vlasta (OP)
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May 29, 2011, 06:27:24 PM |
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I have a dream about the future...
Imagine, in 20 years, all people on Earth are using bitcoins and the amount of coins is fixed. Wait a moment...not fixed. It is decreasing, because: People will inevitably lose access to their wallets. They may die and not tell a password to their wallet to anyone. They may just forget. Their harddrive may crash and they have no backup. Or, imagine, someone has a job and brings home more money than he needs - he just hoards the rest, because that is the best form of investment in this kind of economy. Whatever the reason, the number of coins in active use decreases.
On the other hand, the number of people is probably still increasing, because there are new technologies providing more food and better healthcare.
This future is impossible. Economy cannot reasonably work when there is constant deflation. No one is motivated to invest and take risks.
If bitcoin stays the same as it is today, it will NOT become the main currency in the future, because this future is impossible.
The idea of digital currency is great, but the current coin generation is flawed. It must be repaired. I do not know how, but it should be tied to the amount of subjects using it or the amount of coins exchanged for actual goods or services in the recent past. I do not know if that is technically possible. If not, even connecting the generation rate to the current exchange rate of BTC/USD or other physical currency would be better than the current way.
What Bitcoin needs most are sellers and buyers of actual goods. None of them are motivated right now to use Bitcoins. On the other hand, investors and hoarders are motivated a lot.
If the situation does not change soon, the bubble will burst and there will be a lot of upset users and Bitcoin 2.0 with different rules will appear...
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stic.man
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May 29, 2011, 06:30:01 PM |
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oh word for real?
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justusranvier
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May 29, 2011, 06:30:53 PM |
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What Bitcoin needs most are sellers and buyers of actual goods. So what actual goods are you willing to buy with Bitcoins?
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tachi641
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May 29, 2011, 06:32:02 PM |
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I have a dream about the future...
Imagine, in 20 years, all people on Earth are using bitcoins and the amount of coins is fixed. Wait a moment...not fixed. It is decreasing, because: People will inevitably lose access to their wallets. They may die and not tell a password to their wallet to anyone. They may just forget. Their harddrive may crash and they have no backup. Or, imagine, someone has a job and brings home more money than he needs - he just hoards the rest, because that is the best form of investment in this kind of economy. Whatever the reason, the number of coins in active use decreases.
On the other hand, the number of people is probably still increasing, because there are new technologies providing more food and better healthcare.
This future is impossible. Economy cannot reasonably work when there is constant deflation. No one is motivated to invest and take risks.
If bitcoin stays the same as it is today, it will NOT become the main currency in the future, because this future is impossible.
The idea of digital currency is great, but the current coin generation is flawed. It must be repaired. I do not know how, but it should be tied to the amount of subjects using it or the amount of coins exchanged for actual goods or services in the recent past. I do not know if that is technically possible. If not, even connecting the generation rate to the current exchange rate of BTC/USD or other physical currency would be better than the current way.
What Bitcoin needs most are sellers and buyers of actual goods. None of them are motivated right now to use Bitcoins. On the other hand, investors and hoarders are motivated a lot.
If the situation does not change soon, the bubble will burst and there will be a lot of upset users and Bitcoin 2.0 with different rules will appear...
I don't want to be a cynic but you are absolutely correct.
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hazek
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May 29, 2011, 06:33:30 PM |
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My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)
If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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tachi641
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May 29, 2011, 06:36:10 PM |
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Dude, your technical explanation of inflation and deflation is nice and all and very accurate. However, it doesn't solve the problem that - almost no one outside of the community is willing to accept BTC as a payment service. Even people are in the community won't do business unless you escrow with Clearcoin. BTC will officially take off if someone can convince Amazon to accept it. Until then this is just a investor/hoarders game.
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hazek
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May 29, 2011, 06:44:57 PM |
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Oh sorry, yeah I misunderstood what it is that you don't understand. Now I get it.
Here's your problem. You believe there is a way to plan and design Bitcoin for success. Well I'm sorry to burst your bubble but there is not one person in the world who would poses such a knowledge. The best we can do is have a technologically and economically sound project and let the market figure it out, see what sticks and what doesn't.
You are of course more then welcome to start your own version of a digital currency with your own ideas, present it to the market and see if it fares better. But you cannot plan for success. If we had a person capable of such a thing I'd want them to plan for my life and be our king.
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My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)
If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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vlasta (OP)
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May 29, 2011, 06:49:56 PM |
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I read that. I do not want to haggle about the meaning of words. I call it deflation, you can call it differently if you wish. The economic implications are what is important. And they cannot be easily dismissed by saying that we experience inflation. Denying the deflation is like claiming that humans have fur, because they have 1000s of hairs all over their bodies. Technically it is correct, but everyone knows that humans do not have fur.
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grondilu
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May 29, 2011, 06:52:33 PM |
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Here's your problem. You believe there is a way to plan and design Bitcoin for success. Well I'm sorry to burst your bubble but there is not one person in the world who would poses such a knowledge. The best we can do is have a technologically and economically sound project and let the market figure it out, see what sticks and what doesn't.
You are of course more then welcome to start your own version of a digital currency with your own ideas, present it to the market and see if it fares better. But you cannot plan for success. If we had a person capable of such a thing I'd want them to plan for my life and be our king.
+1
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vlasta (OP)
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May 29, 2011, 06:56:47 PM |
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You are of course more then welcome to start your own version of a digital currency with your own ideas, present it to the market and see if it fares better. But you cannot plan for success. If we had a person capable of such a thing I'd want them to plan for my life and be our king.
I have no intention to do that, but others might. What I am advocating is a change that fixes what appears to be flawed while there is time. You cannot hide from the economic reality and simply focus on the technology. A digital currency must fulfill the needs of the users if it should expand. I want to believe, the community wants Bitcoin to grow and be accepted in many places. If it is just a fun project to test out a technology, then maybe I am in the wrong place.
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Vitalik Buterin
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May 29, 2011, 06:57:16 PM |
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Deflationary spirals can't last forever, for the same reason why bubbles can't keep growing forever: eventually speculators realize that the value of a bitcoin will keep going up and up, the market gets overexcited, and eventually someone decides to cash out. At that point, the market once again gets overexcited and the value of bitcoin crashes right back down again.
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Argumentum ad lunam: the fallacy that because Bitcoin's price is rising really fast the currency must be a speculative bubble and/or Ponzi scheme.
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grondilu
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May 29, 2011, 07:03:29 PM |
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What I am advocating is a change that fixes what appears to be flawed while there is time. You cannot hide from the economic reality and simply focus on the technology. A digital currency must fulfill the needs of the users if it should expand. I want to believe, the community wants Bitcoin to grow and be accepted in many places. If it is just a fun project to test out a technology, then maybe I am in the wrong place.
I hope you realize that there is room for several approaches. In order to implement your stuff, there is no need to alter bitcoin in any way. Just fork it, and use it with people who share your point of view about money. The bitcoin community will keep using bitcoin, and your community will use your inflacoin. Bitcoin doesn't even need to be accepted in many places. If I want to buy something in a "inflacoin-only" store, I'll just buy enough inflacoins with my bitcoins on the exchange market. And everyone is happy.
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hazek
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May 29, 2011, 07:08:29 PM |
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Exactly. And that the beauty of the truly free market. No one is forced to do anything. If you like it, do it, if you don't, don't. But don't try to initiate force against those who disagree with you.
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My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)
If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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rezin777
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May 29, 2011, 07:24:58 PM |
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What I am advocating is a change that fixes what appears to be flawed while there is time.
Have you considered that Bitcoin users like me will simply refuse such "fixes". I will either fork the block chain with others like me, or I will sell all my Bitcoins and move on to the next money system that doesn't rob me of value. Technology will find ways to reduce the amount of lost coins. Safety features, automatic wallet ownership transfers upon account inactivity (death), etc. You are making a mountain out of a molehill. Since when does being born entitle you to money? Suggesting that no one will invest in a deflationary economy is ludicrous. What it will do is drive off malinvestment. Good ideas will remain hugely profitable. Hoarding is temporary. Not many people can enjoy staring at a fat Bitcoin wallet. People enjoy things like life, vacations, toys, fast cars, boats, planes, guns, food, alcohol, houses, land, automatic flushing toilets, a toaster that knows when you wake up, exotic animals roaming the courtyard, replacing body parts with mechanical representations, etc. etc. etc. If you can design a block chain with rules that are more desirable, please, feel free. Let it compete with the current implementation and the more desirable block chain will rise to the top. Perhaps, because there are so many people that want their money to lose value over time, both chains will coexist! I couldn't imagine a more perfect world! Then the people who love inflation will leave this block chain alone. You can all sit around and watch your money lose value together!
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kiba
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May 29, 2011, 07:33:08 PM |
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hazek
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May 29, 2011, 07:42:38 PM |
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This is just from looking at the tittle but I really wished you didn't call it delfation when it's in fact price appreciation which are not one and the same.
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My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)
If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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afterburner229
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May 29, 2011, 08:05:21 PM |
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What Bitcoin needs most are sellers and buyers of actual goods. None of them are motivated right now to use Bitcoins. On the other hand, investors and hoarders are motivated a lot.
If the situation does not change soon, the bubble will burst and there will be a lot of upset users and Bitcoin 2.0 with different rules will appear...
You may read thread: http://forum.bitcoin.org/index.php?topic=9487.msg140015#msg140015- where I proof, bitcoin currency will not survive @ current rules. Now, I am searching for data to confirm/disconfirm my proof. You may help me, if you research the following: - how many traders there are on all BTC exchanges world-wide, as graph/function of time? - how many miners there are on all BTC pools (&singles) world-wide, as graph/function of time? - how many goods (kinds of goods, volumes of goods) sell directly for BTC world-wide, as graph/function of time?
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kiba
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May 29, 2011, 08:20:19 PM |
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cloud9
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May 29, 2011, 08:29:13 PM |
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There will only be (numerical price value like hazek insisted) deflation of BTC for as long as the rate in the increase of the amount of goods/services/other available for exchange with BTC outpaces the rate in the increase of the amount of BTC available for exchange. Once BTC's novelty wears off, and BTC is distributed evenly to all participants, and the rate of increase in the amount of new goods/services/other available for exchange with BTC is in moderation - the BTC deflation rate will equal the rate of increase in the amount of new goods/services/other (as it is now) - only more stable once saturated. Supply and demand dictates. Deflation should not be troublesome - the success of gold as a physical means of book keeping for millenia has shown that the digital age's digital book keeping can be successful if it is analogous to the scarcity property of gold - it pins down supply as nearly constant. Change in demand (measured in the number of available goods/services/other) then dictates the value of deflation / inflation. The system adjust itself in perfect balance of exchange. See http://en.wikipedia.org/wiki/Equation_of_exchange Total value of goods/services/other available for exchange with BTC = Total number of BTC x Value attributed to BTC So if you are complaining about deflation - you should ask people to please stop adding goods/services/other available for exchange with BTC. The system will find its own balance point - because if deflation is such a deterrent as you foresee for people to keep adding goods/services/other available for exchange with BTC - the deflation should adjust when these goods/services/other are not being added anymore - and when this happens, deflation goes down - incentivising people again to add goods/services/other available for exchange. The market finds its own FORWARD LOOKING balance point.
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cindylove
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May 29, 2011, 08:29:24 PM |
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I have a dream about the future...
Imagine, in 20 years, all people on Earth are using bitcoins and the amount of coins is fixed. Wait a moment...not fixed. It is decreasing, because: People will inevitably lose access to their wallets. They may die and not tell a password to their wallet to anyone. They may just forget. Their harddrive may crash and they have no backup. Or, imagine, someone has a job and brings home more money than he needs - he just hoards the rest, because that is the best form of investment in this kind of economy. Whatever the reason, the number of coins in active use decreases.
On the other hand, the number of people is probably still increasing, because there are new technologies providing more food and better healthcare.
This future is impossible. Economy cannot reasonably work when there is constant deflation. No one is motivated to invest and take risks.
If bitcoin stays the same as it is today, it will NOT become the main currency in the future, because this future is impossible.
The idea of digital currency is great, but the current coin generation is flawed. It must be repaired. I do not know how, but it should be tied to the amount of subjects using it or the amount of coins exchanged for actual goods or services in the recent past. I do not know if that is technically possible. If not, even connecting the generation rate to the current exchange rate of BTC/USD or other physical currency would be better than the current way.
What Bitcoin needs most are sellers and buyers of actual goods. None of them are motivated right now to use Bitcoins. On the other hand, investors and hoarders are motivated a lot.
If the situation does not change soon, the bubble will burst and there will be a lot of upset users and Bitcoin 2.0 with different rules will appear...
The problem with you and the other deflation alarmists is that you are looking at BitCoin from a statist perspective. All of your arguments assume that there is only one currency in use in a particular economy (ie a monopoly). In that case I'd agree that deflation is harmful. But why assume such a scenario? Despite all its advantages, BTC will never have 100% currency market share. It might become the most widely used but there will still be competitors (Renmimbi, Canadian dollar, Aussie dollar, Brazil Real, gold, silver,sea shells). So too much deflation or inflation (i.e. volatility) will affect the relative competitive advantage that the currencies in circulation have with each other. Market forces will react to a deflating BitCoin by reducing demand, thereby resulting in a market determined optimal rate of inflation/deflation. Not some rate the so called "experts" at the central bank, issue by decree.
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