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Author Topic: Why the maximum of 21.000.000 bitcoins cannot be enforced  (Read 10484 times)
Stevie1024
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June 13, 2011, 05:29:31 PM
 #61


Addressed in Post #57 above, by me, which I see you chose to ignore.  The argument about "late comers" not accepting "unfair distribution" is ridiculous.  They do, and have.

And if you read my last post (#60) you should know why I chose to do so.

I'm out of here!
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iya
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June 13, 2011, 05:34:08 PM
 #62

Maybe it is accepted by latecomers that early adopters will have spent all their bitcoins by the time 'the distribution curve flattens'. Valid point. Personally I expect the early-adopter advantage to be way too big. (Anyone with 10 bitcoins now, will own more that 99.9% of the world's population can ever hold at the same time.)

That's the core problem: the advantage is simply too big.
To the people who are saying that hording is a bigger problem: How can you not see that this is the reason?
The only "market solution" is for this system to not grow big.
It's like saying communism "works", in that everyone becomes poor and no trade happens.

If you want a viable fixed (i.e., pre-determined and with zero final inflation) alternative solution it would be a "s-curve" for inflation:
Look up how internet adoption grew, how youtube, facebook, twitter, bittorrent and firefox adoption grew, and take something along those lines. This would not have been perfect, but good enough.

Let's explore.

10 BTC is exactly 0.000476% of the total of the 21,000,000 Bitcoins.  
Warren Buffet has $40B in assets.
The US has approximately $900B in circulation (http://www.visualeconomics.com/the-value-of-united-states-currency-in-circulation/).

So, 0.000476% of $900B is $4,284,000.  

Do you think Warren Buffet can get his hands on $4.2M in cash?  Of course he can.  Warren Buffet is also still alive, so he's clearly a "late comer" to the US Dollar Bill.
You're missing that there are people holding 100.000s of Bitcoins, and these people were not rich before.
The introduction of the USD was tied to gold, so there was no huge redistribution during its "birth".
tymothy
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June 13, 2011, 05:43:12 PM
 #63


That's the core problem: the advantage is simply too big.
To the people who are saying that hording is a bigger problem: How can you not see that this is the reason?
The only "market solution" is for this system to not grow big.
It's like saying communism "works", in that everyone becomes poor and no trade happens.

This is not a problem at all. Unless "too big of an advantage" means "people are not willing to use bitcoins and enter the bitcoin economy", there is no issue. So long as people are able to purchase goods in BTC for less than their equivalent value in USDs, it will continue to be rational for people to obtain and use bitcoins.
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June 13, 2011, 05:52:11 PM
 #64

This is not a problem at all. Unless "too big of an advantage" means "people are not willing to use bitcoins and enter the bitcoin economy", there is no issue. So long as people are able to purchase goods in BTC for less than their equivalent value in USDs, it will continue to be rational for people to obtain and use bitcoins.

Yes, it's no problem to use Bitcoins for trading, but they cannot be used by latecomers for saving, which was the intention and would have been at least as important for people, imho.
Rob P.
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June 13, 2011, 05:52:36 PM
 #65

You're missing that there are people holding 100.000s of Bitcoins, and these people were not rich before.
The introduction of the USD was tied to gold, so there was no huge redistribution during its "birth".

How many?  5?  10?  20?  100?  Why do you care?  Does it make your Bitcoins worth less?  If you think so, just go sell one, did you get your ask price?  Everyone who has argued the "unfair distribution" position has done so with the argument that it cannot be overcome for "late comers".  That of course assumes there ARE late comers, which implies that Bitcoins has moved out of the "hacker community" and into mainstream and now people have an issue with those "rich people" who have a lot of coins that they received "relatively easily".

I'm not arguing the introduction of the USD and it being tied to gold.  I'm arguing gold.  

During the California Gold Rush, it was "relatively easy" for people to head to California, grab a pick, climb into the mountains, and mine gold.  Lots of folks got rich doing it.  

Today if I do the same, I won't get anything.  All of the "easy" gold was found and mined.  Am I upset at the prospectors in the 1850s?  Of course not.  They took a risk, they invested time and money, they reaped the rewards.  

How is this different?  I now know Steve won't respond to me, I'd like to understand your position since you seem to agree with him.

Oh.  And who exactly is paying these developers for their time and efforts in maintaining the client software, dealing with bugs, responding in the forums, and maintaining the protocols, websites, and networks we're using for Bitcoins?  Oh yea, no one.  

So, just as I do not begrudge Mark Zuckerberg for being a billionaire because he "founded" Facebook, I don't begrudge the developers and early adopters of Bitcoins for being paper millionaires with their "easy" Bitcoins.  Why do you?

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Stevie1024
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June 13, 2011, 05:56:52 PM
 #66

How is this different?  I now know Steve won't respond to me, I'd like to understand your position since you seem to agree with him.

I'll respond to any post by anyone that is on-topic, does not contain disdain or false accusations.

EDIT: Dammit, did I just respond to a post that had a false accusation?

I'm out of here!
iya
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June 13, 2011, 06:01:32 PM
 #67

So, just as I do not begrudge Mark Zuckerberg for being a billionaire because he "founded" Facebook, I don't begrudge the developers and early adopters of Bitcoins for being paper millionaires with their "easy" Bitcoins.  Why do you?

I don't begrudge anybody. I'm a libertarian at heart, but also a realist. It would be sad if Bitcoin failed for this reason, as it could have been easily avoided with a slightly less early advantage.
It's also true that it's one of the reasons for Bitcoins current popularity. With a "zero redistribution" policy it might never have taken off. It's basically trading short term for long term growth.
gigabytecoin
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June 13, 2011, 06:29:08 PM
 #68

Before I listen to anything you say, do you have any credentials that are worth noting?

Well, if it is about credentials here more than about what I have to say: I did graduate in IT at university.

You went through all of university without ever hearing the word "fallacy"? God help us.
Rob P.
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June 13, 2011, 06:43:54 PM
 #69

I don't begrudge anybody. I'm a libertarian at heart, but also a realist. It would be sad if Bitcoin failed for this reason, as it could have been easily avoided with a slightly less early advantage.
It's also true that it's one of the reasons for Bitcoins current popularity. With a "zero redistribution" policy it might never have taken off. It's basically trading short term for long term growth.

And this is where we'll have to agree to disagree.  Bitcoin adoption is on the rise, not the decline (currently).  I'm a relative "late comer" in that I actually don't OWN any Bitcoins.  Not 1.  But I have no issue with any of the devs or creators owning 10s and 100s of thousands of them.  Why?  Because I see my own opportunities (which I'm actively pursuing), no different than anyone entering any market.  If you measure yourself against those that have gone before, you may never try and succeed.  Before Facebook there was MySpace.  That didn't stop Mark Zuckerberg from founding Facebook.  It inspired him.

Bitcoins are inspirational.  They create opportunities for people.  THAT is why "late comers" will come to the network.  They won't care one wit (and this is where we disagree) that some people who came years and years before them into that network have more than they do.  They will only see their own opportunity to participate and build wealth.

What I *can* guarantee, is that there will be plenty of coins for them to acquire through their own successful opportunities.  You just move the decimal 1 spot to the right and perform a "stock split".  Boom, 10x more coins, release new client update that treats 0.1 coins as a "coin".  Rinse and repeat up to 8 times (currently).  No different than any stock split that happens today.

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June 13, 2011, 07:21:08 PM
 #70

Let's bottom-line this, and get to the root of your beef.

Say someone sets up a digital currency. Say they cap it at 100 million units, guaranteed in decentralized, open-source code.

What's the "best" way to initially distribute the currency? Don't point me to a link, I want you to tell me yourself, in brief.

This is the question I have been thinking about for a while. Cryptocurrency was such a revolutionary concept that even today there are plenty of doubters, I don't see a better bootstrapping method except for what Satoshi and his cohorts did -- putting money/time/effort where their mouths are and proving the concept by their collective work.

There might be some "fairer" ways to bootstrap such currency, i.e. making a well-publicized (blockchain) launch date in advance, so miners have a more equal chance mining at the same difficulty, but that still can be viewed "unfair" to the even later adopters.  Also, rich guys with more money buying gigantic mining rigs thus having more bitcoins -- is that really fair? who is going to take care of the poor in countryside of Africa?



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June 13, 2011, 07:50:16 PM
 #71

The distribution of "real" wealth throughout the world is far less equal and much less fair than that of Bitcoin, with more serious implications as well. Whereas wealthy Bitcoiners got their lucre through risk taking, having access to a small amount of capital, and having basic computer skills -- most of the world's wealthy simply got what they have by being born. Additionally, while one could live a happy life without ever owning a Bitcoin, there are literally children starving to death, for no fault of their own, simply because they were born without. Since there hasn't been any huge revolt recently about this serious inequality, it's hard to imagine people will take up arms over the distribution of private keys.

To make matters worse, Bitcoins will always go to those with the best mining equipment. So it's not like changing the amount given out per block will really do anything to help the poor.

Finally, I'm afraid you -- like so many others -- are missing the point. I'd be happy if all of the mining ended today. It doesn't produce any real wealth and simply dilutes the value of those who have invested in Bitcoin. If people want money they should add value to the economy, not come up with some crazy scheme to print it themselves. Imagine if we all just printed our own money. No work would ever get done!

Those who feel The Fed unfairly monopolizes production of currency are delusional if they think the world would be better if everyone could print as much money as they like. None of it would be worth anything.
Stevie1024
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June 13, 2011, 08:31:32 PM
 #72

Finally, I'm afraid you -- like so many others -- are missing the point. I'd be happy if all of the mining ended today. It doesn't produce any real wealth and simply dilutes the value of those who have invested in Bitcoin. If people want money they should add value to the economy, not come up with some crazy scheme to print it themselves. Imagine if we all just printed our own money. No work would ever get done!

Those who feel The Fed unfairly monopolizes production of currency are delusional if they think the world would be better if everyone could print as much money as they like. None of it would be worth anything.

A mathematically fair (envy-free) initial distribution doesn't exist as far as I know, therefore we have to get rid of the idea of an initial distribution. And switch to a permanent distribution, where everyone get's at all time as many bitcoins as the work he / she (his /her computer) performs.

Unlike the Fed, you cannot print the money without doing the work.

I'm out of here!
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June 13, 2011, 08:35:38 PM
 #73

The distribution of "real" wealth throughout the world is far less equal and much less fair than that of Bitcoin, with more serious implications as well. Whereas wealthy Bitcoiners got their lucre through risk taking, having access to a small amount of capital, and having basic computer skills -- most of the world's wealthy simply got what they have by being born. Additionally, while one could live a happy life without ever owning a Bitcoin, there are literally children starving to death, for no fault of their own, simply because they were born without. Since there hasn't been any huge revolt recently about this serious inequality, it's hard to imagine people will take up arms over the distribution of private keys.

To make matters worse, Bitcoins will always go to those with the best mining equipment. So it's not like changing the amount given out per block will really do anything to help the poor.

Finally, I'm afraid you -- like so many others -- are missing the point. I'd be happy if all of the mining ended today. It doesn't produce any real wealth and simply dilutes the value of those who have invested in Bitcoin. If people want money they should add value to the economy, not come up with some crazy scheme to print it themselves. Imagine if we all just printed our own money. No work would ever get done!

Those who feel The Fed unfairly monopolizes production of currency are delusional if they think the world would be better if everyone could print as much money as they like. None of it would be worth anything.

Printing is entry into the market without begging anyone for an opportunity. Instead of mining I've created a lending structure that works nearly the same way and I don't worry about my electric bills. When money comes in from my loans I start coding something anything even if I never publish. Then I put it out to be borrowed.

If I had a GPU miner I wouldn't be sitting on my ass. I'd get some coins overnight and code through the day.

The only insane thing about this community is running the miners all the damn time when in fact transactions are not made for trading goods.

As for dilution of value, what do you think the difficulty is for?

Truth is the security of the network only needs to be as good as the network is active with transactions. But nutjobs just want something to trade to get fiat.

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
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June 13, 2011, 10:03:47 PM
 #74

1. Most important to understand is that a perfectly natural system for distributing a cryptocurrency in a fair, envy-less way exists. There is no need for a cryptocurrency to have an artificial limit. There will be inflation, yes. The second coin will cause 100% inflation, the 3rd coin 50%, the 4th coin 33%, etc. If inflation kicks in, mining will become less attractive and will be supported by mainly transaction fees (that are not newly created coins and don't drive up inflation further).

It wouldn't be envy-less at all.. Soon enough the mining will be far beyond the means of the average joe (and thus the new coins would flow to an oligarchy anyway).. an inflationary system just means the miners get to tax savings as well as people actively transacting.. worse still, unlike the transaction fee system where transactees get to offer how much they want to pay for their transaction (and risk it not being processed), you would have a built in fixed rate of taxation that doesn't respond to market conditions.
Stevie1024
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June 13, 2011, 11:47:02 PM
 #75

1. Most important to understand is that a perfectly natural system for distributing a cryptocurrency in a fair, envy-less way exists. There is no need for a cryptocurrency to have an artificial limit. There will be inflation, yes. The second coin will cause 100% inflation, the 3rd coin 50%, the 4th coin 33%, etc. If inflation kicks in, mining will become less attractive and will be supported by mainly transaction fees (that are not newly created coins and don't drive up inflation further).

It wouldn't be envy-less at all.. Soon enough the mining will be far beyond the means of the average joe (and thus the new coins would flow to an oligarchy anyway).. an inflationary system just means the miners get to tax savings as well as people actively transacting.. worse still, unlike the transaction fee system where transactees get to offer how much they want to pay for their transaction (and risk it not being processed), you would have a built in fixed rate of taxation that doesn't respond to market conditions.

Please see my post #14 in this thread for what I meant by envy-less.

And for me that concludes this thread, I feel I've said what needed be said and am starting to repeat myself. Thank you all for your kind attention.

If you have more questions, remarks or whatever, feel free to contact me at http://bitcoinforum.org.

I'm out of here!
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June 14, 2011, 01:10:14 AM
 #76

By the time the general public might perceive this as an issue, bitcoin would have serious momentum. It'd be hard to convince people to move across to an inflationary currency as well (when I say hard, I mean downright impossible)
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June 14, 2011, 01:47:59 AM
 #77

1. Most important to understand is that a perfectly natural system for distributing a cryptocurrency in a fair, envy-less way exists. There is no need for a cryptocurrency to have an artificial limit. There will be inflation, yes. The second coin will cause 100% inflation, the 3rd coin 50%, the 4th coin 33%, etc. If inflation kicks in, mining will become less attractive and will be supported by mainly transaction fees (that are not newly created coins and don't drive up inflation further).

It wouldn't be envy-less at all.. Soon enough the mining will be far beyond the means of the average joe (and thus the new coins would flow to an oligarchy anyway).. an inflationary system just means the miners get to tax savings as well as people actively transacting.. worse still, unlike the transaction fee system where transactees get to offer how much they want to pay for their transaction (and risk it not being processed), you would have a built in fixed rate of taxation that doesn't respond to market conditions.

Please see my post #14 in this thread for what I meant by envy-less.

And for me that concludes this thread, I feel I've said what needed be said and am starting to repeat myself. Thank you all for your kind attention.

If you have more questions, remarks or whatever, feel free to contact me at http://bitcoinforum.org.

Here's your post #14;
Quote
50% Or more will not be early adopters -> 50% or more will have envy -> 50% or more will have 50% of the computer power necessary to create the longest chain

Please do tell me my mistake?

In that case your mistake is just that 50% of the computer power is going to be controlled by the top 1%, not more than 50% of the participants. Over time the computing power will become more and more concentrated and less and less 'fair'. There would be no 'fair distribution' of the coin inflation/taxation it would mostly flow to the top few percent of miners. Your system allows the top few percent of miners to tax the entire userbase at a fixed rate of taxation/inflation that they can't negotiate (as they can now with the transaction fees). This would be much less fair than the current system.
Rob P.
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June 14, 2011, 12:24:09 PM
 #78

A mathematically fair (envy-free) initial distribution doesn't exist as far as I know, therefore we have to get rid of the idea of an initial distribution. And switch to a permanent distribution, where everyone get's at all time as many bitcoins as the work he / she (his /her computer) performs.

Unlike the Fed, you cannot print the money without doing the work.

Which is exactly what mining is, and why mining works.  People mining for the longest period of time, have the most bitcoins.  People mining shorter periods of time, have less.

It's already "envy free" in that way.  You can be upset you didn't find out about it until now, but you cannot argue that you haven't been mining as long as they have.

There is no way to distribute coins "where everyone get's at all time as many bitcoins as the work he/she (his/her computer) performs", because you cannot predict how much work that is, so you cannot predict how many coins to provide.

The current system is just fine.

Oh, and we're not "print[ing] the money without doing the work", people are sinking thousands of dollars, lots of electricity, and their personal time into mining.  That's the definition of "work".

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Rob P.
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June 14, 2011, 12:27:07 PM
 #79

The only insane thing about this community is running the miners all the damn time when in fact transactions are not made for trading goods.

I for one spend coins as fast as I make them.  Does two things:
1)  I realize an actual gain for my coins
2)  I put the coins I've mined into the economy, because I personally believe that hoarding is what is going to kill Bitcoin (if anything does)


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June 14, 2011, 12:33:35 PM
 #80

The only insane thing about this community is running the miners all the damn time when in fact transactions are not made for trading goods.

I for one spend coins as fast as I make them.  Does two things:
1)  I realize an actual gain for my coins
2)  I put the coins I've mined into the economy, because I personally believe that hoarding is what is going to kill Bitcoin (if anything does)


Sure if all you want is CDs. I'm gonna pay off my crack dealer... er I mean education loans.

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
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