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Author Topic: Bitcoin will never be as good as gold and why ultimatly it will fail.  (Read 8825 times)
Etlase2
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October 25, 2011, 02:22:28 AM
 #41

There is incentive for people to move to the new P2P currency as in the early stages it is more profitable to generate P2P currency and as you have seen in bitcoins, the early adopters made the most money.

...

This process will continue on indefinitely until all P2P currency is worthless. At the end of P2P currencies life, there could be millions of different competing P2P currencies.

...

If you have bitcoins, you'd be a fool not to sell them at $30.

Prescience and old post aside, I'd like to point out that a P2P currency can only become diluted and worthless if there is incentive to copy it because of the get-rich-early scheme employed by bitcoin and it's 6 or 7 some-odd near exact duplicates nowadays.

A currency that is always difficult to produce, and is only produced when demand is high, would not suffer from the same ills. Feel free to check out my ideas for a currency backed by electricity and secured by a reputation-based consensus.

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rahl
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November 08, 2011, 07:35:43 AM
 #42

There is incentive for people to move to the new P2P currency as in the early stages it is more profitable to generate P2P currency and as you have seen in bitcoins, the early adopters made the most money.

People might think it is more fun to mine if they get more coins but they will all fail unless they are actually better. There is no reason for any trade to move into an identical currency. For the same reason half the people don't move away from Facebook if you where to start an identical Facebook clone...

Merchants have costs for starting to accept a new currency and for each additional currency they trade in. So why would they ever start accepting an identical currency to one they have that have no users? Bitcoin has the network effect advantages that the new currency will not have and thus remain superior.

Platina is actually a better money metal then gold already.

There is a little-bit more of it on the planet then gold, it has much the same dispersion so it is difficult to extract in large quantities anywhere. It has a higher melting point, same resistance to corrosion and it is harder then gold making it overall more durable as coins.
It is fairly recently we figured out how to refine and to melt platina metals properly. They became popular jewelry especially in Japan. But monetary platina has never really been a big hit. The small advantage of platina coins being a little more difficult to scratch (but still rather soft) is just not enough to overcome the network effects of gold.

finway
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November 08, 2011, 09:18:49 AM
 #43

users are gold.

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November 08, 2011, 09:35:31 AM
 #44

Selling them at $30 would be foolish and way too early. Bitcoin is only just starting to emerge and will continue to rise in price for as long as people have interest in it.

Wow, you look pretty silly right about now huh?  Grin
Necrobumping is a pretty good indicator on the collapse of an online community.

Necrobumping. The fact that I understand that term makes me question my sanity. Responding to people that may no longer even be reading this forum makes this medium even more interesting. I think that's the point of Bitcoin. It doesn't care if you think it is relevant, Bitcoin just keeps going for those that believe. The Bitcoin "community" understands that time is on our side.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 08, 2011, 02:50:05 PM
 #45

While there are other cyrpto currencies there are also other istopes which could be used as a currency however only Gold (and to lesser extent Silver) was any usage.  Sure if price of Gold was too high a country prior to the abolishment of Gold standard could have fixed their currency to copper, or tin, or Helium3 however Gold was the recognized elemental currency leader.

Bitcoin is in the same position. Unless a crypto-currency is significantly superior to Bitcoin they market cap for that alt-coin will be a tiny rounding error with Bitcoin picking up 99% of market volume.  If the only reason to pick xCoin over Bitcoin (especially say 8 years from now when Bitcoin is a decade old) is too get rich quick then consumers won't adopt it and merchants won't accept it.  My guess is over time the effective lifespan of alt coins will decrease as the pump & dump cycle tightens.   That will only strengthen Bitcoin as "THE standard".  Now if something vastly superior comes along it may replace Bitcoin.  Just like if some massive reserve of gold (like 10x all gold mined so far in human history) is found or some lost cost method to synthesis gold is created, gold would be replaced with some other element as the defacto "standard".

There are about 100 or so isotopes which have no significant industrial use that could be used as a currency yet only Gold/Silver remain.  It is the ebay effect for crypto-currencies.  Ebay came first.  Ebay got big.  Ebay has problems but 99% of consumers will use ebay thus if you want to sell a lot of "something" in auctions likely you need to use ebay.  Other auction houses are niche at best because that first mover advantage is hard to overcome.  As long as Bitcoin is "good enough" it will be the eBay of currencies.
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November 08, 2011, 08:37:56 PM
 #46

...
Bitcoin is in the same position. Unless a crypto-currency is significantly superior to Bitcoin they market cap for that alt-coin will be a tiny rounding error with Bitcoin picking up 99% of market volume.  If the only reason to pick xCoin over Bitcoin (especially say 8 years from now when Bitcoin is a decade old) is too get rich quick then consumers won't adopt it and merchants won't accept it.  My guess is over time the effective lifespan of alt coins will decrease as the pump & dump cycle tightens.   That will only strengthen Bitcoin as "THE standard".  Now if something vastly superior comes along it may replace Bitcoin.  Just like if some massive reserve of gold (like 10x all gold mined so far in human history) is found or some lost cost method to synthesis gold is created, gold would be replaced with some other element as the defacto "standard".

There are about 100 or so isotopes which have no significant industrial use that could be used as a currency yet only Gold/Silver remain.  It is the ebay effect for crypto-currencies.  Ebay came first.  Ebay got big.  Ebay has problems but 99% of consumers will use ebay thus if you want to sell a lot of "something" in auctions likely you need to use ebay.  Other auction houses are niche at best because that first mover advantage is hard to overcome.  As long as Bitcoin is "good enough" it will be the eBay of currencies.

I'm betting that you are right, and in part because, IMHO, Bitcoin seems to be remarkably tight and free of major functional design defects.

I suspect that the most successful alternate crypto-currencies will end up being ones which use Bitcoin pledged as a backing store.  I believe that it should be fairly doable to parse the existing Bitcoin block chain to validate BTC currency base which is pledged as backing to alternate chains.


rahl
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November 09, 2011, 06:10:21 PM
 #47

I suspect that the most successful alternate crypto-currencies will end up being ones which use Bitcoin pledged as a backing store.  I believe that it should be fairly doable to parse the existing Bitcoin block chain to validate BTC currency base which is pledged as backing to alternate chains.

That really doable? I mean would they be actually be re-demable?

I think there is a niche to fill for something like this when it comes to micro-transactions. LiteCoin seems better for micro-transactions then BTC but this would be even better. Then again the need for decentralization is not particular great when it comes to micro-transactions. A central payment house backing with BTC would probably be good enough. They can dump there assets to another server fast enough and even if everyone loose everything in a micro-payment service it is not that big of a deal.

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November 09, 2011, 07:02:28 PM
 #48

I suspect that the most successful alternate crypto-currencies will end up being ones which use Bitcoin pledged as a backing store.  I believe that it should be fairly doable to parse the existing Bitcoin block chain to validate BTC currency base which is pledged as backing to alternate chains.

That really doable? I mean would they be actually be re-demable?

Not redeemable, at least on the basis only of the public block chain, but some other methods may (or may not) be employed to make that possible.

I envision a situation where (say) I as a holder of BTC in the 'Satoshi' block chain wish to support an alternate chain for whatever reason.  The reason might be that they pay me a cut of the proceeds of inflation, a cut of the transfer fees, or simply because I agree politically with the structure and operation of the currency system.  Most likely it would be some combination of these in my particular case.

If part of the value of the alternate currency was the BTC backing it, it could be possible to automatically keep tabs on that aspect of the alternate currency's value.  That is what I mean be parsing the 'Satoshi' block chain.

There are a lot of complexities associated with how to implement a 'backing', and what exactly that means.  Would it be demand redeemable for BTC?  Under what conditions may the backers withdraw their support?  That kind of thing.  I see a bewildering array of possible structures.  I'm hoping that some of them end up being explored and the process of evolution arrives at a solution which works well for everyone (and most well for the actual users of a currency base, or at least better for these people than our current debt-based currency regimes.)

I think there is a niche to fill for something like this when it comes to micro-transactions. LiteCoin seems better for micro-transactions then BTC but this would be even better. Then again the need for decentralization is not particular great when it comes to micro-transactions. A central payment house backing with BTC would probably be good enough. They can dump there assets to another server fast enough and even if everyone loose everything in a micro-payment service it is not that big of a deal.

One of the reasons why the idea of an array of 'specialty' crypto-currencies appeals to me is that I think it would allow the general 'distributed' scheme to scale to an immense size and be a legitimate and compelling alternative to state sponsored solutions which I fear will be presented as 'our only way forward' in the event of some sort of crisis.

I agree with your point about the practicality of centralization in some areas a family of currency systems, but I very much would like to see the actual core remain decentralized.



johnyj
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November 10, 2011, 02:12:16 PM
 #49

People's behavior changes over time, my father's generation can not imagine children today sitting before a computer surfing all day, internet based consumption need a internet based currency, but the limited amount of BTC supply is really a problem and may ultimately fail it

DeathAndTaxes
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Gerald Davis


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November 10, 2011, 02:28:06 PM
 #50

People's behavior changes over time, my father's generation can not imagine children today sitting before a computer surfing all day, internet based consumption need a internet based currency, but the limited amount of BTC supply is really a problem and may ultimately fail it

BTC Supply isn't limited.

There are 2,100,000,000,000,000 Bitcoin units.  That's enough for 350,000 Satoshis for every man woman and child on the planet.  The protocol can support divisions smaller than 1E-8 so if it became a problem we could just use smaller units.
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