Uncapped coin vs capped coin supply

[AliceWonder]

If bitcoin was meant to replace the dollar or the euro - capped coin supply would be a problem.
I don't think it ever will. Borrowing and lending etc. will remain the domain of fiat currency, bitcoin will be used for transfering money across international borders and for many online purchases but fiat currency isn't going anywhere so I don't think the coin cap is a problem, 21 million is more than enough for our lifetime. Let the next generation not even born yet worry about what happens next.

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[sidhujag]

If bitcoin was meant to replace the dollar or the euro - capped coin supply would be a problem.
I don't think it ever will. Borrowing and lending etc. will remain the domain of fiat currency, bitcoin will be used for transfering money across international borders and for many online purchases but fiat currency isn't going anywhere so I don't think the coin cap is a problem, 21 million is more than enough for our lifetime. Let the next generation not even born yet worry about what happens next.

Narrow minded thinking like that is what got us into this mess in the firstplace

[Voogru]

If bitcoin was meant to replace the dollar or the euro - capped coin supply would be a problem.
I don't think it ever will. Borrowing and lending etc. will remain the domain of fiat currency, bitcoin will be used for transfering money across international borders and for many online purchases but fiat currency isn't going anywhere so I don't think the coin cap is a problem, 21 million is more than enough for our lifetime. Let the next generation not even born yet worry about what happens next.

How?

The coins are infinitely divisible. You might as well just say there are not 21 million bitcoins, but 21 infinity plus one coins. Because the reality is they can infinitely be broken down if it ever comes down to that.

Yes, some people will be made quite wealthy, so there is an argument that early adopters 'unfairly' benefit, a small minority gets a windfall.

So the alternative to this is where the government prints money, and a small minority gets a windfall?

There is one difference though, a small minority gets a windfall once. The alternative government money printing is a small minority gets a windfall until the currency eventually implodes. Then the process repeats itself all over again.

[Vivisector999]

It's fine and dandy in the eyes of someone who owns 1000 Bitcoins, for the value to be capped and eventually have each one be worth the equivalent of $1,000,000.  It's a total different story from the eyes of the masses that you would like to sell this idea to, if/when crypto-currencies took over as a the main method of currency.

My biggest problem with the idea of a capped coin, is when the payout for mining coins starts dropping less and less, and eventually stops all together, how many people will remain mining?  Will we expect that we will start charging the same transaction fees we are supposedly against that are being charged by the banks in order to keep people's computers on, and keep the currency alive.  Would that not be hypocritical???   Plus with all transactions sitting on the blockchain, the worlds transactions (multiple billion a day) would mean the blockchain would start growing by terabytes daily.   Speaking of waste, you could be using petabytes and even exabytes of data transmission just to sync your wallet.

[xxjs]

It's fine and dandy in the eyes of someone who owns 1000 Bitcoins, for the value to be capped and eventually have each one be worth the equivalent of $1,000,000.  It's a total different story from the eyes of the masses that you would like to sell this idea to, if/when crypto-currencies took over as a the main method of currency.

My biggest problem with the idea of a capped coin, is when the payout for mining coins starts dropping less and less, and eventually stops all together, how many people will remain mining?  Will we expect that we will start charging the same transaction fees we are supposedly against that are being charged by the banks in order to keep people's computers on, and keep the currency alive.  Would that not be hypocritical???   Plus with all transactions sitting on the blockchain, the worlds transactions (multiple billion a day) would mean the blockchain would start growing by terabytes daily.   Speaking of waste, you could be using petabytes and even exabytes of data transmission just to sync your wallet.

Capping or not capping makes no difference, as long as it is predermined. Traders and users would just take it into the picture when making decisions. Changing this now, means that it was not predermined, therefore this can not change with bitcoin now.

The same with the number of coins. I could be billions or just one, it makes no difference. Satoshi may have considered the public relations value of one bitcoin having som reference to some amont of dollars though.

The same with the rate of inflation. In retrospect, with the rate of user expansion that we now have seen, less coins in the beginning, more now could be reasonable. But it makes no diffence, the point is that it is predetermined. Changing it now means that it was not predetermined.

There is an enormous PR value in the fixed amount. Listen to this: The difference between the dollar and bitcoin is that dollar amount is ever increasing, and bitcoin is capped at 21 million. Contra this: The difference between the dollar and bitcoin is that dollar amount is ever increasing, but bitcoin is .. oh shit, forgettaboutit.

Any change in these parameters, if they were changed at the genesis, would make no difference to the price, there is no fix star to compare the price with anyway. Changing them now, changes everything, and may reduce bitcoin to a subordinate clause in history.

[sidhujag]

u didnt really respond to what the guy said what happens with miners as difficulty rises? Wheres the incentive.

Ofcourse u cant change btc but there are alts rhat may become more appealing than btc which are not capped if it breaks through mainstream.

[xxjs]

u didnt really respond to what the guy said what happens with miners as difficulty rises? Wheres the incentive.

Ofcourse u cant change btc but there are alts rhat may become more appealing than btc which are not capped if it breaks through mainstream.

Difficulty rising means downward pressure on the profitability of mining. Other parameters are price of bitcoin, price of electric energy, price of equipment and price of the work expended. I suspect currently the price of bitcoin is the most volatile parameter. There will always be a tendency to move to equilibrium, meaning only the most effective miners will remain. That means mining is not for everybody.

[xxjs]

It is not the producers, traders and merchants that want different fiat types. Converting fiat between different types add to the cost. Some products are now truly international, where goods may pass back and forth repeatedly between different money areas. Fiat conversion cost thus could be more than the 1-2 percent single conversion cost.

The reason we have more than one fiat, is that the governments through money printing tax, each want a piece of the action, just like the small kings in medieval Eurpope took a slice of each horse-cart or barge passing by. Having only USD for example, means that each country would pay the inflation tax to USA.

The alt-coins represents a larger money supply in addition to the original bitcoin money supply, but I suspect traders and merchants will not bother with it because of the convertion cost. And there is no inflation tax with bitcoin. Therefore I think bitcoin is conceivable as a dominating international money.

An altcoin has to provide a unique benefit to succed, something that bitcoin can not be changed to provide. Maybe microtransactions or true anonymity.

[firefop]

u didnt really respond to what the guy said what happens with miners as difficulty rises? Wheres the incentive.

Ofcourse u cant change btc but there are alts rhat may become more appealing than btc which are not capped if it breaks through mainstream.

Difficulty rising means downward pressure on the profitability of mining. Other parameters are price of bitcoin, price of electric energy, price of equipment and price of the work expended. I suspect currently the price of bitcoin is the most volatile parameter. There will always be a tendency to move to equilibrium, meaning only the most effective miners will remain. That means mining is not for everybody.

I agree with difficulty putting downward pressure on the profitability of mining. There are (at least) a couple of other weird things to notice about bitcoin that relate to this discussion.

As velocity of the bitcoin economy increases we have upward pressure on the profitability of mining (more tx fees). Once velocity surpasses the optimal (or is it potential) block size then we have upward pressure on the amounts that will be paid for transaction fees.

As the price of bitcoin moves higher and we're forced to use smaller and smaller fractions of a bitcoin to make normal payments, this will generate more mandatory transaction fees.

Eventually we either achieve 'adoption' (demarked by transactions fees on average being more than 25 btc or even 50 btc per block) or bitcoin fails. I'm unsure if the current blocksize will allow this or not (but it might work if we reduced the block creation time and lowered difficulty and block reward by the correct amounts). At any rate, eventually the tx fees have to become large enough to keep enough miners mining to secure the network.

Isn't it such a grand experiment!

~

@OP - you'll never convince me that an inflationary currency is needed. The entire point of bitcoin is that it's deflationary in nature and will trend up over the very long term (double or triple digits of years). This idea that 'early adopters' are somehow cheating is just silly. Moreover, if you look at it in a long enough time frame. Whenever someone buys bitcoin as a long term investment - eventually that will be rewarded. I mean assume that btc goes to 1000000 USD in our lifetimes. That 10btc I have in cold storage will make me relatively rich... but if my grand-kid buys 100 satoshis as a long term investment and your whole 'population increase' thing actually works the way you think it will... then in his lifetime a bitcoin might be worth 100000000 USD. That's still an amazing investment. Nobody gets screwed on bitcoin in the long term as long as we eventually stop making more of them.

[ktttn]

The cap is MBTC20.9999999... ... ...
Or that many satoshis, or satoshisatoshis (BTC0.00000000000000001) and so on.
Like a halflife.
Not MBTC21.

Cap?
What cap? Poof.

Edit: Think transhumanist surreal quantum values.
Mining never stops. The big rewards just shrink into surreal numbers.

[sidhujag]

u didnt really respond to what the guy said what happens with miners as difficulty rises? Wheres the incentive.

Ofcourse u cant change btc but there are alts rhat may become more appealing than btc which are not capped if it breaks through mainstream.

Difficulty rising means downward pressure on the profitability of mining. Other parameters are price of bitcoin, price of electric energy, price of equipment and price of the work expended. I suspect currently the price of bitcoin is the most volatile parameter. There will always be a tendency to move to equilibrium, meaning only the most effective miners will remain. That means mining is not for everybody.

I agree with difficulty putting downward pressure on the profitability of mining. There are (at least) a couple of other weird things to notice about bitcoin that relate to this discussion.

As velocity of the bitcoin economy increases we have upward pressure on the profitability of mining (more tx fees). Once velocity surpasses the optimal (or is it potential) block size then we have upward pressure on the amounts that will be paid for transaction fees.

As the price of bitcoin moves higher and we're forced to use smaller and smaller fractions of a bitcoin to make normal payments, this will generate more mandatory transaction fees.

Eventually we either achieve 'adoption' (demarked by transactions fees on average being more than 25 btc or even 50 btc per block) or bitcoin fails. I'm unsure if the current blocksize will allow this or not (but it might work if we reduced the block creation time and lowered difficulty and block reward by the correct amounts). At any rate, eventually the tx fees have to become large enough to keep enough miners mining to secure the network.

Isn't it such a grand experiment!

~

@OP - you'll never convince me that an inflationary currency is needed. The entire point of bitcoin is that it's deflationary in nature and will trend up over the very long term (double or triple digits of years). This idea that 'early adopters' are somehow cheating is just silly. Moreover, if you look at it in a long enough time frame. Whenever someone buys bitcoin as a long term investment - eventually that will be rewarded. I mean assume that btc goes to 1000000 USD in our lifetimes. That 10btc I have in cold storage will make me relatively rich... but if my grand-kid buys 100 satoshis as a long term investment and your whole 'population increase' thing actually works the way you think it will... then in his lifetime a bitcoin might be worth 100000000 USD. That's still an amazing investment. Nobody gets screwed on bitcoin in the long term as long as we eventually stop making more of them.

Ive already said my piece about the need for some inflationary pressure and not only deflationary it needs a
balance and you cant achieve equilibrium with btc. Banks will simply stop lending.

Ill let someone else fill you in on that.

[xxjs]

u didnt really respond to what the guy said what happens with miners as difficulty rises? Wheres the incentive.

Ofcourse u cant change btc but there are alts rhat may become more appealing than btc which are not capped if it breaks through mainstream.

Difficulty rising means downward pressure on the profitability of mining. Other parameters are price of bitcoin, price of electric energy, price of equipment and price of the work expended. I suspect currently the price of bitcoin is the most volatile parameter. There will always be a tendency to move to equilibrium, meaning only the most effective miners will remain. That means mining is not for everybody.

I agree with difficulty putting downward pressure on the profitability of mining. There are (at least) a couple of other weird things to notice about bitcoin that relate to this discussion.

As velocity of the bitcoin economy increases we have upward pressure on the profitability of mining (more tx fees). Once velocity surpasses the optimal (or is it potential) block size then we have upward pressure on the amounts that will be paid for transaction fees.

As the price of bitcoin moves higher and we're forced to use smaller and smaller fractions of a bitcoin to make normal payments, this will generate more mandatory transaction fees.

Eventually we either achieve 'adoption' (demarked by transactions fees on average being more than 25 btc or even 50 btc per block) or bitcoin fails. I'm unsure if the current blocksize will allow this or not (but it might work if we reduced the block creation time and lowered difficulty and block reward by the correct amounts). At any rate, eventually the tx fees have to become large enough to keep enough miners mining to secure the network.

Isn't it such a grand experiment!

~

@OP - you'll never convince me that an inflationary currency is needed. The entire point of bitcoin is that it's deflationary in nature and will trend up over the very long term (double or triple digits of years). This idea that 'early adopters' are somehow cheating is just silly. Moreover, if you look at it in a long enough time frame. Whenever someone buys bitcoin as a long term investment - eventually that will be rewarded. I mean assume that btc goes to 1000000 USD in our lifetimes. That 10btc I have in cold storage will make me relatively rich... but if my grand-kid buys 100 satoshis as a long term investment and your whole 'population increase' thing actually works the way you think it will... then in his lifetime a bitcoin might be worth 100000000 USD. That's still an amazing investment. Nobody gets screwed on bitcoin in the long term as long as we eventually stop making more of them.

Ive already said my piece about the need for some inflationary pressure and not only deflationary it needs a
balance and you cant achieve equilibrium with btc. Banks will simply stop lending.

Ill let someone else fill you in on that.

Lending will be hampered in this period of strong deflation (of prices measured in bitcoin). But when bitcoin is implemented to its maximum, whatever fraction of the world economy that is, the deflation (of prices in bitcoin) will be much less, due only to population expansion and loss of coins. In the mean time, you can loan in fiat.

[sidhujag]

hmm interesting thought so you think fiat will have any value when the world realizes that there is a viable alternative? If not then system breaks.

[xxjs]

hmm interesting thought so you think fiat will have any value when the world realizes that there is a viable alternative? If not then system breaks.

It depends on the whims of the central bankers. Some fiat could aquire soundness, but it dowsn't seem likely. Eventually all fiat will be gone. It is conceivable.