a flaw in the 21 million BTC?

[Bitconian]

hey there!

I hope you can solve this issue that it's in my head. There is one thing I can't understand.

In the future there will be only 21 million BTC, right?  Let's pretend that we already have those 21 million out there. (I know it'd be in 2033, but bear with me

Right now the value is 1 BTC = $14, that would make $294 millions, if we hit $100 per BTC this year, that would be $2,1 Billions on BTC. Correct?

That's not enough money for a worldwide currency...my question is, how the btc is going to compete against others currency that has more value?  Shouldn't the BTC be at least the gross domestic product (GDP) of a small country?

Having the 21 millions of BTC =  $2,1 Billions (when it reaches the $100 per BTC), any of the richest men in the world could buy ALL of bitcoins (bill gates has over $61 Billions) and there won't be any more BTC for the rest of us. They could never transfer their whole fortune into BTC (if they want to), but they can do that now with other currencies.  Shouldn't any currency in the world have enough value to gather at least the richest men's fortune?

Even if the BTC rise to the 1 BTC = $10,000, which is HUGE, that would be $210 billions.... that'd be only the top 4 of the richest men.

And also, no country would take btc as currency when there is no enough supply. The GDP of the US is $15,290 billions and Kazakhstan (at #50 in the world) has a GDP of $219 Billions. Still more than BTC when (and if) it reaches $10,000 per BTC.

I know it can be divided into 9 digits, but to get to the point as a dollar, euro or pound where the standard is 3 digits (1 dollar = 100 cents), if in any future, a 0,00000001 BTC = 1 cent, that would make the 1 BTC = $1 million and I don't see that possible...I wish, because if that happens, many of us here would be millionaire

don't get me wrong...I'm NOT against BTC, I love BTC, it's just something that I don't understand how it will work in the future.

Thanks!

[mccorvic]

Bitcoins are divisible to eight decimal places. When BTC become valuable enough people will stop trading in BTC and use mBTC (.001BTC). After that, they'll trade in Satoshis (0.00000001 BTC).

There is no problem here

[hardcore-fs]

Or it could go the other way...... where 21 million bitcoins is worth a buck........

[DannyHamilton]

. . . if in any future, a 0,00000001 BTC = 1 cent, that would make the 1 BTC = $1 million and I don't see that possible . . .

And yet if bitcoin ever reaches mainstream use, this is exactly the sort of thing that will happen.  Why don't you see it as possible?

[DeathAndTaxes]

What is with this all or nothing thinking lately?

Lets say Bitcoin "only" rises to a monetary base of $10B USD equivalent with $100B in annual transactions making it larger (in terms of transaction value) than PayPal, Western Union, MoneyGram, GreenDot, Discover and Amex combined?  Is that a failure?  OH NOES Bitcoin out of nothing, became the largest money transfer system on the planet.  Nope it didn't become the one world currency so lets pull the plug and mark it up as a failure?

Is the value of gold = combined sum of net worths of everyone in the world?  Nope?  I guess Gold as a mechanism for storing wealth has "failed" too.

[remotemass]

I guess that even if all the money in circulation was traded for the 21 million bitcoins, 1 satoshi would still be worth less than what you can buy today with 0.001 USD.
Or, the other way around, if you want 2100000000000000 Satoshis * 0.001 USD = 2.1 trillion USD
There is more money in circulation than 2.1 trillion USD. Maybe something like 21 trillion, actually.
So yeah, with 1 satoshi you would buy what you can buy now with 0.01 USD.
And actually I heard someone in a recent bitcoin conference suggesting that Satoshi Nakamoto might have based his number on this.
No idea why he chose 21 million instead of 98 million, though... 21st Century, the new Millenium... who knows,?

[JoelKatz]

That's not enough money for a worldwide currency...my question is, how the btc is going to compete against others currency that has more value?  Shouldn't the BTC be at least the gross domestic product (GDP) of a small country?

Having the 21 millions of BTC =  $2,1 Billions (when it reaches the $100 per BTC), any of the richest men in the world could buy ALL of bitcoins (bill gates has over $61 Billions) and there won't be any more BTC for the rest of us. They could never transfer their whole fortune into BTC (if they want to), but they can do that now with other currencies.  Shouldn't any currency in the world have enough value to gather at least the richest men's fortune?

If something is scarce, its value will increase. If there's a great demand for bitcoins relative to supply, the price will go up.

[DannyHamilton]

. . . No idea why he chose 21 million instead of 98 million, though... 21st Century, the new Millenium... who knows,?

I could be wrong, but I get the impression that he didn't choose 21 million.  He chose 50BTC as a block reward and then chose to cut that reward in half every 210,000 blocks.  If you do the math, that just happens to work out to a bit less than 21 million (20999999.97690000 to be exact).

[hardcore-fs]

bloody stupid..... 100 BTC would have saved all the bullshit with needing ASICS so soon

[DeathAndTaxes]

bloody stupid..... 100 BTC would have saved all the bullshit with needing ASICS so soon

What?  You do understand units are completely arbitrary.  If there were twice as many coins each coin would be worth half as much and as such the total value would still be the same.  Likewise Satoshi could have made the block reward 500,000 BTC and each BTC while low in value would make up for it in quantity.   Instead of someone being willing to sell a silver coin for ~3BTC they might ask for 30,000 BTC.  The first 10,000 BTC pizza probably would have been more like the first 100,000,000 BTC pizza.

Your claim would be like saying if only there were 9 inches in a foot instead of 12 inches then I would be 7 foot tall and thus be tall enough for the NBA. Obviously then the best basketball players wouldn't be 7ft to 8ft they would be 10ft to 11ft tall.  If the minimum wage in the US was increased to $50 billion a year would everyone have the lifestyle of a billionaire now or would milk simply cost $20B a gallon?

[jl2012]

Why similar idea is raised repeatedly and repeatedly. If at the very beginning Satoshi had decided the total supply as 21 billion BTC instead of 21M and started with 50k reward per block, the exchange rate today would be $0.014/BTC instead of $14/BTC. If he started with 21k BTC, the exchange rate today would be $14k/BTC. It's arbitrary.

[LoweryCBS]

Perhaps bitcoin's destiny is to be the gold standard for some other money.

I predict another digital currency at some point (perhaps with reversible transactions, or with the possibility for fractional-reserve lending) that uses bitcoin as its backing (pegged to the value of, and always exchangeable for, bitcoins)

Say it's called a NEUBUX, and 10,000 NEUBUX = 1 BTC. If a bank has 10,000 BTC on deposit, and maintains a 10% reserve on loans, it could lend out 1,000,000,000 NEUBUX to borrowers. The bank could issue a NEUBUX credit card, with reversible charges built into the system.

After all, GOLD transactions are not reversible. Nor is GOLD suitable for fractional reserve lending. But the currencies based on gold are.

[DannyHamilton]

. . . After all, GOLD transactions are not reversible. Nor is GOLD suitable for fractional reserve lending. But the currencies based on gold are.

There are still currencies based on gold?

And transactions using these currencies are reversible?

[payb.tc]

while the initial numbers may have been arbitrarily chosen there was still a major psychological effect (and related media buzz) when it first passed $1 and $10.

if there were to be 21 Billion BTC, i think the historical charts would look a lot different, and we might be at something completely different from $0.014 today.

[DannyHamilton]

while the initial numbers may have been arbitrarily chosen there was still a major psychological effect (and related media buzz) when it first passed $1 and $10.

if there were to be 21 Billion BTC, i think the historical charts would look a lot different, and we might be at something completely different from $0.014 today.

Perhaps, but I guess we'll never know if a slower growth in popularity and recognition would have been better or worse for bitcoin.

[Bitconian]

Thanks guys for the wonderful answers!

Let me ask you a few more questions if you don't mind. And again, I'm asking for the sake of wisdom and I don't mean disrespect to anybody.

Bitcoins are divisible to eight decimal places. When BTC become valuable enough people will stop trading in BTC and use mBTC (.001BTC). After that, they'll trade in Satoshis (0.00000001 BTC). There is no problem here

I know, but that doesn't solve the problem of the value, even if we start using satoshis. If the value of the total 21 millions is around 2 billions, that's not enough money for rich or banks to move their money over this currency, because there is not enough BTC to do that.

Or it could go the other way...... where 21 million bitcoins is worth a buck........

We hope not! 

. . . if in any future, a 0,00000001 BTC = 1 cent, that would make the 1 BTC = $1 million and I don't see that possible . . .

And yet if bitcoin ever reaches mainstream use, this is exactly the sort of thing that will happen.  Why don't you see it as possible?

Why do you? Honestly, I'd like to know. I just don't think is that possible because it has never happened with any other currency in the world (1 currency = $100,000), why would it happen to BTC? (I hope you are right

Lets say Bitcoin "only" rises to a monetary base of $10B USD equivalent with $100B in annual transactions making it larger (in terms of transaction value) than PayPal, Western Union, MoneyGram, GreenDot, Discover and Amex combined?  Is that a failure?  OH NOES Bitcoin out of nothing, became the largest money transfer system on the planet.  Nope it didn't become the one world currency so lets pull the plug and mark it up as a failure?
Is the value of gold = combined sum of net worths of everyone in the world?  Nope?  I guess Gold as a mechanism for storing wealth has "failed" too.

How can you come up with $100B? is the 21 millions btc = $10B, why is $100B in annual transactions? Sorry, but I have no idea how that works.

I guess that even if all the money in circulation was traded for the 21 million bitcoins, 1 satoshi would still be worth less than what you can buy today with 0.001 USD.
Or, the other way around, if you want 2100000000000000 Satoshis * 0.001 USD = 2.1 trillion USD
There is more money in circulation than 2.1 trillion USD. Maybe something like 21 trillion, actually. So yeah, with 1 satoshi you would buy what you can buy now with 0.01 USD.

so, are you guessing that bitcoins can reach the ratio 1 BTC = $100,000?

Why similar idea is raised repeatedly and repeatedly. If at the very beginning Satoshi had decided the total supply as 21 billion BTC instead of 21M and started with 50k reward per block, the exchange rate today would be $0.014/BTC instead of $14/BTC. If he started with 21k BTC, the exchange rate today would be $14k/BTC. It's arbitrary.

But it seems more believable to see that a  $0.014/BTC can reach a $10/BTC in the future than a $14/BTC becoming a $14000/BTC.

Again, it's just "hard" to believe that if you have a wallet of 10 BTC ($140 today), that can become (in the future) a $1,000,000


thank you all!
B.

[DeathAndTaxes]

I think you are confusing certainty with possibility.

Is it possible the money supply of Bitcoin is someday worth billions, or even trillions?  Sure.  Is it certain?  No.

Nobody knows what the future holds for Bitcoin.  It could die off, it could remain a small marginalized darknet tool, it could be fringe mainstream with millions of users, it could become completely mainstream with billions of users and trillions in market cap.  Nobody knows for sure.  Plenty of people have ideas but nobody knows with absolute certainty.  Your posts seem to indicate because nobody knows the future it isn't possible.

[paybitcoin]

With division down to 8 decimal places, There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of BTC is dictated by supply and demand, and can go up and down. Super crazy exchange rates have happened many many times in the past with other currencies, see this article on hyperinflation for some examples...

Zimbabwe is a recent case, with hyperinflation since 1980 which had 10 000 000 000 000 000 000 000 000 ZWL = 1 ZWD, and today 361 ZWD = 1 USD...

[jl2012]

if there were to be 21 Billion BTC, i think the historical charts would look a lot different, and we might be at something completely different from $0.014 today.

But it seems more believable to see that a  $0.014/BTC can reach a $10/BTC in the future than a $14/BTC becoming a $14000/BTC.

Again, it's just "hard" to believe that if you have a wallet of 10 BTC ($140 today), that can become (in the future) a $1,000,000

Yes but that's purely psychological. The long-term fair market-cap should be more or less the same

[adamstgBit]

Remember the 8 decimals is not set in stone we could easily make it 16 decimals
put that in your pipe and smoke it!

 

the problem is not that we can't fit the worlds economy into bitcoin ( we can ... even with only 8 decimals )
the problem is having the network process all the worlds transactions every sec of every day.

[DannyHamilton]

Remember the 8 decimals is not set in stone we could easily make it 16 decimals . . .

That really depends on your definition of "easily".  The 8 decimals may not be set in stone, but they are set in the blockchain and the protocol.

[adamstgBit]

Remember the 8 decimals is not set in stone we could easily make it 16 decimals . . .

That really depends on your definition of "easily".  The 8 decimals may not be set in stone, but they are set in the blockchain and the protocol.

I don't think it would be hard to get everyone to agree to 16 decimals, if it becomes necessary.
adding decimals doesn't really effect bitcoin in any negative way, its not like talking about changing the 21million coin limit.

[remotemass]

I don't think it would be hard to get everyone to agree to 16 decimals, if it becomes necessary.

Would the entire community have to agree in getting the new client/protocol or only something like 51% of the clients?

[adamstgBit]

I don't think it would be hard to get everyone to agree to 16 decimals, if it becomes necessary.

Would the entire community have to agree in getting the new client/protocol or only something like 51% of the clients?

all who agree will move their coins to the new system ( by upgrading the software ) or be left behind in a "dead fork."



anyway, in the far future, i suspect their will be no need for money, humans will have every one of there needs provided for by busty android slave girls.

[niko]

I'll just repeat myself:

There will be a total of 21 million coins. With eight decimals on top of it, we have a total of 2.1E15 indivisible units of account. This is a big number, you know. To put it in perspective, the total of all gold ever mined in the history of humankind is about 150,000 tonnes, or 1.5E11 grams, or 1.5E14 mg of gold. Ever mined. There are fourteen times more bitcoin units than milligrams of gold ever mined. In current prices, one mg of gold is worth about four US cents.

[adamstgBit]

I'll just repeat myself:

There will be a total of 21 million coins. With eight decimals on top of it, we have a total of 2.1E15 indivisible units of account. This is a big number, you know. To put it in perspective, the total of all gold ever mined in the history of humankind is about 150,000 tonnes, or 1.5E11 grams, or 1.5E14 mg of gold. Ever mined. There are fourteen times more bitcoin units than milligrams of gold ever mined. In current prices, one mg of gold is worth about four US cents.

wait a min.

their 21 million coins
each coin can be divied into 8 decimals
so each coins actually represents  100,000,000 units
100,000,000 * 21,000,000 = 2,100,000,000,000,000
IF we want 0.00000001 BTC to be worth no more then 0.001$
this means we can only ever accommodate  2.1 Trillion dollars?

[odolvlobo]

IF we want 0.00000001 BTC to be worth no more then 0.001$
this means we can only ever accommodate  2.1 Trillion dollars?

I agree that there are not enough bitcoins to represent all the money in the world with precision of $0.001, and that is a deficiency. However, the precision of $0.001 may not be necessary. There are no $0.001 coins and nobody (as far as I know) does transactions with that precision. Furthermore, even $0.01 coins are becoming outmoded. I think Bitcoin can get by with a $21 to $210 trillion value.

[adamstgBit]

IF we want 0.00000001 BTC to be worth no more then 0.001$
this means we can only ever accommodate  2.1 Trillion dollars?

I agree that there are not enough bitcoins to represent all the money in the world with precision of $0.001, and that is a deficiency. However, the precision of $0.001 may not be necessary. There are no $0.001 coins and nobody (as far as I know) does transactions with that precision. Furthermore, even $0.01 coins are becoming outmoded. I think Bitcoin can get by with a $21 to $210 trillion value.

I don't want bitcoin to "get by"
if it ever come down to pushing these limits
we will just agree to have 16 decimals.

I (for lack of a better word) pray every night that this actually becomes a issue 

[DeathAndTaxes]

I'll just repeat myself:

There will be a total of 21 million coins. With eight decimals on top of it, we have a total of 2.1E15 indivisible units of account. This is a big number, you know. To put it in perspective, the total of all gold ever mined in the history of humankind is about 150,000 tonnes, or 1.5E11 grams, or 1.5E14 mg of gold. Ever mined. There are fourteen times more bitcoin units than milligrams of gold ever mined. In current prices, one mg of gold is worth about four US cents.

wait a min.

their 21 million coins
each coin can be divied into 8 decimals
so each coins actually represents  100,000,000 units
100,000,000 * 21,000,000 = 2,100,000,000,000,000
IF we want 0.00000001 BTC to be worth no more then 0.001$
this means we can only ever accommodate  2.1 Trillion dollars?

Sure however name a global payment network that allows you to make payments with 0.1 cent precision.  Can you western union $123.001?  ACH? Bank Wire?  Credit Card?  Is there even a need?  I mean 1 cent has a negligible purchasing power (in todays dollars).  Most countries are getting rid of coins with purchasing power around 1 US cent (circa 2012 purchasing power).  The smallest subdivision of the Euro is about 2 US cents in purchasing power, and the smallest subdivision of the Yuan is about 6 US cents in purchasing power.  If 1 satoshi rose to be worth ~$0.05 (in 2012 dollars) that would put the money supply at ~$100 Trillion.  The global money supply (all currencies, all forms) is estimated at ~$80T.    Now all this is academic I don't think Bitcoin will replace all global currencies, but it would be possible and still have $0.05 precision.  Not bad and that is without a fork to add additional units.  It is essentially a non-problem.   Now lets figure out how to grow the economy to $1B before we worry about the second $100T.

[odolvlobo]

I know, but that doesn't solve the problem of the value, even if we start using satoshis. If the value of the total 21 millions is around 2 billions, that's not enough money for rich or banks to move their money over this currency, because there is not enough BTC to do that.

As noted previously, the there are 2.1 quadrillion satoshis, not 2 billion. That is plenty. Also, remember that it is not necessary to have enough currency to represent all the wealth in the world. There only needs to be enough to facilitate transactions. In other words, my house is worth $100,000, but there isn't $100,000 stored somewhere that represents my house.

Why do you? Honestly, I'd like to know. I just don't think is that possible because it has never happened with any other currency in the world (1 currency = $100,000), why would it happen to BTC? (I hope you are right

You don't think it will happen because 1 BTC = $1 million is a lot and it hasn't happened before, but that doesn't mean it won't or that it can't. But the more important answer is that even if it never reaches $1 million, it doesn't mean that Bitcoin has a flaw. It just means that Bitcoin doesn't become the only currency in the world.

The value of gold has gone up by a factor of 50 in only 30 years. Give it another 30 years and it could go up by another factor of 50 to 2500 in 60 years. Another 30 years could be another factor of 50. In your lifetime gold could go up by a factor of 125,000. So, perhaps it is possible that BTC could go up by 100,000 in your lifetime.

How can you come up with $100B? is the 21 millions btc = $10B, why is $100B in annual transactions? Sorry, but I have no idea how that works.

It's just an example, the $10B and $100B numbers are not related. BTW, the ratio of the two is called the "velocity of money".

so, are you guessing that bitcoins can reach the ratio 1 BTC = $100,000?

Any prediction on the value of BTC (in any time frame) is just speculation. Nobody knows with any certainty.

But it seems more believable to see that a  $0.014/BTC can reach a $10/BTC in the future than a $14/BTC becoming a $14000/BTC.
Again, it's just "hard" to believe that if you have a wallet of 10 BTC ($140 today), that can become (in the future) a $1,000,000

Does it seem more believable that  1 yen/BTC could reach 1000 yen/BTC ? If you say no, then you are falling victim to your dollar-based bias. The numbers truly are arbitrary. There is no difference between $0.014 becoming $14 and  $14 becoming $14000.

[payb.tc]

The numbers truly are arbitrary. There is no difference between $0.014 becoming $14 and  $14 becoming $14000.

yep, similarly, there is no difference (as of this moment) bitcoin becoming $100 USD or $94.70 AUD.

one is more psychologically significant for a specific set of people, while another set of people would find $105.58 USD / $100 AUD a more significant milestone.

[JoelKatz]

their 21 million coins
each coin can be divied into 8 decimals
so each coins actually represents  100,000,000 units
100,000,000 * 21,000,000 = 2,100,000,000,000,000
IF we want 0.00000001 BTC to be worth no more then 0.001$
this means we can only ever accommodate  2.1 Trillion dollars?

You don't turn the steering wheel now because your car might be heading for a cliff in thirty years. Relax, if this is every a problem, the solution is well-understood.

[prezbo]

bloody stupid..... 100 BTC would have saved all the bullshit with needing ASICS so soon

There is no need for asics, people want them because the first few to get them will make a pretty decent buck.

[johnyj]

Not all of the people will use BTC, it is a high-end currency that only will be used by a few of people which have enough computer and financial knowledge

[phatsphere]

Let's pretend that we already have those 21 million out there. (I know it'd be in 2033, but bear with me

There won't be 21mio BTC in 2033, and in fact, this limit will never be fully reached.

[lassdas]

IF we want 0.00000001 BTC to be worth no more then 0.001$

The value of BTC is dictated by supply and demand..

The market doesn't care about what we want. 

[Elwar]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

You focus too much on the value of 1BTC.

They could have just as easily called 100BTC "one bitcoin". or .001 "one bitcoin".


In your scenario of the richest man buying all of the Bitcoin of the world...

What would happen if Bill Gates advertised that he was buying all of the Bitcoin of the world? Would you sell your 1 Bitcoin to him for $14/BTC or would you hold out for more? How much would you sell it for if he had all Bitcoin except for your 1 BTC? Would you still only take $14? Or would a couple of million dollars be worth it?

[justusranvier]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

Your example is of a 1,000 times decrease in value.

[DannyHamilton]

I don't think it would be hard to get everyone to agree to 16 decimals, if it becomes necessary.

Would the entire community have to agree in getting the new client/protocol or only something like 51% of the clients?

all who agree will move their coins to the new system ( by upgrading the software ) or be left behind in a "dead fork." . . .

Or, those who agree will move to the dead fork, and the ones who stay behind keep the old system running.

Since there are multiple proposals on how to increase the number of decimal places, perhaps 3 or 4 new forks are created (each subset of users moving to their preferred solution). The majority of users stay behind waiting to see which fork survives before moving.  Those who choose the wrong fork end up with a real financial mess on their hands when all transactions are rolled back to the block where the chain forked.

[Piper67]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

You focus too much on the value of 1BTC.

They could have just as easily called 100BTC "one bitcoin". or .001 "one bitcoin".


In your scenario of the richest man buying all of the Bitcoin of the world...

What would happen if Bill Gates advertised that he was buying all of the Bitcoin of the world? Would you sell your 1 Bitcoin to him for $14/BTC or would you hold out for more? How much would you sell it for if he had all Bitcoin except for your 1 BTC? Would you still only take $14? Or would a couple of million dollars be worth it?

Precisely. If anyone wants all the Bitcoin in the world, they'd have to pry mine from my cold dead hands! 

[MJGrae]

It helps to think of Bitcoin more as a commodity than a currency. As was pointed out previously, gold is a great "store of one's wealth" but that doesn't mean that all of the gold in existence is worth as much or more than the worlds money supply, and it likely never will. Bitcoin will scale in value to the amount of people that want it, and the amount of it there is in circulation.

Another good point that someone brought up is that the annual transaction value is more important than the market capitalization of Bitcoin. Should the Bitcoin "economy" be a 20 trillion economy, it's actually very possible that the total market capitalization could end up being less than 10billion, etc. (These were arbitrary numbers)

It all depends on what people want/use bitcoins for. If it were to become a common currency for digital purchases of all shapes and sizes, the market capitalization would not matter so much, because the "economy" would be an outstanding transfer of dollar value and fuel the market by momentum.

[Phinnaeus Gage]

Perhaps bitcoin's destiny is to be the gold standard for some other money.

I predict another digital currency at some point (perhaps with reversible transactions, or with the possibility for fractional-reserve lending) that uses bitcoin as its backing (pegged to the value of, and always exchangeable for, bitcoins)

Say it's called a NEUBUX, and 10,000 NEUBUX = 1 BTC. If a bank has 10,000 BTC on deposit, and maintains a 10% reserve on loans, it could lend out 1,000,000,000 NEUBUX to borrowers. The bank could issue a NEUBUX credit card, with reversible charges built into the system.

After all, GOLD transactions are not reversible. Nor is GOLD suitable for fractional reserve lending. But the currencies based on gold are.

People claim that Bitcoin is backed by nothing. Imagine a future world where all crypto-currencies are backed by Bitcoin.

[Elwar]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

Your example is of a 1,000 times decrease in value.

A 1,000 increase in the value of a "shave and a haircut" (with regard to the dollar).

[Piper67]

. . . if in any future, a 0,00000001 BTC = 1 cent, that would make the 1 BTC = $1 million and I don't see that possible . . .

And yet if bitcoin ever reaches mainstream use, this is exactly the sort of thing that will happen.  Why don't you see it as possible?

When I was a boy, it seemed impossible to me for a postage stamp to cost one million units of the currency I was living with. Just 10 years later, it turned out you had to shell out one billion units to buy a stamp.

Impossible? That's just a failure of the imagination.

[Vandroiy]

Please, give up comparing backing currency to >M2 currency.

We already have BTC banking, and there will be more of it. Bill Gates does not hold a mountain of dollars! Even if he were to do that, those would be dollars on a bank, which this bank does not actually have -- it has ownership on investments on that scale.

A raw BTC is not the equivalent to a FIAT unit on your bank account, let alone a stock. If Bill Gates wanted to get ten billion USD in cash, do you think a bank would spit out the 100 tons of 100 USD bills? That's just not how it works.

That aside, the OP is still true -- for a mainstream Bitcoin usage, even just for selected purposes, the value of 100 current USD per Bitcoin would be insufficient. The world is pretty big after all.

[justusranvier]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

Your example is of a 1,000 times decrease in value.

A 1,000 increase in the value of a "shave and a haircut" (with regard to the dollar).

Sure, you can look at it from both perspectives but it's better to stay consistent within the conversation. If Bitcoins increases in value as a currency by 1000 times, that the opposite of what the dollar has done in your example.

[Peter Lambert]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

Your example is of a 1,000 times decrease in value.

A 1,000 increase in the value of a "shave and a haircut" (with regard to the dollar).

Am I the only one here who sees the math mistake which keeps getting repeated over and over? You are all talking about a factor of 1000 when it is actually a factor of 100!

[Piper67]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

Your example is of a 1,000 times decrease in value.

A 1,000 increase in the value of a "shave and a haircut" (with regard to the dollar).

Am I the only one here who sees the math mistake which keeps getting repeated over and over? You are all talking about a factor of 1000 when it is actually a factor of 100!

Yeah, he probably meant 1000 percent 

[Peter Lambert]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

Your example is of a 1,000 times decrease in value.

A 1,000 increase in the value of a "shave and a haircut" (with regard to the dollar).

Am I the only one here who sees the math mistake which keeps getting repeated over and over? You are all talking about a factor of 1000 when it is actually a factor of 100!

Yeah, he probably meant 1000 percent 

But that is even more wrong, since it would be a 9900 percent increase.

[MJGrae]

Impossible? That's just a failure of the imagination.

+1

[Elwar]

A shave and a hair cut used to cost 2 bits ($.25).

Now you could get the same for $25.00.

That is a 1,000 times increase.

1 BTC is currently $14/BTC.

Why is it unreasonable that it too could not have a 1,000 times increase?

Your example is of a 1,000 times decrease in value.

A 1,000 increase in the value of a "shave and a haircut" (with regard to the dollar).

Am I the only one here who sees the math mistake which keeps getting repeated over and over? You are all talking about a factor of 1000 when it is actually a factor of 100!

lol...oops

[Rygon]

Perhaps bitcoin's destiny is to be the gold standard for some other money.

I predict another digital currency at some point (perhaps with reversible transactions, or with the possibility for fractional-reserve lending) that uses bitcoin as its backing (pegged to the value of, and always exchangeable for, bitcoins)

Say it's called a NEUBUX, and 10,000 NEUBUX = 1 BTC. If a bank has 10,000 BTC on deposit, and maintains a 10% reserve on loans, it could lend out 1,000,000,000 NEUBUX to borrowers. The bank could issue a NEUBUX credit card, with reversible charges built into the system.

After all, GOLD transactions are not reversible. Nor is GOLD suitable for fractional reserve lending. But the currencies based on gold are.

People claim that Bitcoin is backed by nothing. Imagine a future world where all crypto-currencies are backed by Bitcoin.

But what is gold backed by?  LOL. I'll have  ask that to the next goldbug I see.

[MJGrae]

But what is gold backed by?  LOL. I'll have  ask that to the next goldbug I see.

Gold isn't backed by anything. Gold has value under the assumption that if global economies were to implode tomorrow, that people would still be willing to accept gold as "payment" for goods/services.

The reason they would be willing to accept it, (or at least why this was originally the case) was because ... Are you ready for it? .. It was pretty, and it was rare. And that was why gold had value. People wanted it, and it was controlled. In this case, gold is controlled by natural forces whereas arguably bitcoin is not. However, bitcoin is as close as it gets nowadays to being controlled by natural forces as far as currencies go.

Which is kind of a funny oxy moron, because it's an artificial natural constraint of the algorithm.

[odolvlobo]

I predict another digital currency at some point (perhaps with reversible transactions, or with the possibility for fractional-reserve lending) that uses bitcoin as its backing (pegged to the value of, and always exchangeable for, bitcoins)

Say it's called a NEUBUX, and 10,000 NEUBUX = 1 BTC. If a bank has 10,000 BTC on deposit, and maintains a 10% reserve on loans, it could lend out 1,000,000,000 NEUBUX to borrowers. The bank could issue a NEUBUX credit card, with reversible charges built into the system.

There is no need to have another currency in order to support reversible transactions or fractional reserve banking. Both are easily done with Bitcoin.

Escrow is already a simple way to do reversible transactions. There is no reason you couldn't have a Bitcoin credit card that does chargebacks. Chargebacks are part of the agreement between the CC company and the merchant that accepts the card.

Fractional reserve banking is simply the process in which a bank loans out money that has been deposited. There is no reason it can't be done with Bitcoin. Bitcoin banks would offer an interest rate to encourage people to deposit bitcoins, and then they would loan out the bitcoins at a higher rate.

[furrycoat]

Bitcoin has 8 decimal points, thats plenty to go around for plenty of time

[payb.tc]

Bitcoin has 8 decimal points, thats plenty to go around for plenty of time

i think you meant to say it "ought to be enough for anybody".