Comment for topic 99200

[Wasi]

I would like to add the following comment into the ''Will deflation be the fatal weakness of bitcoin?' discussion but I'm still marked as a newbie and can't reply there so I have to write it down here. It would be nice if someone can quote my comment there.

The deflationary property can be a threat. But I see a much bigger problem: With the 21M limit there is a chance that someone can hoard nearly all the coins and make sure Bitcoin become useless. As long as people believe in some value of any FIAT currency and support them by using it, the once who can print that money are able to buy nearly all the Bitcoins over time and make sure this great creation is no longer a threat for the elite. Without the 21M limit it's more difficult for them to hoard 'all' but the problem isn't really solved. A way to keep Bitcoin alive would be keep it in the geek world and make sure it will never be a threat for the elite. I would like to see a solution for our financial mess and Bitcoin seems to be a step in the right direction but it's by far not the solution. It doesn't really matters if there is the 21M limit or not. This is just my opinion. Some will agree, some will disagree . The question is how a creation should look like that is able to dis-power the elite? It has to be something like 'free money' (free like free software, free speech, instead of free beer). This is kinda difficult, right?

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[Etlase2]

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[Wasi]

I may don't understand it right, but your idea will not eliminate the problem that the trade between coins and FIAT defines the value, right? Bitcoin is a great commodity and great for transactions and we currently need nothing else for this. But I see that Bitcoin can't work as a currency because of the exchange with FIAT stuff. How your idea makes sure FIAT currencies can't manipulate the value of your cryptocurrency?

[paulkoan]

But I see a much bigger problem: With the 21M limit there is a chance that someone can hoard nearly all the coins and make sure Bitcoin become useless.

What would motivate someone to hoard nearly all the bitcoins and render them useless?  Surely giving all the money this would cost away to charity would be more fulfilling?

[Wasi]

@paulkoan: Those who can print money out of nothing do not have to care about the value of the money. They can print as many as they want. As soon as Bitcoin become a real threat for the fed and their USD (or whatever the global currency will be called) they are able to simply print enough money to be able to buy nearly all coins and make them useless by hoarding or 'destroy' them. Why they would do it? Simply to keep their power over the money system and so almost all of the areas. We need to learn that no centralized creation (like all the FIAT currencies) has any value at all. Otherwise there is no solution to this mess that is going on since at least 130 years.

[Wasi]

@Holliday: I see your point. I do not have a solution for this problem. Otherwise I would share it.

[paulkoan]

@paulkoan: Those who can print money out of nothing do not have to care about the value of the money.

That statement would seem at odds with any state attempting to maintain value in their own currency.

[Wasi]

I never said we need any state at all. States depends on centralized powers. Split the power makes it less worse for a while but isn't the solution and doesn't really make sense as long as these constructs work centralized within them self. It would just be a matter of time and the powers from each area will merge again. We need something on the top of the 'pyramid' we can trust instead of people. Once again: Bitcoin is a step in the right direction. But there is a lot more to do. As long as the most of the people are that brainwashed to believe our system is the way to go, it's very hard to succeed for any creation trying to protect our rights and freedom.

[SuperHakka]

yo Wasi, like someone said, if a big hoarder comes along and buys up all 21M then the only reason he would do it would be to destroy the currency because bitcoin has become too much of a threat to his own. He's got to be very discreet though because the more he buys up the more money its going to cost him and if anybody on the inside or outside of his organization finds out what he's up to, then the price of bitcoins will go exponential and he might not have the resources to buy up all 21M coins. If the bitcoin community finds out about this attack and decide to launch bitcoin 2, then attacker is going to lose an awful lot of money for no gain.

[Wasi]

Good point SuperHakka. But as long as the 'attacker' is able to print unlimited money out of nothing this fight can go on until Bitcoin vEndless. Of course they do not really have to print the money, they simply can change some bits on a computer and the fight goes on as long as both parties are fighting. Let's hope Gandhi's statement in your signature is the key.

[Etlase2]

I may don't understand it right, but your idea will not eliminate the problem that the trade between coins and FIAT defines the value, right? Bitcoin is a great commodity and great for transactions and we currently need nothing else for this. But I see that Bitcoin can't work as a currency because of the exchange with FIAT stuff. How your idea makes sure FIAT currencies can't manipulate the value of your cryptocurrency?

Because new currency can be created. If someone spends a couple million to buy currency like what happened with bitcoin in June of 2011, rather than early adopter "quantitative easing" e.g. a bunch of old, cheap coins being sold on the market bringing the price down, people will create new currency until the price levels out to somewhere around the cost to produce plus a profit margin. Anyone attempting to manipulate the market upwards is guaranteed to lose money. Anyone attempting to manipulate the market downwards gives the opportunity for arbitrage whereby people will buy currency because it currently costs less than what it cost to produce. Energy, computer hardware, and time [to create money] define the value rather than a closed and limited commodity. There's no way to hoard all the coins. People will just make more and you will look foolish.

One of the great things with a system like this is that you don't need an exchange to determine the value. Anyone with access to a reasonable computer could determine how much effort including hardware, electricity, and time it would take to create X amount of currency and then realize that exchanging 2 coins for a loaf of bread is a reasonable value, for example. The tricky part was making it so that coins don't lose value due to efficiency gains in hardware, or if they do, that existing account balances are increased to make up for it. Thus part of the reason behind giving lots of coins away.