Scaling bitcoin to world economy is unrealistic.

[mobodick]

I just had a thought.
The crazy thing about it is i have never heared anyone actually talking about something similar.

Let's say the world economy is worth about 63 Trillion dollars.
Divide this by the ammount of bitcoin that will ever be made, 21 million.

63^12 / 21^6 = 3 milion dollar per bitcoin.

Soo...

In the end, for bitcoin to replace all other monies, it would have to be worth the equivalent of 3 milion dolars per bitcoin.

That also means, that everyone with more that 0.3 bitcoin would be the equivalent of a millionaire.

That's basicly everyone in the community right now.
And a lot of other people that will join soon enough.

It also means i'll be filthy rich in the future. Woohoo!

Now let's say Pirateat40 still has the 500.000 bitcoin that supposedly went through him.
He would then have owned $1.500.000.000.000 worth of bitcoin, or 1.5 trillion dollars worth.
He'd be the ritchest person to have ever been conceived.

So my question is, why do people keep thinking up fanasies about how bitcoin will take over the worlds moneys?
Isn't it blatantly clear bitcoin could never scale to a size that would allow it to operate as the worlds currency?

[1715685164]

1715685164

[1715685164]

1715685164

[cedivad]

The world financial economy and the world tangible economy are 2 real different things. There is a reason if the USD economy is orders of magnitude bigger than the others. Just saying.

Anyway, I don't see why it couldn't happen in 100 years.

Apple shares grow 1000 times in 10 years.

[mobodick]

The world financial economy and the world tangible economy are 2 real different things. There is a reason if the USD economy is orders of magnitude bigger than the others. Just saying.

Anyway, I don't see why it couldn't happen in 100 years.

Apple shares grow 1000 times in 10 years.

Yeah, they were early adopters...
And that's why i'm critical of bitcoin when it comes to this.
This small community already owns almost half of the possible bitcoins.
And due to deflation everyone is much more greedy than normally.
How the hell will 99.99999% of the world (almost everyone) agree on using what's left (about half) of the total amount of bitcoin.
Wouldn't that create a much much worse imbalance then is already there in the world?

[k3t3r]

i dont see it as a replacement for other currencies. bitcoin will exist along side other forms of money including fiat currencies and people will choose which they want to use based on what value those forms of money offer.

[Savior]

As price goes up, more people will sell/trade their bitcoins away. We can already see this by the super early adopters, they have kept some probaly, but one of the firsts as an example bought himself a new house. The higher the value, the more tempting it will be to buy something.

If for instance bitcoin went up to 1000 $ now, I would sell more then half my bitcoins and buy stuff or diversify my investments.

[tosku]

i dont see it as a replacement for other currencies. bitcoin will exist along side other forms of money including fiat currencies and people will choose which they want to use based on what value those forms of money offer.

This is the realistic view. Bitcoin will never be the #1 currency of the world. It will always be a niche currency, but that's good enough for me.

[fivemileshigh]

The world financial economy and the world tangible economy are 2 real different things.

And the amount of cash that is needed to be in circulation is yet a 3rd very different thing. The value of everything that exists is one thing, but bitcoin only needs to replace the amount of cash in active circulation. Still a substantial amount compared to where it is today but nowhere near 3,000,000 of today's dollars. (unless my math is way off)

[mobodick]

I think a more realistic calculation would be the total number of Satoshi's minus a substantial percentage for loss and divided by the percentage of the worlds population likely to be in a position to use a digital currency.

So if quarter of the coins are lost and half the worlds population use bitcoin there are nearly half a million Satoshi per head.

From there distribute the worlds wealth through the population, 63 trillion / 7 billion = 9000 dollars per head. 9000 / half a million Satoshi's = 0.018 or about 2c a Satoshi, 1.8 million per coin (surprised how close that came out )

But this distribution would need to be forced somehow otherwise it will never happen.
Or will everyone just allow the coin in their wallet to be distributed over the world?
So we will never see an equal distribution of bitcoin. It is not evenly distributed now and it will never be evenly distributed in the future.
And counting in satoshis is unfair when pople in this community sometimes already own thousands of bitcoin.

I'm talking about the economics of this community owning already half of the future total of bitcoin.
Then, even with your evaluation, this little community will own about half of the worlds currency.
Of course some of that will be spent, but it would still be the biggest amount of wealth owned by the smallest group of peaople ever in history of humanity.

[mobodick]

i dont see it as a replacement for other currencies. bitcoin will exist along side other forms of money including fiat currencies and people will choose which they want to use based on what value those forms of money offer.

Realistically i agree completely with you.
I strongly feel that bitcoin is fully dependent on current underlying economic structures so it can only integrate with current systems but not replace them completely.

But i hear a lot of revolutionary talk on these fora and frankly i'm getting a bit scared by the completely unrealistic projections some people tend to dream up.
So i'm trying to point out flaws in that line of reasoning.
And frankly it's not very hard..

[matthewh3]

I think a more realistic calculation would be the total number of Satoshi's minus a substantial percentage for loss and divided by the percentage of the worlds population likely to be in a position to use a digital currency.

So if quarter of the coins are lost and half the worlds population use bitcoin there are nearly half a million Satoshi per head.

From there distribute the worlds wealth through the population, 63 trillion / 7 billion = 9000 dollars per head. 9000 / half a million Satoshi's = 0.018 or about 2c a Satoshi, 1.8 million per coin (surprised how close that came out )

But this distribution would need to be forced somehow otherwise it will never happen.
Or will everyone just allow the coin in their wallet to be distributed over the world?
So we will never see an equal distribution of bitcoin. It is not evenly distributed now and it will never be evenly distributed in the future.
And counting in satoshis is unfair when pople in this community sometimes already own thousands of bitcoin.

I'm talking about the economics of this community owning already half of the future total of bitcoin.
Then, even with your evaluation, this little community will own about half of the worlds currency.
Of course some of that will be spent, but it would still be the biggest amount of wealth owned by the smallest group of peaople ever in history of humanity.

So you haven't heard of the Rothschild's then.

[k3t3r]

i dont see it as a replacement for other currencies. bitcoin will exist along side other forms of money including fiat currencies and people will choose which they want to use based on what value those forms of money offer.

Realistically i agree completely with you.
I strongly feel that bitcoin is fully dependent on current underlying economic structures so it can only integrate with current systems but not replace them completely.

But i hear a lot of revolutionary talk on these fora and frankly i'm getting a bit scared by the completely unrealistic projections some people tend to dream up.
So i'm trying to point out flaws in that line of reasoning.
And frankly it's not very hard..

agreed

but it would still be the biggest amount of wealth owned by the smallest group of peaople ever in history of humanity.

i dont see this as a huge problem. and certainly not worse than under a central banking system. for the most part we live in a world were the money supply is largely owned and controlled by a handful (as a generous estimate) of families or corporations.

[Etlase2]

I'm talking about the economics of this community owning already half of the future total of bitcoin.
Then, even with your evaluation, this little community will own about half of the worlds currency.
Of course some of that will be spent, but it would still be the biggest amount of wealth owned by the smallest group of peaople ever in history of humanity.

This is the flaw of a closed supply. Even if everybody on earth was given 1 BTC, wealth will trickle its way up to those that lend or what have you, which in itself is not a problem, the problem is that the closed supply means that manipulation is much easier. So once someone gets ahold of a large part of the supply, they can manipulate it to make themselves even more and more wealthier. The same problem as gold. The same problem that is "baked in" to fiat currencies because the people with the gold influence the politicians to write the laws. Otherwise why would any government be silly enough to give up its right to produce currency, yet almost every single country in the world has done so. (Though admittedly many have done it by force of the influence of the more powerful countries.)

i dont see it as a replacement for other currencies. bitcoin will exist along side other forms of money including fiat currencies and people will choose which they want to use based on what value those forms of money offer.

So ^this is often the response. "Bitcoin wasn't particularly meant to be revolutionary, just a cheap way to send money."

See my signature for a palatable solution to having an unbounded supply that has significant protection against inflation and could actually replace fiat currency.

[k3t3r]

i dont see it as a replacement for other currencies. bitcoin will exist along side other forms of money including fiat currencies and people will choose which they want to use based on what value those forms of money offer.

So ^this is often the response. "Bitcoin wasn't particularly meant to be revolutionary, just a cheap way to send money."

See my signature for a palatable solution to having an unbounded supply that has significant protection against inflation and could actually replace fiat currency.

thats not really what i meant. i think of bitcoin as a form of money not just a way to send money.

[Etlase2]

thats not really what i meant. i think of bitcoin as a form of money not just a way to send money.

But the gist is you're apologizing for the fact that bitcoin has its faults and that people will see that it isn't as revolutionary as it sounds. If bitcoin can't deflate in a stable manner, then fiat will be seen as more stable, and people will not store wealth in bitcoin as anything other than a risky investment. If bitcoin can't deflate in a stable manner, what incentive is there for people to "invest" in it? Why not just invest in gold instead? Oh because you can send money cheaply (then use it when you need to send money, like WU)? Because you can "fight the man" by getting in at the bottom of a pyramid and hoping more will do the same after you?

There is not much upside to anyone who wants the utility of a cryptocurrency that has had 50% of its money given away already who doesn't already have a vested interest. There will be competitors, and they will cause bitcoin stagnation at best, inflation at worst. Deflation is far from guaranteed. Once people realize that, what advantage does bitcoin have at all?

[mobodick]

I think a more realistic calculation would be the total number of Satoshi's minus a substantial percentage for loss and divided by the percentage of the worlds population likely to be in a position to use a digital currency.

So if quarter of the coins are lost and half the worlds population use bitcoin there are nearly half a million Satoshi per head.

From there distribute the worlds wealth through the population, 63 trillion / 7 billion = 9000 dollars per head. 9000 / half a million Satoshi's = 0.018 or about 2c a Satoshi, 1.8 million per coin (surprised how close that came out )

But this distribution would need to be forced somehow otherwise it will never happen.
Or will everyone just allow the coin in their wallet to be distributed over the world?
So we will never see an equal distribution of bitcoin. It is not evenly distributed now and it will never be evenly distributed in the future.
And counting in satoshis is unfair when pople in this community sometimes already own thousands of bitcoin.

I'm talking about the economics of this community owning already half of the future total of bitcoin.
Then, even with your evaluation, this little community will own about half of the worlds currency.
Of course some of that will be spent, but it would still be the biggest amount of wealth owned by the smallest group of peaople ever in history of humanity.

So you haven't heard of the Rothschild's then.

Sure i have and that is my point.
Bitcoin would only shift the situation, not actually change it.

[mobodick]

thats not really what i meant. i think of bitcoin as a form of money not just a way to send money.

But the gist is you're apologizing for the fact that bitcoin has its faults and that people will see that it isn't as revolutionary as it sounds. If bitcoin can't deflate in a stable manner, then fiat will be seen as more stable, and people will not store wealth in bitcoin as anything other than a risky investment. If bitcoin can't deflate in a stable manner, what incentive is there for people to "invest" in it? Why not just invest in gold instead? Oh because you can send money cheaply (then use it when you need to send money, like WU)? Because you can "fight the man" by getting in at the bottom of a pyramid and hoping more will do the same after you?

There is not much upside to anyone who wants the utility of a cryptocurrency that has had 50% of its money given away already who doesn't already have a vested interest. There will be competitors, and they will cause bitcoin stagnation at best, inflation at worst. Deflation is far from guaranteed. Once people realize that, what advantage does bitcoin have at all?

This is an interesting point and i will have to contemplate it.

[Realpra]

Technically the Bitcoin network could handle all trade in the world.
It would require some updates, but no hard forks:

1. Swarm client; thought it up myself, allows smaller computers to participate in a VISA+ sized network with no sweat. It can be bridged to the current full node network no problem as the only change is in the communication protocol - a bridge would spread blocks from both networks into the other, with no one being able to see the difference.

2. Ledger update; every 10-20 years the BTC beyond this time would be put in a public ledger and earlier blockchains deleted to save HD space. The BTC would still be there and spendable, but stored in a simpler fashion. 10-20 years to avoid temporary 51% attacks to completely rewrite history in the ledgers. (ala the genesis block)
These clients would still be able to communicate with older clients, but would simply not answer any requests for blocks 10-20 years old.
(This one is not my idea btw)

3. Possible cryptographic breach/ECDSA update due to quantum computers; the protocol already more or less supports new address/key systems, slowly or quickly switching to a safer standard would not require a hard fork.

4. Running out of units; the client can be hard forked to allow more decimal places - however this is such a natural update that I doubt anyone will object when the time comes. (1 Satoshi would no longer be the smallest unit)

Simply put; as long as you are operating within a space sphere of maybe 1 light minute (0.125 AU) in diameter - Bitcoin can last forever and for any size economy. (assuming the current understanding of physics and no practical wormholes)


There may be other cryptocurrencies, but I really think Bitcoin will remain the new "gold standard" for at least a hundred years as it has no weak points and there is no really good reason to use other copy currencies.

The dollar and euro are likely doomed, but I guess people could choose many other things than bitcoin to hedge with/panic to. 100% penetration is unlikely for anything, but Bitcoin could feasibly become the world reserve currency like dollars are today in 20-100 years.

[Kitemike]

I envision a day when large governments will realize the value of bitcoins and begin buying up huge sums of them in an effort to control the wealth.  Then at some point they'll print currencies backed by bitcoins to better protect their stash and to control the rates of exchange as well as provide a means of tracking the bitcoin economy.  When they realize that they've printed too much money and fearing a run on their bitcoins, they will by decree order the citizens to hand over all their bitcoins to the government in the name of national security. Many will follow their patriotic conscience and do as they are told, but many will not.  Fearing that a rogue hoarder will dump a large amount of bitcoins someday that would devalue the governments huge stash, they declare that their printed money is now backed by ... trust in God maybe and happily print ever after.

So, if history repeats itself, bitcoins and bitcoin transactions will go the way of gold and at some point become merely a very valuable curiosity vaulted away till needed.  At that time the size of the block chain and relative value of individual coins will become unimportant.

[mobodick]

Technically the Bitcoin network could handle all trade in the world.
It would require some updates, but no hard forks:

1. Swarm client; thought it up myself, allows smaller computers to participate in a VISA+ sized network with no sweat. It can be bridged to the current full node network no problem as the only change is in the communication protocol - a bridge would spread blocks from both networks into the other, with no one being able to see the difference.

2. Ledger update; every 10-20 years the BTC beyond this time would be put in a public ledger and earlier blockchains deleted to save HD space. The BTC would still be there and spendable, but stored in a simpler fashion. 10-20 years to avoid temporary 51% attacks to completely rewrite history in the ledgers. (ala the genesis block)
These clients would still be able to communicate with older clients, but would simply not answer any requests for blocks 10-20 years old.
(This one is not my idea btw)

3. Possible cryptographic breach/ECDSA update due to quantum computers; the protocol already more or less supports new address/key systems, slowly or quickly switching to a safer standard would not require a hard fork.

4. Running out of units; the client can be hard forked to allow more decimal places - however this is such a natural update that I doubt anyone will object when the time comes. (1 Satoshi would no longer be the smallest unit)

Simply put; as long as you are operating within a space sphere of maybe 1 light minute (0.125 AU) in diameter - Bitcoin can last forever and for any size economy. (assuming the current understanding of physics and no practical wormholes)


There may be other cryptocurrencies, but I really think Bitcoin will remain the new "gold standard" for at least a hundred years as it has no weak points and there is no really good reason to use other copy currencies.

The dollar and euro are likely doomed, but I guess people could choose many other things than bitcoin to hedge with/panic to. 100% penetration is unlikely for anything, but Bitcoin could feasibly become the world reserve currency like dollars are today in 20-100 years.

Yeah, but in the same 'technical' way fiat can also be kept alive...
I started this discussion on basis of how bitcoin would actually relate to the social reality of current world economy.
That is a completely different set of technicalities.
Decentralised currency system is absolutely not the same as decentralised wealth but it is often confused.
If bitcoin would handle anything near the volume of the worlds trade then most people on these fora would become stinking filthy rich and will act accordingly (like in the good old days of fiat).
So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

[Realpra]

So, if history repeats itself, bitcoins and bitcoin transactions will go the way of gold and at some point become merely a very valuable curiosity vaulted away till needed.  At that time the size of the block chain and relative value of individual coins will become unimportant.

Gold did not go away because the US government said it should. It went away as a means of trade because its a bitch to carry around or send across the world.

Gold is however STILL used as a store of wealth and is STILL traded among big central banks and goldbugs. If the US announced tomorrow that all their gold in fort knox was gone, the dollar would likely drop a little.

Bitcoin does not have the problems of golds bulkiness and will become the new "easy" currency - except it is also BETTER, not "just" easier than fiat.

Yeah, but in the same 'technical' way fiat can also be kept alive...

Fiat could be very strong in the hands of a trustworthy government - however with all the temptation in the world to print and no reasons NOT to the incentive model of fiat is flawed.
The incentive model of something might not be technical, but it cannot be changed and is fundamental - and for fiat heavily flawed.

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

But:
1. Poor people can save up in Bitcoin while in fiat they would loose on inflation (and since they are poor, they have very few other options).
2. The elite cannot print bitcoin and so hoard less.

Given these two facts, I would say Bitcoin is MORE fair and will over time lead to a BETTER distribution of wealth.

[Kitemike]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

[mobodick]

So, if history repeats itself, bitcoins and bitcoin transactions will go the way of gold and at some point become merely a very valuable curiosity vaulted away till needed.  At that time the size of the block chain and relative value of individual coins will become unimportant.

Gold did not go away because the US government said it should. It went away as a means of trade because its a bitch to carry around or send across the world.

Gold is however STILL used as a store of wealth and is STILL traded among big central banks and goldbugs. If the US announced tomorrow that all their gold in fort knox was gone, the dollar would likely drop a little.

Bitcoin does not have the problems of golds bulkiness and will become the new "easy" currency - except it is also BETTER, not "just" easier than fiat.

Yeah, but in the same 'technical' way fiat can also be kept alive...

Fiat could be very strong in the hands of a trustworthy government - however with all the temptation in the world to print and no reasons NOT too the incentive model of fiat is flawed.
The incentive model of something might not be technical, but it cannot be changed and is fundamental - and for fiat heavily flawed.

Bitcoin also could be very strong in the hands of a trustworthy government.
But:
1) show me a completely trustworthy government, or to put it differently, how many completely trustworthy people are there in the world.
2) The temptation of governments would be not to print but to 'save' (not invest in the world but hoard and not spend). So with all this temptation to not make the world go round the incentive of bitcoin is flawed.

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

But:
1. Poor people can save up in Bitcoin while in fiat they would loose on inflation (and since they are poor, they have very few other options).

Poor people can save all they want but they will be left behind by rich people that have the ability to save at a much faster (absolute) pace. So when (and this is just for illustration) a poor person saves 2 bitcoins a rich person can save 2000 bitcoins.
Relatively poor people would always be able to save less than relatively rich people.
The poor are screwed and the rich get richer.
If anything it would lead to an even bigger divide between rich and poor.

2. The elite cannot print bitcoin and so hoard less.

Whaa..?
If they cannot print and lend then the only way left for them to get more is by hoarding.
This point of yours makes no sense whatsoever.

Given these two facts, I would say Bitcoin is MORE fair and will over time lead to a BETTER distribution of wealth.

Those are hardly facts and so your conclusion is shaky at best and a complete fantasy at worst.

[mobodick]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

Yes, and that's why i'm against all this idealistic bullshit people spew.
It's an idealized, sterile and abstract way of thinking about how the world should fuction.
It has little bearings to how the actual real world functions of could function.
 

[mobodick]

Bitcoin will scale and become the world economy because God says so: "the geek shall inherit the earth"

(ok, weak argument but it worked for the dollar )

Aah, the technocrat argument

[cbeast]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

[mobodick]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

[cbeast]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

over 50% of the Bitcoin is not in anyone's hands yet. Come get some.

[mobodick]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

over 50% of the Bitcoin is not in anyone's hands yet. Come get some.

Sooo... you give an half-full glass to share amongst 99.9999% of the world population.
I like your bullish sentiment.

[cbeast]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

over 50% of the Bitcoin is not in anyone's hands yet. Come get some.

Sooo... you give an half-full glass to share amongst 99.9999% of the world population.
I like your bullish sentiment.

It's a lot better than what we have now. At least the Bitcoin elite do not have the authority to maintain their elite status through control of the money creation process. Eventually things will even out. Fiat currency based capitalism has no such option.

[DeathAndTaxes]

Your assumption is that the value switches overnight.  By your logic Bitcoin shouldn't even be functioning at all.  For the first year or so Bitcoin was mined collectively at less than 5 MH/s.  At most that was a dozen nodes.  Those dozen users accumulates as many coins as the thousands of users who joined in the next year.  The "thousands" should have said "wait those early dozen already accumulated ~10% of all the coins.  We shouldn't join now we should build our own currency".   Likewise the tens of thousands in the third and fourth years were at a time/opportunity disadvantage to the thousands in the second year and the dozens in the first year.

My guess is that most bitcoin holders are not looking for $3M per BTC before they sell a single coin.  The base can keep growing while the price keeps rising.   The idea that 100 years or 200 years from now 50% of the coins are still owned by users (or their direct decendants) who joined the network prior to 2013 is just laughably silly.

I don't think Bitcoin will be a one global currency but your reasons for why are just silly.   Personally if Bitcoin grows to a network that rivals say PayPal (~$100B in transactions annually among millions of users) that would be a major accomplishment.

[DeathAndTaxes]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

So you think nobody who owns coins today will ever sell a single one to a "new users"?  If they will then it doesn't really matter what the value of Bitcoin is in some future date.  You can't look at the wealth distribution based on future prices and today's ownership. 

[mobodick]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

over 50% of the Bitcoin is not in anyone's hands yet. Come get some.

Sooo... you give an half-full glass to share amongst 99.9999% of the world population.
I like your bullish sentiment.

It's a lot better than what we have now. At least the Bitcoin elite do not have the authority to maintain their elite status through control of the money creation process. Eventually things will even out. Fiat currency based capitalism has no such option.

No, no it would not be better.
The bitcoin elite would not need to press money since they would already be top dog and there would be nothing in the world capable of contesting their position.
Things will not even out magically.
It will replace current elite with bitcoin elite and you're just happy that you're part of it.

[DeathAndTaxes]

No, no it would not be better.
The bitcoin elite would not need to press money since they would already be top dog and there would be nothing in the world capable of contesting their position.
Things will not even out magically.
It will replace current elite with bitcoin elite and you're just happy that you're part of it.

Once again this idoitically assumes the distribution of coins will not change as the value rises.  The value only rises as more people enter the system thus some of the "bitcoin elite" will sell of huge chunks of coins at say $20 per BTC, $100 per BTC, $1,000 per BTC, $5,000 per btc $25,000 per BTC, $100,000 per BTC etc, etc, etc.   The idea that someone dollar poor and BTC rich would refuse to sell off any coins as BTC rises from $2 to $3M just so they could own 1% of the worlds economy is just laughably stupid.  Of course they would sell.  

Money =/= wealth.  Money can be exchanged for wealth.  There is no reason to hold money except to store future purchasing power.  As the value of their currency holdings increase there will be a temptation to exchange it for goods and services (either directly or indirectly BTC->USD->goods).

[Domrada]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

I'm still trying to wrap my head around what it is you find objectionable about an uneven distribution of wealth in general.  Please tell us, what is perfection for a currency in your mind? Should everyone have the same amount at all times? Or does everyone start with the same amount? By what standard would you consider this "flaw" resolved?

[DeathAndTaxes]

I'm still trying to wrap my head around what it is you find objectionable about an uneven distribution of wealth in general.  Please tell us, what is perfection for a currency in your mind? Should everyone have the same amount at all times? Or does everyone start with the same amount? By what standard would you consider this "flaw" resolved?

I would also point out that money is merely an accounting system.  Some people are not good at producing wealth.  They lack the skills, discipline, creativity, etc to accumulate significant wealth.  Hell many people even in developed nations have a negative net worth.   Bitcoin doesn't change that.  Lets ignore Bitcoin for a second.

Tomorrow you could do a global wealth reset.  Blam everyone in the world has exactly the same amount of wealth.  Within 10 years you would see the distribution pattern being reformed.  Within 2-3 generations it would look remarkably similar to the situation today. 

[mobodick]

I kind of agree that having the top 1% owning almost all the wealth makes me lose faith in the currency. That's why the USD will fail and Bitcoin will prosper.

In bitcoinland a few thousand people out of 7 bilion people already own half the possible amount currency.
That puts half the possible wealth is in hands of 0.0001% of the people.
The current situation in bitcoinland is much much worse than in fiat so..

What was your argument again?

So you think nobody who owns coins today will ever sell a single one to a "new users"?  If they will then it doesn't really matter what the value of Bitcoin is in some future date.  You can't look at the wealth distribution based on future prices and today's ownership. 

No, what i'm saying is that if bitcoin grows to globally significant proportions that it's value would be so incredibly astronomically high that anybody who now owns even a small amount of bitcoin could in the future spend only a very tiny fraction of their coin and buy themselfs anything.
So in that situation the 'early investors' (basically all of this community) will get to keep most of their 50% of coin and put it in action against 99.9999% of the rest of the world that will own the other 50%.

To put it short:
Replacing paypal? maybe, but the distribution of bitcoin is already sewed.
Replacing fiat? i don't think so.

[Domrada]

I'm still trying to wrap my head around what it is you find objectionable about an uneven distribution of wealth in general.  Please tell us, what is perfection for a currency in your mind? Should everyone have the same amount at all times? Or does everyone start with the same amount? By what standard would you consider this "flaw" resolved?

I would also point out that money is merely an accounting system.  Some people are not good at producing wealth.  They lack the skills, discipline, creativity, etc to accumulate significant wealth.  Hell many people even in developed nations have a negative net worth.   Bitcoin doesn't change that.  Lets ignore Bitcoin for a second.

Tomorrow you could do a global wealth reset.  Blam everyone in the world has exactly the same amount of wealth.  Within 10 years you would see the distribution pattern being reformed.  Within 2-3 generations it would look remarkably similar to the situation today.  

That's exactly right.  What Bitcoin changes about today's situation is that Bitcoins cannot be taken by force, whereas every other store of wealth can. That will shake up the power structure, so that the richest people in the bitcoin world will not have gotten that way by usurping their wealth at the point of a gun. Obviously, this is an immeasurable improvement.

[DeathAndTaxes]

The distribution will change over time.  Hell the distribution has already changed.  Why did you start using Bitcoin the distribution was even more uneven when you joined.  Why was it not a problem for you but it will be a problem for some future adopter (say the one coming tomorrow or next year)?  If it isn't a problem for the "next guy" tomorrow or next year why would it be a problem for the guy coming next decade (when the distribution will be more even)?

[matthewh3]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

No it's from when mankind first started farming and ownership of land became important.  Before that as hunter-gathers your only possessions were what you could carry.  Mankind lived under a form of anarco-socialism for most of its history.  Mankind has only lived under capitalism for a blink of an eye and with the current credit-crunch and banking crises things may be changing again?

[mobodick]

No, no it would not be better.
The bitcoin elite would not need to press money since they would already be top dog and there would be nothing in the world capable of contesting their position.
Things will not even out magically.
It will replace current elite with bitcoin elite and you're just happy that you're part of it.

Once again this idoitically assumes the distribution of coins will not change as the value rises.  The value only rises as more people enter the system thus some of the "bitcoin elite" will sell of huge chunks of coins at say $20 per BTC, $100 per BTC, $1,000 per BTC, $5,000 per btc $25,000 per BTC, $100,000 per BTC etc, etc, etc.   The idea that someone dollar poor and BTC rich would refuse to sell off any coins as BTC rises from $2 to $3M just so they could own 1% of the worlds economy is just laughably stupid.  Of course they would sell.  

Money =/= wealth.  Money can be exchanged for wealth.  There is no reason to hold money except to store future purchasing power.  As the value of their currency holdings increase there will be a temptation to exchange it for goods and services (either directly or indirectly BTC->USD->goods).

If value rises, then it would be idiotic to spend it beyond nessesity.
Risky investments will be a lot less interesting and that is how money flows out of pockets.
Much much less coin will flow out of the pockets of the few into the pockets of the many than is currently happening.
The fact that value is a multiplication on the number of coins means that if value rises by one unit then someone with 10 BTC will get 10 times as much value as someone with 1 BTC.

The process of value growth of bitcoin intrinsically magnifies the difference of value per coin in an exponential way.
If you show this to be false then you may have a point.
Otherwise you're just having a fantasy.

[mobodick]

I'm still trying to wrap my head around what it is you find objectionable about an uneven distribution of wealth in general.  Please tell us, what is perfection for a currency in your mind? Should everyone have the same amount at all times? Or does everyone start with the same amount? By what standard would you consider this "flaw" resolved?

I would also point out that money is merely an accounting system.  Some people are not good at producing wealth.  They lack the skills, discipline, creativity, etc to accumulate significant wealth.  Hell many people even in developed nations have a negative net worth.   Bitcoin doesn't change that.  Lets ignore Bitcoin for a second.

Tomorrow you could do a global wealth reset.  Blam everyone in the world has exactly the same amount of wealth.  Within 10 years you would see the distribution pattern being reformed.  Within 2-3 generations it would look remarkably similar to the situation today.  

That's exactly right.  What Bitcoin changes about today's situation is that Bitcoins cannot be taken by force, whereas every other store of wealth can. That will shake up the power structure, so that the richest people in the bitcoin world will not have gotten that way by usurping their wealth at the point of a gun. Obviously, this is an immeasurable improvement.

Because noone can steal your wallet. Right? Right? Am i right?
If you replace 'bitcoin wallet' with 'your gold cache' you'll see that what you think is propably not going to work.
Owning bitcoin still requires something physical and that can be taken from you and you lose control over your coins.

[DeathAndTaxes]

No, no it would not be better.
The bitcoin elite would not need to press money since they would already be top dog and there would be nothing in the world capable of contesting their position.
Things will not even out magically.
It will replace current elite with bitcoin elite and you're just happy that you're part of it.

Once again this idoitically assumes the distribution of coins will not change as the value rises.  The value only rises as more people enter the system thus some of the "bitcoin elite" will sell of huge chunks of coins at say $20 per BTC, $100 per BTC, $1,000 per BTC, $5,000 per btc $25,000 per BTC, $100,000 per BTC etc, etc, etc.   The idea that someone dollar poor and BTC rich would refuse to sell off any coins as BTC rises from $2 to $3M just so they could own 1% of the worlds economy is just laughably stupid.  Of course they would sell.   

Money =/= wealth.  Money can be exchanged for wealth.  There is no reason to hold money except to store future purchasing power.  As the value of their currency holdings increase there will be a temptation to exchange it for goods and services (either directly or indirectly BTC->USD->goods).

If value rises, then it would be idiotic to spend it beyond nessesity.
Risky investments will be a lot less interesting and that is how money flows out of pockets.
Much much less coin will flow out of the pockets of the few into the pockets of the many than is currently happening.
The fact that value is a multiplication on the number of coins means that if value rises by one unit then someone with 10 BTC will get 10 times as much value as someone with 1 BTC.

The process of value growth of bitcoin intrinsically magnifies the difference of value per coin in an exponential way.
If you show this to be false then you may have a point.
Otherwise you're just having a fantasy.

If Bitcoin crashes and burns it would be equally idiotic to have the potential to sell 1M BTC at an average price of $50 ea and you didn't.  You pretend the rise from $0.001 per BTC to $3M is guaranteed and without any risk and then also pretend it is impossible and that even a rise in hundreds of dollars (PayPal scale) would be very unlikely.  If it is impossible/unlikely the best thing would be to sell not hold.

Likewise by your logic it is idiotic for anyone to spend any money on anything but the most basic needs for survival and put everything cent they have left into wealth producing assets (stocks, bonds, real estate, equity).  Of course the real world DOESN'T work that way.  People spend lots of money on lots of things they don't need.  You can't take your money with you when you die.

[DeathAndTaxes]

Because noone can steal your wallet. Right? Right? Am i right?
If you replace 'bitcoin wallet' with 'your gold cache' you'll see that what you think is propably not going to work.
Owning bitcoin still requires something physical and that can be taken from you and you lose control over your coins.

What wallet officer?

Owning bitcoins doesn't require anything physical.  Brainwallet is one example.

Try plausible deniability with $10M worth of gold sitting in your house.

Brainwallets
Encrypted plausible deniability truecrypt partitions
Backups (possibly to cloud services accessible from any internet enabled computer in the world).
instawallet/blockchain.info like services
n of m keysharing

None of those are possible with gold or any other asset.

[imanikin]

I just had a thought.
The crazy thing about it is i have never heared anyone actually talking about something similar.
...

The crazy thing is actually that in a year since you've register on this forum, you haven't yet learned to search it.

This amazing and original "thought" you "just had" has been discussed here before over and over to the point that it and similar recurring revelations have become just annoying noise some time ago.

So many substantive discussions get lost here among an avalanche of genius revelations like yours... 

It is a great way to become a "Sr. Member" though.  Fortunately,  we have a way to click ignore on Sr. Noisemakers like you. Happy thinking! 

[mobodick]

The distribution will change over time.  Hell the distribution has already changed.  Why did you start using Bitcoin the distribution was even more uneven when you joined.  Why was it not a problem for you but it will be a problem for some future adopter (say the one coming tomorrow or next year)?  If it isn't a problem for the "next guy" tomorrow or next year why would it be a problem for the guy coming next decade (when the distribution will be more even)?

Well, now i can still mine for a good profit.
Also, the value of bitcoin is still so low compared to what it needs to be to replace large parts of world economy that people do not mind spending it frivolously. Heck, most people here treat it as experimental monopoly money.

Once all coins are there there will be no intrinsic way of getting money from mining and it will be unattractive to join such a skewed system.

The more value bitcoin gains the more problematic joining will become as anyone joining later will be able to gain, on average, less coin at the value everybody in the system already has.

[Domrada]

I'm still trying to wrap my head around what it is you find objectionable about an uneven distribution of wealth in general.  Please tell us, what is perfection for a currency in your mind? Should everyone have the same amount at all times? Or does everyone start with the same amount? By what standard would you consider this "flaw" resolved?

I would also point out that money is merely an accounting system.  Some people are not good at producing wealth.  They lack the skills, discipline, creativity, etc to accumulate significant wealth.  Hell many people even in developed nations have a negative net worth.   Bitcoin doesn't change that.  Lets ignore Bitcoin for a second.

Tomorrow you could do a global wealth reset.  Blam everyone in the world has exactly the same amount of wealth.  Within 10 years you would see the distribution pattern being reformed.  Within 2-3 generations it would look remarkably similar to the situation today.  

That's exactly right.  What Bitcoin changes about today's situation is that Bitcoins cannot be taken by force, whereas every other store of wealth can. That will shake up the power structure, so that the richest people in the bitcoin world will not have gotten that way by usurping their wealth at the point of a gun. Obviously, this is an immeasurable improvement.

Because noone can steal your wallet. Right? Right? Am i right?
If you replace 'bitcoin wallet' with 'your gold cache' you'll see that what you think is propably not going to work.
Owning bitcoin still requires something physical and that can be taken from you and you lose control over your coins.

Why, that argument is as sound as a dollar!  

[Realpra]

Yeah, but in the same 'technical' way fiat can also be kept alive...

Fiat could be very strong in the hands of a trustworthy government - however with all the temptation in the world to print...

Bitcoin also could be very strong in the hands of a trustworthy government.
But:
1) show me a completely trustworthy government

Okay gahd; you JUST said that fiat and Bitcoin are equal on the technical side, I am trying to argue that in fact fiat is flawed relying on perfect government and then you attack me for believing in perfect government....... DUDE YOUR ARGUMENT WAS THAT FIAT IS SOUND TECHNICALLY, it's NOT MY argument.

Poor people can save all they want but they will be left behind by rich people that have the ability to save at a much faster (absolute) pace. So when (and this is just for illustration) a poor person saves 2 bitcoins a rich person can save 2000 bitcoins.

There is no such thing as "saving at a faster pace". You can EARN at a faster pace, but this requires creating wealth (or printing money).

2. The elite cannot print bitcoin and so hoard less.

Whaa..?
If they cannot print and lend then the only way left for them to get more is by hoarding.

Again you cannot make money by looking at the money you already have... I honestly don't what you are thinking here.

This point of yours makes no sense whatsoever.

Makes perfect sense; today crony politicians print money and give to their donor companies. These companies are run by the crony elite and as such they get to own a greater percentage of the money supply while the poor just had their pensions inflated to oblivion.

Without the elite having the ability to print, the poor have a chance at saving and the elites can't get free money which makes them much less "elite" in the free market.

Those are hardly facts and so your conclusion is shaky at best and a complete fantasy at worst.

1. Was inflation eats pensions and 2. was that bitcoins cannot be printed.... which one is NOT a fact?

If BTC was at 0% inflation/deflation then a poor dad saving up a steady amount for 10 years for his kids' college would be able to afford an exactly 11.7% more expensive education compared to same scenario with just 2% inflation.

Maybe you just don't understand how (any school of) economics works. "Hoarding at a faster pace", LOL.

Bitcoin is for the PEOPLE. Go away with your crazy theories about the early adopters - its nothing compared to Ben Bernankes 20% stake in the entire world economy.

[mobodick]

Because noone can steal your wallet. Right? Right? Am i right?
If you replace 'bitcoin wallet' with 'your gold cache' you'll see that what you think is propably not going to work.
Owning bitcoin still requires something physical and that can be taken from you and you lose control over your coins.

What wallet officer?

Owning bitcoins doesn't require anything physical.  Brainwallet is one example.

I consider information to be a physical quantity.
Hence information needs the physical world to be effective.
You cannot transfer information without the physical world so information is something physical.
(if you think information is not physical then you'll need to explain why black holes have an event horizon, but that is another discussion)
Your brainwallet example just encodes some information in your brain and so your brain becomes a physical expression of that information. Destroy your brain and the coins are locked.

But let's scale this up to world proportions.
If people indeed would use braincrypt for everything then there would be, according to you, no way to prove scams as all transactions could be unprovable.
Now tell me, how many people in the world would be interested in a currency where scams can be done in stealth mode?

Try plausible deniability with $10M worth of gold sitting in your house.

Brainwallets
Encrypted plausible deniability truecrypt partitions
Backups (possibly to cloud services accessible from any internet enabled computer in the world).
instawallet/blockchain.info like services
n of m keysharing

None of those are possible with gold or any other asset.

That only means they can take it from you (take your ultraturboencrypted home computer) but cannot use the coins claimable by it.
Net effect is a general increase in value for the group of people still owning their coin and you not having a dime.

[mobodick]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

No it's from when mankind first started farming and ownership of land became important.  Before that as hunter-gathers your only possessions were what you could carry.  Mankind lived under a form of anarco-socialism for most of its history.  Mankind has only lived under capitalism for a blink of an eye and with the current credit-crunch and banking crises things may be changing again?

Bullshit.
Mankind stems from monkeys and all monkeys (including humans) have a strong social hierarchy.
Strongest monkey gets the best food and fucks the most females.
There is nothing 'anarco' or 'socialistic' about the human situation.

If you want anarchy then look at how lions survive as family groups.
Humans don't work that way.

[matthewh3]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

No it's from when mankind first started farming and ownership of land became important.  Before that as hunter-gathers your only possessions were what you could carry.  Mankind lived under a form of anarco-socialism for most of its history.  Mankind has only lived under capitalism for a blink of an eye and with the current credit-crunch and banking crises things may be changing again?

Bullshit.
Mankind stems from monkeys and all monkeys (including humans) have a strong social hierarchy.
Strongest monkey gets the best food and fucks the most females.
There is nothing 'anarco' or 'socialistic' about the human situation.

If you want anarchy then look at how lions survive as family groups.
Humans don't work that way.

Deny over 200,000 years of mankind living as hunter gathers then.  Anyway I don't think you really know what anarcho-socialism really means    http://en.wikipedia.org/wiki/Social_anarchism

[Realpra]

I consider information to be a physical quantity.

I guess that's why you should be careful with your passwords around pickpockets right? /sarcasm (dripping)

[mobodick]

I just had a thought.
The crazy thing about it is i have never heared anyone actually talking about something similar.
...

The crazy thing is actually that in a year since you've register on this forum, you haven't yet learned to search it.

This amazing and original "thought" you "just had" has been discussed here before over and over to the point that it and similar recurring revelations have become just annoying noise some time ago.

So many substantive discussions get lost here among an avalanche of genius revelations like yours... 

It is a great way to become a "Sr. Member" though.  Fortunately,  we have a way to click ignore on Sr. Noisemakers like you. Happy thinking! 

Of course i knew this.
But for me it was a new thought.

And your point about discussions being snowed over is something that i feel confronted with all the time in these fora.
There is not enough structure to search through it effectively.
Usually i find that posts from people making my point are somewhere halfway a 150 page discussion...

[Etlase2]

If value rises, then it would be idiotic to spend it beyond nessesity.
Risky investments will be a lot less interesting and that is how money flows out of pockets.
Much much less coin will flow out of the pockets of the few into the pockets of the many than is currently happening.
The fact that value is a multiplication on the number of coins means that if value rises by one unit then someone with 10 BTC will get 10 times as much value as someone with 1 BTC.

The process of value growth of bitcoin intrinsically magnifies the difference of value per coin in an exponential way.
If you show this to be false then you may have a point.
Otherwise you're just having a fantasy.

There is no point in arguing bitcoin economics with people like DeathAndTaxes, Realpra, or evoorhees. They are heavily invested in this system and it is in their best interests to make sure that the wool stays pulled down.

[cbeast]

https://en.bitcoin.it/wiki/Scalability

[Adrian-x]

As price goes up, more people will sell/trade their bitcoins away. We can already see this by the super early adopters, they have kept some probaly, but one of the firsts as an example bought himself a new house. The higher the value, the more tempting it will be to buy something.

If for instance bitcoin went up to 1000 $ now, I would sell more then half my bitcoins and buy stuff or diversify my investments.

This I think is part of the process. And all those believers waiting on the side like me will jump in every time it drops (or be forced to earn there way in if the fiat BTC continues to rise.)

[Severian]

Owning bitcoin still requires something physical and that can be taken from you and you lose control over your coins.

Say WHAT?! The Feds still can't read minds. Two people that trust each other can still trade bitcoins by word of mouth.

[Realpra]

There is no point in arguing bitcoin economics with people like DeathAndTaxes, Realpra, or evoorhees. They are heavily invested in this system and it is in their best interests to make sure that the wool stays pulled down.

I have about 6.5K DKK in BTC (became worth 12K DKK), 14K DKK in a wind turbine and 5K DKK in a Singaporean fish farm.

You are lying about the heaviness of my investment. Further it would be in my self-interest to talk Bitcoin DOWN so that I could buy more cheaply.

Even if I stood to gain massively the facts and numbers don't lie; even the last adopter stands to gain here.

[cbeast]

For the next several hundred years, the new generations will complain about how cheaply their parents got *their* bitcoins.

[Etlase2]

You are lying about the heaviness of my investment. Further it would be in my self-interest to talk Bitcoin DOWN so that I could buy more cheaply.

I am only going by what you said:

All of this will be given to us by Bitcoin and Satoshi in time.

Since I realized the potential of Bitcoin I have been blessing my stars, not because I got to get in early and maybe will become wealthy, but because of what it will do to the world.

Just because you rationalize it doesn't mean you didn't say it.

Even if I stood to gain massively the facts and numbers don't lie; even the last adopter stands to gain here.

Right, "facts" being "what I and people who agree with me post on a message board backed by nothing but our own opinions".

[Severian]

There is no point in arguing bitcoin economics with people like DeathAndTaxes, Realpra, or evoorhees.

Add me to your list. That's good company.

The fact is, bitconomics makes far more sense than whatever is being peddled by Krugman and his ilk.

[mobodick]

Yeah, but in the same 'technical' way fiat can also be kept alive...

Fiat could be very strong in the hands of a trustworthy government - however with all the temptation in the world to print...

Bitcoin also could be very strong in the hands of a trustworthy government.
But:
1) show me a completely trustworthy government

Okay gahd; you JUST said that fiat and Bitcoin are equal on the technical side, I am trying to argue that in fact fiat is flawed relying on perfect government and then you attack me for believing in perfect government....... DUDE YOUR ARGUMENT WAS THAT FIAT IS SOUND TECHNICALLY, it's NOT MY argument.

No, i said that technically fiat also has technical stuff that make it function as currency.
So if current government screws fiat up i see no reason they could not screw up bitcoin. Just requies a different technique.
You spoke primarily about the (computer)technical qualities of bitcoin.
What i'm trying to say is that fiat does not suck because of its own technical flaws, it suck because some people have ammassed enourmous power within that system.
Nothing (technical or otherwise) about bitcoin will prevent people with masses of it from controling your world.

Poor people can save all they want but they will be left behind by rich people that have the ability to save at a much faster (absolute) pace. So when (and this is just for illustration) a poor person saves 2 bitcoins a rich person can save 2000 bitcoins.

There is no such thing as "saving at a faster pace". You can EARN at a faster pace, but this requires creating wealth (or printing money).

2. The elite cannot print bitcoin and so hoard less.

Whaa..?
If they cannot print and lend then the only way left for them to get more is by hoarding.

Again you cannot make money by looking at the money you already have... I honestly don't what you are thinking here.

With bitcoin you can.
Last year my bitcoin was worth $2, now it is worth almost 12.
The value of my stored bitcoin increased 6-fold within one year.
It's almost as good as a ponzi...

This point of yours makes no sense whatsoever.

Makes perfect sense; today crony politicians print money and give to their donor companies. These companies are run by the crony elite and as such they get to own a greater percentage of the money supply while the poor just had their pensions inflated to oblivion.

Without the elite having the ability to print, the poor have a chance at saving and the elites can't get free money which makes them much less "elite" in the free market.

Those are hardly facts and so your conclusion is shaky at best and a complete fantasy at worst.

1. Was inflation eats pensions and 2. was that bitcoins cannot be printed.... which one is NOT a fact?

If pensions are not inflation corrected then that means a stupid government, not stupid fiat.
You should primarily think about replacing the government instead of the currency system.
Look at me pointing to stupid governments and saying: "Well, thurs yer problem."
And your point 2 was, and i quote: "2. The elite cannot print bitcoin and so hoard less."
So you're right on the "The elite cannot print bitcoin" part but what makes this point having no sense is that you imply that it will lead to less hoarding.
And i still think that my point about that is still valid.

If BTC was at 0% inflation/deflation then a poor dad saving up a steady amount for 10 years for his kids' college would be able to afford an exactly 11.7% more expensive education compared to same scenario with just 2% inflation.

But when the incentive is to not spend too much, who is going to take the risk of creating work for poor old father to build up his pension?
Who will be willing to spend their coins to loan coins so that he can start his risky wood-cutting imperium when all they have to do is sit there and see their value grow?

Maybe you just don't understand how (any school of) economics works. "Hoarding at a faster pace", LOL.

Bitcoin is for the PEOPLE. Go away with your crazy theories about the early adopters - its nothing compared to Ben Bernankes 20% stake in the entire world economy.

Bitcoin is already not for 'the people' as there difference between many and few bitcoins will expand exponentially as value increases and coins will mostly move toward 'the strongest hands' (also known as 'not the people')

[hazek]

The world financial economy and the world tangible economy are 2 real different things. There is a reason if the USD economy is orders of magnitude bigger than the others. Just saying.

Anyway, I don't see why it couldn't happen in 100 years.

Apple shares grow 1000 times in 10 years.

Yeah, they were early adopters...
And that's why i'm critical of bitcoin when it comes to this.
This small community already owns almost half of the possible bitcoins.
And due to deflation everyone is much more greedy than normally.
How the hell will 99.99999% of the world (almost everyone) agree on using what's left (about half) of the total amount of bitcoin.
Wouldn't that create a much much worse imbalance then is already there in the world?

At first yes you are right, those of us right now holding a good chunk of coins would become quite a bit wealthier as new value is transferred into bitcoins but in the long run it would lessen this imbalance because there is no vehicle by which we can maintain this wealth other than saving or producing something of value. When we start spending and buying goods and services which are our real ends and not money.. Then our wallets will slowly start to shrink while other people, mainly those who produce something of value, will add to their wallets and since no one can be robbed through monetary inflation everyone would benefit.

It's a paradigm shift. There's going to be a huge transfer of value from those who hold a bad money to those who hold a good but that's a good thing because a good money encourages the best behaviors one can hope if ones goal is to live in a prosperous and free society.

[mobodick]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

No it's from when mankind first started farming and ownership of land became important.  Before that as hunter-gathers your only possessions were what you could carry.  Mankind lived under a form of anarco-socialism for most of its history.  Mankind has only lived under capitalism for a blink of an eye and with the current credit-crunch and banking crises things may be changing again?

Bullshit.
Mankind stems from monkeys and all monkeys (including humans) have a strong social hierarchy.
Strongest monkey gets the best food and fucks the most females.
There is nothing 'anarco' or 'socialistic' about the human situation.

If you want anarchy then look at how lions survive as family groups.
Humans don't work that way.

Deny over 200,000 years of mankind living as hunter gathers then.  Anyway I don't think you really know what anarcho-socialism really means    http://en.wikipedia.org/wiki/Social_anarchism

I'm not denying it, i'm just saying that people were always in a social hierarchy and especially in the hunter-gatherer situation that hierarchy of power dictated anything of value.
There was no anarchy and struggles for power were common.
There is no freedom if you're the bitch of the group.
You see the past as way to rosy. Reality in that time was harsh and lawless.
It was completely driven by physical dominance.
Humans dominating nature.
Stronger humans dominating weaker ones.
No fucking socialism.
Social anarchism is an artefact of modern society. No part of it goes further than a few hundred years.
Hunter gatherers lived hundreds of thousands of year ago.
They had no concept of socio-economics.
Strongest takes all and a group is stronger than an individual.
That was the system.

You are right insofar that humans only became aware of this situation when they settled and started to accumulate possesion.

[hazek]

So we will never see an equal distribution of bitcoin.

Why on Earth would we want that?

[mobodick]

I consider information to be a physical quantity.

I guess that's why you should be careful with your passwords around pickpockets right? /sarcasm (dripping)

If you mean that it's hard to pick someones brain i agree.
It is just hard.
But a memorized password it is still a physical expression of some information and can theoretically be picked.
Scientists can already, for instance, see the actual processed output of the visual cortex (http://www.youtube.com/watch?v=FLb9EIiSyG8).
Why do you think the information in a password cannot be extracted from your brain in the future?
As far as i understand it it won't be long before we can do such things.

[Etlase2]

At first yes you are right, those of us right now holding a good chunk of coins would become quite a bit wealthier as new value is transferred into bitcoins but in the long run it would lessen this imbalance because there is no vehicle by which we can maintain this wealth other than saving or producing something of value. When we start spending and buying goods and services which are our real ends and not money.. Then our wallets will slowly start to shrink while other people, mainly those who produce something of value, will add to their wallets and since no one can be robbed through monetary inflation everyone would benefit.

It's a paradigm shift. There's going to be a huge transfer of value from those who hold a bad money to those who hold a good but that's a good thing because a good money encourages the best behaviors one can hope if ones goal is to live in a prosperous and free society.

Most of the "new value" you mention is actually "old value" to a "new currency". And you are right, no one can be robbed through monetary inflation (then again, this is totally untrue, $30 to $2 anyone???)--they will be robbed via monetary deflation.

[mobodick]

If value rises, then it would be idiotic to spend it beyond nessesity.
Risky investments will be a lot less interesting and that is how money flows out of pockets.
Much much less coin will flow out of the pockets of the few into the pockets of the many than is currently happening.
The fact that value is a multiplication on the number of coins means that if value rises by one unit then someone with 10 BTC will get 10 times as much value as someone with 1 BTC.

The process of value growth of bitcoin intrinsically magnifies the difference of value per coin in an exponential way.
If you show this to be false then you may have a point.
Otherwise you're just having a fantasy.

There is no point in arguing bitcoin economics with people like DeathAndTaxes, Realpra, or evoorhees. They are heavily invested in this system and it is in their best interests to make sure that the wool stays pulled down.

Aah, ok, thanks for the heads-up.
 

[matthewh3]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

No it's from when mankind first started farming and ownership of land became important.  Before that as hunter-gathers your only possessions were what you could carry. Mankind lived under a form of anarco-socialism for most of its history. Mankind has only lived under capitalism for a blink of an eye and with the current credit-crunch and banking crises things may be changing again?

Bullshit.
Mankind stems from monkeys and all monkeys (including humans) have a strong social hierarchy.
Strongest monkey gets the best food and fucks the most females.
There is nothing 'anarco' or 'socialistic' about the human situation.

If you want anarchy then look at how lions survive as family groups.
Humans don't work that way.

Deny over 200,000 years of mankind living as hunter gathers then.  Anyway I don't think you really know what anarcho-socialism really means    http://en.wikipedia.org/wiki/Social_anarchism

I'm not denying it, i'm just saying that people were always in a social hierarchy and especially in the hunter-gatherer situation that hierarchy of power dictated anything of value.
There was no anarchy and struggles for power were common.
There is no freedom if you're the bitch of the group.
You see the past as way to rosy. Reality in that time was harsh and lawless.
It was completely driven by physical dominance.
Humans dominating nature.
Stronger humans dominating weaker ones.
No fucking socialism.
Social anarchism is an artefact of modern society. No part of it goes further than a few hundred years.
Hunter gatherers lived hundreds of thousands of year ago.
They had no concept of socio-economics.
Strongest takes all and a group is stronger than an individual.
That was the system.

You are right insofar that humans only became aware of this situation when they settled and started to accumulate possesion.

Humans lived as hunter-gathers until less than 5,000 years ago.  There was no wars or power struggles other than those that exist in extended family life.  Just because you don't like the word "socialism" and you don't know what Anarcho-Socialism really means you can't argue with the basic human condition for most of its existence.

Edit:  Anyway this is off-topic and I did say "a form of Anarcho-Socialism".

[arruah]

I think Bitcoin is intended to replace currency online, but not offline currency.

[mobodick]

https://en.bitcoin.it/wiki/Scalability

I'm sorry, but this only discusses the scalability of the technical process that makes up bitcoin.
It does not, however, discuss the scalability of bitcoin as a currency used in a social system like i set out to discuss in this thread.
It is completely off-topic.

[hazek]

At first yes you are right, those of us right now holding a good chunk of coins would become quite a bit wealthier as new value is transferred into bitcoins but in the long run it would lessen this imbalance because there is no vehicle by which we can maintain this wealth other than saving or producing something of value. When we start spending and buying goods and services which are our real ends and not money.. Then our wallets will slowly start to shrink while other people, mainly those who produce something of value, will add to their wallets and since no one can be robbed through monetary inflation everyone would benefit.

It's a paradigm shift. There's going to be a huge transfer of value from those who hold a bad money to those who hold a good but that's a good thing because a good money encourages the best behaviors one can hope if ones goal is to live in a prosperous and free society.

Most of the "new value" you mention is actually "old value" to a "new currency". And you are right, no one can be robbed through monetary inflation (then again, this is totally untrue, $30 to $2 anyone???)--they will be robbed via monetary deflation.

There is no monetary deflation in Bitcoin - except of course if you lose your coins. But how can losing bitcoins be theft?

[Severian]

I think Bitcoin is intended to replace currency online, but not offline currency.

I'm sorry, but reason and a calm answer are out of place on this thread.

[mobodick]

Owning bitcoin still requires something physical and that can be taken from you and you lose control over your coins.

Say WHAT?! The Feds still can't read minds. Two people that trust each other can still trade bitcoins by word of mouth.

Yes, and with current progress of technology, how long do you think that will last?
One of the new cool things being done lately is taking high resolution real-time cat scans where you can see every neuron in your brain as it processes information.
There are also big steps being taken towards our complete uderstanding of how information is transfered  processed in the brain (which, for instance, alows for eye protheses and such) so if i'm honest it's just a matter of time before we have tools to read peoples minds.

edit: Two people can trade bitcoin all they want, but if no bitcoin is transfered through the chain (which requires lots of physical stuff) then the are effectively trading IOU's, not bitcoin.

[Severian]

Yes, and with current progress of technology, how long do you think that will last?

By that reasoning, buggy-whip factories should have gone out of business as soon as word of the internal combustion engine got out.

Business is conducted on what is, not what might be.

[Etlase2]

There is no monetary deflation in Bitcoin - except of course if you lose your coins. But how can losing bitcoins be theft?

You got me. I award you one internet point.

Most of the "new value" you mention is actually "old value" to a "new currency". And you are right, no one can be robbed through monetary inflation--they will be robbed via monetary deflation.

Now respond to that post or I will remove your internet point.

[Realpra]

I am only going by what you said:

Since I realized the potential of Bitcoin I have been blessing my stars, not because I got to get in early and maybe will become wealthy, but because of what it will do to the world.

Just because you rationalize it doesn't mean you didn't say it.

I meant that as early in a 50-100 years time-frame. I am by no means an early adopter sitting on 400.000 btc like some are.

If Bitcoin is a ponzi, or whatever you believe, I would loose a lot and talking Bitcoin up on a forum would do diddly for me.

I am a blood donor too, is it really so hard to believe that I actually care about other people and genuinely think BTC would help them out?

Right, "facts" being "what I and people who agree with me post on a message board backed by nothing but our own opinions".

Dude: (1.02^1+1.02^2+....+1.02^10)/10 IS, by the laws of mathematics, 1.117 or 11.7% more value to a college fund.

But I guess not believing in math and the positivist principle (our other debate) fits perfectly with disbelief in cryptocurrency.

 author=mobodick
But when the incentive is to not spend too much, who is going to take the risk of creating work for poor old father to build up his pension?

People have invested since WAY before fiat currencies and inflation. People are investing BTC NOW on GLBSE. People are working at mtgox NOW.

So to answer your question: "Historically speaking, going back infinite years or just 1; someone".

You are the one that cannot explain why people will NOT invest/spend BTC or other deflationary currency or why they are doing it now contrary to your theories.

There is no point in arguing bitcoin economics with people like DeathAndTaxes, Realpra, or evoorhees.

Add me to your list. That's good company.

Thanks

[Etlase2]

I meant that as early in a 50-100 years time-frame. I am by no means an early adopter sitting on 400.000 btc like some are.

:shrug: what you said is open to interpretation, what I said was open to interpretation ("heavily")

If Bitcoin is a ponzi, or whatever you believe, I would loose a lot and talking Bitcoin up on a forum would not do diddly for me.

I don't think bitcoin is ponzi. I think bitcoin has brought a lot of good things into the world. But the pyramid structure of the currency is not one of them.

I am a blood donor too, is it really so hard to believe that I actually care about other people and genuinely think BTC would help them out?

When people foam at the mouth to obvious concerns like the OP and are incapable of rationally discussing that hey, maybe there IS something wrong with this scenario, then yes, I find it hard to believe. Because if you were generally interested in the well being of people, you would be able to rationally discuss these issues.

Dude: (1.02^1+1.02^2+....+1.02^10)/10 IS, by the laws of mathematics, 1.117 or 11.7% more value to a college fund.

Proving that increasing the money supply increases the money supply does not prove either:

1) That inflating the money supply is bad (there are many better arguments)
or
2) That a fixed currency is good

Haven't we gone over some basic logic syllogisms before?

But I guess not believing in math and the positivist principle (our other debate) fits perfectly with disbelief in cryptocurrency.

Why must you resort to a strawman? I have a link for a freakin alternative cryptocurrency in my sig, how could I possibly disbelieve in cryptocurrency?

[finkleshnorts]

mobodick, I haven't read this entire thread.

But as far as your OP goes: you point out the one problem I have with bitcoin. It may be more or less of a problem than I realize, but it is a problem.

[mobodick]

The world financial economy and the world tangible economy are 2 real different things. There is a reason if the USD economy is orders of magnitude bigger than the others. Just saying.

Anyway, I don't see why it couldn't happen in 100 years.

Apple shares grow 1000 times in 10 years.

Yeah, they were early adopters...
And that's why i'm critical of bitcoin when it comes to this.
This small community already owns almost half of the possible bitcoins.
And due to deflation everyone is much more greedy than normally.
How the hell will 99.99999% of the world (almost everyone) agree on using what's left (about half) of the total amount of bitcoin.
Wouldn't that create a much much worse imbalance then is already there in the world?

At first yes you are right, those of us right now holding a good chunk of coins would become quite a bit wealthier as new value is transferred into bitcoins but in the long run it would lessen this imbalance because there is no vehicle by which we can maintain this wealth other than saving or producing something of value. When we start spending and buying goods and services which are our real ends and not money..  

Well, that would be true if it were not for the fact that by the time bitcoin is heavily used worldwide it would value at some incredible amount.
With my current humble bitcoin wallet i could then live off of, say, 0.0001 percent of my bitcoins for the rest of my life. I would have to put insignificant amounts of it into the economy to sustain myself.
So maybe you're right that there is an equalizing force that will affect bitcoin, but such a process would be slooow.
Meanwhile there are other forces that are much stronger than that that will move coins towards the 'collectors'. A lot of it will be in the form of:"You want to lend money? Sure, it'll be 20% per week. You no like it? Tough luck buster, there are no regulations to protect you and I have the moneys."

Then our wallets will slowly start to shrink while other people, mainly those who produce something of value, will add to their wallets and since no one can be robbed through monetary inflation everyone would benefit.

Sure, if you keep assuming that government induced inflation is the only way to reduce general wealth.

It's a paradigm shift. There's going to be a huge transfer of value from those who hold a bad money to those who hold a good but that's a good thing because a good money encourages the best behaviors one can hope if ones goal is to live in a prosperous and free society.

It's a pretty big and fundamentally ideological assumption that everyone has the same goal that you have in mind.
Wake up and smell the coffee.
It is not how humans work and bitcoin will not change that.
You think noone will feel greedy in a bitcoin society?
You think noone will try to make a quick buck on somebody elses account?
You think whishes for you to live in a free society?
Think again.

Most of the problems concerning money are social problems, not monetary problems.
It's just that the social problems tend to express themselfs as monetary problems.
But fixing it from the monetary perspective is like applying adhesive bandage to a broken bone.
...

[Hawkix]

The OP question is indeed very important. I have some doubts, too.

Either the time will prove the Bitcoin idea as wrong and noone will care (and current early adopters will loose).
Or it will prove as fundamental and great idea - but then it will be STOLEN.

You may ask how one could stole Bitcoin. Simply. Setup alternative currency and offer you multi-million user base (Apple users, US tax payers, etc.) an easy way how to cooperate in new virtual currency based on similar ideas, but INCOMPATIBLE with current Bitcoin.

Check the IQ distribution curve. There is not enough geek to fight with average Joe.

[mobodick]

Yes, and with current progress of technology, how long do you think that will last?

By that reasoning, buggy-whip factories should have gone out of business as soon as word of the internal combustion engine got out.

Business is conducted on what is, not what might be.

Wait, i never said ANYTHING against buggy-whips.  

Also, i don't see how this applies to the fact that humanity is developing technology that makes it feasable to read someones memories.
Bitcoin is not nearly the size to 'conquer the world'.
Meanwhile technology marches on.
Before bitcoin is large enough to be a viable world currency it will, just like buggy-whips, already be put into the niche economy of 10-year old pony cuddlers and SM-dungeon owners.

[Domrada]

mobodick, I haven't read this entire thread.

But as far as your OP goes: you point out the one problem I have with bitcoin. It may be more or less of a problem than I realize, but it is a problem.

It's not a bug. It's a feature.

[Daily Anarchist]

Wow! There's a whole lot of economic ignorance in this thread. Please people, do yourselves a favor...

http://www.amazon.com/Economics-One-Lesson-Henry-Hazlitt/dp/B001G8NW6Y/ref=sr_1_2?ie=UTF8&qid=1347814115&sr=8-2&keywords=economics+in+one+lesson

[finkleshnorts]

mobodick, I haven't read this entire thread.

But as far as your OP goes: you point out the one problem I have with bitcoin. It may be more or less of a problem than I realize, but it is a problem.

It's not a bug. It's a feature.

I know this.

And I can't really think of a better form of money. I also can't deny that a fixed monetary supply is not without its own issues.

[mobodick]

So bitcoin will not solve our global social problem of skewed economic relations, it will accumulate even more wealth in an even smaller number of pockets.

Isn't that they way it's always been ever since the first caveman used a weapon to bring down dinner or picked all the berries in an area, but only shared them in exchange for services.  Technology is not going to supercede our nature.

No it's from when mankind first started farming and ownership of land became important.  Before that as hunter-gathers your only possessions were what you could carry. Mankind lived under a form of anarco-socialism for most of its history. Mankind has only lived under capitalism for a blink of an eye and with the current credit-crunch and banking crises things may be changing again?

Bullshit.
Mankind stems from monkeys and all monkeys (including humans) have a strong social hierarchy.
Strongest monkey gets the best food and fucks the most females.
There is nothing 'anarco' or 'socialistic' about the human situation.

If you want anarchy then look at how lions survive as family groups.
Humans don't work that way.

Deny over 200,000 years of mankind living as hunter gathers then.  Anyway I don't think you really know what anarcho-socialism really means    http://en.wikipedia.org/wiki/Social_anarchism

I'm not denying it, i'm just saying that people were always in a social hierarchy and especially in the hunter-gatherer situation that hierarchy of power dictated anything of value.
There was no anarchy and struggles for power were common.
There is no freedom if you're the bitch of the group.
You see the past as way to rosy. Reality in that time was harsh and lawless.
It was completely driven by physical dominance.
Humans dominating nature.
Stronger humans dominating weaker ones.
No fucking socialism.
Social anarchism is an artefact of modern society. No part of it goes further than a few hundred years.
Hunter gatherers lived hundreds of thousands of year ago.
They had no concept of socio-economics.
Strongest takes all and a group is stronger than an individual.
That was the system.

You are right insofar that humans only became aware of this situation when they settled and started to accumulate possesion.

Humans lived as hunter-gathers until less than 5,000 years ago.  There was no wars or power struggles other than those that exist in extended family life.  Just because you don't like the word "socialism" and you don't know what Anarcho-Socialism really means you can't argue with the basic human condition for most of its existence.

Edit:  Anyway this is off-topic and I did say "a form of Anarcho-Socialism".

What?
You've got to be kidding me.
So monkeys, of which we know they conduct wars, evolved into this peacefull little race called humans which lived a happy little life untill they became even less monkey and started to assert themselfs just like monkeys do?
Did not occur in reality.

I never said i dont like the word socialism, or anarchism.
I'm just strongly stating that that is not how monkeys (of any kind) organise socially.
The whole of the past 10000 years was devoted to a struggle of humanity to free itself from these local tyranies by increasingly abstracting them away from their environment.
It was less than 500 years ago that most peoples ass was owned by their landlord.
These social changes happen slowly as they require genetic change.
Selection works over generation and that is the level at which humanity needs to change to make all these ideals come true.
Untill then you can count on greed and power to rule the world.

[mobodick]

 author=mobodick
But when the incentive is to not spend too much, who is going to take the risk of creating work for poor old father to build up his pension?

People have invested since WAY before fiat currencies and inflation. People are investing BTC NOW on GLBSE. People are working at mtgox NOW.

So to answer your question: "Historically speaking, going back infinite years or just 1; someone".

You are the one that cannot explain why people will NOT invest/spend BTC or other deflationary currency or why they are doing it now contrary to your theories.

People in history used to invest, but not nearly as much as now.
200 years ago you would not be able to go to a bank and ask for a loan to buy a house.
Now it is standard practice and embedded in our society.

So only 'someone' investing will not be enough to keep the economy spinning.

Most of the people who are now involved in bitcoin see it as play money.
They try out lots of things with big amounts of their stash.
When bitcoin rises further in value they will naturally become much more conservative.
Also, a lot of the people involved in bitcoin are young inexperienced people so their behaviour tends to be more reckless.
The first thing that will happen to bitcoin if it starts being accepted is that the general user demographic will include much more conservative people then it does now.
And conservative people will not be as reckless as the wild bunch here.
You cannot judge bitcoins future performance by it's pre-puberal frenzy.

[mobodick]

I am a blood donor too, is it really so hard to believe that I actually care about other people and genuinely think BTC would help them out?

No, but unfortunately that is not how most people think.
And it doesn't take a lot of people to screw up a system that is based on ideals.
It has been a problem throughout human history.
While i think it is important to have ideals, it is also unrealistic to think these ideals can be applied to the current situation, however good you think these ideals are.
So thinking about bitcoin developing along the lines of an ideal will not match reality and it is important to think in what ways reality will be different from the ideal.

[mobodick]

The OP question is indeed very important. I have some doubts, too.

Either the time will prove the Bitcoin idea as wrong and noone will care (and current early adopters will loose).
Or it will prove as fundamental and great idea - but then it will be STOLEN.

You may ask how one could stole Bitcoin. Simply. Setup alternative currency and offer you multi-million user base (Apple users, US tax payers, etc.) an easy way how to cooperate in new virtual currency based on similar ideas, but INCOMPATIBLE with current Bitcoin.

Check the IQ distribution curve. There is not enough geek to fight with average Joe.

Yes, i agree.
If the world will adopt a form of cryptocurrency it will not be bitcoin but some institutionalised state regulated form of crytocurrency.
That is how things stand at the moment and i dont see this changed without a complete world revolution that destroys most of todays economic value.

[Severian]

Bitcoin is not nearly the size to 'conquer the world'.

That's a poor metric to use for any tool's value. The rial doesn't rule the world but is still reliably used by tens of millions of people and isn't going anywhere anytime soon.

I don't think anyone rational expects bitcoin to take over the world. It's a new tool in the toolbox, and a damn good one.

[lovendahl]

Wow! There's a whole lot of economic ignorance in this thread. Please people, do yourselves a favor...

http://www.amazon.com/Economics-One-Lesson-Henry-Hazlitt/dp/B001G8NW6Y/ref=sr_1_2?ie=UTF8&qid=1347814115&sr=8-2&keywords=economics+in+one+lesson

You can do better than that..
Here it is free of charge :

http://www.fee.org/library/books/economics-in-one-lesson/

great book.. a must read !

[justusranvier]

I don't think anyone rational expects bitcoin to take over the world. It's a new tool in the toolbox, and a damn good one.

I expect Bitcoin to do to currency what Bittorrent did to old media, what websites did to the newspaper industry, what VoIP did to landline phones and what email did to the postal service.

[Severian]

I don't think anyone rational expects bitcoin to take over the world. It's a new tool in the toolbox, and a damn good one.

I expect Bitcoin to do to currency what Bittorrent did to old media, what websites did to the newspaper industry, what VoIP did to landline phones and what email did to the postal service.
[/quote]

I'm right there with you. But we still have newspapers, old media, landlines and postal mail.

I take exception to using the metric of domination as the measure of success. Bitcoin has already succeeded. Now it just has to mature.

[justusranvier]

I'm right there with you. But we still have newspapers, old media, landlines and postal mail.

For that most part that will only be true until the last generation that grew up without the Internet dies.

[Severian]

For that most part that will only be true until the last generation that grew up without the Internet dies.

Surely so. But even now, the internet is only used by about a third of humanity. That number will rise as time progresses, but there will always be a segment of humanity that won't have any meaningful connection to the network.

It will be a long time, if at all, before the old infrastructures are completely gone.

[Adrian-x]

No it's from when mankind first started farming and ownership of land became important.  Before that as hunter-gathers your only possessions were what you could carry.  Mankind lived under a form of anarco-socialism for most of its history.  Mankind has only lived under capitalism for a blink of an eye and with the current credit-crunch and banking crises things may be changing again?

+1

This is so bang on. Things are changing we don't have to do much to make it happen Ben my boy, is doing it for all of us.
I predict even the concept of land ownership will change.

[Adrian-x]

It's almost as good as a ponzi...

I will go one further and say most of the value is comparable to a ponzi.
The economy needed to justify the current value has not developed yet, leaving a collapse as a viable option.

There is the economic circumstances in which Bitcoin has been developed and don't be fooled the timing is perfect.

Humans has to evolve so far as to adopted the wheel. Those idiots who thought it a fad all had to come around and pick it up later or fade away to Darwinian selection. Bitcoin will be that wheel, and if it isn't, I still have faith in Darwinian selection,  and my kind will disappear.

[Adrian-x]

There is no point in arguing bitcoin economics with people like DeathAndTaxes, Realpra, or evoorhees. They are heavily invested in this system and it is in their best interests to make sure that the wool stays pulled down.

We are all investigated in it, what is there to hide?

[Adrian-x]

No, what i'm saying is that if bitcoin grows to globally significant proportions that it's value would be so incredibly astronomically high that anybody who now owns even a small amount of bitcoin could in the future spend only a very tiny fraction of their coin and buy themselfs anything.
So in that situation the 'early investors' (basically all of this community) will get to keep most of their 50% of coin and put it in action against 99.9999% of the rest of the world that will own the other 50%.

This was my big problem with Bitcoin, think about this. The success of Bitcoin is not guaranteed, it has to succeed in a free market system. If it is horded and not distributed it will die. If anything goes out of balance it will die.

But being so well designed all the problems self correct you don't have to do anything except depend on your greed to make it succeed.

IE. Sell your Bitcoin when you think the system is about to fail (and so will all the other greedy people in this community.)   If it really looks bad and I am sure it may, the "old" coins will flood the market too. If things stay healthy the people will continue to save.  And if you see benefits in buying Bitcoin buy some, that benefit you see is part of the distribution process. You must not buy in to Bitcoin if it is going to fail, because that would be charity for those (clueless Austrian cripto, anarco egnaramuses.) of us that understand the problems with the fiat system.

[Adrian-x]

Tomorrow you could do a global wealth reset.  Blam everyone in the world has exactly the same amount of wealth.  Within 10 years you would see the distribution pattern being reformed.  Within 2-3 generations it would look remarkably similar to the situation today. 

There is one big difference with a fixed currency like Bitcoin, this will happen but we won't end up with the poor we have today.

An increase in the money base (money inflation) transfers wealth from the working class to the money class by means of the Cantillon Effect. It is not an ideology of Bitcoin users that prevents this, but a biproduct of a fixed money supply.

Cantillon Effect.
When the money supply is increased it affects relative inflation. That is the disproportionate rise in prices among different goods in an economy over time, that will benefit those who are first to receive the money and diminish the wealth of those in the economy who have to experience price inflation before earning the new money.

[Etlase2]

We are all investigated in it, what is there to hide?

The flaws of bitcoin, of course.

[Dabs]

Earlier there was a post that bitcoins could not be taken by force. I disagree. You simply transfer coins to a different address that you don't control, under threat of force (whether that's you or someone else.) Because they know you control a certain amount of bitcoins and can easily verify in the blockchain.

So the rule now is to protect your identity against your public bitcoin addresses so that people (like bad guys) do not know how much you really control.

As to scaling, I conservatively predict $100 per bitcoin in the next 5 to 10 years, then $500 to $1000 in the next 10 to 15 years. The number of people adopting bitcoin would be in the range from 100,000 people to maybe a few million people (like a small country) within that time frame.

You wouldn't be hoarding bitcoins because people would be spending them to buy stuff. But you'd accept them from others in exchange for fiat money.

[mobodick]

As to scaling, I conservatively predict $100 per bitcoin in the next 5 to 10 years, then $500 to $1000 in the next 10 to 15 years. The number of people adopting bitcoin would be in the range from 100,000 people to maybe a few million people (like a small country) within that time frame.

You wouldn't be hoarding bitcoins because people would be spending them to buy stuff. But you'd accept them from others in exchange for fiat money.

Who's going to spend when they can have a ROI of 900% in 5 to 10 years?
Or even a ROI of 9000% if they wait a bit longer?
There will bot be enough of an economy to justify a large scale use of bitcoin.

[mobodick]

No, what i'm saying is that if bitcoin grows to globally significant proportions that it's value would be so incredibly astronomically high that anybody who now owns even a small amount of bitcoin could in the future spend only a very tiny fraction of their coin and buy themselfs anything.
So in that situation the 'early investors' (basically all of this community) will get to keep most of their 50% of coin and put it in action against 99.9999% of the rest of the world that will own the other 50%.

This was my big problem with Bitcoin, think about this. The success of Bitcoin is not guaranteed, it has to succeed in a free market system. If it is horded and not distributed it will die. If anything goes out of balance it will die.

But being so well designed all the problems self correct you don't have to do anything except depend on your greed to make it succeed.

IE. Sell your Bitcoin when you think the system is about to fail (and so will all the other greedy people in this community.)   If it really looks bad and I am sure it may, the "old" coins will flood the market too. If things stay healthy the people will continue to save.  And if you see benefits in buying Bitcoin buy some, that benefit you see is part of the distribution process. You must not buy in to Bitcoin if it is going to fail, because that would be charity for those (clueless Austrian cripto, anarco egnaramuses.) of us that understand the problems with the fiat system.

You put way too much trust in technology. I mean, what do you mean exactly by "all the problems self correct "?
Bitcoin has some specific features but that doesn't magically make all problems self correct.

[conspirosphere.tk]

Chart of the day, from http://feedproxy.google.com/~r/RunToGold/~3/6kn8JveK2c0/

[Adrian-x]

We are all investigated in it, what is there to hide?

The flaws of bitcoin, of course.

No one has identified a flaw that I think is serious.
my biggest worry is there is a security flaw in the protocol; (here the correction is motivated by enthusiasm for the system.)

So yes there is risk.

But most of the issues raise here were once concerning for me I now think of them as benefits.

[Severian]

You put way too much trust in technology.

Anyone using money today has to trust technology anyway. Might as well make the money ours as opposed to using someone else's digits flying across the wires.

[conspirosphere.tk]

my biggest worry is there is a security flaw in the protocol

I am much more worried about security protocols of the users 
... and that's why I think that it will remain forever a geek's money -and maybe it's better that way-.

[Adrian-x]

As to scaling, I conservatively predict $100 per bitcoin in the next 5 to 10 years, then $500 to $1000 in the next 10 to 15 years. The number of people adopting bitcoin would be in the range from 100,000 people to maybe a few million people (like a small country) within that time frame.

You wouldn't be hoarding bitcoins because people would be spending them to buy stuff. But you'd accept them from others in exchange for fiat money.

Who's going to spend when they can have a ROI of 900% in 5 to 10 years?
Or even a ROI of 9000% if they wait a bit longer?
There will bot be enough of an economy to justify a large scale use of bitcoin.

Good point, but you have to consider the free market.
It is not going to happen overnight.

The fact remains, If no economy grows to support that kind of value then Bitcoin is a ponzi and the investors / suckers (demand for high value Bitcoin) will dry up.

The market result of a ponzi is the price will crash to $0

Bitcoin is not a ponzi for 2 reasons.
1) People do uses it for trade. (tnx Etlase2) (Silk rode reportedly does $1,900,000 per month in trade.)
2) It is such a good idea whose time has come (meaning benefits for users - all resulting from sound money) - this point alone puts it on par with the wheel; farming; the printing press; the internet.

note:
2) is the only point worth debating  and that distils down to Australia v Keynesian economics.
To be insulting I'll spell it out ( Austrian = 1+1=2,  2+2=4,  4+4=8... tangible mathematics, the only social since is the practice of humans imperfect decision making process:  eg. are 2 gold nuggets worth 1 dead deer, everyone throughout history and in the future will have has a radically different answer to that depending on their circumstances.)
(Keynesian = 1+1=2.3 [it the central authority thinks you have too much, or 1+1=1.8 if the central authority thinks you should spend more] Keynesian Economics becomes infinity complex over time and distorts the free market, the central authority doesn't = a benevolent government; it = the money controllers (by contras there are no money controllers in the Bitcoin world.)

The other technical argument for point 2 is, can you cracks the mathematics behind the system and cheat it?

To get to the point of the ponzi  (let's say I understand the economy of goods traded to be in the realm of  $1,900,000 per month) - I don't know how to calculate the total Bitcoin value based on the total number of people trading goods and services by the frequency of trades and by the relative value associated with those trades (the subjective value defined in the eg. 2 gold nuggets are worth 1 dead dear)  but by conventional methods it looks like Bitcoin evaluations is already overvalued by more than 1000% based on Silk roads GDP.  (i know it isn't the only measure for economic base just an illustrative example)

Now the irrelevant actual value aside, how valuable is sound money to the population of the world?

I know our current money system causes global poverty and concentrates wealth in the hands of the few by use of a sound logic derived from the Cantillon Effect, unless someone can in a pleasant and fun way convince me I am wrong through an argument based on logic, this is a fact the people just need to be educated.  

Now is 1BTC worth 2 gold nuggets - I don't know; only silly humans like me can make that choice for themselves.

I think by my calculation Bitcoin is undervalued in relation to the benefits it brings. But if you fears or concerns are true then Bitcoin will be horded and no economy will develop and if that happen there will be no value to the population of the world, and Bitcoin will resemble a ponzi and collapse.

If it collapses it will be worthless to most, and very valuable to the people who participate in the Bitcoin economy, and so the ponzy will start up again because it is a good idea not just a Ponzy and this cycle will go on and on over the next 3month 5 days and 16 years, at which point it will be worth $1302.58 + in today dollars.

So if the hoarders mess it up they loos, while it may not be a specific design feature, it does enable a free market, and that is a feature of the free market. IE. a corrective balance. The market will insure Bitcoin becomes viable, we don't want stability as you point out that gives the hoarders charity.

We want believers in sound money; and it is not the responsibility of the Bitcoin community that is Ben Bernanke's job. The Bitcoin communities job is make sure it is sound money - a P2P system that can't be cheated, and can never inflate past 21,000,000

[Etlase2]

Bitcoin is not a ponzi for 2 reasons.
1) People do uses it for triad. (Silk rode reportedly does $1,900,000 per month in triad.)
2) It is such a good idea whose time has come (meaning benefits for users - all resulting from sound money) - this point alone puts it on par with the wheel; farming; the printing press; the internet.

Sorry, but I'm going to correct some of your English mistakes because it's starting to bug me as they are really bad for someone who seems to have a fairly good grasp of the language. "Trade" not "triad". I don't think that anyone has called bitcoin a ponzi scheme in this thread, though I could be wrong and I don't feel like checking.

2) is the only point worth debating  and that distils down to Australia v Keynesian economics.

Distills, Austrian (it's from Austria not Australia). And I'm getting tired of Austrian economics being used to back bitcoin. Mises specifically may have liked the idea of deflation, but Hayek for example, did not. It is not a matter of deflation = austrian and inflation = keynes. This is deceptive and tired. Most of Austrian economics has to do with government (and ergo central bank) policy. Not even all of them can agree on fractional reserve banking.

So yes, Austrians would agree that bitcoin is good because it is free market. Austrians would not (universally) agree that bitcoin is good because it is deflationary. Austrian = free market, Keynes = central bank policy. Just because bitcoin is a free market currency does not mean it is some ideal, Austrian wet dream of a perfect currency. And arguments that favor bitcoin should compare bitcoin to a potential free market competitor, not fiat. ("Could bitcoin be better than it is?" not "Is bitcoin better than fiat?")

To be insulting I'll spell it out ( Austrian = 1+1=2,  2+2=4,  4+4=8... tangible mathematics, the only social since is the practice of humans imperfect decision making process:  eg. are 2 gold nuggets worth 1 dead deer, everyone throughout history and in the future will have has a radically different answer to that depending on their circumstances.)
(Keynesian = 1+1=2.3 [it the central authority thinks you have too much, or 1+1=1.8 if the central authority thinks you should spend more] Keynesian Economics becomes infinity complex over time and distorts the free market, the central authority doesn't = a benevolent government; it = the money controllers (by contras there are no money controllers in the Bitcoin world.)

You spelled it wrong. Again you associate a fixed supply of money with Austrian and an inflating one with Keynes. Austrians would be quite happy with regional bank currency competition I think, which without a doubt inflates the money supply. The statement I bolded is akin to saying "there were no money controllers in the gold world." That is an incredibly naive point of view that flies in the face of facts about both gold and bitcoin.

Now the irrelevant actual value aside, how valuable is sound money to the population of the world?

You make the premise that bitcoin is sound money, but you offer nothing to back this up with. The topic of this thread is that, hey, maybe it isn't so sound. Ignoring that and assuming that it is defeats any point of discussion. You've won the thread without even trying (except, you didn't).

I know our current money system causes global poverty and concentrates wealth in the hands of the few by use of a sound logic derived from the Cantillon Effect, unless someone can in a pleasant and fun way convince me I am wrong through an argument based on logic, this is a fact the people just need to be educated.  

"Furthermore, [Cantillon] posited that the original recipients of new money enjoy higher standards of living at the expense of later recipients." Isn't that precisely what has happened with bitcoin? And will continue to happen for each new market that adopts bitcoin? The only time this wouldn't be the case (where bitcoin inflates the existing supply via entering markets) would be when bitcoin is used as currency in almost all transactions around the world. And when or if that is ever the case, you fall back to "who controls the money supply?" And that will of course be the bitcoin bankers, just like the gold bankers. And the cycle of shit money continues because bankers control the money rather than the people.

So if the hoarders mess it up they loos lose, while it may not be a specific design feature, it does enable a free market, and that is a feature of the free market. IE. a corrective balance. The market will insure Bitcoin becomes viable, we don't want stability as you point out that gives the hoarders charity.

How does stability give hoarders charity? I don't follow that at all.

[Adrian-x]

@ Etlase2 thanks for putting the spelling mistakes aside,  

Keynesian vs. Austrian - the world isn't one or the other, but my understanding I world lean more credibility to Austrian economics. All I just see is the benefits of a fixed currency.  Gold just leads to gold backed paper which leads to free banking which just leads to central banking, which leads to fiat , Bitcoin is a paradigm shift.

I don't think Bitcoin is sound money, I think it could be a ponzi, but for the fact people are using it as a medium of exchange just like people use money.

"Furthermore, [Cantillon] posited that the original recipients of new money enjoy higher standards of living at the expense of later recipients." Isn't that precisely what has happened with bitcoin?

yes you could say that, it looks like the same end result at this point in time, but model the Cantillon's principle mathematically and it is a transfer of wealth from the old money to the people with new money.  

Bitcoin is different, the BTC doesn't transfer to the Bitcoin rich every time new coins are introduced. And I too have a problem with the new wealth distribution but once the Bitcoin Rich spend the coins, they can't introduce more they are gone. So to stay Bitcoin Rich you have to contribute to the economy to get new coins. If you are able to get them all they will be worthless.      

How does stability give hoarders charity? I don't follow that at all.

If the value is stable then the risk of the early adopters is quantifiable. Early adopters are guaranteed a benefit.   Hording pays off.
If the value is unpredictable then the early adopters have risk. Early adopters are not guaranteed a benefit, so they have to balance the risk. Selling Bitcoin pays off.  

if Bitcoin was guaranteed to be a success the statement " Scaling Bitcoin to world economy is unrealistic."   Would have some merit, But if that statement were fact, it would not scale and the early adopters would not benefit in a disproportionate way. But Bitcoin does have merit and the market is trying to price it, I am not sure if it can technically scale, but I am not worried about users scaling. I have assessed the risk and invested I stand to triad out for a lot of wealth or lose a little money.  My wife thinks I will lose a little money. What do you think?

I think a more appropriate title would be: "Is the idea of Scaling Bitcoin to world economy unrealistic?" and I haven't seen an argument that suggests it isn't?

[Etlase2]

All I just see the benefits of a fixed currency.  Gold just leads to gold backed paper which leads to free banking which just leads to central banking, which leads to fiat , Bitcoin is a paradigm shift.

All you see are the benefits of a fixed currency, then you talk about how gold led us to the situation we are in. Why would bitcoin be so different? Because it is cheaper to transact in bitcoin than in real gold? The story is not so simple. There is currently a hard limit on the amount of data each block can have; this leads to rising transaction prices. Bandwidth usage for bitcoin is horribly inefficient; this leads to higher transaction prices and fewer people serving the network which means less competition which is never a good thing when it comes to prices. Most people will argue, "well then there will be a banking layer on top of bitcoin! This solves everything!" Except then fractional reserve and digital/paper money becomes easy. And people will accept it because interest rates will be lower. High tx fees and high interest or low tx fees and low interest?

Although there is not much study into the topic, I think that fractional reserve had a significant impact several centuries ago in bringing about the merchant/middle class. Suddenly, the productivity of people was able to be utilized not because there hadn't been enough money prior, but because the money was not being allocated (invested) efficiently. This can be seen in every economic depression. The supply of money didn't disappear during the great depression, it was just nowhere to be found in the hands of the general populace. Prior to FRB, the vast majority of the world's peoples were slaves, serfs, or some other low caste. Why is that? Because gold stayed in vaults or kings and emperors controlled their fiat.

So bitcoin is at stage 1 of gold: making kings, pharaohs, and what have you. But I see no real reason why it would veer from the same path. And that same path leads to present-day economics where banks have amassed the entirety of all the wealth in the world and loan it back to us on their terms. They pay the politicians to write laws that benefit them. They control the media.

yes you could say that, it looks like the same end result at this point in time, but model the Cantillon's principle mathematically and it is a transfer of wealth from the old money to the people with new money.  

Who says the people with the new money will be any better than those with the old? Hopes and wishes?

Bitcoin is different, the BTC doesn't transfer to the Bitcoin rich every time new coins are introduced. And I too have a problem with the new wealth distribution but once the Bitcoin Rich spend the coins, they can't introduce more they are gone. So to stay Bitcoin Rich you have to contribute to the economy to get new coins.

You forget about the gigantic industry called lending. The goldrich couldn't introduce more money either, yet many of the wealthiest of wealthy families from several hundred years ago are still the wealthiest of wealthy families today. If there is no way to produce new currency, then you must borrow it at interest. This of itself is not necessarily the biggest problem; the biggest problem always arises when those with the money decide to stop lending. Then everything melts down and the richest of rich profit handsomely off the misery of others.

If the value is stable then the risk of the early adopters is quantifiable. Early adopters are guaranteed a benefit.   Hording pays off.
If the value is unpredictable then the early adopters have risk. Early adopters are not guaranteed a benefit, so they have to balance the risk. Selling Bitcoin pays off.

I don't see how a stable value guarantees no risk. Is this a comment toward my proposal? People still would have to accept the value of a thing.

What do you think?

I think that anyone who thinks gold was a better currency than fiat does not know their history. They are both bad. And with the perfect information available to us via a cryptocurrency, it is an awful shame that the creators of bitcoin sought to emulate it so closely. I think, like Friedman and other monetarists, like Hayek and other Austrians, that inflation only occurs when the supply of money exceeds demand. There are two flaws with central bank policy: 1) New money goes to those who already control the wealth (banks), 2) the central bank has little idea what the real demand for currency is or how to put currency where it is needed. Both of these problems are fixed in the Decrits proposal. It also gets rid of the need for FRB and the potential vanishing money that comes along with that. And I think, given that it becomes reality, the general population will be much more willing to use a currency that rewards trade rather than old/new wealth. It would be a direct competitor to bitcoin, and bitcoin would lose because it will have to convince people to buy in to the same old shit. When people have a choice in the matter, this will work until you run out of stupid people.

If it isn't me, it will be someone else, and bitcoin will be a long-term losing proposition for the vast majority of people.

[Etlase2]

Constantly promoting your own cryptocurrency is one thing but saying everyone who uses bitcoin is stupid to do it is sinking low.

That is not what I said. Although it was a harsh criticism, it was referring to people that want to hold on to the idea that a currency will ever appreciate and that no one will be left holding the bag. But people will be left holding the bag if something legitimately better comes along. I was trying more to point out the flawed idea of bitcoin in the face of competition. Bitcoin has no way of competing against a currency that actually promotes trade. Maybe it will be a store of value compared to fiat, but it will unlikely be a better store of value than a better cryptocurrency, because few will want it over the better one. It is speculation though.

[justusranvier]

Bitcoin has no way of competing against a currency that actually promotes trade. Maybe it will be a store of value compared to fiat, but it will unlikely be a better store of value than a better cryptocurrency, because few will want it over the better one. It is speculation though.

Will you change your thesis if it turns out that people do not, in fact, want what you think they "should" want, or will declare your theory to be perfect and blame the world?

[Etlase2]

Will you change your thesis if it turns out that people do not, in fact, want what you think they "should" want, or will declare your theory to be perfect and blame the world?

It is not necessarily what people do or do not want, but the nature of money. There are many, many things that exist as stores of wealth, there is only one that works really well for trade--and I just mean money in a general sense. Bitcoin has to compete with all the other stores of wealth and loses almost all of its utility in trade in the face of a "better" cryptocurrency, whatever that might be. It is indeed the newest users of bitcoin that are always taking the risk that the demand for bitcoin will increase, or at the very least stay stable. At what point will they decide that the risk is no longer worthwhile?

It's an impossible call to make that any currency will remain around forever, in which case there will always be people left holding the bag. But as I've stated in various posts and in various ways, there are fundamental flaws with bitcoin that will make it very unappealing to new markets when the free market gives them a choice in the matter. People won't use gold loaned from the king's vaults while silver lies around simply needing to be dug up. A bad analogy, but close enough.

[benjamindees]

I haven't read the thread but in general I agree with this line of criticism.

Specifically, though, instead of thinking about anyone becoming a trillionaire, just consider what it would take for Satoshi to become as wealthy as Bill Gates.  That's not such a ridiculous outcome.  If we assume, generously, that Satoshi has 1 million Bitcoins, then for him to be worth $60 billion dollars, the value would have to rise to $60,000.  That would make anyone with 17 Bitcoins a millionaire.

[Jack1Rip1BurnIt]

Even if the whole bitcoin economy was worth 60 billion (in about 12 years when pretty much all 20 million or so bitcoins are circulating), each coin would be worth around $2850. It would only take 350 to make you a milllionare. I think it's worth the risk 

[Dabs]

Cool, I just need to buy about 400 bitcoins now, and just put it in cold storage. 10 to 12 years from now, I'll look at my paper wallet and see how much it's worth, and maybe cash out half of it.

[anu]

This was my big problem with Bitcoin, think about this. The success of Bitcoin is not guaranteed, it has to succeed in a free market system. If it is horded and not distributed it will die. If anything goes out of balance it will die.

Bitcoin will die because everyone wants to have it? I don't understand, please explain.

[anu]

Owning bitcoin still requires something physical and that can be taken from you and you lose control over your coins.

The only thing physical that is required is your brain. If that gets stolen from you, you got much more serious problems than just losing a few BTC.

http://brainwallet.org/

[mobodick]

Chart of the day, from http://feedproxy.google.com/~r/RunToGold/~3/6kn8JveK2c0/

That chart is nonsense.
It doesn't start at the bottom and is thus way too positive.
We'll hit a bottom of $10 in january and a bottom of $20 around september next year.
That's what my charts are saying.

[cbeast]

Chart of the day, from http://feedproxy.google.com/~r/RunToGold/~3/6kn8JveK2c0/

I'm not sure you can really project Bitcoin price based purely on historical price. You have to look at projected adoption vectors. I don't think the chart is really wrong, just a little conservative. There will probably some punctuated equilibrium along the way. I think it may look more like this curve, but somewhat time compressed because of the accelerated rate of technological development.

[mobodick]

Chart of the day, from http://feedproxy.google.com/~r/RunToGold/~3/6kn8JveK2c0/

I'm not sure you can really project Bitcoin price based purely on historical price. You have to look at projected adoption vectors. I don't think the chart is really wrong, just a little conservative. There will probably some punctuated equilibrium along the way. I think it may look more like this curve, but somewhat time compressed because of the accelerated rate of technological development.

Well, according to my graph it is not conservative enough.
Go to bicoincharts, view mtgox all data (at max time resolution) in log scale and take a screenshot.
Then use some tool to put makers at the lowest points of the 'triangle' structures (starting around october 2010).
Then just connect the dots and notice the simple curve.

This curve is more conservative than the runtogold one, but it may be that it's the start of a curve like you described.

[Adrian-x]

This was my big problem with Bitcoin, think about this. The success of Bitcoin is not guaranteed, it has to succeed in a free market system. If it is horded and not distributed it will die. If anything goes out of balance it will die.

Bitcoin will die because everyone wants to have it? I don't understand, please explain.

What makes Bitcoin valuable is the idea of a frictionless, free market economy, with a fixed currency supply. This value is ultimately expressed through a prosperous economy.

In contrast, Bitcoin's current value is derived from the market demand for Bitcoin. This value is derived from the idea of having Bitcoin in a prosperous economy.   

I will distil the paradox further but the explanation to my original statement above is distilled in this post. 

[Adrian-x]

Bitcoin will die because everyone wants to have it? I don't understand, please explain.

Would it be reasonable to answer: Just having Bitcoin's without an economy to back up the value is akin to a ponzi and will ultimately crash

[the_thing]

We'll hit a bottom of $10 in january and a bottom of $20 around september next year.
That's what my charts are saying.

This is interesting. How did you figure that out?
(I'm not saying you're wrong. I'm just curious.)

[sippsnapp]

At the current rate we are arround 250.000.000 USD.
What where the amonts hedgefunds usually invest? And what are the amounts nowadays bailouts come up with? How much USD hold the top 100 of forbes each? Top
We are still very, very small!
If just 1 crazy entity decides to strike and scoop up some of the coins we go parabolic straight up with alice in my opinion.

[anu]

Bitcoin will die because everyone wants to have it? I don't understand, please explain.

Would it be reasonable to answer: Just having Bitcoin's without an economy to back up the value is akin to a ponzi and will ultimately crash

This is a completely theoretical scenario. There is no way from here to there. Most people in the Bitcoin community want to live life and are not hell-bent to take all their Bitcoins into the void with them, eventually. People do buy and sell stuff. Of course they want to keep some, just in case the price shoots past the moon, overnight.

[Realpra]

We are still very, very small!

Keep in mind that a lot of the monetary system doesn't exist. A lot of the money "printed" by the FED is just in a computer as loans to some bank that then put it in a government bond paying ~3%.
Since THAT government also pays with loaned/"printed" money it's a completely empty/fictional system without substance. They couldn't even store a trillion dollars in bills IF they had them.

If these banks ever tried to move from their trillion dollar derivatives/junk bonds into the real world it would either cause an immediate crash or hyperinflation.

It would be like all early BTC adopters cashing out tomorrow; they know it would destroy their value so they DON'T do it.

The entire world budget for renewable energy is ~200 billion euro I think, that is 1/5 of the debt added by the USA in the past 6-12 months -the real market could never absorb all the monopoly money going around, so they just skim a little off the top and otherwise act as if its real.

If the Bitcoin economy grows "just" 1000 times we could buy that renewable energy for a year - not that small huh!

[dooferorg]

For the next several hundred years, the new generations will complain about how cheaply their parents got *their* bitcoins.

Time to write in the will "I bequeath my wallet.dat to .."

[Richy_T]

If bitcoin can't deflate in a stable manner, then fiat will be seen as more stable, and people will not store wealth in bitcoin as anything other than a risky investment. If bitcoin can't deflate in a stable manner, what incentive is there for people to "invest" in it?

Maybe the difference between carrying your wealth home on a thumbdrive or in a wheelbarrow. Bitcoin has its issues but the other options aren't looking so hot themselves. That's largely why it's interesting to me.

[Jermainé]

Well WW3 is around the corner (already started depending on where you are) and its only a matter of time for the market to hit $30 a share or higher again. Millions per? Yes, thats impossible.

[VogueBlackheart]

Money gets chosen by markets primarily on the basis of its utility and only secondarily on the basis of its distribution; its utility stems foremost from the physical characteristics of the substance. (Is it money-apt like gold and bitcoin, short-term-metastable-quasi-money-apt like fiat currencies, or ineffective as money like ice cubes?) The secondary aspects, while relevant, are far more forgiving.

An example:

Warren Buffett once invoked the image of all the gold in the world merged into a giant cube to illustrate the unproductivity/uselessness of gold as such, and his example is contrived to create just that impression. Such a scenario could indeed, at least temporarily, demonentize gold, just as one person holding all BTC would demonetize Bitcoin; a commodity can't act as a medium of exchange without enough eligible exchangers to render it a common value proxy across an economy.

That said, if you owned that giant cube of gold, you'd want to get a chunk of it out into people's hands and in the marketplace as money so that people will accept gold from you in exchange for goods and services. One can see the incentive for large holders of 'money-apt' commodities to circulate them, particularly in those markets that provide the wealth holder useful goods/services. In fact, if someone were to have possession of ALL the world's gold/bitcoins, the smartest thing for him or her to do would be to distribute enough of it, even for free, to remonetize it. All the money-apt characteristics--the primary condition for something to be money--are there lying dormant, as compelling as ever, waiting for the weak secondary condition to be fulfilled. Note that nothing more need be done than to distribute the money-apt commodity past some minimum threshold. Markets will do the rest automatically--Game recognize game; money demand recognizes money.

This is why I don't fear for the scalability of Bitcoin or its appeal to latecomers. Even if it's storing value mostly for a small group, it's just as good a store of value to any new entrant, and of course a great medium of exchange.

Also note what I said about the dominant strategy for the unilateral holder of a money apt-substance implies about the marginal utility of money ownership. If I have 50 bitcoins, I'm more likely to be frivolous with a few Satoshis than someone who owns 1/1000th of a bitcoin. In combination with the limitations on fraud with Bitcoin relative to fiat, I expect some trickle-down on that basis, and from those with large holdings promoting the new currency and assisting their communities.

Gold has similar distributional inequality to Bitcoin. A new, independent form of sound money concentrated within a different group helps to decentralize power in the world. Bitcoin is mostly owned by forward-thinkers, nerds, etc. (I'm venturing a guess there.) Gold ownership rests on a history of violence and theft stretching endlessly back through a savage past. Those massive hoards need a counterweight.

Assuming all goes well with Bitcoin's rise and it reaches its anticipated potential, the challenge for the early adopters will be to use their purchasing power wisely and philanthropically.

[mobodick]

Money gets chosen by markets primarily on the basis of its utility and only secondarily on the basis of its distribution; its utility stems foremost from the physical characteristics of the substance. (Is it money-apt like gold and bitcoin, short-term-metastable-quasi-money-apt like fiat currencies, or ineffective as money like ice cubes?) The secondary aspects, while relevant, are far more forgiving.

An example:

Warren Buffett once invoked the image of all the gold in the world merged into a giant cube to illustrate the unproductivity/uselessness of gold as such, and his example is contrived to create just that impression. Such a scenario could indeed, at least temporarily, demonentize gold, just as one person holding all BTC would demonetize Bitcoin; a commodity can't act as a medium of exchange without enough eligible exchangers to render it a common value proxy across an economy.

I think that if distribution is distorted enough it can have a bigger influence on money choice than utility when the value gets higher. And ultimately it will act as a break on value when this group aggregates too much coins (for instance through loans) and becomes too big a power.
So there is a limit to the growth potetial of bitcoin because of the 'early' adopters.

That said, if you owned that giant cube of gold, you'd want to get a chunk of it out into people's hands and in the marketplace as money so that people will accept gold from you in exchange for goods and services. One can see the incentive for large holders of 'money-apt' commodities to circulate them, particularly in those markets that provide the wealth holder useful goods/services. In fact, if someone were to have possession of ALL the world's gold/bitcoins, the smartest thing for him or her to do would be to distribute enough of it, even for free, to remonetize it. All the money-apt characteristics--the primary condition for something to be money--are there lying dormant, as compelling as ever, waiting for the weak secondary condition to be fulfilled. Note that nothing more need be done than to distribute the money-apt commodity past some minimum threshold. Markets will do the rest automatically--Game recognize game; money demand recognizes money.

Well, yes.
And that would then make such a person the controller of the market. Think of it, individuals owning much more than the complete market and spreading coins as they see fit. They could manipulate prices on a massive scale. That can only be healthy within a bigger framework of something more balanced where the market has value stored in other ways as well. Bitcoin can only function in a symbiotic relation.

This is why I don't fear for the scalability of Bitcoin or its appeal to latecomers. Even if it's storing value mostly for a small group, it's just as good a store of value to any new entrant, and of course a great medium of exchange.

I also think bitcoin can be a great medium, i just think it cannot be the only medium and it cannot be the biggest medium.

Also note what I said about the dominant strategy for the unilateral holder of a money apt-substance implies about the marginal utility of money ownership. If I have 50 bitcoins, I'm more likely to be frivolous with a few Satoshis than someone who owns 1/1000th of a bitcoin. In combination with the limitations on fraud with Bitcoin relative to fiat, I expect some trickle-down on that basis, and from those with large holdings promoting the new currency and assisting their communities.

I'm sure that there will be some trickle-down, but it will propably not flow easily. And on its way down more trenches will be formed.
Although relatively speaking big coin holders will be more frivolous compared to small holders, in general the incentive is to hold on to your coin. Not only will people be frivolous with their money less often, the coin they spend will not distribute easily.
So i'm not sure this process will unfold as nicely as you described.

Gold has similar distributional inequality to Bitcoin. A new, independent form of sound money concentrated within a different group helps to decentralize power in the world. Bitcoin is mostly owned by forward-thinkers, nerds, etc. (I'm venturing a guess there.) Gold ownership rests on a history of violence and theft stretching endlessly back through a savage past. Those massive hoards need a counterweight.

Those forward-thinking nerds are pretty sketchy overall. Lots of scams, lots of tor connections, lots of puppets, lots of obscure information passing through hidden irc chanels etc.
And they would be a big part of the 'nouveau riche' superclass (so even above upper-class as this class effectively owns the market).

Assuming all goes well with Bitcoin's rise and it reaches its anticipated potential, the challenge for the early adopters will be to use their purchasing power wisely and philanthropically.

And you trust the bunch of us are generally capable of that?
I don't see that happen.

[Adrian-x]

Bitcoin will die because everyone wants to have it? I don't understand, please explain.

Would it be reasonable to answer: Just having Bitcoin's without an economy to back up the value is akin to a ponzi and will ultimately crash

This is a completely theoretical scenario. There is no way from here to there. Most people in the Bitcoin community want to live life and are not hell-bent to take all their Bitcoins into the void with them, eventually. People do buy and sell stuff. Of course they want to keep some, just in case the price shoots past the moon, overnight.

Sure I can agree there is no way from here to there, but here sure feels bad and there looks pity good, I want to go there.

It may just be theoretical but with savings being a benefit in a growing economy it doesn't look like we are going "there" it feels more like staying "here".

[YokoToriyama]

the world is a scary place