Would a permanent 50BTC block reward have changed the discussion?

[wingding]

I have extensively describe  the problems with a deflationary cryptocurrency.

See this thread

https://bitcointalk.org/index.php?topic=12109.0

Unfortunately most bitcoin-fans are computer geeks with no knowledge in macroeconomics.
Their argument is that bitcoin attracts people because its scarce (max 21 million coins).

I love bitcoin because it enables transactions around the world 247 with low costs, and with high security and with no double spending - not because of its inflation attributes.

Most bitcoin-fans don't understand that when bitcoin becomes deflationary it will become a speculative hoarding asset instead of a medium of exchange, which will lead people to focus on other alt-coins until all alt-coins are speculative and two kind of cryptocurrencies will remain as useful:
1) IOU-coin - a proposed coin with zero value which is guaranteed with hyperinflation. it is a medium of exchange and transfer values via IOUs
2) LowInflation-Coin - a proposed coin with low inflation for ever, something like gold (1% inflation over time), its scarce but is still possible to mine gold if you have right equipment and resources (labor and energy).

Agree with you there. Check out my alt-coin here: https://bitcointalk.org/index.php?topic=181488.0

[Sweft]

I have extensively describe  the problems with a deflationary cryptocurrency.

See this thread

https://bitcointalk.org/index.php?topic=12109.0

Unfortunately most bitcoin-fans are computer geeks with no knowledge in macroeconomics.
Their argument is that bitcoin attracts people because its scarce (max 21 million coins).

I love bitcoin because it enables transactions around the world 247 with low costs, and with high security and with no double spending - not because of its inflation attributes.

Most bitcoin-fans don't understand that when bitcoin becomes deflationary it will become a speculative hoarding asset instead of a medium of exchange, which will lead people to focus on other alt-coins until all alt-coins are speculative and two kind of cryptocurrencies will remain as useful:
1) IOU-coin - a proposed coin with zero value which is guaranteed with hyperinflation. it is a medium of exchange and transfer values via IOUs
2) LowInflation-Coin - a proposed coin with low inflation for ever, something like gold (1% inflation over time), its scarce but is still possible to mine gold if you have right equipment and resources (labor and energy).

Agree with you there. Check out my alt-coin here: https://bitcointalk.org/index.php?topic=181488.0

There's a problem with a constant block reward and the problem is that the currency will eventually become deflationary because the inflation rate will be insignificant and the amount of new blocks created will be less than the amount of coins lost.  Plus, as inflation rate approaches 0, the profits of miners will decrease, thus the network hash will grow.

I would work with you in creating a crypto.

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

[wingding]

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

[Sweft]

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

Forking is bad for a couple of reasons.
1) People who hold bitcoins may not be interested in an inflationary cryptocurrency, therefore they will suppress the price of that currency until all of their coins are sold.
2) There's the possibility of manipulation by accumulating bitcoins prefork, and selling them after the fork.

Both of these reasons are negatives on the adoption of a cryptocurrency based on a bitcoin fork.


A crypto based on a constant block reward will not work.  I'm pretty sure of that.

I will only support a crypto with an inflation rate of 2% or higher.

[firefop]

People consistently confuse BTC monetary base growth with inflation.  Inflation is a change in PURCHASING POWER, and this has never been negative (outside of the crashes) for BTC after the existence of effective exchanges.  Even if the money supply was expanding 20-30% in a year back in 2010 the user base was growing sufficiently fast and the utility from that wider network as adding yet more value to mean that their was never inflation.  Their has only ever been deflation and it has averaged something like 1000% a year over the long run, well into anyone's definition of hyper-deflation.  Regardless of your opinion on inflation or deflation don't be confused as to the actual history.

there is some legitimate debate as to the meaning of inflation. Traditionally it was used to describe an expansion of the money supply. It has gradually lost this meaning and been replaced with the more politically friendly meaning of a change in purchasing power. It should be noted that we are still in the transitional period and neither meaning is "incorrect" you just need to define your terms when talking with people.

Impaler and I are basically having this same fight in another thread. I don't subscribe to the 'purchasing power' definition.

But yes, I absolutely wouldn't be involved in bitcoin if didn't have a limited supply. That's it's primary selling point ingeneral. In specific I'm fascinated to watch as the whole thing unfolds and we'll all get to see if this idea can really free the world from perpetual debt based thinking.

[firefop]

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount...

That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year).

[Sweft]

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount...

That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year).

I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin.

You know that it takes energy to discover blocks?  It's not like printing fiat out of thin air.  Those coins
support miners who secure the system.

Much like gold requires energy to mine.  So what you're saying that gold loses value over time because more gold is mined?

[firefop]

I have extensively describe  the problems with a deflationary cryptocurrency.

See this thread

https://bitcointalk.org/index.php?topic=12109.0

unfortunately your premise is deeply flawed.

Flaw 1. You're depending on moores law to continue unchanged... it is in fact expected to slow near the end of 2013... the projections say another doubling will occur over the following 3 years. . . after that it's in doubt if it will continue at this rate at all. The reason being that we're fast approaching the physical limits of size involved with silicon. I believe that the limit is in the 3 to 4 nanometer range... and once we're hard up against that it will become impossible for moores law to continue as it has for the last 50 years (quantum computing will break this barrier and may infact cause moores law to remain true when it become practical).

Flaw 2. The issue of 'loss of coins' and the idea that the amount of bitcoin in circulation decreases over time is completely irrelevant. The accepted solution to this is an increase in price and an associated extension of the decimal places to allow smaller and smaller transactions will keep this from ever being an issue.

Flaw 3. Your assumption that the value of a bitcoin is somehow related to the hashrate or security of the network as a whole. While this sounds good in theory, once you become aware of the hard limit imposed by silicon's molecular size and the issues involved in quantum computing... this same 'wall' in technology that will slow and stop moores law will effectively prevent this from being an issue until we get into quantum computing. once bitcoin hashing acis are in the same nano-meter range as the final stages of other asic technology there's nowhere else to go relative to computer power increases for cost... and we're in the exact same boat we're in now... enough money spent on hash power could cripple the network - but once asics are profitable and there's any sort of 'asic arms race'  this concern almost vanishes. What you're describing is the non-adoption scenario... where bitcoins don't gain enough transaction velocity to compensate for the lack of a block rewards.  While this could possibly happen. Supporters of bitcoin believe it will achieve 'adoption' before then and manage to sustain itself.

[firefop]

I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin.

You know that it takes energy to discover blocks?  It's not like printing fiat out of thin air.  Those coins
support miners who secure the system.

Much like gold requires energy to mine.  So what you're saying that gold loses value over time because more gold is mined?

If gold was being used as a currency it would be losing more value over time as more was mined...

Gold is used as a store of value rather than as a currency. But it's value does decrease as more is mined, that however is not a net lever on the value of gold because it's value relative to fiat is increasing by a much larger amount - due to rampant inflation on the fiat side. This effect has been noticed ever since nations abandoned gold as a backing for fiat. I believe that using it to back fiat was actually holding the price of gold down over this time... and you can see evidence of this by looking at the price of gold from 1970 to 1973 in the USA.

[johnyj]

The only reason you want to manipulate the money supply is that you want the price level to stay relatively stable. Other than this goal,  all the other money supply scheme, be it constant or limited, are the same: You have unstable price level

No one has tried a limited supply, so it is worth trying. Even set the transaction fee to be 0.005, the transaction fee in each block might bypass block reward after 4 years

[Walter Rothbard]

Anyone care to join me in this thought exercise?

Why make it a thought exercise?  Make a currency that does this, and see what happens.

[wachtwoord]

   
Would a permanent 50BTC block reward have changed the discussion?

Yes, I would not be part of it.

Yes you would as it is easy to fork Bitcoin. If no-one would have forked the imaginary KeynesianCoin (which i highly doubt) I would have.

[DataPlumber]

Anyone care to join me in this thought exercise?

Why make it a thought exercise?  Make a currency that does this, and see what happens.

In part, because I think the fixed-supply model is stronger.

In part, because to most users, this isn't noticeably distinct from the current Bitcoin model.

In part, because I don't think a lot of cryptocurrency competition is necessarily good, this early in the game.  If there's one clear winner, it's more likely to spur public adoption.  For example, the a big "Blu-Ray vs HD-DVD" fight delayed (or at least reduced) general adoption of HD media by years.  Or if you don't like that example, find 100 people on the street and (attempt to) explain the difference between Bitcoin and Litecoin.  Now, ask them if having to make that choice makes them *more* or *less* likely to adopt one.

[wingding]

Anyone care to join me in this thought exercise?

Why make it a thought exercise?  Make a currency that does this, and see what happens.

In part, because I think the fixed-supply model is stronger.

In part, because to most users, this isn't noticeably distinct from the current Bitcoin model.

In part, because I don't think a lot of cryptocurrency competition is necessarily good, this early in the game.  If there's one clear winner, it's more likely to spur public adoption.  For example, the a big "Blu-Ray vs HD-DVD" fight delayed (or at least reduced) general adoption of HD media by years.  Or if you don't like that example, find 100 people on the street and (attempt to) explain the difference between Bitcoin and Litecoin.  Now, ask them if having to make that choice makes them *more* or *less* likely to adopt one.

How to explain the difference?  I would tell them litecoin is a little less ponzi than bitcoin. I would also tell them that if they want a medium for exchange of value, and not for speculation, they have to wait. So contrary to your line of argument, new coins and experimentation are required for general adaption to take place.

[DataPlumber]

How to explain the difference?  I would tell them litecoin is a little less ponzi than bitcoin.

"A little less Ponzi"?  ... Wow.  Um.  I'm not going to engage you on that point.

I would also tell them that if they want a medium for exchange of value, and not for speculation, they have to wait. So contrary to your line of argument, new coins and experimentation are required for general adaption to take place.

I know I couched my argument in terms of user adoption, but the thing we need more than anything else right now is merchant adoption (which is the "wait" in your "they have to wait.")  And getting merchants to adopt one shockingly new and different currency will be a huge challenge; asking them to select one (or more) out of several or dozens will generally result in them adopting none.

So, I don't mind that there's one big dog in the market right now.

[wingding]

How to explain the difference?  I would tell them litecoin is a little less ponzi than bitcoin.

"A little less Ponzi"?  ... Wow.  Um.  I'm not going to engage you on that point.

I would also tell them that if they want a medium for exchange of value, and not for speculation, they have to wait. So contrary to your line of argument, new coins and experimentation are required for general adaption to take place.

I know I couched my argument in terms of user adoption, but the thing we need more than anything else right now is merchant adoption (which is the "wait" in your "they have to wait.")  And getting merchants to adopt one shockingly new and different currency will be a huge challenge; asking them to select one (or more) out of several or dozens will generally result in them adopting none.

So, I don't mind that there's one big dog in the market right now.

Anyway, my answer to your OP qustion, A permanent 50 BTC reward would have been much better. It  would demonstrate more than a game of beeing in early.

[firefop]

How to explain the difference?  I would tell them litecoin is a little less ponzi than bitcoin.

"A little less Ponzi"?  ... Wow.  Um.  I'm not going to engage you on that point.

I would also tell them that if they want a medium for exchange of value, and not for speculation, they have to wait. So contrary to your line of argument, new coins and experimentation are required for general adaption to take place.

I know I couched my argument in terms of user adoption, but the thing we need more than anything else right now is merchant adoption (which is the "wait" in your "they have to wait.")  And getting merchants to adopt one shockingly new and different currency will be a huge challenge; asking them to select one (or more) out of several or dozens will generally result in them adopting none.

So, I don't mind that there's one big dog in the market right now.

I agree with the the sentiment, I don't believe it's very helpful if a dozen other coins started pushing for mainstream adoption. But it could be extremely valuable re:media coverage if we could turn the focus from "is bitcoin a good idea" to "which crypto should you choose".

I don't worry so much about vendor adoption for 2 reasons. Companies like bitpay are out there growing like crazy... and if a business owner is asked by enough customers 'when are you going to accept bitcoins?' the business owner will want to start accepting them. Also I see the primary feature for vendors is 'no chargebacks' which is a huge issue for most retail businesses and seem to be an instant selling point to me.

Bitcoin has already found growth in the online services sector. Online Gambling, web hosting, etc and adoption by companies like wordpress and reddit.  So while we could as a community push for big existing companies to adopt, it seems to me that this is already happening and will continue to happen in cases where bitcoin makes sense for existing companies to use.

Eventually, someone is going to have to throw big money at some sort of hardware wallet and point of sale system to get that off the ground - if someone like a major pharmacy or chain store (7-11) were to start OTC bitcoin trades using a POS system provided by some bitcoin based company... that right there would solve all these problems.

Another potential route is to push content delivery systems (steam, origins whatever) to use bitcoin because of the drastically reduced fees... imo this is more likely the easiest route to go. Even something like zynga taking it as payment might be all it would need to everyone to start taking it.

But I think when it comes right down to it... there's nothing more important than the getting individual users to start using bitcoin (and asking the people they do business with to start accepting it also). In this vein I think it would be very interesting to see some numbers on the actual 'buying power' of bitcoin users as a whole. If we could show a vendor that basically "there's 10million geeks, potential customers who'll come look at your store / products if you accept bitcoin" that might be enough to get them to do it right there... even without some sort of POS system.

[Sweft]

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount...

That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year).

I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin.

You know that it takes energy to discover blocks?  It's not like printing fiat out of thin air.  Those coins
support miners who secure the system.

Much like gold requires energy to mine.  So what you're saying that gold loses value over time because more gold is mined?

I have reconsidered your idea and I believe that the two properties that you have proposed may make an adoption or a fork less frictional.  The reason being is that the fork will allow current bitcoiners to more easily participate in the network.  The second thing that is beneficial is that since you have proposed to change block reward to 200 coins is basically nullifies the existing early adopter advantage and allows for a wider adoption of the future currency.  

Where we diverge in opinion is in the fact that I believe that there needs to be a point where inflation is controlled at a rate similar to that of Gold inflation, which is 2%.

[wingding]

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount...

That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year).

I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin.

You know that it takes energy to discover blocks?  It's not like printing fiat out of thin air.  Those coins
support miners who secure the system.

Much like gold requires energy to mine.  So what you're saying that gold loses value over time because more gold is mined?

I have reconsidered your idea and I believe that the two properties that you have proposed may make an adoption or a fork less frictional.  The reason being is that the fork will allow current bitcoiners to more easily participate in the network.  The second thing that is beneficial is that since you have proposed to change block reward to 200 coins is basically nullifies the existing early adopter advantage and allows for a wider adoption of the future currency.  

Where we diverge in opinion is in the fact that I believe that there needs to be a point where inflation is controlled at a rate similar to that of Gold inflation, which is 2%.

Well, remember that the 200 coin block reward fork will create a inflation starting with 100% the first year. It will take 50 years before it reach 2%. I think we need not worry to much about what happens after that.

[Sweft]

I like your idea, except i would make a couple of changes.

1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation.  Then have coin inflation adjust to 2%.

1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining.

2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year.

But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time)

Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount...

That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year).

I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin.

You know that it takes energy to discover blocks?  It's not like printing fiat out of thin air.  Those coins
support miners who secure the system.

Much like gold requires energy to mine.  So what you're saying that gold loses value over time because more gold is mined?

I have reconsidered your idea and I believe that the two properties that you have proposed may make an adoption or a fork less frictional.  The reason being is that the fork will allow current bitcoiners to more easily participate in the network.  The second thing that is beneficial is that since you have proposed to change block reward to 200 coins is basically nullifies the existing early adopter advantage and allows for a wider adoption of the future currency.  

Where we diverge in opinion is in the fact that I believe that there needs to be a point where inflation is controlled at a rate similar to that of Gold inflation, which is 2%.

Well, remember that the 200 coin block reward fork will create a inflation starting with 100% the first year. It will take 50 years before it reach 2%. I think we need not worry to much about what happens after that.

I understand that and it is a problem.  There are ways to make a fork reach the 2% threshold faster, like bitcoin does.