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841  Bitcoin / Bitcoin Discussion / Re: 1BR: Should the block reward be 50 BTC for ages? on: September 15, 2012, 08:13:35 PM
No it's not, it's the same mistake as calling rising prices inflation.

Except that rising prices is called inflation.

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Deflation is the decrease in money supply

Except that falling prices is called deflation.

This message board is the only place in the world that has a different definition because of one misinterpreted quote by Milton Friedman.

It really is not very becoming.
842  Bitcoin / Bitcoin Discussion / Re: 1BR: Should the block reward be 50 BTC for ages? on: September 15, 2012, 08:08:45 PM
Personally, I think it universally makes more sense that inflation and deflation refer to prices unless you say "monetary inflation/deflation."

Considering that Friedman did not even mean that inflating the money supply equals price inflation, it is about as faux-pedantic as you can get.
843  Bitcoin / Bitcoin Discussion / Re: 1BR: Should the block reward be 50 BTC for ages? on: September 15, 2012, 07:57:48 PM
I use inflation in the proper sense, to refer to the growth of the money supply (number of bitcoin). I'm not referring to price or change in prices.

But even though deflation is universally used to mean price levels in bitcoin, that is ok?

This is such a silly distinction made by one person, a monetarist, that leads to "an aggravating spew of stupid arguments about one man's eccentric definition of a word on this message board phenomenon."
844  Alternate cryptocurrencies / Altcoin Discussion / Re: Decrits Proposal: Solution for an unbound, energy-related, stable value currency on: September 15, 2012, 05:02:20 PM
To transfer it to a future, better cryptocurrency, if such a thing could possibly exist. Shocked Grin The only reason I brought that up was because of the issue you had with the energy waste. A future cryptocurrency could use essentially zero energy by not allowing currency creation and only bringing in currency over from destroyed Decrits currency. That is if the economy ever got to a reasonable steady state. I think it still would bring back the issue of manipulation, but perhaps at that point we'll have a Star Trekkian utopia. I don't really want to go off on a tangent about it. Yes energy gets used, the same is true for every currency and everything in production. It can't be avoided without introducing some kind of central authority that distributes the currency--and of course even then you go back to security, etc. ad nauseum. The argument compared to bitcoin and traditional fiat is moot. Decrits will be far more energy efficient.
845  Alternate cryptocurrencies / Altcoin Discussion / Re: Decrits Proposal: Solution for an unbound, energy-related, stable value currency on: September 15, 2012, 04:43:12 PM
burned decrits did belong to somebody. Somebody would have to pay for burning it.

The point was to move value to another currency if one so desired--there is no actual destruction of value. Bitcoin can accomplish the same thing with an address like 1111 or whatever like you said, but this was just a way to sanction it as well as remove the record of that currency from existence instead of leaving it sitting around in an inaccessible account.

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Defending the currency against inflation [or collapse of credibility] is more difficult than against deflation.

You would have to implement ways to add value to the currency by giving away something for burning decrits.

In earlier versions of the Encoin proposals such a thing existed--destroying unrefunded transaction fees. However, Red originally brought up the idea of arbitrage, killerstorm mentioned it in this thread, and I think it makes sense. If the trade value of the currency is typically below its cost to produce, it presents an opportunity for arbitrage. People will want the currency simply because they know it would cost more to create it than they can buy it for. This is something bitcoin cannot defend against, because there is no mechanism for finding the true cost to create currency. In effect, I am willing to wager that bitcoin is more likely to experience extended periods of gross inflation than decrits. Like say, 1600% in a few months.

Now if there is a collapse of credibility, that is a different story and one that cannot be solved by destroying currency or whatever else. Every currency can suffer from this problem. Every single one. There isn't much you can do to fix it except hope that it rarely happens (or isn't permanent) by making the foundation for the currency solid. If the cryptography behind bitcoin or decrits is broken, that's it, game over. Destroying currency won't help.
846  Bitcoin / Bitcoin Discussion / Re: Why bitcoin is doomed: I can't couterfeit them on: September 15, 2012, 03:04:42 PM
You left out some subtleties yourself. Of course you're entitled to your opinion that the economy has grown by 10%, but I say that it has only grown by 5%. Who is correct? This goes back to my comment about using a representative "basket of goods" to judge growth. Why should your particular method of judging economic growth take into account items that I think should carry less weight (just for the sake of this example)? And why should we trust some secretive authority to make "official" rulings on economic growth, which invariably try to justify inflation?

Relax, brother. It is obviously unrealistic to tie this to an exact real-world scenario, but I am giving a similar parable to the person I quoted. You are derailing that.

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But let's say that the growth appears to be real because some guy just manufactured a large number of widgets. How do we measure this growth? By the profit he makes, denominated in the currency we're about to alter? By the retail price of the widgets? It's nonsensical! And if that's not bad enough, we can muddy the waters even more by discussing the opportunity cost of the time and resources he spent making widgets. We could argue that there was never any growth per se. He simply spent some effort converting one resource into another kind of resource. And if he hadn't made widgets, he could have made quibblets instead.

This is all completely irrelevant to the example I provided.

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And neither does anyone else. Observer bias is the rule of the day.

This is where you are exceptionally wrong. Those manipulating the economy know precisely what is happening, and how best to take advantage of it. See the ENTIRE HISTORY OF MONEY.
847  Alternate cryptocurrencies / Altcoin Discussion / Re: Decrits Proposal: Solution for an unbound, energy-related, stable value currency on: September 15, 2012, 01:20:39 PM
The reasons for gold value fluctuations are in the instability of other currencies though.

The instability of other currencies did not cause the gold spike in the late 70s, speculation of the instability of other currencies did. As it turned out, the sky was not falling.

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If You have a stable currency than You risk destabilization because people will trade other unstable currencies against You. You would have to have a total value much bigger than gold to be resistant.
Remember the problem of Switzerland ? :-)
http://www.theweek.co.uk/business/2433/swiss-national-bank-pegs-franc-euro [just a top hit from ggle]

This is exactly the situation that Decrits can handle so easily though. "Decrits is so stable while all this other crap sucks! BUY ALL THE DECRITS!" And then currency production ramps up and keeps the price/value relatively stable, at least over time. What would eventually happen is that Decrits would become worth more vs. fiat currencies because nobody wants fiat anymore, but this would not affect the price of a loaf of bread in Decrits.

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Some instability can not be avoided. Also pegging to energy transfers the effort of the community to energy suppliers [and increases energy consumption, imagine green peace demonstrations against BTC-like currencies :-)]. You wrote, You want to avoid this ... I have to read about this (scary) multiplier concept :-)

Many people make the argument that bitcoin is not energy-inefficient because of all the energy wasted storing, transferring, securing fiat. I don't really buy it, but the same argument applies here but divided by 10 for creating currency, and divided by almost zero in securing the currency. I think Friedman estimated that gold production at one point was around 0.5% of the US's GDP. If the world economy can ever reach a steady state (which might be a lot more likely with a stable currency), then very little energy is needed. Efficiency gains in old products can cause natural deflation while new products soak up the difference and allow everyone to be wealthier.

In my consciousness stream notes I mention a special transaction that destroys currency so this can be used as proof to transfer it to a new currency. The new currency could accept Decrits destruction for some time, but then eventually sever ties. This new currency could be without any form of money creation at all.
848  Bitcoin / Bitcoin Discussion / Re: PayPal set to suspend domestic transactions in Argentina on: September 15, 2012, 12:46:51 PM
AFAIK BitTorrent is far from being throttled. Arguably the exact opposite is true.

I don't know how you could possibly argue that the opposite is true unless you think that bittorrent traffic impedes other traffic, which is possible I suppose.

But ISPs have most definitely attempted to throttle bittorrent traffic.

http://torrentfreak.com/bittorrent-throttling-internet-providers-exposed-111020/
849  Bitcoin / Bitcoin Discussion / Re: Why bitcoin is doomed: I can't couterfeit them on: September 15, 2012, 12:45:01 PM
Voila, value or rather purchasing power added in both cases. In the first I as the holder of bitcoins am the one that gets it, in the second the money printers get it.

While your argument is correct, it leaves out some subtleties. Let's say in the bitcoin scenario the value of a bitcoin has increased solely because of increased value in the economy, and this value is 10%.

If person X has 10,000 bitcoins, he now effectively has 11,000 bitcoins, a real increase worth 1,000 (original) bitcoins in value.
If person Y has 100 bitcoins, he now effectively has 110 bitcoins, a real increase worth 10 bitcoins in value.

While this may be slightly more fair than the way fiat works (this is not necessarily true because of the issues of employment when it comes to deflation; factoring in deflation into the economy is still upsetting to the economy and probably more so than inflation), it still isn't that much different. It is not the people producing the new value that benefit, it is those that have control of the wealth in currency (banks mostly). And if it is money from the banks that is being lent to produce this new wealth, it is doubly advantageous for the banks because not only do they get the lion's share of the new wealth, but they also earn interest on it. A situation that is remarkably similar to fiat.

But the worst part is that Bitcoin doesn't know if new value has been added to the economy or if the velocity of money has reduced (equation of exchange). It has no way of knowing, and the wealthy can spend/loan less to make it seem like new value has entered into the economy, when in reality it is just manipulation of the supply. So while no new value has entered the system, person X still has 11,000 effective bitcoins and person Y has 110 effective bitcoins, but 1,000 bitcoins buys a lot more existing value than 10. And once those 1,000 effective bitcoins get into the economy and increases the velocity of money, person X has more real world value than he traded for in bitcoins.
850  Alternate cryptocurrencies / Altcoin Discussion / Re: Decrits Proposal: Solution for an unbound, energy-related, stable value currency on: September 15, 2012, 12:18:18 PM
Now You probably wanted to show that gold is prone to large value fluctuations. Maybe it is not gold, maybe it is the dollar :-)

This is a semi-valid argument. The top and bottom lines on the gold graph are inflation-adjusted values though. The problem with "inflation-adjusted" is that this is based on the consumer price index (CPI) which many people will argue is a flawed way to measure the inflation rate, but it's really the only thing we've got, and it is accurate enough.

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This was my question about stability. How do You define it ... what is the reference standard. Only after this we can check if the system you propose will deliver the expected stability.

The example I used with the encoin proposals is was something along the lines of "If a loaf of bread costs 1 encoin in 2012, then a loaf of bread will cost 1 encoin in 2050, assuming the production costs of bread have not changed." But such a thing is insanely hard to accomplish, and a more accurate description for Decrits would add something like, "unless the cost of currency production has changed, in which case if a loaf of bread costs 2 decrits in 2050, a coin saved from 2012 will now be 2 about coins (because of the coin multiplier)." Many of the risks (and incentives) added to creating coins is intended to make such a situation as unlikely as possible, but I can't guarantee it, so instead I guarantee you "free money" to make up for it. I suppose I should add something like this to the abstract.

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You wanted relation to energy costs [energy as reference]. Don't You have this in BTC ? The halving will now change the exchange rate BTC~Energy by 100%.

BTC does not have this because the cost of creating currency generally follows what the currency is valued at. If demand for BTC is high and the value increases, demand for creating currency by mining is increased as well, and anyone who mines receives less currency for their mining efforts. Energy/hardware costs increase to meet the value of BTC whereas the value of decrits would decrease to meet the energy/hardware costs, resulting in much more stable price levels, and the inability for the wealthy/banks to manipulate the supply in order to make themselves even more wealthy.

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You get these stupid posts only because Your model is too complicated and average people can not follow :-)

I also spent much more time on technical details rather than economic details with the Decrits proposal, mostly because few believed what I said could be possible for Encoin, so I set to prove them wrong.


Of course the value of BTC would follow energy costs better if there would be no network wide difficulty changes and miners would just mine faster to meet the demand.
The improvement in hardware would cause inflation as you get more hashes / joule. To keep the value more or less constant the hardware effect would have to be be evaluated / compensated, but I could imagine an inflation rate that corresponds to hash/joule. there would be little hoarding but the currency would be still a valuable transaction medium.

This leads to the currency being a poor store of value. I want Decrits to be both a fantastic transaction medium as well as a great store of value. Bitcoin is a great store of value, but not such a great transaction medium.
851  Economy / Economics / Re: Lost Bitcoins on: September 15, 2012, 05:22:20 AM
What you should argue is, if you are going to make the change, make the change smart. Doubling the size of every integer in the block chain so that you can go to 30 zeroes seems a bit odd from that standpoint. I wonder why satoshi didn't just go to 11 decimals though since that wouldn't have changed anything.
852  Bitcoin / Bitcoin Discussion / Re: PayPal set to suspend domestic transactions in Argentina on: September 15, 2012, 05:14:18 AM
To those saying that bitcoin can be easily blocked: Shouldn't it be easier to stop bittorrent than bitcoin?

No one has made an effort to stop bittorrent that I know of, only throttle it. And there are many legitimate uses for torrents. I don't see why one would be particularly easier or harder than the other to block.
853  Bitcoin / Bitcoin Discussion / Re: Why bitcoin is doomed: I can't couterfeit them on: September 14, 2012, 11:14:44 PM
I don't know what that means. What's he actually going to do with his bitcoins?

Banks usually lend money.
854  Economy / Economics / Re: Lost Bitcoins on: September 14, 2012, 11:13:46 PM
A 64 bit int can hold the entire supply (8 decimals in all) in one integer, 8,700 times over. 4 more decimals could be added and still almost hold the entire supply in one int64 (18.5 vs 21 with a bunch of zeroes). If you limit the left hand side, you could go much further than 4 more decimals.
855  Other / Off-topic / Re: Clues for the origin of the name Satoshi Nakamoto on: September 14, 2012, 10:50:01 PM
Ugh I can't remember his name exactly, but there's an established cryptographer with a name like Hiroshi Osaka or something ridiculously similar to Satoshi's name. Quite a bit more relevant than this connection. Can't really give too much meaning to similar looking anglicanized Japanese names.
856  Bitcoin / Bitcoin Discussion / Re: Why bitcoin is doomed: I can't couterfeit them on: September 14, 2012, 10:43:15 PM
Deflation is associated with depression because depressions always happen after an bubble created by the mass emission of unbacked credit, with all the resource misallocation this entails.

What do you think would happen if, for example, Satoshi actually does control 1-2 million BTC and starts a banking empire? (I'm asking your opinion, not giving a leading question.)
857  Bitcoin / Bitcoin Discussion / Re: Why bitcoin is doomed: I can't couterfeit them on: September 14, 2012, 09:55:41 PM
It's true that in a perfect monetary system the money supply is linked 1:1 to the GDP.

But this concept is incompatible with an incorruptible Cryptocurrency.

I disagree. See signature.
858  Bitcoin / Bitcoin Discussion / Re: PayPal set to suspend domestic transactions in Argentina on: September 14, 2012, 09:46:02 PM
Encrypted traffic like the SSL people use to access their banks? This doesn't work.

It does, actually, because encrypting the traffic does not hide the obvious patterns of that traffic. Encrypted bitcoin traffic will look much different from encrypted SSL bank traffic, and it will be pretty obvious until people start focusing their efforts on steganography and/or protocol obfuscation. Not simple tasks, and not efficient uses of bandwidth either.
859  Alternate cryptocurrencies / Altcoin Discussion / Re: Decrits Proposal: Solution for an unbound, energy-related, stable value currency on: September 14, 2012, 09:33:32 PM
Absolutely. But it is also essentially the same as BTC without block halving.

Never has a more rage-inducing sentence been written. Wink Block rewards that don't halve would be an example of disinflation, which will almost certainly still lead to price deflation or general instability in price levels.

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To gain stability [resistance against speculative changes] the currency must be just large [total value of all coins].

This is not historically correct. If we want to take gold, for example:

http://upload.wikimedia.org/wikipedia/commons/thumb/9/9c/Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg/800px-Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg.png

There are many more factors at play than just having a large total value. And that is just speculative change--that doesn't address actual, economic change. Like, for example, the business cycle. Something that is oft-argued by bitcoin proponents to be something that bitcoin will address, which I wholeheartedly disagree with. I've used the term "BitStreet" to describe the manipulation that I think will absolutely occur has already occurred with a limited commodity currency. Without the ability to create new currency as needed, banks will hold disproportionate power over the economy. Power = Wealth2 rather than simply Power = Wealth. Wealth, value, and productivity will once again trickle up the chain and there will be nothing that the people can do about it (except ditch bitcoin in bitcoin's case). Begin economic depression, wealth buys up durable goods, middle and poor lose years of productivity; rinse repeat same scenario as modern fiat.

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If You want to speed up this process You must generate value [burn energy] faster.

The process doesn't need to be sped up, the process needs to react to economic activity in a sane manner. Drastic currency appreciation is not a sane route because it incentivizes manipulation and runaway deflation until powerful actors decide they can't pass up the opportunity to flood the market either via lending (rinse, repeat) or via fiat exchange; either way causing currency depreciation. A cycle, if you will, rather than anything close to an orderly expansion. And this cycle will happen every time the bitcoin market expands--there isn't even the potential for a gold rush as that possibility has come and gone and increasing production towards currency creation bears no fruit other than increasing currency appreciation even more.

The Decrits proposal, economically, is not anything remotely close to the same thing as BTC without the award halve.
860  Bitcoin / Bitcoin Discussion / Re: 1BR: Should the block reward be 50 BTC for ages? on: September 14, 2012, 02:01:17 PM
Yes, but even if you combine all lost unspent outputs and make only one transaction, block would be bigger by this one transaction, compared to stituation if we would do nothing at all.

Not with pruning.

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I already agreed that pruned would be smaller.

It won't be several megabytes though, it will still be huge. Spent inputs are what gets pruned, that's it.
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