You don't believe me? then try and fabricate some bitcoins, you will see that energy must be expended and hardware must be purchased/mantained. Ah, can't that same argument be applied to fiat? Gottta buy and maintain a printer, ink, and paper. Printing fiat is counterfeiting. You cannot counterfeit bitcoins. This is why bitcoins are more comparable to gold than to fiat. |
|
|
|
I'd have to sell first, then count on it to drop so that I could afford to buy it back.  |
|
|
|
- more European economic problems, Cyprus-like: Spain, Portugal, Greece.
I think this is a given. The EU is a failed experiment and is falling apart. The only question is when the next implosion will hit. Given that many other countries, e.g. Canada and Switzerland, have either already enacted or have legislation in front of them now for "bail-in" thefts from people's bank accounts, it's probably a safe assumption that we'll see more thefts by the bankers to prop up their criminality. This will have further devastating effects on central bank fiat currency, and drive people into hard assets that are not so easily subject to confiscation. However, there are significant market manipulations going on that have affected assets like gold/silver in ways opposite to what one would expect from current news and events. The question there is whether or not the manipulations can continue indefinitely or how long they can suppress asset prices. With the acceleration of the decay of the EU, I don't think it will be long before we see another major crisis. Japan is debasing its currency, which is just one more indication that the rot is worldwide, and not limited to the EU. The recent reports of Chinese municipality debt also indicates the rot is inside the BRICs countries. Not good for them. But it will be good for bitcoin!  |
|
|
|
Shutting down exchanges? They will just move to friendlier countries.
GO SEALAND!  |
|
|
|
Energy consumption is massively impacted by the size of the semiconductor die, e.g. 110 nm vs. 50 nm vs. 20 nm. Currently, most ASIC rigs are using 110+ nm chips, but the currently available semiconductor techology available to OEMs is in the 2x-nm class. The 1x-nm class isn't far behind now.
I'm an electrical engineer, so I know about the technological constraints you are talking about. But you are wrongly assuming that the efficiency in MH/J affects overall energy consumption. It does not (at least to my understanding of a free market). More efficient HW will just make the Hashrate go up what in turn will make difficulty level go up. As long as additional gear can be run profitably, this will be done. Good point. However: It then seems that X years down the road, mining will only be done by massive supercomputers. Or that seems to be the implication to me anyways. Could be wrong, but if the hashrate an difficulty go up like that, we should see ASICs pushed out as being unprofitable the same way that CPU mining has been pushed out, and the way that GPUs older than <insert # of months/years here> are not profitable now. The question then seems to be about the initial cost of hardware? i.e. Are we assuming that the limiting factor will be electricity when the limiting factor in the future may be the cost of hardware? |
|
|
|
I don't believe people are as influenced by the media as they were before the Internet, so it's hard to peg exactly how people will feel about Bitcoin and how easily they'll be swayed into not using it.
For myself, whenever I read something in the MSM, I figure that the opposite is likely true, or that such a large part has been omitted as to make the story nothing more than a jump point to figure out what is actually happening. Perhaps I'm a tad cynical... However, I know a lot of people that believe that if it's in the news, it must be true. In the short term, I think hit pieces will have a negative effect on bitcoin adoption. However, I don't think that they can stem the tide forever. Eventually people will catch on. One only needs to look at how the pundits never seem to be able to predict anything useful to see that they're just full of BS. Where were they in predicting the dot-com bubble or the sub-prime mortgage crisis? Hmmm... I suppose their records speak for themselves. Keep in mind that the lone voice that predicted the sub-prime crisis was ridiculed and dismissed as being a kook. So, while people may swallow these kinds of headlines right now, they won't forever. Reality will reveal the pundits scare tactics for what they are - eventually. When? Dunno. But it will come to light at some point. |
|
|
|
|
Well, since most people actually believe in ACGW, they'll freak out without even a thought towards the facts.
The article just shows how desperate those that are threatened by bitcoins are. They'll publish any kind of drivel whatsoever to try to attack BTC in the public mind.
|
|
|
|
Your numbers are way off. Energy consumption is massively impacted by the size of the semiconductor die, e.g. 110 nm vs. 50 nm vs. 20 nm. Currently, most ASIC rigs are using 110+ nm chips, but the currently available semiconductor techology available to OEMs is in the 2x-nm class. The 1x-nm class isn't far behind now. Have a read around here: http://www.samsung.com/global/business/semiconductor/minisite/Greenmemory/That will give you an idea about how die size affect energy consumption. With ever smaller classes of chips, energy consumption will decrease. So, any prediction of future energy consumption must take into account the energy efficiency of semiconductor technologies available in the future. For example, would you calculate it in cords of wood or tonnes of coal for a steam engine to produce your electricity? Of course not, because that technology is pretty much obsolete now (outside of a few specialty cases). |
|
|
|
|
Does Krugman believe his own BS? I kind of wonder... Everybody has their price.
|
|
|
|
|
The fiat collapse will likely boost bitcoin.
As for precious metals, I think it's a good idea to have both BTC and metals.
Given the recent crash of gold & silver, now is about a good time to buy more. However, they may dive even more, so, perhaps a bit of "wait & see" would be good now.
For silver, the market to watch is the NYMEX. That's generally where JP Morgan does all its shorting, and where the greatest volatility is - usually, but not always. e.g. We just saw a horrible dive in Hong Kong the other day.
|
|
|
|
But it is important to remember that men naturally do what is beneficial to them, and given a tool such as the hammer of State, no man is immune to seeing his problems as nails.
Moneylending is a business like any other, and so long as it is constrained by the market - that is to say, it has no power to enforce a higher interest rate than is acceptable to those who would borrow - it is a very respectable one.
Hmmm... Not so sure... I've only ever seen the kind of system we have now, and calling it criminal would be an understatement. I'm having a hard time imagining how it can ever be anything except predatory. It seems that money is heroin for bankers - they're junkies perpetually jonesing for another fix, and they'll do anything to get it, no matter the consequences for them or anyone else. |
|
|
|
Oh? The Australian kleptocrats want to steal more from people? I'm shocked!  |
|
|
|
Credentials are meaningless. Paul Krugman, for example, has a Nobel prize in economics, but knows nothing about how a free-market economy leads to prosperity. He's been drinking too much of that Keynesian Kool-Aid. If you're unsure about how to "connect the dots", just dig for answers and think things through logically. The light bulb will eventually come on.
Hahahaah~! +1 I can't stand that shilly douche... |
|
|
|
If there is interest, it will create more "claims" on bitcoins than there are bitcoins that exist. This is deterministically true and the simple math is above to illustrate it. Not necessarily, because you're ignoring the time dimension. The claims are not for X number of BTC right now, but rather for X BTC/day for Y days. The total number of BTC/day available for buying goods and services as well as paying off loans depends on monetary velocity and is not strictly limited to the number of BTC in circulation. It seems to me that the time dimension is simply not important. But, let's run with it... Inside of the velocity of money, it seems that you are assuming that a sort of equilibrium will be reached where money moves fast enough through the economy and that the lenders (those charging interest) will continue to move money. This seems to ignore the possibility (probability?) that all money must move through the lenders eventually, and that they will never call in loans ahead of schedule. We know that this doesn't happen in reality - banks call in loans and ruin people's lives. I'm skeptical that there would be an equilibrium there. It seems to me that the fabrication of claims on bitcoins would result in the lenders eventually taking all wealth the way it happens in the current system. I just don't see how usury is compatible with bitcoin unless we want to go down that same road that we see with other fiat currencies and paper silver/gold. Your use of the term "usury" implies a negative view of interest. Interest is simply the cost of money. Now, having that money, as money, at a later date may well be more profitable than using it immediately to buy something physical, in the bitcoin economy. So interest rates can be expected to be low, as there is less incentive for the lender to convert the currency to hard assets than in an inflationary economy, which is what, essentially you are paying for: the ability to use money which might otherwise be used for some other endeavor by the lender. But that is not to say that interest is impossible. Even an interest debt which totals (after compounding and such) more than 21 million coins can still be paid off. You are, after all, paying in installments, and the lender isn't simply holding onto the coins after you pay him. He's making other loans, purchasing capital, expending it on resources such as food and shelter, etc. Just because your heart pumps 191,625,000 gallons of blood over the course of your lifetime doesn't mean that you have to have that much at all times in your body. Yes - I absolutely have a negative view of usury/interest. Usury, once in control, will wreck any nation. The heart and blood analogy somewhat distorted. It's always the same amount moving through your body, just as the amount of bitcoin would always be the same moving through the economy. We don't count every transaction towards the total number of bitcoins in existence, just as we don't count each contraction of the heart muscle as creating new blood. Ah, I see your point, he is right though, over the course of a 10 year loan for example, there would in effect be 630,000,000 BTC because each coin can be spent more than once. The reality is, in this universe , Bitcoin works the same way as cash (except better). -Interest works fine. -Money can be taxed. -Fractional reserve banking works. -Businesses can run. The ideas circulating that Bitcoin will somehow prevent certain aspects of the financial system (referring to honest business, not government money printing) are generally untrue. Still it's an interesting thing to think about, so thanks for posting it. Well, I guess I understand how people view bitcoin better now. It just seems more to me now that the only real advantage is that it cannot be directly controlled by central banks, which is an advantage that I think could disappear very quickly once it gains broader acceptance. FWIW - I don't think fractional reserve banking works, except for the banks. Here's a series of articles on the topic: Part 1 - The Mechanics of Fractional Reserve BankingPart 2 - What is money?Part 3 - "How" Fractional Reserve Banking Creates Money and "Why" it is FraudulentPart 4 - Run on the Banks? Or Run on the People? Part 5 - Compound Interest as Invisible Slavery Part 6 - Summary & Additional Resources Fractional reserve banking relies on float time, which if you or I use, we go to prison. It's just fraud. The articles above explain that in depth.
Anyways, I was looking to see what the general outlook on the topic there was from other people. Thanks for everyone chipping in with their 2 satoshi! |
|
|
|
|
Those are nice charts! Thanks for making them publicly available!
|
|
|
|
Perhaps I've framed the question wrong... If there is interest, it will create more "claims" on bitcoins than there are bitcoins that exist. This is deterministically true and the simple math is above to illustrate it. So, we have two things: 1) Bitcoins (created through mining) 2) Claims on bitcoins (created through usury) The two are NOT the same. So, at some point in the (distant?) future, we will have a situation where there are 21 million bitcoins, and claims against 210 million bitcoins. That is, when people suddenly start calling in claims on bitcoins, the debt system begins to rapidly unwind, as in a "run on the 'system'". That system MUST be outside of the bitcoin system though because it's not a part of the protocol, i.e. that's trivially true. THE QUESTION REFRAMED FROM THE ABOVE:Is this problematic that there will be more claims on bitcoins than there will be bitcoins in existence? My gut reaction is that usury, with respect to bitcoin, it nothing more than counterfeiting fake bitcoins and convincing people that they are real, which we know is false, i.e. a claim on a thing is not the thing. The implication then is that usury will create inflation for a currency that is inherently deflationary (if nobody objects to framing the terminology like that).
OP is an idiot and does not understand the movement of money. A loan of 21 million bitcoins or more seems like it would be impossible to pay back, but then you have to remember that bitcoins circulate. After paying a portion of the loan, the bitcoins circle back through the economy and another portion of the loan can be payed.
Not quite. In my original post I thought I was pretty clear that I wanted to frame the question in 'frictionless universe'. The question isn't about practicality, it's theoretical. I understand the velocity of money and how that affects systems, but I think you might have missed the point above where I glossed over the velocity and assumed a near infinite velocity (zero friction). (Just like in physics, assuming ideal conditions and no friction. ) Since the system is deterministic, it's only a matter of time before claims on bitcoins eclipse the number of bitcoins in existence. Any talk about the velocity of money is just arguing about "when" the claims eclipse the real thing. I am not worried about "when". I'm interested in the implications of that eclipse. Right now we have central banks printing fiat money out of thin air, and it seems to me that usury is not significantly different. I'm merely framing that issue in terms of how usury is compatible with bitcoin as bitcoin has a hard limit on the amount that can exist. Another way to look at it is how JP Morgan, Goldman Sachs, and now the Fed have been shorting silver and gold - paper silver & gold. By manufacturing imaginary silver & gold, they've managed to manipulate the market and crash the prices. In terms of bitcoin, the imaginary bitcoins (claims on bitcoins) created through usury seem to lead to the same problem. I just don't see how usury is compatible with bitcoin unless we want to go down that same road that we see with other fiat currencies and paper silver/gold. |
|
|
|
That's Chris Duane. He's a smart fellow, but to describe him as 'set in his opinions' might be a bit of an understatement. He's got other good material, though I certainly can't get behind his hatred of bitcoin. Again, 'hatred' is likely understating it. |
|
|
|
Yes, I know my numbers aren't realistic. The point was to have nice easy round numbers to illustrate the determinism.
Are you suggesting a negative interest rate? e.g. -0.5% when the deflation is 1%, for example only.
No, not negative interest, because the benefits of such a loan would be less beneficial to the creditor than just holding the currency. However, say that the interest rate in dollars is 3.5% and (this would be in the future with hopefully slower deflation) 1% deflation, the BTC interest rate might be 2.5% because of the deflationary advantage to the creditor. I'm not sure that I understand what you're saying. If, for example, deflation is 1%, then if I loan out BTC to you at -0.5% interest, I am up 0.5% on that loan when you pay me back because I've recouped 0.5% of the 1% deflation. But as you've pointed out, it's still better for me to hold on to the money and gain the deflation rate instead... Are you agreeing with me in that BTC interest requires another fiat currency to deal with interest? I'm fuzzy there. |
|
|
|
On the contrary.
Usury is impossible under Freicoin, because only demurrage cancels the liquidity premium of money. A load under FRC will be zero (before accounting for risk) and the lenders will benefit by not having to pay demurrage for the duration of the loan, hence they achieve by investing what other in standard currency get by mere mattress stuffing.
Meanwhile the borrower will pay demurrage (if he just holds the coins) and need to be acquiring more coins to pay back the loan but the loan will not increase in cost and if they can produce 1 coin worth of salable products from 1 coin of capital goods they will be able to repay the loan (this assumes the borrower immediately converts all the borrowed money into capital goods which in essence passes demurrage on yet again).
Under BTC Usury is inevitable because under deflation the principle of any loan (even one with zero interest) in increasing and putting the borrower deeper into debt. Only the most obscenely profitable endeavors are worth investing in and these are rarely of much redeeming social value (drugs and gambling) or really create anything (spending BTC to buy more computers to mine more BTC (what a circle-jerk)).
Obviously the borrower gets shafted under BTC, while under FRC the borrower would be better off then in our current Fiat system.
I'm reading that now... But need more time. It's a fascinating concept. |
|
|
|
|
Show Posts
