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Author Topic: Bitcoin has about 16% "sneaky taxes"  (Read 3665 times)
kristoffernolgren
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June 16, 2011, 10:21:25 PM
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I checked out the graph of bitcoin. 2011 about 16% more bitcoins is introduced in to the economy. This, ofcorse as a cost to any bitcoinowners, as this desaturates the currency. I have seen a lot of complaining at early adopters getting a to sweat a deal from bitcoins. Could one expect that the value increase in bitcoins will be even steaper in 2013 when the amount of new coins decreases? Or should this already be accounted for by the longterm investors in bitcoins? I have a feeling people don't really know what they are doing here and that this may have strong impact on the market.

How many % of miners actually sell their coins? Any statistics? It should at least be possible to see how many coins stay in their original wallets right?

Could this be concidered a 16% inflation and in that case, is that comparable to a 16% inflation in a currency based on fractional reserve?
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June 16, 2011, 10:25:51 PM
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The factor you're missing is "who is buying from the miners?"

Mostly the answer is "speculators" but the important sub-answer is that it is a rapidly growing number of speculators.

Yes, until all 21 million bitcoins are finished being mined, about 7,200 BTC are added to the economy each day. Over time this comes to represent a smaller total percentage of the economy and eventually they stop being created, then data loss occurs as it always does and the number of BTC in circulation decreases. The thing that is keeping this initial up-stroke in BTC volume from being inflationary is that the number of bitcoin users is increasing faster than the number of bitcoins. This means that even while the number of BTC is increasing every day, the average number of BTC each user can be expected to have is decreasing, thereby making them more valuable.

It's not just about the number of existing copies of a thing, it's also about how many people want/need/have that thing - not just scarcity but scarcity per capita Smiley

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June 16, 2011, 10:37:39 PM
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The factor you're missing is "who is buying from the miners?"

Mostly the answer is "speculators" but the important sub-answer is that it is a rapidly growing number of speculators.

Yes, until all 21 million bitcoins are finished being mined, about 7,200 BTC are added to the economy each day. Over time this comes to represent a smaller total percentage of the economy and eventually they stop being created, then data loss occurs as it always does and the number of BTC in circulation decreases. The thing that is keeping this initial up-stroke in BTC volume from being inflationary is that the number of bitcoin users is increasing faster than the number of bitcoins. This means that even while the number of BTC is increasing every day, the average number of BTC each user can be expected to have is decreasing, thereby making them more valuable.

It's not just about the number of existing copies of a thing, it's also about how many people want/need/have that thing - not just scarcity but scarcity per capita Smiley

7,200 BTC a day? I thought we would reach 21,000,000 million BTC in 2031 but with 7,200 BTC it will be more like in 8 years...
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June 16, 2011, 10:43:33 PM
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Yes the supply of Bitcoins is inflating.  And since we're only about halfway through 2011, the rate is actually closer to 30%.

But since that inflation goes towards attracting new entrants to the Bitcoin economy who bring their special skills, and miners who secure transactions, rather than dimwit assholes who just blow up asset bubbles and countries full of brown people, it's not such a huge problem.

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June 16, 2011, 10:45:54 PM
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it's transparent from the start how and roughly how quickly the total number of btc will increase so it should already be priced in.
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June 16, 2011, 11:00:34 PM
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it's transparent from the start how and roughly how quickly the total number of btc will increase so it should already be priced in.
Yes, there is nothing "sneaky" in the new mined bitcoins to begin with, hence this is a misleading title.
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June 16, 2011, 11:04:52 PM
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7,200 BTC a day? I thought we would reach 21,000,000 million BTC in 2031 but with 7,200 BTC it will be more like in 8 years...

Yeah, but in 2013 the reward halves (25btc per block), and so on, until the blocks stop paying out.

See here.
http://upload.wikimedia.org/wikipedia/en/5/54/Total_bitcoins_over_time.png
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June 16, 2011, 11:40:39 PM
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7,200 BTC a day? I thought we would reach 21,000,000 million BTC in 2031 but with 7,200 BTC it will be more like in 8 years...

The supply of BTC won't reach 21 M in eight years or in 2031.  It won't reach 21 Million ever.  It's log limit, ever approaching but never reaching.  Around 2129 the block reward will drop from .00000001 BTC to zero, if the decimal accuracy of the bitcoin protocol isn't increased by that time, but even then it will be just under 21 million.

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June 17, 2011, 12:14:52 AM
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Yes, until all 21 million bitcoins are finished being mined, about 7,200 BTC are added to the economy each day.

7200BTC/day is the average and it will drop at block 210000 to 3600BTC/day.

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June 17, 2011, 01:26:03 AM
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Yeah, but in 2013 the reward halves (25btc per block), and so on, until the blocks stop paying out.

Blocks will never ever stop paying out, and the number of bitcoins will never ever reach 21 million. The longer the system stays online the closer to 21 million bitcoins we will be, but we will never reach that point.

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June 17, 2011, 01:39:04 AM
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7,200 BTC a day? I thought we would reach 21,000,000 million BTC in 2031 but with 7,200 BTC it will be more like in 8 years...

The supply of BTC won't reach 21 M in eight years or in 2031.  It won't reach 21 Million ever.  It's log limit, ever approaching but never reaching.  Around 2129 the block reward will drop from .00000001 BTC to zero, if the decimal accuracy of the bitcoin protocol isn't increased by that time, but even then it will be just under 21 million.

And that's without considering all the coins that have been lost and will have been lost by then.
Matarael
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June 17, 2011, 01:41:00 AM
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Blocks will never ever stop paying out, and the number of bitcoins will never ever reach 21 million. The longer the system stays online the closer to 21 million bitcoins we will be, but we will never reach that point.

Assuming this doesn't happen

the decimal accuracy of the bitcoin protocol isn't increased
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June 17, 2011, 02:21:25 AM
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7,200 BTC a day? I thought we would reach 21,000,000 million BTC in 2031 but with 7,200 BTC it will be more like in 8 years...

The supply of BTC won't reach 21 M in eight years or in 2031.  It won't reach 21 Million ever.  It's log limit, ever approaching but never reaching.  Around 2129 the block reward will drop from .00000001 BTC to zero, if the decimal accuracy of the bitcoin protocol isn't increased by that time, but even then it will be just under 21 million.

Oh right, I forgot how fast halving something will diminish it. It's only a little over 100 years before mining is essentially gone, intuitively I thought it would be longer. If they increase the precision past 8 then again it will only be 100 or so years before even 16 decimal places become 0's. At this point even if the world population was using this currency exclusively and millions of bitcoins were lost forever, the value of a common good today would (probably!) not be something like 1x10^-12 coinbits. No math to back this up because there is no math that can predict the value of an apple in coinbits after 250 years. Just my intuition.

My point here is that at some point yes, mining should cease to be a thing. And I think I came to that conclusion by determining that the rate at which a number is halved far exceeds the rate at which bitcoins can deflate (raise the value of) after several centuries. So I retract the portion of my previous post which dealt with that issue. mhmm...

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imperi
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June 17, 2011, 02:23:26 AM
 #14

Mining Bitcoins in this form will be gone waaaay before 100 years from now. SHA-2 will be broken in a decade or two.
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June 17, 2011, 05:15:45 AM
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There will still be transaction fees though, which would go to any miners still around to process new blocks.

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June 17, 2011, 12:19:05 PM
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