Bitcoin Forum
December 08, 2016, 08:29:40 PM *
News: Latest stable version of Bitcoin Core: 0.13.1  [Torrent].
 
   Home   Help Search Donate Login Register  
Pages: [1] 2 3 »  All
  Print  
Author Topic: Would the failure of Bitcoin lead you to reconsider your assumptions?  (Read 9513 times)
jon_smark
Member
**
Offline Offline

Activity: 90


View Profile
June 07, 2011, 03:24:55 PM
 #1

Consider the scenario where Bitcoin fails to get any sort of traction in the real world, its value ultimately implodes, and it ends up failing as either an alternative currency or as a store of value.  Moreover, this scenario occurs purely due to market forces, ie, there is no government crack down or any action against Bitcoin by The Powers That Be™.  Perhaps it simply happens that tomorrow someone starts Inflato-coin, a digital P2P currency based on Bitcoin but with the "tiny" difference that instead of a hard-cap on the total number of coins, Inflato-coin has an inflation rate that asymptotically approaches 1% or 0% or whatever small number without ever actually being 0%.  And it just so happens that Inflato-coin manages to overtake and eclipse Bitcoin.

There's no shortage of people warning on this forum and on the wider blogosphere that Bitcoin's builtin deflation may lead to the above scenario and thus ultimately to its demise. And I know there's a fair amount of Austrian School apologists in this forum who simply dismiss these warnings without further ado.  But would the realisation of this scenario lead Austrians to reconsider their views on Economic theory?

(Obviously the dual scenario also applies.  Should deflation turn out not to be a problem for Bitcoin's success, then inflationistas (me included) may need to revise their assumptions.)
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1481228980
Hero Member
*
Offline Offline

Posts: 1481228980

View Profile Personal Message (Offline)

Ignore
1481228980
Reply with quote  #2

1481228980
Report to moderator
1481228980
Hero Member
*
Offline Offline

Posts: 1481228980

View Profile Personal Message (Offline)

Ignore
1481228980
Reply with quote  #2

1481228980
Report to moderator
BubbleBoy
Sr. Member
****
Offline Offline

Activity: 322



View Profile
June 07, 2011, 04:15:31 PM
 #2

Quote from: Bram Cohen
Will the Bitcoin fiasco make Libertarians realize they know diddly about economics? No, it will not.

http://twitter.com/#!/bramcohen
Jaime Frontero
Full Member
***
Offline Offline

Activity: 126


View Profile
June 07, 2011, 04:17:51 PM
 #3

the failure of Bitcoin due to competition with a more successful form of crypto-currency would obviously only serve to strongly reinforce my assumptions as to the merits of the basic idea.

Bitcoin's failure due to some kind of unilateral implosion would definitely lead to reassessment.
jon_smark
Member
**
Offline Offline

Activity: 90


View Profile
June 07, 2011, 04:34:29 PM
 #4

the failure of Bitcoin due to competition with a more successful form of crypto-currency would obviously only serve to strongly reinforce my assumptions as to the merits of the basic idea.

Note that I was not referring to Bitcoin's many technical merits.  Me too, I'm convinced that the basic idea of a digital P2P currency will succeed.  The only point of contention is whether this currency will have builtin deflation (Bitcoin), or will it be technically identical except that it has a small but non-zero rate of inflation.
hugolp
Hero Member
*****
Offline Offline

Activity: 742



View Profile
June 07, 2011, 04:36:50 PM
 #5

Consider the scenario where Bitcoin fails to get any sort of traction in the real world, its value ultimately implodes, and it ends up failing as either an alternative currency or as a store of value.  Moreover, this scenario occurs purely due to market forces, ie, there is no government crack down or any action against Bitcoin by The Powers That Be™.  Perhaps it simply happens that tomorrow someone starts Inflato-coin, a digital P2P currency based on Bitcoin but with the "tiny" difference that instead of a hard-cap on the total number of coins, Inflato-coin has an inflation rate that asymptotically approaches 1% or 0% or whatever small number without ever actually being 0%.  And it just so happens that Inflato-coin manages to overtake and eclipse Bitcoin.

There's no shortage of people warning on this forum and on the wider blogosphere that Bitcoin's builtin deflation may lead to the above scenario and thus ultimately to its demise. And I know there's a fair amount of Austrian School apologists in this forum who simply dismiss these warnings without further ado.  But would the realisation of this scenario lead Austrians to reconsider their views on Economic theory?

(Obviously the dual scenario also applies.  Should deflation turn out not to be a problem for Bitcoin's success, then inflationistas (me included) may need to revise their assumptions.)

There are plenty of examples of how price deflationary economies grow and thrive. In fact, it is inflation that stops growth because it creates malinvestments.

The problem is that keynesians ignore the empricial evidences and keep repeating the same nonsense. If Bitcoin works or it does not it wont be due to price deflation.
AntiVigilante
Member
**
Offline Offline

Activity: 98



View Profile
June 07, 2011, 04:45:19 PM
 #6

Consider the scenario where Bitcoin fails to get any sort of traction in the real world, its value ultimately implodes, and it ends up failing as either an alternative currency or as a store of value.  Moreover, this scenario occurs purely due to market forces, ie, there is no government crack down or any action against Bitcoin by The Powers That Be™.  Perhaps it simply happens that tomorrow someone starts Inflato-coin, a digital P2P currency based on Bitcoin but with the "tiny" difference that instead of a hard-cap on the total number of coins, Inflato-coin has an inflation rate that asymptotically approaches 1% or 0% or whatever small number without ever actually being 0%.  And it just so happens that Inflato-coin manages to overtake and eclipse Bitcoin.

There's no shortage of people warning on this forum and on the wider blogosphere that Bitcoin's builtin deflation may lead to the above scenario and thus ultimately to its demise. And I know there's a fair amount of Austrian School apologists in this forum who simply dismiss these warnings without further ado.  But would the realisation of this scenario lead Austrians to reconsider their views on Economic theory?

(Obviously the dual scenario also applies.  Should deflation turn out not to be a problem for Bitcoin's success, then inflationistas (me included) may need to revise their assumptions.)

There are plenty of examples of how price deflationary economies grow and thrive. In fact, it is inflation that stops growth because it creates malinvestments.

The problem is that keynesians ignore the empricial evidences and keep repeating the same nonsense. If Bitcoin works or it does not it wont be due to price deflation.

1 internet is worth 1000 internets. Bitcoin is a set of protocols as is the net. A crash would be an opportunity of a lifetime. All that would occur is a reboot with hindsight. It would be criminal to not take a ride on a much stronger project at flea market prices.

Proposal: http://forum.bitcoin.org/index.php?topic=11541.msg162881#msg162881
Inception: https://github.com/bitcoin/bitcoin/issues/296
Goal: http://forum.bitcoin.org/index.php?topic=12536.0
Means: Code, donations, and brutal criticism. I've got a thick skin. 1Gc3xCHAzwvTDnyMW3evBBr5qNRDN3DRpq
hugolp
Hero Member
*****
Offline Offline

Activity: 742



View Profile
June 07, 2011, 04:50:14 PM
 #7

There are plenty of examples of how price deflationary economies grow and thrive. In fact, it is inflation that stops growth because it creates malinvestments.

The problem is that keynesians ignore the empricial evidences and keep repeating the same nonsense. If Bitcoin works or it does not it wont be due to price deflation.

1 internet is worth 1000 internets. Bitcoin is a set of protocols as is the net. A crash would be an opportunity of a lifetime. All that would occur is a reboot with hindsight. It would be criminal to not take a ride on a much stronger project at flea market prices.

Honestly, I have started mining now so it goes against my short term interests, but deep inside I hope Bitcoin collapses and a lot of the people that is in here not for the community or the currency and just purely for the monetary gain go away. Nothing wrong in wanting to earn money (I do), but Bitcoin is much more than that. If Bitcoin crashes to some degree and some people get caught on it, maybe we can focus 100% in Bitcoin as a currency and have a nice community here.
Jaime Frontero
Full Member
***
Offline Offline

Activity: 126


View Profile
June 07, 2011, 04:51:29 PM
 #8

the failure of Bitcoin due to competition with a more successful form of crypto-currency would obviously only serve to strongly reinforce my assumptions as to the merits of the basic idea.

Note that I was not referring to Bitcoin's many technical merits.  Me too, I'm convinced that the basic idea of a digital P2P currency will succeed.  The only point of contention is whether this currency will have builtin deflation (Bitcoin), or will it be technically identical except that it has a small but non-zero rate of inflation.


oh.  you're one of those "i've been screwed by the early adopters" people?

< shrug >

they took the risks to make it work.  you didn't.

i hope they all get a million times richer than i do.
AbeSkray
Member
**
Offline Offline

Activity: 72



View Profile
June 07, 2011, 04:54:10 PM
 #9

There are plenty of examples of how price deflationary economies grow and thrive.
I am an armchair economist (at best) and would be honestly interested in reading more about non-inflationary economies thriving in history. Would you mind listing some of these examples or at least giving me some Google search terms to set me in the right direction?

It would be much appreciated!
hugolp
Hero Member
*****
Offline Offline

Activity: 742



View Profile
June 07, 2011, 05:04:26 PM
 #10

There are plenty of examples of how price deflationary economies grow and thrive.
I am an armchair economist (at best) and would be honestly interested in reading more about non-inflationary economies thriving in history. Would you mind listing some of these examples or at least giving me some Google search terms to set me in the right direction?

It would be much appreciated!

You have two periods during the USA XIX century. One, after Andrew Jackson closed the Second Bank of the USA (the central bank of the USA back then) until the civil war, and then after the depression that the civil war brought until the beggining of the XX century, although during this last period there was the National Banks Act that centralized the credit in the New York banks and allowed for some expansion of credit and some bubbles. But it was very tame compared to what a central bank could do, so there was still price deflation. Its very important that you keep in mind that a lot of the statistics during this period are just bullshit. Because the data of this period was not precise lot of economists applied models to extrapolate the data and they pushed their own view with the model. Even keynesians like Cristina Rommer (worked for the Obama admin) admits that the data was grossly exagerated for the worse. If you want to get a good picutre you need to look at big intervals like 10 or 20 years.

Canada during big periods of the XIX century had a price deflationary economy. Scotland during the XVIII and XIX centuries. Etc...
iya
Member
**
Offline Offline

Activity: 81


View Profile
June 07, 2011, 05:36:54 PM
 #11

But would the realisation of this scenario lead Austrians to reconsider their views on Economic theory?

Bitcoin and Austrian economics are two pair of shoes. Have you actually gone to an Austrian website and asked them what they think of Bitcoin?

There are lots of potential reasons for Bitcoin failing, but deflation is not one of them.
AbeSkray
Member
**
Offline Offline

Activity: 72



View Profile
June 07, 2011, 06:21:11 PM
 #12

There are plenty of examples of how price deflationary economies grow and thrive.
I am an armchair economist (at best) and would be honestly interested in reading more about non-inflationary economies thriving in history. Would you mind listing some of these examples or at least giving me some Google search terms to set me in the right direction?

It would be much appreciated!

You have two periods during the USA XIX century. One, after Andrew Jackson closed the Second Bank of the USA (the central bank of the USA back then) until the civil war, and then after the depression that the civil war brought until the beggining of the XX century, although during this last period there was the National Banks Act that centralized the credit in the New York banks and allowed for some expansion of credit and some bubbles. But it was very tame compared to what a central bank could do, so there was still price deflation. Its very important that you keep in mind that a lot of the statistics during this period are just bullshit. Because the data of this period was not precise lot of economists applied models to extrapolate the data and they pushed their own view with the model. Even keynesians like Cristina Rommer (worked for the Obama admin) admits that the data was grossly exagerated for the worse. If you want to get a good picutre you need to look at big intervals like 10 or 20 years.

Canada during big periods of the XIX century had a price deflationary economy. Scotland during the XVIII and XIX centuries. Etc...
Much obliged! There are some forum members here who respond very negatively to anyone who doesn't know as much as they do about a given topic. Thanks for not being one of those and taking the time to elaborate in a polite and informative manner! Grin

DATA COMMANDER
Full Member
***
Offline Offline

Activity: 126


View Profile
June 07, 2011, 06:26:05 PM
 #13

Quote from: jon_smark
Inflato-coin has an inflation rate that asymptotically approaches 1% or 0% or whatever small number without ever actually being 0%.

Bitcoin has an inflation rate that asymptotically approaches 0%...

Tips are appreciated (very tiny tips are perfectly okay!) 13gDRynPfLH3NNAz3nVyU3k3mYVcfeiQuF
Bimmerhead
Legendary
*
Offline Offline

Activity: 971



View Profile WWW
June 07, 2011, 06:33:33 PM
 #14

I might be misunderstanding the OP's question, but assuming I'm not...
Bitcoin could very well fail in the marketplace.  That doesn't mean a deflationary currency is inferior to an inflationary one.  It just means more people 'vote' for inflation by adopting the inflationary currency.

Just as they've voted for inflation over the last 100 years by constantly re-electing politicians who promise them 'freebies'.

Auroracoin forum: http://auroraspjall.is/   Auroracoin-enabled Q&A: https://spurt.is/
AuroracoinLocal: https://www.skiptum.is/   Auroracoin twitter tipping: http://auroratip.auroracoin.io/#/
evoorhees
Legendary
*
Offline Offline

Activity: 994


Democracy is the original 51% attack


View Profile
June 07, 2011, 06:41:57 PM
 #15

Bitcoin is not deflationary, monetarily speaking. It is always increasing in quantity, at a decreasing rate, until it stops increasing in quantity. Thus, it's always inflationary until it becomes constant - ie neither inflationary nor deflationary.

If the money supply of Bitcoins -shrinks- then it could be considered deflationary. But unless a bunch of people are throwing their wallet files in the ocean I don't see that happening.

Thus, if Bitcoin fails, it neither proves nor disproves that inflationary currencies are superior - it is after all an inflationary currency itself. Clearly, humans are so used to using inflating currencies that when they see one which inflates much slower than national fiat monies, they cry out that it's deflationary!   Huh
DATA COMMANDER
Full Member
***
Offline Offline

Activity: 126


View Profile
June 07, 2011, 06:42:51 PM
 #16

Quote from: Bimmerhead
Bitcoin could very well fail in the marketplace.  That doesn't mean a deflationary currency is inferior to an inflationary one.  It just means more people 'vote' for inflation by adopting the inflationary currency.

Assuming that we're talking about a perfectly free market, wouldn't the failure of a deflationary currency in competition against an inflationary one mean precisely that?

Tips are appreciated (very tiny tips are perfectly okay!) 13gDRynPfLH3NNAz3nVyU3k3mYVcfeiQuF
buckeye
Newbie
*
Offline Offline

Activity: 14


How to Get More Bitcoins — A Guide for Newbies


View Profile
June 07, 2011, 06:50:38 PM
 #17

Consider the scenario where Bitcoin fails to get any sort of traction in the real world, its value ultimately implodes, and it ends up failing as either an alternative currency or as a store of value.  Moreover, this scenario occurs purely due to market forces, ie, there is no government crack down or any action against Bitcoin by The Powers That Be™.  Perhaps it simply happens that tomorrow someone starts Inflato-coin, a digital P2P currency based on Bitcoin but with the "tiny" difference that instead of a hard-cap on the total number of coins, Inflato-coin has an inflation rate that asymptotically approaches 1% or 0% or whatever small number without ever actually being 0%.  And it just so happens that Inflato-coin manages to overtake and eclipse Bitcoin.

There's no shortage of people warning on this forum and on the wider blogosphere that Bitcoin's builtin deflation may lead to the above scenario and thus ultimately to its demise. And I know there's a fair amount of Austrian School apologists in this forum who simply dismiss these warnings without further ado.  But would the realisation of this scenario lead Austrians to reconsider their views on Economic theory?

(Obviously the dual scenario also applies.  Should deflation turn out not to be a problem for Bitcoin's success, then inflationistas (me included) may need to revise their assumptions.)


I think it has already got traction now, don't you?

http://bitcoin.co.cc/r1/banner.jpg (http://bitcoin.co.cc/r1/)
evoorhees
Legendary
*
Offline Offline

Activity: 994


Democracy is the original 51% attack


View Profile
June 07, 2011, 06:55:42 PM
 #18

Quote from: Bimmerhead
Bitcoin could very well fail in the marketplace.  That doesn't mean a deflationary currency is inferior to an inflationary one.  It just means more people 'vote' for inflation by adopting the inflationary currency.

Assuming that we're talking about a perfectly free market, wouldn't the failure of a deflationary currency in competition against an inflationary one mean precisely that?

It would if all variables were held constant, like in a laboratory. Unfortunately, in economics, there are thousands of variables and it is always dangerous to make conclusions like that. For example, the fact that the economy sucks doesn't mean Obama's socialism isn't good economic policy. And if the economy was strong, it wouldn't mean socialism was good economic policy. Way too many variables - conclusions must be very carefully drawn and examined. 
jon_smark
Member
**
Offline Offline

Activity: 90


View Profile
June 07, 2011, 06:58:31 PM
 #19

Quote from: jon_smark
Inflato-coin has an inflation rate that asymptotically approaches 1% or 0% or whatever small number without ever actually being 0%.

Bitcoin has an inflation rate that asymptotically approaches 0%...

That would only be true if new blocks were to produce new coins indefinitely, either with the same amount (50BTC) or with a decreasing amount.  The current algorithm will cut that amount in half every N blocks until it reaches a point where new coin generation will cease altogether. At that point the inflation rate will be effectively 0%, not asymptotically approaching 0%.
Findeton
Full Member
***
Offline Offline

Activity: 126


View Profile
June 07, 2011, 07:04:45 PM
 #20

If price goes down, everybody (me included) will start buying again. If price stays stable, more businesses will use it. So price in the long term will increase as long as bitcoin miners do their part in maintaining a secured transaction network, which will happen because difficulty adjusts to network hashing capacity.

Bitcoin Weekly, bitcoin analysis and commentary

14DD7MhRXuw3KDuyUuXvAsRcK4KXTT36XA
Pages: [1] 2 3 »  All
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!