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Author Topic: Change the rules of Bitcoin money supply to fix the price stability issue!  (Read 4799 times)
Vladimir
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May 29, 2011, 12:27:06 AM
 #21

If the Bitcoin community adds any form of currency creation beyond the initial decreasing reward for securing transactions, I will sell all my Bitcoins and move on.

Price stability is a pipe dream of central planners. The larger Bitcoin becomes, the more stable it will become. If you have a good way to force people to use Bitcoin without forcing people to use Bitcoin, please share.

I concur. Price stability is only approximated, and then only by (and some people think this is ironic) speculators.  If bitcoin moves up too much, speculators sell, lowering the price. If it goes down, they scoop up bargains, raising the price.

No need to bother with liquidating bitocoins in "community adds any form of currency creation beyond the initial decreasing reward for securing transactions" scenario. We will just split the blockchain and continue biz as usual using old rules.



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rahl
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May 29, 2011, 05:31:19 PM
 #22

Well, it would be nice if there were a way to price things in bitcoins that would not be affected by bitcoin's change in value. I shouldn't have to keep lowering my price quote somewhere as bitcoin's value increases.

Adjusting your prices is part of retailing, in electronics in particular many stores still need to adjust there prices daily because the development is so fast...

Any import/export business also need to adjust to exchange rates all the time. This is a very normal part of doing business for everyone that deal in multiple currencies or volatile products. If BitCoin becomes more dominant this problem will also decrease as more of the cashflow will be in BitCoin only and rather then being compared with the value of fiat currency all the time it will be the amount of BitCoin demanding your goods that is the only factor you need to worry about in pricing.

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May 29, 2011, 10:06:44 PM
 #23


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I think the best way to do this would be to establish a basket of commodities that everyone can agree on, and have this be automatically computed and posted in multiple locations.

I barely understand what this would mean exactly.  Feel free to elaborate.

It sounds like he is pushing IMF agenda of replacing about to implode fiat pyramids by a new bigger one... what is the name SM* something...


I wasn't aware of anything the IMF had that was like my suggestion, and so I was not trying to "push their agenda." What are the similarities here? Do you have a link to this?

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Vladimir
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May 30, 2011, 12:36:17 AM
 #24


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I think the best way to do this would be to establish a basket of commodities that everyone can agree on, and have this be automatically computed and posted in multiple locations.

I barely understand what this would mean exactly.  Feel free to elaborate.

It sounds like he is pushing IMF agenda of replacing about to implode fiat pyramids by a new bigger one... what is the name SM* something...


I wasn't aware of anything the IMF had that was like my suggestion, and so I was not trying to "push their agenda." What are the similarities here? Do you have a link to this?

I am an INTP (http://en.wikipedia.org/wiki/INTP) I do not have links, I have Intuition (which is nearly always right, BTW). If you need links try to google "IMF special drawing rights".



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May 30, 2011, 12:42:56 AM
 #25

A boy, comes into a huge building full of grownups who use it as a marketplace and do their biz there for some time now. Boy shouts: "Hey, you are doing it all wrong! All the tables and the chairs and your nice mining machines should be bolted to the ceiling not to the floor! Than this would be really great marketplace".

Men glance at the boy with amusement and move on doing their usual biz. One man stops and gives the boy a candy.... Than in  a few minutes another boy comes in and shouts the same noncence...






abyssobenthonic
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May 30, 2011, 12:58:41 AM
 #26

Any import/export business also need to adjust to exchange rates all the time. This is a very normal part of doing business for everyone that deal in multiple currencies or volatile products. If BitCoin becomes more dominant this problem will also decrease as more of the cashflow will be in BitCoin only and rather then being compared with the value of fiat currency all the time it will be the amount of BitCoin demanding your goods that is the only factor you need to worry about in pricing.

Import/export businesses generally don't adjust their prices due to exchange rates (at least not on a short term basis): they just trade currency futures to lock in an exchange rate (and build the cost of such trading into the prices).

At the moment there's no easy way to trade BTC futures, though.  Once there is, then you'll see a lot more price stability.

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Vladimir
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May 30, 2011, 01:18:46 AM
 #27

PaulDonnelly, please read this http://forum.bitcoin.org/index.php?topic=10552.0 .

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marcus_of_augustus
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May 30, 2011, 06:42:30 AM
 #28

"PaulDonelly" is probably yet another troll. Posts one post about bitcoins "price stability issues" and disappears.

We are averaging these at about 2-3 times per week or more.

rahl
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May 30, 2011, 05:41:19 PM
 #29

Import/export businesses generally don't adjust their prices due to exchange rates (at least not on a short term basis): they just trade currency futures to lock in an exchange rate (and build the cost of such trading into the prices).

At the moment there's no easy way to trade BTC futures, though.  Once there is, then you'll see a lot more price stability.

Yes, depending on the size of said import/export business they could use currency insurance instead...

Anyone could issue a BitCoin future ... someone just need to code a market. Though designing a anonymous futures market might be a bit of challenge without having to lock down all the promised funds for the durations of the futures.

Also BitCoin futures would probably only be issued in one direction. Futures that give you a lower BitCoin price in the future in fiat currency then today would probably not exist. But people might still want to pay for a contract that gives then a specified increase to the BC value a few months into the future. So I guess we just have to start coding that maketplace...




rayvellest
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March 20, 2013, 03:16:01 AM
 #30

Before very long though, I think the rules should be changed to address the price stability issue.
There ought to be an automated mechanism for doing this..

Anyone have any good ideas on this?

See thread: http://forum.bitcoin.org/index.php?topic=9923.0

It's about creating a currency backed by bitcoins. The bitcoins then become similar to gold in currencies backed by gold. The new currency will have great price stability in the sense of being resilient against deflation and inflation.

That is exactly what my gut feeling tells me about Bitcoin. It will be adopted by governments worldwide to back their currencies—and actually, I even go further speculating that the first government who decide to do that, will be the one in the command of the world.

solex
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March 20, 2013, 03:22:15 AM
 #31

PaulDonnelly, if you are staying in the Bitcoin forum you need to spend some time studying these:



MoonShadow
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March 20, 2013, 03:58:06 AM
 #32

Before very long though, I think the rules should be changed to address the price stability issue.
There ought to be an automated mechanism for doing this..

Anyone have any good ideas on this?

See thread: http://forum.bitcoin.org/index.php?topic=9923.0

It's about creating a currency backed by bitcoins. The bitcoins then become similar to gold in currencies backed by gold. The new currency will have great price stability in the sense of being resilient against deflation and inflation.

That is exactly what my gut feeling tells me about Bitcoin. It will be adopted by governments worldwide to back their currencies—and actually, I even go further speculating that the first government who decide to do that, will be the one in the command of the world.

No.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
BitPirate
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March 20, 2013, 04:31:02 AM
 #33

I think the US$ should be stabilised. It keeps dropping in value. Last time I checked it was only worth around 0.016 BTC. This will deter USD investors.

twolifeinexile
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March 20, 2013, 04:35:15 AM
 #34

Special drawing rights?
exactly the same gimmick or another gimmick:
Dollar pegged currency like CNY.
theta
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March 20, 2013, 08:51:00 PM
 #35

That is exactly what my gut feeling tells me about Bitcoin. It will be adopted by governments worldwide to back their currencies—and actually, I even go further speculating that the first government who decide to do that, will be the one in the command of the world.

The first government that does this will go bankrupt shortly afterwards, as soon as BTC price rises and said government's debt increases disproportionately compared to its tax revenue. There's a reason why the gold standard was abandoned. The same reason that makes every single monetary sovereign nation want to devalue their currencies (so called currency war). The same reason that most Eurozone nations suffer. And you are suggesting that a government that decides to issue debt backed by an asset in fixed supply will somehow end up benefiting from it?

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solex
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March 20, 2013, 10:51:47 PM
 #36

That is exactly what my gut feeling tells me about Bitcoin. It will be adopted by governments worldwide to back their currencies—and actually, I even go further speculating that the first government who decide to do that, will be the one in the command of the world.

The first government that does this will go bankrupt shortly afterwards, as soon as BTC price rises and said government's debt increases disproportionately compared to its tax revenue. There's a reason why the gold standard was abandoned. The same reason that makes every single monetary sovereign nation want to devalue their currencies (so called currency war). The same reason that most Eurozone nations suffer. And you are suggesting that a government that decides to issue debt backed by an asset in fixed supply will somehow end up benefiting from it?

Exactly right. Governments always spend more than they receive through taxes because politicians are incapable of avoiding the temptation to buy votes ahead of the next election. They always want to spend money giving freebies and entitlements to the public because they think it keeps them on their side. Having spent too much money with no intention of paying it back by letting the government run a profit, then inflation is fostered to reduce the government debt in real terms. The downside is that prudent savers are robbed, imprudent borrowers are rewarded, capitalism is crippled by mal-investments.

That is why all of us have lived our whole lives burdened by ever increasing monetary bases, resulting in price inflation, until most of us have accepted it as the normal way an economy should work.

The new era of deflation will make governments go cold-turkey as severely as any heroin addict has done.

marcus_of_augustus
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March 20, 2013, 11:45:28 PM
 #37

Govt.s will no longer be in control of the money supply in the foreseeable future. This is the best possible outcome, so it will happen.

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March 21, 2013, 12:29:32 AM
 #38

Why change the rules when the possibility already exists? (But apparently very few people seem to understand it...)

Basically:

There should be a functioning market between buyers and sellers of block space.
Anyone wanting to move bitcoins between wallets obviously needs to buy block space by bidding for it.
Any miner who discovers a block obviously needs to sell that block space in order to earn more bitcoins.

However, unlike ordinary markets which have price discovery, I strongly suspect that some interesting things will happen when it finally begins to resemble a functioning auction:
  • Miners will notice that if they increase the cut-off price and reject more transactions, there will be DOWNWARDS pressure on the exchange rate.
  • Whereas if miners decrease the cut-off price and accept more transactions into each block, there will be UPWARDS pressure on the exchange rate.

I'll let you guys try to figure the relation between transaction fees and exchange rates. A key concept here is "monetary velocity". Smiley

However, let me just say that I'm really annoyed with the "core developers" right now for sitting on this functionality the entire time and doing SFA to enable it! Even worse, they've sabotaged it for the sake of merchants who want that "zero-confirmation" bullshit to be resistant to double-spends. I guess that that's what happens when one gets stuck straight into coding without figuring out the design first! Angry
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June 05, 2013, 03:48:47 PM
 #39

Govt.s will no longer be in control of the money supply in the foreseeable future. This is the best possible outcome, so it will happen.

that will be the real independence day

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