arashb (OP)
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July 29, 2013, 01:23:04 AM |
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If bitcoins are unregulated, this means that bitcoins are constantly circulating right? It's not like government money that is constantly tossed while new crisp bills are being made. Eventually this means that there will be so many bitcoins as they get mined that a single bitcoin will have nearly no value, right? Or am I missing something?
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It is a common myth that Bitcoin is ruled by a majority of miners. This is not true. Bitcoin miners "vote" on the ordering of transactions, but that's all they do. They can't vote to change the network rules.
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Birdy
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July 29, 2013, 01:33:56 AM |
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Yes, you are missing the cap of 21 million Bitcoins. There will never be mined more than that.
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Anon136
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July 29, 2013, 01:35:25 AM |
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paper notes make up a miniscule fraction of the total dollars in existence.
the fact that paper notes are regulated doesnt cause them to circulate less
when old bills are tossed and new ones are made this only pulls them out of circulation for a very brief time, its inconsequential.
there is a limit on the total number of bitcoins that can be produced. roughly 21million is the cap.
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Rep Thread: https://bitcointalk.org/index.php?topic=381041If one can not confer upon another a right which he does not himself first possess, by what means does the state derive the right to engage in behaviors from which the public is prohibited?
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SpoddyHalfWit
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July 29, 2013, 07:29:55 AM |
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If bitcoins are unregulated, this means that bitcoins are constantly circulating right? It's not like government money that is constantly tossed while new crisp bills are being made. Eventually this means that there will be so many bitcoins as they get mined that a single bitcoin will have nearly no value, right? Or am I missing something?
You couldn't have it more wrong. Money circulating doesn't create new money. If I have one Bitcoin and I spend it with you, now you have one Bitcoin and I have none. There is no increase in the number of Bitcoins. There is no cap on how many dollars can be printed, which is why 100 dollars a century ago could buy you much and now it buys very little. With bitcoins there is a limit of 21million that will ever be created. Some of these will get lost as people lose wallet passwords etc. So the criticism of Bitcoins has normally centred on them being deflationary rather than inflationary. There is an interesting debate as to whether you can have fractional reserve banking with Bitcoins and hence increase the money supply by lending (as happens with real money).
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DeathAndTaxes
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Gerald Davis
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July 29, 2013, 07:33:43 AM |
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Bitcoin is regulated. The protocol is regulated by math, algorithms, and cryptography. I trust that kind of regulation far more than gubbermints made up of fallible humans.
The rate of new generation (and thus inflation) is tightly controlled by the protocol with the rate of new coins in each block being halved every 210,000 blocks.
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Itcher
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July 29, 2013, 08:18:26 AM |
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If bitcoins are unregulated, this means that bitcoins are constantly circulating right? It's not like government money that is constantly tossed while new crisp bills are being made. Eventually this means that there will be so many bitcoins as they get mined that a single bitcoin will have nearly no value, right? Or am I missing something?
You couldn't have it more wrong. Money circulating doesn't create new money. If I have one Bitcoin and I spend it with you, now you have one Bitcoin and I have none. There is no increase in the number of Bitcoins. Ah, crazy-hazy-money-economics! If I invest one btc in a miner's company, I still own one BTC, but the miner's company also owns one btc ... it's the same with the banks: I give some sum on my account, the bank lends it to another bank, this to a customer, the customer to a friend and so on ... officially the sum remains the same, but for the use of it it's rising.
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DeathAndTaxes
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Gerald Davis
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July 29, 2013, 04:44:58 PM |
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If bitcoins are unregulated, this means that bitcoins are constantly circulating right? It's not like government money that is constantly tossed while new crisp bills are being made. Eventually this means that there will be so many bitcoins as they get mined that a single bitcoin will have nearly no value, right? Or am I missing something?
You couldn't have it more wrong. Money circulating doesn't create new money. If I have one Bitcoin and I spend it with you, now you have one Bitcoin and I have none. There is no increase in the number of Bitcoins. Ah, crazy-hazy-money-economics! If I invest one btc in a miner's company, I still own one BTC, but the miner's company also owns one btc ... it's the same with the banks: I give some sum on my account, the bank lends it to another bank, this to a customer, the customer to a friend and so on ... officially the sum remains the same, but for the use of it it's rising. Yeah no that isn't the case. You no longer have 1 BTC. You have 1 share of a company which have different valuation, liquidity, and counterparty risk as an ACTUAL BTC. In fractional reserve banking when you deposit $x and the bank loans out $0.9x both "monies" are functionally identical. They all shares the same counterparty risk, the same liquidity, the same valuation. No store is going to say "hey is this dollar bill the product of a loan deposit or is it unencumbered". Name me one BTC merchant which accepts shares of mining companies as a equivalence for BTC. I will wait.
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Itcher
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July 29, 2013, 04:57:29 PM |
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If bitcoins are unregulated, this means that bitcoins are constantly circulating right? It's not like government money that is constantly tossed while new crisp bills are being made. Eventually this means that there will be so many bitcoins as they get mined that a single bitcoin will have nearly no value, right? Or am I missing something?
You couldn't have it more wrong. Money circulating doesn't create new money. If I have one Bitcoin and I spend it with you, now you have one Bitcoin and I have none. There is no increase in the number of Bitcoins. Ah, crazy-hazy-money-economics! If I invest one btc in a miner's company, I still own one BTC, but the miner's company also owns one btc ... it's the same with the banks: I give some sum on my account, the bank lends it to another bank, this to a customer, the customer to a friend and so on ... officially the sum remains the same, but for the use of it it's rising. Yeah no that isn't the case. You no longer have 1 BTC. You have 1 share of a company which have different valuation, liquidity, and counterparty risk as an ACTUAL BTC. In fractional reserve banking when you deposit $x and the bank loans out $0.9x both "monies" are functionally identical. They all shares the same counterparty risk, the same liquidity, the same valuation. No store is going to say "hey is this dollar bill the product of a loan deposit or is it unencumbered". Name me one BTC merchant which accepts shares of mining companies as a equivalence for BTC. I will wait. Naa, it may be not exactly the same, that's right. But I own still 1 Bitcoin after I spent it for a share. This Bitcoin has a double-usage: For the company to buy things like asics, and for me as a sleeping money ... Also: who says that the system you described for the banks will never develope for Bitcoin? Enable some people to get a credit and to store money with interest rate is a very important function of money / banks, and if bitcoin should ever rise really high, especially in developing countries, it will develope a way to do this.
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J603
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July 29, 2013, 05:10:09 PM |
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If bitcoins are unregulated, this means that bitcoins are constantly circulating right? It's not like government money that is constantly tossed while new crisp bills are being made. Eventually this means that there will be so many bitcoins as they get mined that a single bitcoin will have nearly no value, right? Or am I missing something?
You're missing the cap of 21 million. Eventually 1 BTC will be worth thousands if not millions of dollars. When the cap is reached most transactions are going to be in very small fractions. This is assuming that it continues to grow and expand, however. Also, while bitcoins are continuously mined, it gets harder and harder to mine as time goes on, leading to them being distributed slower and slower until the 21 million mark is reached. Because of this, bitcoins should be heavily deflated by the end as opposed to inflated.
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DeathAndTaxes
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Gerald Davis
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July 29, 2013, 05:15:17 PM |
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Naa, it may be not exactly the same, that's right. But I own still 1 Bitcoin after I spent it for a share. This Bitcoin has a double-usage: For the company to buy things like asics, and for me as a sleeping money ...
No you no longer own 1 Bitcoin, you own a share in a company and while it may have the same value as 1 Bitcoin, it isn't a Bitcoin. If you spent 400 Bitcoins and bought a car would you also say you still own 400 Bitcoins? You may have a car and that car may be worth 400 Bitcoins (today) but it isn't 400 Bitcoins. The money supply hasn't inflated, money was simply transfered. A transfer of wealth is never inflationary.
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