What is the main reason for the recent price raises?

[BigJohn]

3. The key reason why they won't be fungible is because competing currencies will have different properties and their valuations will have different dynamics. However, I think it is wrong to assert that more competitors does not increase the supply of digital coins. Sorry I think the writer is correct, but he must be careful to point out they are not perfectly fungible.

Hey listen, I respect any kind of critical thinking on any subject, especially one such as this. But you can't just say "I think it is wrong..." without explaining why it's wrong and expect to be taken seriously.

The fact is that there are very few things you can pay for directly with gold and silver. One of the reasons is divisibility, but mostly because the state makes it very difficult to actually use gold and silver in that way. Someone could charge you 1oz of gold and 10oz of silver for something, like say 1g10s would be the price. But with Bitcoin that's simply not needed. You could just charge someone 1.281249BTC for something. So why on earth would any merchant charge 1BTC200LTC for something? To accept both Bitcoin and Litecoin for something you could easily denominate with just 1 currency is crazy. Also to exchange between one and the other will incur a price. So if say 1BTC is worth 1,000LTC in the future, if you wanted to actually trade 1BTC you'd get 900LTC. The rest is the merchant fee. Why lose that money when you could just sell something for 0.05BTC to begin with?

Your entire premise doesn't make sense.

Another thing is that the Bitcoin 21million cap could simply be removed if enough people wanted that. So why even bother with a new currency? Just move the cap on Bitcoin if it ever comes to that (and I hope it won't)

[AnonyMint]

3. The key reason why they won't be fungible is because competing currencies will have different properties and their valuations will have different dynamics. However, I think it is wrong to assert that more competitors does not increase the supply of digital coins. Sorry I think the writer is correct, but he must be careful to point out they are not perfectly fungible.

Hey listen, I respect any kind of critical thinking on any subject, especially one such as this. But you can't just say "I think it is wrong..." without explaining why it's wrong and expect to be taken seriously.

The fact is that there are very few things you can pay for directly with gold and silver. One of the reasons is divisibility, but mostly because the state makes it very difficult to actually use gold and silver in that way. Someone could charge you 1oz of gold and 10oz of silver for something, like say 1g10s would be the price. But with Bitcoin that's simply not needed. You could just charge someone 1.281249BTC for something. So why on earth would any merchant charge 1BTC200LTC for something? To accept both Bitcoin and Litecoin for something you could easily denominate with just 1 currency is crazy. Also to exchange between one and the other will incur a price. So if say 1BTC is worth 1,000LTC in the future, if you wanted to actually trade 1BTC you'd get 900LTC. The rest is the merchant fee. Why lose that money when you could just sell something for 0.05BTC to begin with?

Your entire premise doesn't make sense.

Another thing is that the Bitcoin 21million cap could simply be removed if enough people wanted that. So why even bother with a new currency? Just move the cap on Bitcoin if it ever comes to that (and I hope it won't)

You are missing a point. There is only a finite demand for P2P currency. That demand has to be spread between P2P currency units that are issued. The spreadout won't be uniform (e.g. Bitcoins are $90 and Litecoins are $0.65 at the moment), but there is a conjecture that the competitors will become better and gain more market share.

So if I create a better Bitcoin and I debase mine more than Bitcoin does, Bitcoin will suffer a debasement of the market. But remember what I wrote below too...


I sort of superseded those comments with the following. Did you miss my post above?

I missed the main point. Gresham's Law.

Bad money drives good money out of circulation.

So Bitcoin will end up being more hoarded than a P2P competing currency that has more debasement. Which will be better for that competitor, because lack of velocity is the problem in Bitcoin. Too much hoarding as store-of-value, not enough using as a unit-of-exchange.

[BigJohn]

There is only a finite demand for P2P currency. That demand has to be spread between P2P currency units that are issued. The spreadout won't be uniform (e.g. Bitcoins are $90 and Litecoins are $0.65 at the moment), but there is a conjecture that the competitors will become better and gain more market share.

Why? Who says the competitors will be better? You're defeating your own point.

You're saying it's possible to extend Bitcoin by making nearly-identical alternatives, thereby bypassing Bitcoin's 21million limit, and in the same breath you're saying that the new currency will be different and better and gain marketshare on its own, which means it's not Bitcoin.

So if I create a better Bitcoin and I debase mine more than Bitcoin does, Bitcoin will suffer a debasement of the market.

See, that's an oxymoron. Either the new currency is identical to Bitcoin, which means it's extending the money-base and creating inflation, or it's unique enough to be "a better Bitcoin", which means it's not Bitcoin and cannot extend the Bitcoin money-base.

You're countering yourself.

Which by the way I actually agree with you. I think some new and completely not-Satoshi based digital currency will come up that will be better than Bitcoin. But that has nothing to do with any of this, or the viability of Bitcoin itself in the short term until that moment comes.

[AnonyMint]

There is only a finite demand for P2P currency. That demand has to be spread between P2P currency units that are issued. The spreadout won't be uniform (e.g. Bitcoins are $90 and Litecoins are $0.65 at the moment), but there is a conjecture that the competitors will become better and gain more market share.

Why? Who says the competitors will be better? You're defeating your own point.

You're saying it's possible to extend Bitcoin by making nearly-identical alternatives, thereby bypassing Bitcoin's 21million limit, and in the same breath you're saying that the new currency will be different and better and gain marketshare on its own, which means it's not Bitcoin.

It is possible that there are people who would otherwise buy Bitcoin, who would prefer some features in another system more.

You are actually missing the KEY POINT, which is barrier to entry. Replacement goods have low barriers to entry.

If there is an exchange rate from currency A to currency B, then the barrier to entry is nearly zero. Merchants will accept as many currencies as they can.

That is why I say real-time market exchange at POS is a crucial factor. Surely some aspiring entreprenuer will provide it, if not already.

People should be dumping Bitcoins and buying Litecoins like mad right now. Those who do are going to make a big arbitrage when the rest of the herd catches up to this reality.

But the competitors can't all be the same. You are correct someone won't go buy Litecoin if it is just an exact copy of Bitcoin.

So each competitor has to have a few compelling features. I don't know how many such features are possible. The market will tell us.

So I am saying that not everybody buying Bitcoin now or in future, is getting exactly what they want from Bitcoin. Competition will come (I hope).

So if I create a better Bitcoin and I debase mine more than Bitcoin does, Bitcoin will suffer a debasement of the market.

See, that's an oxymoron. Either the new currency is identical to Bitcoin, which means it's extending the money-base and creating inflation, or it's unique enough to be "a better Bitcoin", which means it's not Bitcoin and cannot extend the Bitcoin money-base.

Study "replacement good" in economics.

[BigJohn]

lol but I'm agreeing with you. I'm saying that in the future there will be a new currency that will either replace Bitcoin (and its derivatives), or supplement it significantly. But the fact is that right now in the present, such a currency doesn't exist. So you telling people that Bitcoin is a scam because in the future something else will replace it is pure nonsense. When that future comes, then you will have a point. Until then Bitcoin remains useful.

[AnonyMint]

lol but I'm agreeing with you. I'm saying that in the future there will be a new currency that will either replace Bitcoin (and its derivatives), or supplement it significantly. But the fact is that right now in the present, such a currency doesn't exist. So you telling people that Bitcoin is a scam because in the future something else will replace it is pure nonsense. When that future comes, then you will have a point. Until then Bitcoin remains useful.

I am not saying that Bitcoin is a scam for that reason. Read the next post please.

[AnonyMint]

Bitcoin: The Digital Kill Switch

https://bitcointalk.org/index.php?topic=160612.0

[MikeH]

the current rules aren't set in stone, there may very well be a minimum transaction fee or other such things you are concerned with in the future.

[AnonyMint]

the current rules aren't set in stone, there may very well be a minimum transaction fee or other such things you are concerned with in the future.

I believe it to be impossible to force in any protocol that can be imagined.

If a corporation wants to provide free tx fees, even if the protocol attempts to enforce it, they can just refund the money back in another transaction.

So users will route their transactions to those corporations.

I believe the only possible way is forced debasement and NO tx fees.  

You must remove the user's incentive for a Tragedy of the Commons.


P.S. this is why I suspect Satoshi had evil intentions. He made a big deal about lying and saying Bitcoin's money supply was modeled on gold.

[GCInc.]

I talked with the developers for a period of days, then they banned me when they realized I had figured out their scam system

Do you mean locking your thread or banned how?

He made a big deal about lying and saying Bitcoin's money supply was modeled on gold.

Maybe he just didn't notice or account for the possibility to mine gold on other planets than earth, like many other experts. Upon scrutiny I saw such omittances in his writings many times. A genius may not see every possible point of view on every area.

[AnonyMint]

I talked with the developers for a period of days, then they banned me when they realized I had figured out their scam system

Do you mean locking your thread or banned how?

He made a big deal about lying and saying Bitcoin's money supply was modeled on gold.

Maybe he just didn't notice or account for the possibility to mine gold on other planets than earth, like many other experts. Upon scrutiny I saw such omittances in his writings many times. A genius may not see every possible point of view on every area.

My SE bitcoin.stackexchange.com account is locked for 7 days, but I won't be returning there any way. I am finished talking to the developers of bitcoin, they obviously won't listen. So I have moved on to replacing Bitcoin:

Bitcoin: The Digital Kill Switch

https://bitcointalk.org/index.php?topic=160612.0

Bitcoin is diabolical, but only an expert can see it.

I will grant you that it is possible that Satoshi did not intend his design flaw, but I find it highly unlikely. But it isn't worth arguing. Let's move on to fixing the problem, then let users decide which P2P coin they want.

[GCInc.]

I will grant you that it is possible that Satoshi did not intend his design flaw, but I find it highly unlikely. But it isn't worth arguing. Let's move on to fixing the problem, then let users decide which P2P coin they want.

Yes, I read your Killswitch earlier and was about to suggest that [moving on] next