hgmichna
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October 02, 2013, 07:27:42 AM |
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… And like some one else has already stated "lost coins" aren't truly lost, we just don't care or have the technology yet to recover them. As things are, there is no possible way of detecting "lost coins", short of asking every person and every computer in the whole world whether any apparently "lost coins" are his or hers or its. We would need new and very different rules to determine what a lost coin is, for example, that all bitcoins have to be moved from one account to another at least once every year. Then we could state that a bitcoin that has not been moved in a year is a "lost coin".
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DannyHamilton
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October 02, 2013, 12:58:20 PM |
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So you think it will take another 127 years to mine??
Give or take a few years, yes. What makes you think it will take another 127 years to mine the rest of the bitcoins?
A reasonably good understanding of the bitcoin protocol. And a decent ability to handle basic mathematics. - The subsidy that releases new bitcoins into the bitcoin network started at 5,000,000,000 satoshi.
- It is reduced by half (rounding down to the nearest full satoshi) every 210,000 blocks until the subsidy is 0.
- If you do the math, you'll find that the last satoshi will be mined in block number 6,930,000
- So far there have been 261,273 block (as of the writing of this post).
- That leaves 6,668,727 blocks until the last satoshi is mined.
- The protocol adjusts the mining difficulty every 2016 blocks to attempt to keep the rate of block creation as close to 2016 blocks per fortnight as possible.
- 6,668,727 divided by 2016 is 3,308 fortnights.
- There are 26 fortnights per year.
- 3,308 divided by 26 is 127 years.
Which part of that did you think I got wrong? Let's revisit this statement in another year shall we?
If you like, sure. I don't expect the subsidy rules of the protocol to change significantly in a year, do you?
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whitslack (OP)
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October 02, 2013, 01:04:02 PM |
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Due to the error between the actual hash rate and the hash rate upon which the difficulty is based, it's likely that we will reach block 6,930,000 a little bit ahead of "schedule," but not by much — maybe a year or two.
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nuffsaid420
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October 02, 2013, 07:55:04 PM |
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A reasonably good understanding of the bitcoin protocol. And a decent ability to handle basic mathematics. - The subsidy that releases new bitcoins into the bitcoin network started at 5,000,000,000 satoshi.
- It is reduced by half (rounding down to the nearest full satoshi) every 210,000 blocks until the subsidy is 0.
- If you do the math, you'll find that the last satoshi will be mined in block number 6,930,000
- So far there have been 261,273 block (as of the writing of this post).
- That leaves 6,668,727 blocks until the last satoshi is mined.
- The protocol adjusts the mining difficulty every 2016 blocks to attempt to keep the rate of block creation as close to 2016 blocks per fortnight as possible.
- 6,668,727 divided by 2016 is 3,308 fortnights.
- There are 26 fortnights per year.
- 3,308 divided by 26 is 127 years.
Which part of that did you think I got wrong? Let's revisit this statement in another year shall we?
If you like, sure. I don't expect the subsidy rules of the protocol to change significantly in a year, do you? Ok, I am not exactly sure how this works, so please excuse my ignorance. Would it not be possible to bring online with new technology some mining rigs that do Petahash/s(PT/s) soon? and after that... the machines catch up to and surpass the difficulty level? So Bitcoin was inherently created to only give out so many BTC based on TIME not difficulty?? So even if we find ourselves with a machine that can do 600000000000 MHash/s it would still take 127 years?
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whitslack (OP)
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October 02, 2013, 07:57:00 PM |
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Ok, I am not exactly sure how this works, so please excuse my ignorance. Would it not be possible to bring online with new technology some mining rigs that do Petahash/s(PT/s) soon? and after that... the machines catch up to and surpass the difficulty level? So Bitcoin was inherently created to only give out so many BTC based on TIME not difficulty?? So even if we find ourselves with a machine that can do 600000000000 MHash/s it would still take 127 years?
The monster machine would very quickly chew through as many as 2016 blocks (at most), at which point the difficulty would readjust, and the monster machine would be back to creating one block every ten minutes. It would barely affect the pace of bitcoin production overall.
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DannyHamilton
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October 02, 2013, 08:09:17 PM |
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Ok, I am not exactly sure how this works, so please excuse my ignorance.
Not a problem. None of us know anything until we learn it. Just try not to be so confrontational when you know that you aren't exactly sure how something works. It might have been better to simply ask why it would take 127 years and skip the whole "Let's revisit this statement in another year shall we" part. Would it not be possible to bring online with new technology some mining rigs that do Petahash/s(PT/s) soon?
Sure. And at first they'd solve blocks very quickly. Then within 2016 blocks the difficulty would be adjusted so that blocks would return to occuring at intervals of approximately 10 minutes each. and after that... the machines catch up to and surpass the difficulty level?
Difficulty level just adjusts again every 2016 blocks. The faster the network is hashing, the higher the difficulty. The opposite is also true. If it takes more than a fortnight to create 2016 blocks, then the difficulty will be adjusted down to speed the block creation back up to 2016 blocks per fortnight. So Bitcoin was inherently created to only give out so many BTC based on TIME not difficulty??
Yes, bitcoin is designed to give out so many bitcoins per block, and is designed to try to keep the average time between blocks as close to 10 minutes as can be done with adjustments made every 2016 blocks. Difficulty is used to adjust the average amount of time it is likely to take to solve a block, so it plays a roll. So even if we find ourselves with a machine that can do 600000000000 MHash/s it would still take 127 years?
Approximately (give or take a few years), yes.
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polarhei
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October 14, 2013, 08:39:39 AM |
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I think the being is based on gold. Only deflation will be.
Silver also be,too
But not crude oil and polythene based as there are ways for absolutely inflation by using germs,plants and iterations for it.
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wachtwoord
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October 29, 2013, 05:59:39 PM |
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Eventually that little line on your graph will level out. Once all BTC are mined and in the hands of bearers, inflation will be impossible because the amount of BTC is FINITE!
True, but since that is approximately 127 years away, can we assume that the bitcoin supply will be inflationary for the entire lifetime of anyone alive today? I suppose it depends on whether you count "lost coins" as a reduction in supply against the generation of new coins, and how high the rate of lost coins is in any given year. No, we can assume Bitcoin is not inflationary at all but has a constant of 21M BTC outstanding. That some of the Bitcoins haven't been given out yet is irrelevant.
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DannyHamilton
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October 29, 2013, 07:25:16 PM |
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Eventually that little line on your graph will level out. Once all BTC are mined and in the hands of bearers, inflation will be impossible because the amount of BTC is FINITE!
True, but since that is approximately 127 years away, can we assume that the bitcoin supply will be inflationary for the entire lifetime of anyone alive today? I suppose it depends on whether you count "lost coins" as a reduction in supply against the generation of new coins, and how high the rate of lost coins is in any given year. No, we can assume Bitcoin is not inflationary at all but has a constant of 21M BTC outstanding. That some of the Bitcoins haven't been given out yet is irrelevant. I don't think that's how markets work.
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rampalija
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November 02, 2013, 11:44:40 PM |
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thx for graphs, if they could only tell us the price of BTC ![Cheesy](https://bitcointalk.org/Smileys/default/cheesy.gif)
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deisik
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November 06, 2013, 10:08:48 AM Last edit: November 06, 2013, 11:47:50 AM by deisik |
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By your calculations, 2030 could possibly be the year that bitcoin will be 100% the dominant currency, fiat will be completely obsolete, hopefully used as toilet paper. This would also be the point where those initial single 1 bitcoin pieces will be worth a small fortune.
Old post (still reading) but it seems that the utmost problem of bitcoin (the fatal depth of which people don't understand yet) lies in its deflationary nature, so its ultimate doom appears to be some marginal asset like gold (if it doesn't fade into non-existance entirely) - costs a lot but fails as a currency
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deisik
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November 06, 2013, 11:12:12 AM Last edit: November 06, 2013, 11:47:03 AM by deisik |
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Inflation and deflation are 2 sides of the same coin. Both are bad for participants in the economy, through no fault of their own. Either way, some sectors of the economy benefit unfairly and some suffer unfairly. You can't say that deflation is good and inflation is bad. It doesn't work like that. They're both bad No, deflation is flat out damaging for the economy (Great Depression as an obvious example). The same is not true for inflation The changing itself of the value of money up or down as the change works its way unevenly through the economy is what hurts people. Both inflation and deflation change the value of money.
Not quite so. The changing value of money may hurt some people, it may even hurt the majority of people, but at the same time it may be healthy for the economy as a whole, being a lesser evil. Actually it all depends
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deisik
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November 06, 2013, 11:41:36 AM |
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Regarding the assertion that the amount of money in circulation should grow in proportion to the population, although on the surface that seems like a reasonable system, it actually steals wealth from individuals. The key point to realize is that, even if prices are holding absolutely steady over time, it can still be true that your wealth is being stolen from you. The natural tendency, given advancements in technology and improvements in efficiency of production, is for prices to decline. We see that natural tendency most exemplified in the high-tech sector. Computers are continually getting cheaper. This is only because the high-tech sector is advancing at such a rapid pace. The slower moving sectors of the economy do not demonstrate price deflation because monetary inflation is offsetting it. If we had a constant money supply, everything would be getting cheaper over time. The fact that we are seeing prices remaining relatively stable indicates that we are having our wealth stolen from us insidiously through monetary inflation. I opted out of that dishonest system by moving most of my savings into Bitcoin. I don't want to see Bitcoin fall into the same criminal pattern as the fiat currencies The fallacy of this logic is that it doesn't take into consideration the other part of the equation. You take just one side - the side of the Consumer and keep away from the side of the Producer
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hgmichna
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November 06, 2013, 11:44:24 AM |
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No, deflation is flat out damaging for the economy (Great Depression as an obvious example). The same is not true for inflation This is certainly true for hyper-deflation. It is not true for moderate deflation. One example is the deflation we currently have on computer-based products. The argument that people do not spend their money in a deflation, because the money will be worth more in the future, is simply not true. If people thought that way, they would never buy a computer or a mobile phone, but they do. Add to that the fact that human life is of limited length, so humans have to spend their money before they die. You cannot always wait for tomorrow. I still think that the deflationary tendency of bitcoin is damaging, for example because it creates speculative price bubbles. I wish that Satoshi Nakamoto had thought of that and dropped the idea of halving production every four years. I believe bitcoin would have worked better without any halving.
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whitslack (OP)
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November 06, 2013, 11:54:09 AM |
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I still think that the deflationary tendency of bitcoin is damaging, for example because it creates speculative price bubbles.
What creates price bubbles is not the deflationary nature of Bitcoin (which we aren't even observing yet); it's the fact that the supply is perfectly inelastic. With most commodities, when a speculative price bubble begins to form, profit motive drives production to increase, and the increasing supply counteracts the growth in price. But Bitcoin is different: no matter what the price does, the production is always at an approximately constant rate. Thus, there is no moderating effect on an increasing price, and we get speculative price bubbles. I personally believe we will continue seeing this "plateau-ramp-crash" cycle throughout Bitcoin's adoption. However, I do think it will moderate in amplitude as the market grows.
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hgmichna
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November 06, 2013, 12:06:58 PM |
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I still think that the deflationary tendency of bitcoin is damaging, for example because it creates speculative price bubbles.
What creates price bubbles is not the deflationary nature of Bitcoin (which we aren't even observing yet); it's the fact that the supply is perfectly inelastic. With most commodities, when a speculative price bubble begins to form, profit motive drives production to increase, and the increasing supply counteracts the growth in price. But Bitcoin is different: no matter what the price does, the production is always at an approximately constant rate. Thus, there is no moderating effect on an increasing price, and we get speculative price bubbles. I personally believe we will continue seeing this "plateau-ramp-crash" cycle throughout Bitcoin's adoption. However, I do think it will moderate in amplitude as the market grows. If it ever does. The actual bitcoin market, in which bitcoins are used to pay for goods and services, is tiny and would currently only warrant a bitcoin price below $10. All the rest is people who buy bitcoins because their price goes up, and the price goes up because they buy bitcoins—the perfect vicious circle, producing a huge price bubble. When this bursts, i.e. when they begin to sell bitcoins because their price goes down, and the price goes down because they sell bitcoins, it will not be a pretty sight. Unfortunately I am pretty much unable to predict when a price bubble will burst, so at this time I can only sit on the fence and wonder. But I'd be grateful for any ideas on predicting price bubbles.
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deisik
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November 06, 2013, 12:32:34 PM Last edit: November 06, 2013, 12:48:25 PM by deisik |
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This is certainly true for hyper-deflation. It is not true for moderate deflation. It is true even for moderate deflation provided all other things being equal (or constant). In real life, yes, it can be offset by technological advances or scientific break-throughs. But once you get into a deflationary spiral (which starts as you may well guess from ever small deflation) you have not many options available to break out (WWII as such a breakout)
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whitslack (OP)
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November 06, 2013, 12:38:42 PM |
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But once you get into a deflationary spiral (which starts as you may well guess from ever small deflation) you have not much options available to break out (WWII as such a breakout)
Why would you want to break out? Having my savings continually gaining value doesn't sound so bad.
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deisik
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November 06, 2013, 12:38:58 PM Last edit: November 06, 2013, 01:03:03 PM by deisik |
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One example is the deflation we currently have on computer-based products. The argument that people do not spend their money in a deflation, because the money will be worth more in the future, is simply not true. If people thought that way, they would never buy a computer or a mobile phone, but they do. Your example confirms what I said before about technological progress. It is not "real" deflation Add to that the fact that human life is of limited length, so humans have to spend their money before they die. You cannot always wait for tomorrow You seem to not know people very well. Heaps of precious metals/coins are passed from generation to generation. There is even a term "old money"
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deisik
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November 06, 2013, 12:45:25 PM |
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But once you get into a deflationary spiral (which starts as you may well guess from ever small deflation) you have not much options available to break out (WWII as such a breakout)
Why would you want to break out? Having my savings continually gaining value doesn't sound so bad. Because you think only from a consumer's point of view. It's not bad for one person (may be even for two or two thousand) but it is very bad for the economy as a whole. Take the side of a producer and you will get a clue
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