SgtSpike
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April 05, 2013, 06:14:10 PM |
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But John. Your FAQ does not answer why one would want to sell a finite resources increasing in value(once minting grinds to a halt) when one can form a new service which does not. Again and again.
I'll answer that. People do not want to receive a portion infinite resources, because infinite = worthless. There is only value in scarcity. Scarce resources (i.e. Gold and Bitcoin) are valuable. So, if you create a "new service" which is not finite, then that new service will be worthless. Who would want 10,000 inflatacoins when someone could create 10 billion more tomorrow? No one would accept these coins in a trade. Now, if you go to the age-old deflationary economy problem, here's a few of points to mull over: - A deflationary currency has never actually been tried, only theorized about. - A funny thing happens when people find that their wealth has increased - they begin to think about ways to spend it! Imagine that tomorrow, you found that your bank account had $100,000 more in it than it had today. What would you do? Go out and party? Buy a nice car? Pay off a house? Guess what - all of that is SPENDING! When people have more wealth to spend, they spend it. - There is also a psychological "risk analysis" that everyone goes through, either consciously or subconsciously. It's something along these lines: "What if Bitcoin is worthless tomorrow?" "What if Bitcoin loses even 10% of it's value tomorrow?" "What if my house burns down and I lose all my Bitcoins?" "What if a stalker knows how much Bitcoin I have, and holds me at knife-point until I give them all to him?" Etc, etc. The bottom line is, there is a very real risk of loss of wealth when holding Bitcoin - enough of a risk that it causes people to "cash out" and begin spending them whenever they feel they are holding more than they can safely take care of. - Deflationary currencies do encourage saving rather than spending - I will concede that point. But it does not encourage it enough to completely kill an economy, as some economists would have you believe. Rather, it reduces the propensity for people to go into ridiculous amounts of debt to keep up with the Joneses, and it reduces the government's likelihood of doing the same. Deflationary currency would discourage people, businesses, and governments from taking out loans unless absolutely necessary. Now ask yourself, is that really such a bad thing, to encourage people, businesses, and governments to save their money for a rainy day?
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BluesBrother (OP)
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April 06, 2013, 09:07:56 PM Last edit: April 06, 2013, 09:23:28 PM by BluesBrother |
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Heya Sgt.
Infinite (to a reasonable amount) does not mean infinitely available. The general problem of bitcoins is that it is based on nothing but trust which is also something that has never been tried befoe. So every discussion becomes extremely complex. Most forms of fiat currency basically start out as IOU papers of some form.
Basically the idea is that I give you paper worth nothing for something but it is expected that you later give me something for nothing as well. That's the idea around contolled money supply that follows GDP production. So it is still based on production, even if it has no real value.
Gold has intrinsic value and is quite rare and trade with it can be described as trade with an easily managable resource. When trust in classical economic production and thus fiat currency falls then trust in commodities usually rises and gold which is not only a commodity but also partly a currency thus gets its bubble-like frowns on the chart.
You're right that a deflationary currency has never been tried but there has been criticism targete towards it. Part of the reason for the implementation of fiat currency was so called "money hoarding". People hoarded gold or gold-certificates and literally made money on money. This slows commerce, at least according to some modern economic philosophies. This is also part of the reason for fractional reserve banking where money is created out of debt in hopes of future economics investment and progress. (And obviously our economies are imploding since debt now exceeds wealth in critical sectors and growth can't keep up).
You may be right that commerce may not completely grind to a halt but it still doesn't answer the question of why mining should start at a high level and then grind downwards until a halt. Wouldn't an adjustable (in various way, not by a lever in someones home) mining rate following computing power advances be better?
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XXthetimeisnowXX
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April 06, 2013, 09:27:37 PM |
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Please review my post again fellas. The reason for the 2012 date is because I read somewhere that it was in December 2012 that mining became quite alot more difficult per hash. Please explain to me what bitcoins has in common with gold?
Either it is a ponzi-scheme or an added inflationary cost to the whole worlds currency supply created out of thinner air than the so called fiat currency that is supposed to be build upon economic growth and thus stay at 0 inflation. Please note that I am not suggesting that they should do a ponzi-scheme, I am suggesting that it is a variation of the ponzi-scheme.
Part of the criticism against gold and its many bubbles have also always been that its value is exaggerated by its investors and that it is not related to its output value and while gold has a value in both industry and jewelry bitcoins have none beyond their function as a service - one that could be argued gold has in addition to its actual value.
Inflation with bitcoins (one way or an other) starts at the second coin minted. There's no reason to stop at 21^ if there is a feeling that the full sum can't be sold right away by its creators.
In effect you are creating money out of thin air but as I said it does provide a service in itself. So the ponzi aspect of increased value based on increased investment and not profit (and thus return) I can accept to a degree. What I have a hard time accepting or understanding are the pyramid-scheme aspects of it all.
like a presentation to your junior high? thats cool buddy!! but I dont think you completely understand bitcoins, actually I think you kinda know about a lot of false information about bitcoins. you should just focus on doing actual research with the links provided, read A LOT of the already created threads for god sakes before stumbling in here and creating a thread that is just awful. PLEASE LET THIS KID BE IN HIGH SCHOOL AND NOT COLLAGE!!!!
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BluesBrother (OP)
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April 06, 2013, 09:32:15 PM |
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Hey dude. We are actually studying in an IT college and towards user-centered design, BA and systemscience so economics is not our main cup of tea but things like security, system architecture, stability and such. Personally I am alot more interested in the technical aspects and that's what I am researching mostly about.
These are just some concerns I had as a potential BitCoin user. Also reading some of the links provided atm!
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Fiyasko
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April 06, 2013, 09:36:01 PM |
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Im really just gonna hit the ignore button... If people arent going to do thier Own Research about "what is a bitcoin" and "Why is it valuble" before they make a Presentation group of "Me and some buddies will soon be making an University presentation based on digital economies and we are considering using bitcoins as our main subject"
I cant shake my head hard enough... Why dont you just ask "What is inflation?" and "Why it is bad?" aswell as "Why dont we just print more money" You freaking stated "why is it a limited amount?, why not unlimited" THATS ONE OF THE MAJOR REASONS FOR GOVERNMENTS TO COLLAPSE, UNLIMITED MONEY.
You are a Fucking Troll, and if not, im not even going to call you a Tool, you're less than a tool, you're a Subtool, a fucking Drillbit
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odolvlobo
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April 06, 2013, 09:36:40 PM |
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But John. Your FAQ does not answer why one would want to sell a finite resources increasing in value(once minting grinds to a halt) when one can form a new service which does not. Again and again. And so when you reach this point (and we saw a spike of value right after 2012 decrease in production that is still going) the currency does in reality become a commodity, an investment and loses its function thus because it has not intrinsic value it must become a ponzi scheme.
My notion that it is a pyramid scheme builds only upon what I find to be a pyramid-scheme like way of supplying additional coins that perhaps could have been differently. I can not see any moral justification for rewarding the production of things that have no intrinsic value but I am not here to argue morals. Only the pyramid model itself. Infinite supply could have been kept by spiral waves of new block-difficulties relieving old still keeping anonimity and algorithm safety but protecting the service and removing the pyramid-scheme aspect.
The morality of things would also be better as the minters would now be in a better position to argue that they are protecting a service, not using it.
@Milon Thanks. I'll read the paper over the weekend then! Not really started any research, just throwing out some ideas. Coming back later then.
In reply to your new post: My feeling based on my own limited understanding of basic economics is that the opposite is true. It was a service for very long while minting was stabile as I am advocate it should be (infinite) but that it will turn into a ponzi-scheme by default at the end of the minting/as minting decreases in profitability. Statistics related to December 2012 seem to support my notion. PS: Finite release of 21^ at once would create the same problems and sooner but it would be more moral and it would test the theory sooner.
First, Bitcoin cannot be a Ponzi scheme because there is no person or organization defrauding investors. You don't know what a Ponzi scheme is, so it is difficult to understand your claim that Bitcoin will become a Ponzi scheme. People spend bitcoins despite the fact that they are rising in value because the value of what they buy is greater (to them) than the present value of the amount they spend. In other words, people buy now because they don't want to wait until later when the value of bitcoin has increased. The intrinsic value of bitcoin is a subject of debate, primarily because nobody can agree on what "intrinsic" value means. Either way, if you believe that bitcoin has no intrinsic value, then you must also believe that fiat currencies (dollar, euro, etc.) also have no intrinsic value. I can see why people claim that bitcoin is a pyramid scheme, and it is hard to refute their claims. Bitcoin is not designed to be a pyramid scheme, but there is a substantial portion of people that buy bitcoins simply hoping that more people will buy them and drive up the price. On the other hand, if you consider bitcoin a pyramid scheme, then you must consider all currencies and commodities to be pyramid schemes because a large number of people buy them for the same reason.
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BluesBrother (OP)
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April 06, 2013, 09:40:29 PM Last edit: April 06, 2013, 09:57:09 PM by BluesBrother |
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@Jack Hi!
What is inflation and why is it bad? Greece is pobably kickinig itself in the balls right now because it can't inflate its currency. But no, generally speaking inflation is bad. My question is more: Why is deflation good? I've been reading up on some of the links sent and still haven't really goten an answer to this although my confidence in other aspects of the bitcoin system is growing steadily.
Now Jack don't go about insulting me. I mean not to insult you! The unlimited supply of money thing has worked pretty good for quite some time. It's still doing well in countries that have actual economic growth. That's not saying that a delfationary policy wouldn't work but that's the point of topic. Don't ever be afraid to examine your own positions!
@Obolvlobo Heya
The idea is that the miners defraude the investors here. Technically speaking here, not that anyone is doing it intentionally.
_________
The more I think about it the more I do not know if it should even be called inflation or deflation when we discuss bitcoins. Perhaps falling or rising value is more correct? Inflation is tied to a specific economy. At least if we tie Bitcoins value to its value as a service it should then behave more as gold or any other commodity or stock? What are your thoughts on this and would a stabile value then be the best for the commodity to act as a currency?
I'll ad this question to the frontpage if possible.
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Gabi
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April 06, 2013, 09:49:08 PM |
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A deflationary currency has never actually been tried, only theorized about. True, but we know that it will behave like gold, more or less
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BluesBrother (OP)
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April 06, 2013, 10:44:01 PM |
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Yeah. But I don't think it's inflationary neither now that I think about it but that its value is changing (?). Sure inflation and deflation isn't by definition only increase of moneysupply o decrease of it (tied or not tied to an economy) but then at 21^ or close to it "inflation" (and "deflation") should theoretically stop - shouldn't it?
But what's left then? Would "value" rise? Must it rise? If the currency can be divided into very, very small parts then it shouldn't (for currency purposes). So perhaps my worries are unfounded.
But then this must indeed be nothing then a bubble. Value should if anything be falling as "Inflation"(supply) rises up until 21^!
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odolvlobo
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April 06, 2013, 10:54:25 PM |
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The idea is that the miners defraude the investors here. Technically speaking here, not that anyone is doing it intentionally.
It is absurd to claim that bitcoin is a ponzi scheme because miners are defrauding people unintentionally. First, anyone can mine. Are you claiming that a person is committing fraud while he is mining, and is a victim of fraud while he is not mining? Second, a person can't commit fraud unintentionally. Fraud requires intention.
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odolvlobo
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April 06, 2013, 10:58:51 PM |
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A deflationary currency has never actually been tried, only theorized about. True, but we know that it will behave like gold, more or less No. It's not true. Gold (and gold-backed currencies) were deflationary for the same reasons that bitcoin is regarded as a deflationary currency: there is a finite supply and some portion is lost or destroyed over time.
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BluesBrother (OP)
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April 06, 2013, 11:02:00 PM |
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Alright I agree with you! We need new words!
What is a non-fraduelent investment that builds value not on the investments increased output but on new investments only. What would Enron have been if nobody had "gone out" before it failed? (it could be argued that people knew Enrons output wasn't anything near its investment value and thus a ponzi scheme but let's argue they didn't. What is it then "called" if not a ponzi scheme?)
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odolvlobo
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April 06, 2013, 11:08:23 PM |
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Yeah. But I don't think it's inflationary neither now that I think about it but that its value is changing (?). Sure inflation and deflation isn't by definition only increase of moneysupply o decrease of it (tied or not tied to an economy) but then at 21^ or close to it "inflation" (and "deflation") should theoretically stop - shouldn't it?
But what's left then? Would "value" rise? Must it rise? If the currency can be divided into very, very small parts then it shouldn't (for currency purposes). So perhaps my worries are unfounded.
But then this must indeed be nothing then a bubble. Value should if anything be falling as "Inflation"(supply) rises up until 21^!
The meanings of "inflation" and "deflation" are ambiguous. Sometimes the words mean a change in the money supply -- "inflation" is an increasing money supply. Sometimes the words mean changing prices -- "inflation" means the value of the currency falls. When people talk about bitcoin as being "deflationary", they either mean that the demand for bitcoin is increasing faster than the supply, or they mean that coins are lost, so the supply goes down.
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BluesBrother (OP)
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April 06, 2013, 11:11:15 PM |
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Alright let's not go to far out. That post was way to weird and when I think about it quite rubbish. It's exciting to read and think about bitcoins. Every new article brings something new and interesting.
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odolvlobo
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April 06, 2013, 11:11:42 PM |
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Alright I agree with you! We need new words!
What is a non-fraduelent investment that builds value not on the investments increased output but on new investments only. What would Enron have been if nobody had "gone out" before it failed? (it could be argued that people knew Enrons output wasn't anything near its investment value and thus a ponzi scheme but let's argue they didn't. What is it then "called" if not a ponzi scheme?)
Enron was not a ponzi scheme. It seems like you think that every kind of financial fraud is called a ponzi scheme. It is not. A ponzi scheme is a specific kind of fraud.
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BluesBrother (OP)
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April 06, 2013, 11:16:58 PM |
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So what was Enron? We need a word for it! " Jump to: navigation, search 1910 police mugshot of Charles Ponzi, the namesake of the scheme A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. " That's the definition I went after when creating this thread. I was thinking if there was a better word for it without using a paragraph each time but I couldn't think of it. The Atlantic seems to be leaning in my favor for example: http://www.theatlantic.com/magazine/archive/2002/03/the-enron-ponzi-scheme/303156/So let's swim easy here!
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odolvlobo
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April 06, 2013, 11:51:07 PM |
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I'm not interested in discussing Enron. The only reason I have responded to your posts is that you are planning to make a presentation that is based on ignorance and is not supported by facts. I hope that by showing you the flaws in your thesis, you will not perpetuate myths about Bitcoin, and display a lack of knowledge in the process.
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BluesBrother (OP)
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April 06, 2013, 11:53:42 PM |
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So you are not willing to provide an alternative word for it, you are not willing to discuss the two citations that support my definition of the word yet you seem willing to bash my definition of it! Good for you then. Let's redefine the word ignorance to! ( ![Cheesy](https://bitcointalk.org/Smileys/default/cheesy.gif) )
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FreddyFender
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Shamantastic!
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April 07, 2013, 12:13:15 AM |
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Troll-pile
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niko
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April 07, 2013, 12:13:29 AM |
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Bitcoins, much like yen or dollars or gold coins, have to come into existance somehow before we can use them. The way bitcoins are minted is the most democratic, verifiable, fair, and controlled among the currencies in use today. I've minted bitcoins. You can, too. Try doing that with dollars, and consequences for you will be painful and violent. I don't see how anyone with at least half a brain functioning can have a problem with bitcoins "still being minted."
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They're there, in their room. Your mining rig is on fire, yet you're very calm.
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