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Author Topic: A Bitcoin future seems like massive poverty!  (Read 3019 times)
gen. specific
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July 10, 2011, 01:25:47 AM
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Given that there will only be 21 million bitcoins in existence, with an untold number of them disappearing into the void and unrecoverable, I feel like this utopian acceptance is a march toward a great poverty!

Now, granted - bitcoins are very easily divisible to smaller denominations, and 1 BTC could easily turn into a cherishable value.

I just feel like 21 million in existence with no recourse for missing bitcoins presents a problem.

Discuss?
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July 10, 2011, 01:29:08 AM
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I don't understand. Why do you think that's a problem?

I am an employee of Ripple.
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July 10, 2011, 01:37:24 AM
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Just because a value is numerically small does not impact it's usefulness.

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July 10, 2011, 02:02:50 AM
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No one says it'll ever become a currency masses start to accept.

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July 10, 2011, 02:15:47 AM
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What makes a bitcoin future more like massive poverty than any other currency's future?

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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July 10, 2011, 02:20:03 AM
 #6

Given that there will only be 21 million bitcoins in existence, with an untold number of them disappearing into the void and unrecoverable, I feel like this utopian acceptance is a march toward a great poverty!

Now, granted - bitcoins are very easily divisible to smaller denominations, and 1 BTC could easily turn into a cherishable value.

I just feel like 21 million in existence with no recourse for missing bitcoins presents a problem.

Discuss?

Think about it this way.  Even if 20 million of those 21 million are lost, there are still 100 trillion individual units of currency remaining.
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July 10, 2011, 03:51:34 AM
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I think this question is fascinating. For the past century we've been told by all the powers that be, that inflation is necessary for the economy. The money supply must grow for the economy to grow. If your money became more valuable just sitting in your matress, people would hide all their money under their matress, and not spend any.

Maybe they are right, but Bitcoin is an interesting experiement to see if a deflationary currency can work. I think people will want to spend a deflationary currency, because once it is widely known to be deflationary, they will get better prices purchasing in deflationary currency than an inflationary one. They will transfer some assets from inflationary currencies to deflationary currencies, and then find themselves richer... and spend more as a result.

I hope I'm right. If you look at the numbers on Bitcoin Watch www.bitcoinwatch.com there are 6.7 million bitcoins in existence, and 2 million of them traded hands in the last 24 hours... that seems like a very vibrant economy with a very high velocity of money, no? Then again, it's hardly been a deflationary last 30 days. So the jury is still out.

As for the paying in fractions of bitcoins, currently the annualized GDP of the bitcoin economy is about $10 billion US. (A bit larger than the country of Macedonia.) The US GDP is around 60 trillion dollars. In the highly unlikely event that the bitcoin economy became as large as the US economy, the dollar to bitcoin ratio would need to be 3 million to one. And while you might find it odd to pay BTC 0.00000833 to purchase a book on Amazon.com, I suspect we'd all do our payments in microBTC or some unit that signifies the millionth decimal place. We'd pay mBTC 8.33 for our book and the wheels of the world would go about spinning as before. I don't see this as the fatal flaw in Bitcoins. (Though I will admit that there may be many other flaws... both seen and unforeseen.)
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July 10, 2011, 05:21:00 AM
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It's just weird thinking that we'll all be buying hotdogs at 0.00000001 bitcoins in a few years. I guess people will have to be comfortable with exponents real soon.
gen. specific
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July 10, 2011, 05:35:43 AM
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It's just weird thinking that we'll all be buying hotdogs at 0.00000001 bitcoins in a few years. I guess people will have to be comfortable with exponents real soon.

yeah this is what I was getting at: it seems that it can be divisible so people will just make sub-denominations, where 1 actual bitcoin will be like owning a gold nugget.
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July 10, 2011, 06:19:25 AM
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Take a look at the discussions here and here:

http://forum.bitcoin.org/index.php?topic=24821.msg318718#msg318718
http://forum.bitcoin.org/index.php?topic=57.0

You're not the only rational person in this forum.  I've posted as "patvarilly" over the last two weeks, as I learned and learned of the technical marvel that underpins Bitcoin.  But I got so fed up with the herd mentality of "government bad, deflation good" that I deleted my account on the forum and swore never to associate myself with Bitcoin again.  However, regretting that today, I've started to notice that if you read enough of the posts here, eventually you'll find that not everyone's a libertarian nutjob, a speculator, a ponzi scheme scammer or a me-me-me goldbug.

I hope a successor to Bitcoin without the nonsense economics to which its inextricably linked will one day prosper.  For now, I'd read, learn, and enjoy, but wouldn't touch it with a 10-ft pole.
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July 10, 2011, 06:29:08 AM
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I hope I'm right. If you look at the numbers on Bitcoin Watch www.bitcoinwatch.com there are 6.7 million bitcoins in existence, and 2 million of them traded hands in the last 24 hours... that seems like a very vibrant economy with a very high velocity of money, no? Then again, it's hardly been a deflationary last 30 days. So the jury is still out.

Hold your horses!!  The overwhelming fraction of those 2 million bitcoins are people sending money to themselves.  The way the Bitcoin client works, if you want to send 42.53 BTC to someone, and all you have is an address with 41689.32 BTC, then you have to send *all* the 41689.32 BTC out, then split it into 42.53 BTC for your recipient and 41646.79 BTC back to yourself:

http://blockexplorer.com/tx/8659d60ef083113240772fa4246c60b5daa4356fde50dc58184a497c2d65280a

Try examining the blocks in block explorer.  It's pretty easy in most transactions to pick out what's actual trading and what's "change" being sent back to the sender (hint #1: if there's an output that's 100 times bigger than the rest, that's usually change; hint #2: people like to send nice rounds numbers of bitcoins to each other, but their wallets usually have ridiculously unround numbers in them due to transaction fees or pooled mining;  hint #3: the "change" output is smaller than all of the "inputs" to any transaction).  An OVERWHELMING fraction of volume is change.  If I had to guess, I'd peg the volume of actual trade around 20,000 - 50,000 BTC (and someone with enough patience to sort out change from trade in the block chain can in principle give you a very accurate estimate).  An overwhelming majority of *that* is going into speculation at the exchanges, which creates no real economic activity (look at the volume exchanged at MtGox, and realize that that's not the only exchange site in operation).  The amount of Bitcoins that are actually facilitating trade is paltry, and the economics of the system is sufficiently crazy to ensure that this remains the case.
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July 10, 2011, 06:42:05 AM
 #12

if 1 BTC is worth one million dollars, then .00000001 btc would equal one penny.

think about it

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DumbOldDog
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July 10, 2011, 06:42:58 AM
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What makes a bitcoin future more like massive poverty than any other currency's future?
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July 10, 2011, 07:11:04 AM
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It's just weird thinking that we'll all be buying hotdogs at 0.00000001 bitcoins in a few years. I guess people will have to be comfortable with exponents real soon.
^ this.

As for the people who believe that the value of a single Bitcoin goes up. Yes it does, but so many people who started using Bitcoin to check what it is all about, will jump off the bandwagon because it's too geeky, too expensive to maintain and absolutely uncomfortable as payment method. In the end, maybe five people will be left using Bitcoins and everybody else returned to usable currencies, laughing at those loony Bitcoin users. So who cares about the Bitcoin/gold value.
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July 10, 2011, 10:48:26 AM
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An OVERWHELMING fraction of volume is change.
Not just that, but a lot of the volume is the same change being transferred between addresses repeatedly and counted multiple times. If we look at  the address you linked to with 40,000 BTC, whoever owns that account is sending out small and varying amounts of BTC to a whole bunch of different addresses, and every time they do that it adds another 40,000 BTC to the day's volume.

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July 10, 2011, 10:51:03 AM
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Quote
I just feel like 21 million in existence with no recourse for missing bitcoins presents a problem.
why?
indio007
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July 10, 2011, 10:56:57 AM
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21 million bitcoins to 8 decimal places.....


Your clinging to whole numbers is strange....


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July 10, 2011, 11:00:08 AM
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Quote
I just feel like 21 million in existence with no recourse for missing bitcoins presents a problem.
why?

Probably for the same reason that people worry about address collisions; the scale of numbers involved in Bitcoin are so far beyond anything we deal with meaningfully, it's hard to grasp just what they mean.

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July 10, 2011, 11:30:08 AM
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It's just weird thinking that we'll all be buying hotdogs at 0.00000001 bitcoins in a few years. I guess people will have to be comfortable with exponents real soon.
^ this.

As for the people who believe that the value of a single Bitcoin goes up. Yes it does, but so many people who started using Bitcoin to check what it is all about, will jump off the bandwagon because it's too geeky, too expensive to maintain and absolutely uncomfortable as payment method. In the end, maybe five people will be left using Bitcoins and everybody else returned to usable currencies, laughing at those loony Bitcoin users. So who cares about the Bitcoin/gold value.

The USD has dropped in value 96% in the last 100 years, so the cost of a hotdog is ridiculously high nowadays. Dollars are very expensive to maintain as shown by a national debt or over 14 trillion dollars http://www.usdebtclock.org/
Only time will tell who will be laughing at the loonies.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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July 10, 2011, 02:40:31 PM
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I think either bitcoins will work or something derived from bitcoins will. Cryptocurrency is here to stay and the impact will absolutely massive, like something noone's ever seen before. We're talking change on a galactic scale.
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