Who should pay the miner ?

[grau]

The miner delivers the computation needed to secure the network.

Who enjoys network security ? In the first place those with significant holdings in BTC.
This makes me think that a demurrage (cost of storage) should be imposed on holdings that is to be distributed to miner.

Note that older transactions (means older money) enjoy higher security and until they do not move disallow pruning the merkle tree, therefore also imposing added bandwith on the network. These observations support a demurrage too.

Demurrage would also foster trade since storing money is associated with cost. Note that if storage cost is benefited to miner, then this is not inflationary and but mining (that delivers value to everyone) more attractive.

[hugolp]

You dont get tired of throwing this idea around, do you?

If this was implemented Bitcoin would be a lot less atractive, it would not take off and basically wold make mining a lot less profitable.

[grau]

You dont get tired of throwing this idea around, do you?

If this was implemented Bitcoin would be a lot less atractive, it would not take off and basically wold make mining a lot less profitable.

You would wish it was implemented if miners realize that doing it is not profitable without it and stop securing your old coins.

[JoelKatz]

You would wish it was implemented if miners realize that doing it is not profitable without it and stop securing your old coins.

If they did that, they'd have to stop securing their own coins too.

[hugolp]

You dont get tired of throwing this idea around, do you?

If this was implemented Bitcoin would be a lot less atractive, it would not take off and basically wold make mining a lot less profitable.

You would wish it was implemented if miners realize that doing it is not profitable without it and stop securing your old coins.

Honestly, I hope some p2p competing currency to Bitcoin appears, so they go down this route (or inflationary route, or any of the ideas that promote consumerism) so everybody can see how that currency collapses and we are done with all this discussions.

Please, go start your own currency with this system. Thanks to Satoshi and the open source code its very easy.

[grau]

A miner who stops is likely to cash out too using an exchange.

Please do not get me wrong, I want this experiment to succeed and am not envying old money.

It is just economics. The system has a cost of electricity and hardware, costs have to be reallocated to those benefit.
I see two ways: Transaction costs and Demurrage. It is important to keep transaction costs low for wide acceptance.

It only need to be a tiny cost but it has to be.

[hugolp]

A miner who stops is likely to cash out too using an exchange.

Please do not get me wrong, I want this experiment to succeed and am not envying old money.

It is just economics. The system has a cost of electricity and hardware, costs have to be reallocated to those benefit.
I see two ways: Transaction costs and Demurrage. It is important to keep transaction costs low for wide acceptance.

It only need to be a tiny cost but it has to be.

Two questions:

1) Why are you so obsess on promoting consumerism inside Bitcoin? (Almost all your posts relate to this idea).

2) What would stop anyone from moving their bitcoins from one account to other so they dont become "old"?. They would not even have to offer almost or at all fee because they dont care if they stay without processing a lot of time (even better because they will be "younger").

[grau]

Two questions:

1) Why are you so obsess on promoting consumerism inside Bitcoin? (Almost all your posts relate to this idea).

Thanks for taking me seriously.
I am long time goldbug and no inflationtionist nor consumerist. The design of bitcoin is brilliant for a reserve currency. It try to make it suitable for trade too, because without entering the merchants and customers it will starve.

2) What would stop anyone from moving their bitcoins from one account to other so they dont become "old"?. They would not even have to offer almost or at all fee because they dont care if they stay without processing a lot of time (even better because they will be "younger").

That would already a benefit to the system since the Merkle tree could be pruned. Encouraging such an action is one of the reasons to introduce a cost of storage.

The solution could be e.g.: a minimum transaction fee paid to miner of the block that is a function of age of the source.

[hugolp]

Thanks for taking me seriously.
I am long time goldbug and no inflationtionist nor consumerist. The design of bitcoin is brilliant for a reserve currency. It try to make it suitable for trade too, because without entering the merchants and customers it will starve.

I just watched your post history.

You say that you dont want to promote consumerism, but your proposal does just that. People would have an incentive to spend their bitcoins in things they would not have buyed in normal conditions. They would buy things they dont really need just to get rid of the bitcoins. That is the definition of consumerism.

Also, I believe that your changes go against stablishing Bitcoin as a long term real currency for merchants and customers. Here is why:

That would already a benefit to the system since the Merkle tree could be pruned. Encouraging such an action is one of the reasons to introduce a cost of storage.

The solution could be e.g.: a minimum transaction fee paid to miner of the block that is a function of age of the source.

And then what would be the incentive for saving? If you do that you turn bitcoins into something that nobody wants to hold for very long because it depreciates with time. Therefore it will start a process of people starting to spend their bitcoins as quick as they can, turning into a inflationary spiral forcing merchants to stop accepting bitcoins. It would be the edn of Bitcoin.

There is a reason why you only see depreciating currencies as a very local and short term experiments or forced by governments. Its because they dont work.

[grau]

You say that you dont want to promote consumerism, but your proposal does just that.

There is a difference between consume and investment. A tiny cost of storage on money does not make you buy something you do not need, but makes you think on how to recoup it by e.g. running a miner that earns that and thereby securing the network.

And then what would be the incentive for saving?

A storage cost does not necessarily eliminates saving incentives, since all things relative. If storage cost is smaller than the effect of built in deflation then it does not change the game.

Remember that even holding gold has a storage cost either explicit for the vault or implicit by the chance that it could be stolen or lost if not in vault.

There is a reason why you only see depreciating currencies as a very local and short term experiments or forced by governments. Its because they dont work.

Just a side note: Gold standard was a depreciating currency in fact for thousands of years. It depreciated by the fact that new kings used to clip the old coins.

[hugolp]

There is a difference between consume and investment.

Yes, so?

A tiny cost of storage on money does not make you buy something you do not need, but makes you think on how to recoup it by e.g. running a miner that earns that and thereby securing the network.

Really? You really think the reaction to the majority of the people would be: Hey, lets install a mining rig! The ones that wanted to would anyways, and the rest would not anyways. Your proposal is just an incentive to spend bitcoins quickly, triggering a inflationary spiral.

Btw, you keep using this languate like tiny cost, small transaction, it needs to be done, etc... The fact that you add a subjective adjective to give the impression that it would be acceptable or that kind of rethoric does not impress me. Its a bad sign when debating someone actually.

A storage cost does not necessarily eliminates saving incentives, since all things relative. If storage cost is smaller than the effect of built in deflation then it does not change the game.

It changes the game. You might argue that not enough, but it changes the game.

Remember that even holding gold has a storage cost either explicit for the vault or implicit by the chance that it could be stolen or lost if not in vault.

Bitcoin can be stolen as well so that cost does not apply here. As for the rest, I might own gold and not be paying any storage. But still, I dont see your point. The fact that gold has the phisical need of being sotred and some people pay for that service does not change the fact that with Bitcoin is not necesary and any competitor that tries to impose that cost will have to fight against Bitcoin, that does not.

Just a side note: Gold standard was a depreciating currency in fact for thousands of years. It depreciated by the fact that new kings used to clip the old coins.

I dont support the gold standard, and there are a lot of types of gold standard very different from each other. I dont really get your comment.

You have avoided addressing the problem of the inflationary spiral. Why would merchants accept a currency that they can not hold for long (or its devaluated) when anyone can easily create a currency that has the same properties except for the fact that it does not depreciate over time. How would your currency compete against that? (there is a reason why this kind of currencies are imposed and do not last long if done voluntarely). If you think it can, you should start your own currency and prove it.

[grau]

There is a difference between consume and investment.

Yes, so?

You are right that my proposal does not make people do the right decision. I meant that storage cost might give the incentive to both not only consume.

Your proposal is just an incentive to spend bitcoins quickly, triggering a inflationary spiral.

It would redistribute money, not create any new. I do not see how it would be inflationary.

Btw, you keep using this languate like tiny cost, small transaction, it needs to be done, etc... The fact that you add a subjective adjective to give the impression that it would be acceptable or that kind of rethoric does not impress me. Its a bad sign when debating someone actually.

Valid point, thanks I will watch my tongue.

A storage cost does not necessarily eliminates saving incentives, since all things relative. If storage cost is smaller than the effect of built in deflation then it does not change the game.

It changes the game. You might argue that not enough, but it changes the game.

Yes, but not in the meaning of eliminating savings incentives. I propose it to pay those providing security of savings.

Remember that even holding gold has a storage cost either explicit for the vault or implicit by the chance that it could be stolen or lost if not in vault.

Bitcoin can be stolen as well so that cost does not apply here. As for the rest, I might own gold and not be paying any storage. But still, I dont see your point.

If you do not protect your gold (paying no storage means likely that), you run the cost of probability weighted loss.

The fact that gold has the phisical need of being sotred and some people pay for that service does not change the fact that with Bitcoin is not necesary and any competitor that tries to impose that cost will have to fight against Bitcoin, that does not.

If BitCoin does not offer competitive incentive to do the computation, miner might switch to an other chain that does.

Just a side note: Gold standard was a depreciating currency in fact for thousands of years. It depreciated by the fact that new kings used to clip the old coins.

I dont support the gold standard, and there are a lot of types of gold standard very different from each other. I dont really get your comment.

You have avoided addressing the problem of the inflationary spiral. Why would merchants accept a currency that they can not hold for long (or its devaluated) when anyone can easily create a currency that has the same properties except for the fact that it does not depreciate over time. How would your currency compete against that? (there is a reason why this kind of currencies are imposed and do not last long if done voluntarely). If you think it can, you should start your own currency and prove it.

My point was that there were long periods with depreciating currencies.

As for the inflation I adressed above.

I suggest we think about how to add even more attractive features to Bitcoin, usability enhancements or added features like the trust chain I also suggested.

For the Merchant BTC is not a store of wealth but a medium of exchange. He is more concerned of transaction costs, since moves much more money than he earns.

Transaction costs might become high explicitly because miner demand more profit or implicitly because unprofitable mining stops and network security endangers transactions.

[hugolp]

It would redistribute money, not create any new. I do not see how it would be inflationary.

It would not redistribute money in the typical sense that word is used. It would incentivate spending it instead of saving it.

It would be price inflationary because people would not want to hold it. If you destroy the demand for the currency, even without changing its supply, its value goes down because you are changing the demand.

My point was that there were long periods with depreciating currencies.

Which is not addressing my point, since I said that said currencies do not last UNLESS imposed by force.

As for the inflation I adressed above.

With the clarification I hope I make clear what I mean and you can answer to it.

For the Merchant BTC is not a store of wealth but a medium of exchange. He is more concerned of transaction costs, since moves much more money than he earns.

But someone at some point will have to accumulate bitcoins in order to make big investments, like expanding the business. You are penalizing this type of behaviour and I predit that a lot of merchants will choose a currency that does not penalize saving if given the choice.

I honestly hope that some competing currency to Bitcoin with depreciating or inflationary characteristics appears so you and anyone else can see for yourself.

Transaction costs might become high explicitly because miner demand more profit or implicitly because unprofitable mining stops and network security endangers transactions.

If miners do become annoyed with people having bitcoin savings, they can always refuse to process their transactions unless they give a big fee, which would be similar to your propposal. There is no need to impose it beforehand. If miners really become annoyed as you claim they can already react to it with the present implementation.

[grau]

It would redistribute money, not create any new. I do not see how it would be inflationary.

It would not redistribute money in the typical sense that word is used. It would incentivate spending it instead of saving it.

It would be price inflationary because people would not want to hold it. If you destroy the demand for the currency, even without changing its supply, its value goes down because you are changing the demand.

You might not like the direction of transfer but the proposal does not change the quantity of currency therefore is not inflationary through money creation.
Let me address your remaining argument the demand for currency: 
People demand for currency in my opinion for purposes including:

- medium of exchange
- store of wealth

You argue the store has to come for free. I think that:

1. usability for storage is not eliminated by storage costs since all things relative. As long as it is competitive with other storage forms does not change the game. You will not buy anything for saving that depreciates faster.
2. if store is for free people will use it primarily for that purpose and seek an other way to do exchange. Which is bad for BTC economy to grow.

My point was that there were long periods with depreciating currencies.

Which is not addressing my point, since I said that said currencies do not last UNLESS imposed by force.

Yes. In this case the force is the second law of thermodynamics. Bitcoin savings exist because energy is continually expended to keep them secure.  If savers do not pay for that somebody else does or the systems stops and saving destroyed.

I should have said depreciation of saving not currency. I think this is causing the disagreement. Neither me nor you want a depreciating currency that is actually inflation.

Cost on storage of savings is perceived by the saver as depreciation of his wealth but this is his view only. The miner who receives the storage cost perceives the same as return on investment. The currency in whole is not affected, this is not currency depreciation.

I honestly hope that some competing currency to Bitcoin with depreciating or inflationary characteristics appears so you and anyone else can see for yourself.

It would not be too late to balance out BItcoin between interest of saver and miner. Now these groups are nearly the same, that is why no one moans. If chance is missed, yes that gives room to competition.

[hugolp]

You might not like the direction of transfer but the proposal does not change the quantity of currency therefore is not inflationary through money creation.

Yes, I already said that. Its not monetarely inflationary, it is price inflationary.

Let me address your remaining argument the demand for currency:  
People demand for currency in my opinion for purposes including:

- medium of exchange
- store of wealth

You argue the store has to come for free.

No. Bitcoin storage is not free btw. I argue that you should not impose a artificial fee on storage. If miners decide that they dont want to support long time savers and want to charge them a more expensive fee, that is alright with me, but there is no need to have it by default. Let the miners decide their business model as they see fit.

And please stop putting words in my mouth.

I think that:

1. usability for storage is not eliminated by storage costs since all things relative. As long as it is competitive with other storage forms does not change the game. You will not buy anything for saving that depreciates faster.
2. if store is for free people will use it primarily for that purpose and seek an other way to do exchange. Which is bad for BTC economy to grow.

It is a historic fact that savings promote long term growth, while economies that penalize savings go into consumption frencies that stop growth.

But lets avoid discussing your opinion and my opinion, and let the miners and users decide by themselves.

Yes. In this case the force is the second law of thermodynamics. Bitcoin savings exist because energy is continually expended to keep them secure.  If savers do not pay for that somebody else does or the systems stops and saving destroyed.

I stopped reading at second law of thermodynamics.

I should have said depreciation of saving not currency. I think this is causing the disagreement. Neither me nor you want a depreciating currency that is actually inflation.

Cost on storage of savings is perceived by the saver as depreciation of his wealth but this is his view only. The miner who receives the storage cost perceives the same as return on investment. The currency in whole is not affected, this is not currency depreciation.

There is nothing stopping the miners from implementing this by themselves if they see its needed.

It would not be too late to balance out BItcoin between interest of saver and miner. Now these groups are nearly the same, that is why no one moans. If chance is missed, yes that gives room to competition.

Please start the competition. I really do want competition to Bitcoin.

[grau]

I stopped reading at second law of thermodynamics.

You reject listening to scientific arguments and repeat dogmas.

Please start the competition. I really do want competition to Bitcoin.

I wish for a living standard not for a religious community.

[Grinder]

I think you are right, the current modell will not work. Bitcoins are perfect for hoarding, but at the same time it is expected that only those using it for consumption will pay the price for keeping the network secure. It seems very unlikely that this will be enough to me. However, it is only the miners who get to vote on how this is solved, so my guess is that eventually there will be some kind of tax. Either from the existing bitcoins or through inflation.

[hugolp]

I stopped reading at second law of thermodynamics.

You reject listening to scientific arguments and repeat dogmas.

Im an engineer. I know how to recognize between science and charlatanery.

Please start the competition. I really do want competition to Bitcoin.

I wish for a living standard not for a religious community.

  I as an atheist wish for the same. I really dont understand what all this have to do with monetary policy.

[grau]

I stopped reading at second law of thermodynamics.

You reject listening to scientific arguments and repeat dogmas.

Im an engineer. I know how to recognize between science and charlatanery.

This was a rather weak argument. Try again.

Please start the competition. I really do want competition to Bitcoin.

I wish for a living standard not for a religious community.

  I as an atheist wish for the same. I really dont understand what all this have to do with monetary policy.

We are not talking about monetary policy, but allocation of costs of a system of common interest.
Your unconditional but weakly argumented support for savings at no cost sounds like a dogma.

[grau]

I think you are right, the current modell will not work. Bitcoins are perfect for hoarding, but at the same time it is expected that only those using it for consumption will pay the price for keeping the network secure. It seems very unlikely that this will be enough to me. However, it is only the miners who get to vote on how this is solved, so my guess is that eventually there will be some kind of tax. Either from the existing bitcoins or through inflation.

Thanks for the support.

I would personally rule out inflation, if miner are paid by saver and trader there is no need for it.

Miner are currently paid with newly printed money, if anything this is inflationary.