth to go around. People don't default, hoard, or stop consuming in this situation; in fact, the increased production ultimately allows for increased consumption.

Under Bitcoin, price deflation will be the predominant factor.

You need to understand the difference between the two. The word "deflation" simply isn't enough to go on, and most of the negative things you hear about deflation are related to monetary deflation, usually under the circumstances of a credit bust.

That "deflation" is actually great for young people looking to buy a new home. The housing prices never should have been so high in the first place.

In fact, if housing prices dropped to $1 (but the quality was the same), that would be even better for society as a whole. Imagine how easy it would be to get a house, then. Arbitrary paper numbers are not real wealth.

Are these also diacreticals? They appear normal.

I think we just need to be clearer on the differences between price deflation and monetary deflation. The first is a good thing, the second is not. Many of the issues that you raise are actually issues that occur under the second, not the first.

I certainly don't mind if someone implements a commodity currency that tracks a basket of goods; indeed, I believe a more resilient digital economy will come about if people use more than one currency. The trouble lies in exchanging said currency for the basket of goods, which is the advantage of something like Bitcoin.


Haha, I know the feeling. I hope I don't seem like I'm trying to come down hard on you, because I'm not, but I want to be sure that we're actually arguing over the same thing so that I can properly respond to you. Not only in my opinion, but substantiated by many bodies of works, the most stable money is one that avoids both monetary deflation and monetary inflation. This is achieved both by having currency competition (so that good money can be chosen over bad) and by having sound money whose supply remains stable, in order to not redistribute the pie. When both factors are in place, it will be difficult to have a huge inflationary credit run up that then leads to a huge deflationary bust. You need exogenous forces such as legal tender to really make that happen.

If you were to say that Bitcoin's slight monetary deflation is a slight problem, I'd agree with you. Until we find a better solution, though, I think we can deal with it by ensuring robust replication and backup solutions.

Price deflation, however, is not a problem. We need to be very clear on the differences between the two before we can continue the debate, because I feel you're linking the two when they shouldn't be linked.

I'm not really interested in beating around the bush. I'm still waiting for you to tell me why your proposed solution is better than the current system in place, and how it will avoid pitfalls such as distortions through inflation.


So the extra islanders exchange their labour in return for goods, and prices drop; again, what is the issue here? Are you proposing we just grab what belongs to the current islanders and give it to the newcomers? There's nothing wrong with the newcomers satisfying their demand by performing labour in exchange for other goods of value.


You need to explain it in more than just "It's my hunch that this would be better. It would be better, no?". Couldn't you back it up with a bit more than "I think this is better because it feels better"? How do you propose actually implementing such a system, and how does it lead to a more efficient market and more total wealth?


Why not implement both systems and let the customer decide? You say you don't like competing currencies, but competition is the only way that the weak ideas get weeded out and the strong ideas survive. Competition is how the customer is better served! There's no need for a monopoly or a winner-take-all, not even for Bitcoin


I made the point earlier on that the coins must be distributed in some fashion. If we were to fix the supply now, who would have the rest of the coins? Maybe we should have fixed it at 0 coins? Obviously, when you start from a base of 0, you do need to have some inflation to bring the system into existence. This type of inflation is based on resources expended to create the system and there is not necessarily much profit in doing so, since it takes real resources to be done. We can argue the different ways we can create the system, and I don't mind doing so; I don't claim that the current way is perfect, though I do think it's a heck of a lot better than monopolizing the means of creation.

The current way gives plenty of time for new users to help create the currency, thus encouraging adoption. It helps prevent scenarios such as the first 100 forum members grab 100 of the coins, thus other users don't see any point in buying coins since there isn't much of a market for them, and they can't generate them themselves. The whole point of coin generation is to get around this chicken & egg problem and function as a demand generator, to help grow the network. This is why we don't fix the supply now, but we fix it once the demand to trade for Bitcoins far exceeds the demand to generate them, because a whole ecosystem has grown up around the currency.

Eventually, though, once the market reaches critical mass -- and Bitcoin is far from there right now, but is doing better than any other similar idea that I've seen -- once it reaches a point where market supply and demand is self-sustaining, then there is much less of a need to seed the network in this fashion, as it is now able to stand on its own. Once the initial supply is large enough that Bitcoin is able to perform all of the functions of money adequately, then there is no further need to expand it beyond that point, other than perhaps a precision increase for future proofing.

Something that I'm curious about actually; is the process of processing transactions / generating new coins the same? I can see the rationale for compensating for transactions at some point, because the cost to generate a new bitcoin will at some point exceed the additional value gained from said bitcoin.

Regular old BTC client running on ubuntu (2150-2500 khash/sec) managed to produce a block last night

My 300 khash laptop got lucky and produced one the first day I used Bitcoin.

Interesting, though it doesn't seem to work with your user name? Is the star burst supposed to appear over the D? For me, it appears after the D; I'm using Google Chrome on Windows.

How does it make business and personal planning easier?


Again, why? It's not enough to say "we should do this because we should."


Ok, I'm glad to see that we see eye to eye about CPI and related measures. However, first, how does maintaining a Bitcoin/user ratio maintain price stability, and second, why is it more desirable than a fixed supply?


He's not made wealthier for doing nothing. He's made wealthier for making the decision to hold Bitcoins in expectation of increasing demand. This is not "doing nothing". At every moment he must make a decision, "Should I continue to hold on to my Bitcoins? Or are my needs and purposes better served by spending them in exchange for something else?"

There is also no guarantee that he will be made wealthier. If too many people hoard, then it will be hard to buy Bitcoins, which means that less people will use Bitcoins, which means that the value of Bitcoins will go down, which means that the hoarders ultimately lose out. The value of Bitcoin is not set in stone; it is determined by what people are willing to exchange for it. This is a self-correcting equilibrium.



Ok, now we have a metric. You are proposing that the ratio of Bitcoins to users should remain constant. Why would this be superior to the current system? How would you determine the # of users? How would you distribute the coins?


I can't read your mind; I'm sure you are convinced that what you are proposing is a great idea, but you need to formulate this in writing. You make statements such as "Bitcoins will be the best money if the supply flexes with the user base", but that doesn't actually explain anything to me. You are telling me what you think, but not why you think that way.

If the value crashes because people speculated and drove the value too high, then what's wrong with that? That's how things should work. Would you prefer that oil prices still be near $200 a barrel? Some speculators lost out, again, so what?

"If you just want them to become a digital commodity, then expect there to be swings in demand and value, which would make it less preferable as money."

How would fixing it to the # of users alleviate this, and how could we accurately measure this? Why are swings in demand and value a bad thing? If anything, they are how a market, through the collective actions of individual players, allocates capital most efficiently. This is based on the axiom that every trade is made in order to make each individual player better off. If Bitcoins rise and fall in value, there are good reasons for it, and we should not try to "hide" this or fight against it.