Bitcoin’s Technocracy

[btcbible]

Bitcoin’s success ultimately depends on the miners’ collective ability and willingness to redistribute (spend) the bitcoin they earn by mining. Miners are somewhat oxymoronic in the sense that they serve as a “distributed” Central Bank. For example, Bitcoin would fail if every miner on the network refused to spend any bitcoin; the economy would essentially become “owned” and insulated by the miners. It would be the equivalent of the Federal Reserve printing bailout money but never delivering it to the banks.

http://btcbible.com/bitcoin-technocracy/

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[Trillium]

Except your statement is entirely theoretical and also improbable, because bitcoin miners like to reap the rewards from what they've sown. If they held BTC and never spent it, what would be the point of mining?

[Operatr]

Bitcoin’s success ultimately depends on the miners’ collective ability and willingness to redistribute (spend) the bitcoin they earn by mining. Miners are somewhat oxymoronic in the sense that they serve as a “distributed” Central Bank. For example, Bitcoin would fail if every miner on the network refused to spend any bitcoin; the economy would essentially become “owned” and insulated by the miners. It would be the equivalent of the Federal Reserve printing bailout money but never delivering it to the banks.

http://btcbible.com/bitcoin-technocracy/

This quote is both ignorant and incorrect, as the author apparently thinks mining is free. Dan Roseman is talking out of his ass.

At this point mining is becoming a serious industry, it takes thousands of dollars and a lot of time to invest in system that provides a decent return. Miners cannot just hoard their coin forever because they have expenses in equipment, space, cooling, power, ect, to keep their operations running and need to cash out to do so.

I don't understand such a narrow and short term point of view either. Long term as Bitcoin and its network grows, the centralization of power is less, not more.

In actuality, miners are the core of spending economy and have the most incentive to use their coins as intended, hopefully the industry will find itself spending only in Bitcoin (and others) instead of USD as time goes along. Get equipment providers to start accepting Bitcoin payments from miners in need, property management companies they use for mining space to take rent in Bitcoin, power companies and/or green power dealing in Bitcoin, etc. This is how the real economy is born and moves Bitcoin away from a commodity mentality.

[btcbible]

Bitcoin’s success ultimately depends on the miners’ collective ability and willingness to redistribute (spend) the bitcoin they earn by mining. Miners are somewhat oxymoronic in the sense that they serve as a “distributed” Central Bank. For example, Bitcoin would fail if every miner on the network refused to spend any bitcoin; the economy would essentially become “owned” and insulated by the miners. It would be the equivalent of the Federal Reserve printing bailout money but never delivering it to the banks.

http://btcbible.com/bitcoin-technocracy/

This quote is both ignorant and incorrect, as the author apparently thinks mining is free. Dan Roseman is talking out of his ass.

At this point mining is becoming a serious industry, it takes thousands of dollars and a lot of time to invest in system that provides a decent return. Miners cannot just hoard their coin forever because they have expenses in equipment, space, cooling, power, ect, to keep their operations running and need to cash out to do so.

I don't understand such a narrow and short term point of view either. Long term as Bitcoin and its network grows, the centralization of power is less, not more.

In actuality, miners are the core of spending economy and have the most incentive to use their coins as intended, hopefully the industry will find itself spending only in Bitcoin (and others) instead of USD as time goes along. Get equipment providers to start accepting Bitcoin payments from miners in need, property management companies they use for mining space to take rent in Bitcoin, power companies and/or green power dealing in Bitcoin, etc. This is how the real economy is born and moves Bitcoin away from a commodity mentality.

Thank you for the criticism and discussion. While I know that there are significant costs (space, equipment & electricity) involved in cryptocurrency, there are currently few (if any) options available to fund those expenses with Bitcoin. Mining expenses are largely paid in fiat currency - which may or may not come from selling Bitcoin. I don't agree with the assertion that miners must cash out in order to continue funding their mining operations. Sure, this is true for some miners. However, my suspicion is that most miners would rather use inflationary fiat currency to pay for such expenses rather than the deflationary currency that they are actively mining.

I'm not quite sure what you mean when you say that "[miners] have the most incentive to use their coins as intended." Could you please elaborate on these incentives and the "intended use" for miner-generated revenue?

Cheers,
DR

[btcbible]

Except your statement is entirely theoretical and also improbable, because bitcoin miners like to reap the rewards from what they've sown. If they held BTC and never spent it, what would be the point of mining?

Speculative investing.

[mitty]

Thank you for the criticism and discussion. While I know that there are significant costs (space, equipment & electricity) involved in cryptocurrency, there are currently few (if any) options available to fund those expenses with Bitcoin. Mining expenses are largely paid in fiat currency - which may or may not come from selling Bitcoin. I don't agree with the assertion that miners must cash out in order to continue funding their mining operations. Sure, this is true for some miners. However, my suspicion is that most miners would rather use inflationary fiat currency to pay for such expenses rather than the deflationary currency that they are actively mining.

I'm not quite sure what you mean when you say that "[miners] have the most incentive to use their coins as intended." Could you please elaborate on these incentives and the "intended use" for miner-generated revenue?

Cheers,
DR

That may be true in the short term for small to medium sized miners but I don't think big miners are going to keep dumping thousands of dollars (or the equivalent of) into mining costs without seeing some return on their investment in the form of selling or using the mined coins. 
Of course some people have lots of money and don't mind paying the costs to mine with no return but I think there are more miners who need to sell/use some of the mined coins to fund their operation than those who don't. 

[Zangelbert Bingledack]

Except your statement is entirely theoretical and also improbable, because bitcoin miners like to reap the rewards from what they've sown. If they held BTC and never spent it, what would be the point of mining?

Speculative investing.

Speculating miners still have to spend (or sell) the coins to obtain any actual real-world benefit. The point being that miners can only hoard insofar as they forego reaping any real-world benefit - that is, only insofar as they do not exert any actual purchasing power. In short, hoarding or control of the money supply comes at a hefty cost.

Moreover, people only hoard coins in order to one day use them. The value appreciation they gain is offset by the risks they take on by not using their coins right away. Everyone has their dis-hoarding point, some immediately, some much later (trading present indulgence for the possibility of greater future gains).