Is there really a limited supply of bitcoins?

[limikael]

I know that there will only ever exist 21 million bitcoins, and I trust that there is reliable algorithms in place to ensure that there will never be any more.

However, say that I take the source for bitcoin and start up a new genesis block and call this bitcoin2 and get some people starting to use that as well. And then someone else starts up bitcoin3 and so on to infinity. Then we have an unlimited supply of limited supplies. Any reason that this would not happen if bitcoin really become a household name?

I really like the idea of bitcoin and I'm trying to spread the word as much as I can. A friend of mine who is knowledgeable in economics brought up the argument above and I didn't know what to answer really...

[1715267742]

1715267742

[FreeMoney]

It's so easy to make Bitcoin2,3,4,5 that you could practically say they already exist. The problem is that they have no difficult, no demand, no vendors, etc. And they offer nothing to compensate compared to Bitcoin.

[limikael]

It's so easy to make Bitcoin2,3,4,5 that you could practically say they already exist. The problem is that they have no difficult, no demand, no vendors, etc. And they offer nothing to compensate compared to Bitcoin.

So you are saying that the reason Bitcoin would work and not Bitcoin1,2,3 is that Bitcoin has more credibility and is more widely accepted?

Well, if that is the only thing it relies on then that is not much actually, because Bitcoin has no demand, no ventors, etc, compared to gold or traditional currencies. What is Bitcoin then more than a Ponzi scheme?

[error]

It's so easy to make Bitcoin2,3,4,5 that you could practically say they already exist. The problem is that they have no difficult, no demand, no vendors, etc. And they offer nothing to compensate compared to Bitcoin.

So you are saying that the reason Bitcoin would work and not Bitcoin1,2,3 is that Bitcoin has more credibility and is more widely accepted?

Well, if that is the only thing it relies on then that is not much actually, because Bitcoin has no demand, no ventors, etc, compared to gold or traditional currencies. What is Bitcoin then more than a Ponzi scheme?

No demand and no vendors? THIS again? That might have been true a year ago; it certainly is not true now.

[benjamindees]

One thing (probably the only thing) that limits competition at this point is that Bitcoin is very small in a very large market.  There are huge threats arrayed against it.  It is more profitable to cooperate rather than to compete.

[FreeMoney]

It's so easy to make Bitcoin2,3,4,5 that you could practically say they already exist. The problem is that they have no difficult, no demand, no vendors, etc. And they offer nothing to compensate compared to Bitcoin.

So you are saying that the reason Bitcoin would work and not Bitcoin1,2,3 is that Bitcoin has more credibility and is more widely accepted?

Well, if that is the only thing it relies on then that is not much actually, because Bitcoin has no demand, no ventors, etc, compared to gold or traditional currencies. What is Bitcoin then more than a Ponzi scheme?

No demand and no vendors? THIS again? That might have been true a year ago; it certainly is not true now.

You misread me. Bitcoin2 has no demand and no vendors.

edit:nm

[limikael]

Yes what we are saying is that Bitcoin has more demand and vendors than Bitcoin2 would have.

And what I said then was that Bitcoin (the original one) have no demand and no vendors compared to traditional currencies. Yes I know that there is a list of places where you can use Bitsoins on this site, and I agree that the list is getting impressive. However, just in comparison there are several thousand places in the city where I live where they accept traditional currency but I haven't seen any accepting Bitcoin.

Back to the original discussion. So say that Bitcoin become a household name, and Bitcoin2 would be started by someone who has a lot of money to put into promoting Bitcoin2 as _the_ digital currency. Say that it was started by a big corporation, who would put millions of USD into promoting it, or by the US government, the Chinese government or by the IMF who would put billions or trillions. Take this to the extreme and say that each and every one of us would start our own digital currency and we would try to promote it as _the_ currency and there would be an exchange rate between our currencies. The exchange rate would settle at something depending on our ability to promote our own currency, and that ability would be equal to the amount of money or gold we had before it all started. So we are back where we started, right? What difference does bitcoin do?

[FreeMoney]

Bitcoin had advantages over all other currencies. Bitcoin2 has zero advantages and all disadvantages.

[limikael]

Bitcoin had advantages over all other currencies. Bitcoin2 has zero advantages and all disadvantages.

That's not an argument... 

Shall I take it that you agree that Bitcoin is a Ponzi Scheme then?

[limikael]

One thing (probably the only thing) that limits competition at this point is that Bitcoin is very small in a very large market.  There are huge threats arrayed against it.  It is more profitable to cooperate rather than to compete.

That's like saying "come on and join us, that will make you closer to the top of the pyramid".

[Astro]

Well, if that is the only thing it relies on then that is not much actually, because Bitcoin has no demand, no ventors, etc, compared to gold or traditional currencies. What is Bitcoin then more than a Ponzi scheme?

It's always a Ponzi scheme to people who heard about it last week.  Bitcoin will hit critical mass whether you or whatever "humor" forum you came from think it's a scam or not.

No currency had demand or usefulness before it existed, and to most people in the world, bitcoin simply does not exist yet.  We will remedy that situation shortly.

[Meni Rosenfeld]

You should probably read the Ponzi FAQ.

tl;dr version: Bitcoin is a revolutionary currency. Because of its rapid adoption, its value increases and some people invest in it anticipating such increase. Bitcoin has so little in common with either pyramid or ponzi that I feel silly talking about the "differences", but the main difference is that Bitcoin is sustainable even after this growth spurt.

And for the original question, as was mentioned, any Bitcoin fork is highly unlikely to be adopted because anyone wishing to adopt a decentralized cryptocurrency will just adopt the more usable Bitcoin instead (and because everyone expects others to do this, there is no reason to anticipate future adoption).

[Grinder]

And what I said then was that Bitcoin (the original one) have no demand and no vendors compared to traditional currencies. Yes I know that there is a list of places where you can use Bitsoins on this site, and I agree that the list is getting impressive. However, just in comparison there are several thousand places in the city where I live where they accept traditional currency but I haven't seen any accepting Bitcoin.

Why do you think that less demand is the same as no demand? It is so obviously wrong to claim that Bitcoin has no demand, all you have to do is check mtgox.

What difference does bitcoin do?

Bitcoin was first with a new technology with several advantages of the the existing ones, and got kickstarted by the unwavering support of a bunch of libertarian hippies. If you try to start Bitcoin2 you won't have any of those advantages.

[nathanrees19]

What is Bitcoin then more than a Ponzi scheme?

Not this again!

[nathanrees19]

Why do you think that less demand is the same as no demand?

This is an extremely common type of fallacy on internet forums. I am no closer to understanding it now than 8 years ago when I first observed it.

Bitcoin was first with a new technology with several advantages of the the existing ones, and got kickstarted by the unwavering support of a bunch of libertarian hippies

Bingo.

Bitcoin gets the kickstart + novelty value. All bitcoin2 has is "Hai guise! We're a clone of bitcoin but with (more coins/faster generation/less fees/more fees/insert other parameter that was changed)! Plz come and mine."

If you want to compete with bitcoin you need something completely new with its own novelty value.

[limikael]

What difference does bitcoin do?

Bitcoin was first with a new technology with several advantages of the the existing ones, and got kickstarted by the unwavering support of a bunch of libertarian hippies. If you try to start Bitcoin2 you won't have any of those advantages.
[/quote]

Yes I know. But say that Bitcoin2 gets kickstarted by the IMF who uses trillions of dollars to promote it. I love libertarian hippies, I could even go as far as calling myself one. But so far the masses have listened more to paid advertising than libertarian hippies unfortunately. I felt that Bitcoin was different in a way, you couldn't argue with it since there was just a limited supply. But if you take away the "limited supply" argument from Bitcoin, I wounder what's left.

Then you have the "it was first" argument, and the "built up trust" argument. But I'm afraid those arguments will not be so strong if someone comes along with a "trillions of US dollars" argument, and this will happen as soon as Bitcoin gets widespread recognition. And if Bitcoin does not get widespread recognition, it will not be useful.

I have to say that this is my feeling about Bitcoin at the moment. I would love for that feeling to change because I would love the libertarian hippies to win.

[limikael]

Why do you think that less demand is the same as no demand?

This is an extremely common type of fallacy on internet forums. I am no closer to understanding it now than 8 years ago when I first observed it.

Bitcoin was first with a new technology with several advantages of the the existing ones, and got kickstarted by the unwavering support of a bunch of libertarian hippies

Bingo.

Bitcoin gets the kickstart + novelty value. All bitcoin2 has is "Hai guise! We're a clone of bitcoin but with (more coins/faster generation/less fees/more fees/insert other parameter that was changed)! Plz come and mine."

If you want to compete with bitcoin you need something completely new with its own novelty value.

If _I_ said "Hai guise! We're a clone of bitcoin..." I don't think that anyone would listen, that's not what I'm saying. But what if someone with a gold reserve said it? It will be an argument between hippies and large corporations, nations and bankers. And hippies have only love, no one listens to that. Unfortunately.

[Stefan Thomas]

If _I_ said "Hai guise! We're a clone of bitcoin..." I don't think that anyone would listen, that's not what I'm saying. But what if someone with a gold reserve said it? It will be an argument between hippies and large corporations, nations and bankers. And hippies have only love, no one listens to that. Unfortunately.

If someone with a gold reserve starts a currency they would probably want to get something out of that deal. If it's somebody private they probably want to get revenue out of it and if it's a government they'll want control/regulatory powers.

In either case, it'll be a very different currency than Bitcoin.

[Grinder]

Yes I know. But say that Bitcoin2 gets kickstarted by the IMF who uses trillions of dollars to promote it.

And what would the value of gold be if it suddenly started raining from the sky? The odds of these things happening are probably fairly similar.

[Meni Rosenfeld]

But say that Bitcoin2 gets kickstarted by the IMF who uses trillions of dollars to promote it.

Yes, if a new decentralized cryptocurrency is introduced with similar nature to Bitcoin, and billions of dollars are spent kickstarting it, it could supersede Bitcoin. But this doesn't seem a likely scenario. The backer will want to profit out of it (if he did it for charitable motives, he would just support Bitcoin instead) and it will be a very difficult balance of making it attractive enough to be adopted, giving a big enough cut to the backer to be worthwhile, doing it late enough to be sure cryptocurrency has a future, doing it early enough to be able to compete with Bitcoin, while all in all being a more lucrative investment in cryptocurrency than simply buying lots of bitcoins.

[markm]

There already are a whole bunch of alternates based on bitcoin code, it is not a problem so far.

If anything they just help bitcoin by showing that the concept is appealing enough that others have adopted the same system for their various alternative currencies.

I do not even see them as competing with bitcoin really, they are mostly co-operating, each of them is in effect yet another thing you can spend bitcoins on.

-MarkM-

[giszmo]

For me the biggest down sides of BTC are
1. I envy the *real* early adopters that mined throughout 2009 with a combined power like my HD6970 and are maybe mainly one person.
2. I fear the system to collapse through regulation.

If governments put together starting a second chain with one additional rule:
Everybody may register one citizen account plus an unlimited number of anonymous accounts and per block a certain percentage of all the coins of all the accounts get redistributed evenly to all citizen accounts I would definitely switch to that as it would not be a speculators currency but rather designed to be used to pay stuff and it would have the backing of governments.

In that sense: Yes I see an option for a competing BTC2 (2 for 2%/month), ...

Why should governments do that? Well it would be one way bring the good of BTC to everybody while at the same time making big style money laundry less attractive due to the cut that goes to every citizen.

(Some consider the deflation of the BTC also a good aspect of it but it renders BTC into a good nobody is willing to give away easily.)

[Vladimir]

...
I take the source for bitcoin and start up a new genesis block and call this bitcoin2 and get some people starting to use that as well.
...

While you are at it why don't you also start ebay 2.0 google 2.0 twitter 2.0 and facebook 2.0 ...

[jerfelix]

For me the biggest down sides of BTC are
1. I envy the *real* early adopters that mined throughout 2009 with a combined power like my HD6970 and are maybe mainly one person.

I think you are looking at this all wrong.  In 2009, there were only about 2.6 million BTC generated ALL YEAR.  Say those are evenly spread over 100 early adopters.  So 100 people got 26,000 BTC each (current value about a half million dollars).  A half million dollars is hardly enough to "retire rich" these days.  Not even close.

Furthermore, most of those people gave away or spent thousands of BTC already.  They would currently be worthless had they NOT thrown them around like candy.  

Even if it's only ONE guy who mined all of 2009, and has $50M in BTC/paper wealth (no where near Bill Gates' wealth), I don't see a reason to be envious.  B.F.D.  Congratulate him on his genius, and move on.



You're envious of some supposed wealth that just really isn't there.  Totalling every bitcoin that has ever been mined, you are only up to $130M.  And with 250,000 users currently*, even using the 80/20 rule, there's really not that many "really rich" Bitcoin early adopters.

Furthermore, they're probably kicking themselves because they paid 10,000 BTC for a pizza, (currently valued at about $200,000 - that's a darn expensive pizza!)   We can all be envious of them, and they can be mad at spending BTC foolishly, or we can look to the future where we have a decent decentralized currency.



* I estimated 250,000 users yesterday in another thread.

Edit:  Here's the list of the 100 richest Bitcoin owners.  B.F.D.   Ranges from $134K  (rich???) to about $6M  (ok, that's some serious money, but that is ONE person.   Congratulate him on his success, and move on.)

[giszmo]

I'm all with you that some guys getting rich is no reason to stop this experiment as this applies to any currency. Still I dream of my version that simply has a strong incentive to give away coins rather than to hoard them.
This also prevents the exchange rate from fluctuating like crazy as it evenly distributes coins to all citizens on the long run rather than having the potential to see all coins accumulate in 5% of the accounts.

[Meni Rosenfeld]

Edit:  Here's the list of the 100 richest Bitcoin owners.  B.F.D.   Ranges from $134K  (rich???) to about $6M  (ok, that's some serious money, but that is ONE person.   Congratulate him on his success, and move on.)

That's a list of addresses, not people. In all likelihood, the one who owns the 297K address also owns some more addresses on this list (doesn't detract much from your point though).

[chiropteran]

While you are at it why don't you also start ebay 2.0 google 2.0 twitter 2.0 and facebook 2.0 ...

While I agree with your general point, facebook is a bad example because it could be argued to be myspace 2.0 itself.

[bittersweet]

Yes what we are saying is that Bitcoin has more demand and vendors than Bitcoin2 would have.

And what I said then was that Bitcoin (the original one) have no demand and no vendors compared to traditional currencies.

If it's that simple, simply create this Bitcoin 2. The cost to start a new chain is almost 0. You will be rich!

[rebuilder]

Yes I know. But say that Bitcoin2 gets kickstarted by the IMF who uses trillions of dollars to promote it. I love libertarian hippies, I could even go as far as calling myself one. But so far the masses have listened more to paid advertising than libertarian hippies unfortunately. I felt that Bitcoin was different in a way, you couldn't argue with it since there was just a limited supply. But if you take away the "limited supply" argument from Bitcoin, I wounder what's left.

I don't understand your argument. If I start a different currency, it is a different currency. Bitcoin clients would not accept Bitcoin2 spends. You'd have to convince people to trade their BTC (or other currency) for BTC2, and then the question is what exchange rate they are willing to do so at. This in no way means Bitcoins are no longer limited in supply.

As for whether some competitor could supercede Bitcoin, certainly. It will be interesting to see what it takes to do that. For much of the crowd here, that currency would have to be decentralized and free (libre), but somehow significantly better than Bitcoin. Others might not care about the libertarian aspects so much, and they may end up using some kind of centralized version, although I don't see the benefits over the government-issued currencies we already have.

[Meni Rosenfeld]

I'm all with you that some guys getting rich is no reason to stop this experiment as this applies to any currency. Still I dream of my version that simply has a strong incentive to give away coins rather than to hoard them.
This also prevents the exchange rate from fluctuating like crazy as it evenly distributes coins to all citizens on the long run rather than having the potential to see all coins accumulate in 5% of the accounts.

Surely you know that such redistribution plans generally destroy productivity (to the detriment of everyone, including the poor) because people prefer to enjoy the free money rather than working hard and/or innovating?

The BTC exchange rate will fluctuate less when it becomes more established.

Yes I know. But say that Bitcoin2 gets kickstarted by the IMF who uses trillions of dollars to promote it. I love libertarian hippies, I could even go as far as calling myself one. But so far the masses have listened more to paid advertising than libertarian hippies unfortunately. I felt that Bitcoin was different in a way, you couldn't argue with it since there was just a limited supply. But if you take away the "limited supply" argument from Bitcoin, I wounder what's left.

I don't understand your argument. If I start a different currency, it is a different currency. Bitcoin clients would not accept Bitcoin2 spends. You'd have to convince people to trade their BTC (or other currency) for BTC2, and then the question is what exchange rate they are willing to do so at. This in no way means Bitcoins are no longer limited in supply.

His argument is: Someone will create BitcoinB and use billions of $$$ to promote it, offer incentives to shops to accept it, hire a development team for a full-featured client, and back it by USD. This can help it grow faster than Bitcoin, to the point where Bitcoin vs BitcoinB will be like Bitcoin2 (unsupported) vs Bitcoin.

Like I said, nothing wrong with this scenario, except I don't believe anyone will do it.

[giszmo]

I'm all with you that some guys getting rich is no reason to stop this experiment as this applies to any currency. Still I dream of my version that simply has a strong incentive to give away coins rather than to hoard them.
This also prevents the exchange rate from fluctuating like crazy as it evenly distributes coins to all citizens on the long run rather than having the potential to see all coins accumulate in 5% of the accounts.

Surely you know that such redistribution plans generally destroy productivity (to the detriment of everyone, including the poor) because people prefer to enjoy the free money rather than working hard and/or innovating?

No. Do you? If so, please enlighten me.
Actually BTC mining payed off big deal so far. People had their hardware payed for in a month. ATM this is even getting shorter than longer. Still BTC is not doomed over that "free money".
In 2011 the total BTC will grow from 6M to 8M. That is 30% inflation and equivalent to keeping it at 6M and redistributing 30% based on CPU in a way similar to what I suggested based on heads. 30% inflation does no harm to bitcoinat all. It is vastly overcompensated by the BTC economy growth.
On the long run I would not redistribute 30% but rather 10% based on heads and rely on fees paying for the block creation but I strongly believe it would work with 30%, too.

If you accept citizen accounts for all the world's citizen you could consider this currency a mean to fight poverty in the world. I would very much love to put $$ into such a currency.

If again envy is your concern, make it less % and limit the citizen accounts to your country. Any foreigner may open anonymous accounts but would not profit from the redistribution.

[limikael]

Thank you for the interesting discussion guys about what would happen if someone started a Bitcoin2 backed with traditional currency...

Here was another thing that popped up in the discussion that I found interesting:

Surely you know that such redistribution plans generally destroy productivity (to the detriment of everyone, including the poor) because people prefer to enjoy the free money rather than working hard and/or innovating?

To that I would say, yes, but is destroying productivity actually a problem? I think the following quote from the Wikipedia page on "Basic income guarantee" is interesting:

...The connection between more and better has been broken; our needs for many products and services are already more than adequately met, and many of our as-yet-unsatisfied needs will be met not by producing more, but by producing differently, producing other things, or even producing less. This is especially true as regards our needs for air, water, space, silence, beauty, time and human contact...

[giszmo]

Thank you for the interesting discussion guys about what would happen if someone started a Bitcoin2 backed with traditional currency...

Here was another thing that popped up in the discussion that I found interesting:

Surely you know that such redistribution plans generally destroy productivity (to the detriment of everyone, including the poor) because people prefer to enjoy the free money rather than working hard and/or innovating?

To that I would say, yes, but is destroying productivity actually a problem? I think the following quote from the Wikipedia page on "Basic income guarantee" is interesting:

...The connection between more and better has been broken; our needs for many products and services are already more than adequately met, and many of our as-yet-unsatisfied needs will be met not by producing more, but by producing differently, producing other things, or even producing less. This is especially true as regards our needs for air, water, space, silence, beauty, time and human contact...

I would not consider a 30% redistribution of BTC a "basic income guarantee" in the sense basic income guarantee is discussed elsewhere.
6M BTC are worth now no more than 40M$ (try selling 6M BTC)
30% that of are 12M$
per month that would be 1M $
How many are we? Are there numbers on MtGox accounts? 50k enthusiasts with some $ left to spend? That would be 1M/50k per capita and month. 20$ per month hardly is worth being called a basic income guarantee. For a Sri Lanka citizen things would be different though. He might open such a citizen account without putting $$ in. But through spending locally he would also solidify the currency in the overall economy. Taking our BTC would not be possible. As citizen accounts would need to also be subject to redistribution, the only way to profit would be by spending the coins. Accepting them would only make sense if the intention is to spend them again. A currency for paying, not for hoarding.