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Author Topic: The Problem With Altcoins  (Read 16459 times)
AnonyMint
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November 08, 2013, 12:46:08 AM
 #81

I was actually thinking I should buy my own altcoin if it got too weak, yet I wouldn't want to be the only person buying it.

That's the way I feel about Yacoin at the moment. I woud say one actual problem of altcoins is that you could burn your self hard on them. Especially if when I realize how much these btc could buy me now.


There hasn't been a real altcoin bubble yet, but if too many people lost too much on alts they might stick just to BTC. Bitcoin had a nice crash from 30$, but there wasn't many lives destryed back then and everyone sticking to the plan got out nicely.
Altcoins will be different on that one.

I remember what happened to Jason Hommel of SilverStockReport.com when he owned a majority of the float in several penny (pinksheet) silver mining stocks and couldn't get out before and during the 2008 implosion.

So we can relate this to the additional risks of investing in penny stocks versus those listed on major exchanges. The golden rule is don't put too great a percent of your networth nor own a significant portion of the float in any one of these (unless you are very sure you know which one is going big).

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November 08, 2013, 01:02:32 AM
 #82

The golden rule is don't put too great a percent of your networth nor own a significant portion of the float in any one of these (unless you are very sure you know which one is going big).
But my beautiful tulpes ...

The problem are not the fools that loose some money, they always have and always will. Banning stuff is goverments favourite pastime and an a altcoin bubble could be a good trigger for such. Crypto will survive, that's clear, but what about a gov regulating just btc for trades in crypto.

We a far away from such bubble in altcoins since even btc isn't known yet, but a altcoinbubble would be desatrous. That's at least a real problem on altcoins, although I'd love the money I will make on it.

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November 08, 2013, 01:08:14 AM
 #83

Freedom is incongruent with 100% consensus. Duh! (on me not you) Well yeah. Thanks.

So the only way you end up with 100% consensus is by state decree and then printing digits out-of-thin-air to gain the power and trickery to make that unnatural 100% consensus stick (with some percent of that 100% under duress).
Did the government force everybody to standardize on HTTP for web sites, or did users freely choose to standardize on the most widely-deployed protocol exactly because the network effect made HTTP more valuable than its alternatives?
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November 08, 2013, 01:08:43 AM
 #84

The golden rule is don't put too great a percent of your networth nor own a significant portion of the float in any one of these (unless you are very sure you know which one is going big).
But my beautiful tulpes ...

The problem are not the fools that loose some money, they always have and always will. Banning stuff is goverments favourite pastime and an a altcoin bubble could be a good trigger for such. Crypto will survive, that's clear, but what about a gov regulating just btc for trades in crypto.

We a far away from such bubble in altcoins since even btc isn't known yet, but a altcoinbubble would be desatrous. That's at least a real problem on altcoins, although I'd love the money I will make on it.

Disastrous for people that invest their life savings, but anyone with half a brain would not do that.
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November 08, 2013, 01:29:25 AM
 #85

Did the government force everybody to standardize on HTTP for web sites, or did users freely choose to standardize on the most widely-deployed protocol exactly because the network effect made HTTP more valuable than its alternatives?

The network effect is very strong, I agree, but I belive it simply doesn't work on crypto. Diverent flavour in ice cream won't just disapere because of it although it would easyly have the power to do so. A special store on strawberry could be far better and cheaper than a store with diverent flavours.

It does work on the ice cornet or cups though. For it to work alternatives must be very similar and it must be more expensive to use both instead of one. There are no costs in paying in LTC over BTC and often the difference that it is different is enough. (Diversivication in investments)

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November 08, 2013, 01:29:36 AM
Last edit: November 08, 2013, 01:47:02 AM by AnonyMint
 #86

Freedom is incongruent with 100% consensus. Duh! (on me not you) Well yeah. Thanks.

So the only way you end up with 100% consensus is by state decree and then printing digits out-of-thin-air to gain the power and trickery to make that unnatural 100% consensus stick (with some percent of that 100% under duress).
Did the government force everybody to standardize on HTTP for web sites, or did users freely choose to standardize on the most widely-deployed protocol exactly because the network effect made HTTP more valuable than its alternatives?

There hasn't been any compelling feature that HTTP didn't have that is offered by any other protocol competing for the web pages.

But the analogy falls apart is another more compelling way. The barriers to competitions are centralized in the HTTP case, i.e. we can't as  individuals decide we want a web page to be served to us in another protocol. Client-server is not a decentralized paradigm. This is different from cryptocoins where an individual can decentrally convert between coins.

Standards are much more compelling when they require large inertia, i.e. changing all browsers, all web servers. Yet for coins, we can convert between them individually, no need to change what everyone else is doing.

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November 08, 2013, 01:41:54 AM
 #87

Search "web page editor" or "cd burner software". There is no winner take all.

Lock-in network effects are not a foregone conclusion in every market.

It varies depending on the natural inertia.

Money in the past had a problem, in that it was physical so it could be stolen, thus people preferred to deposit it and carry receipts. These receipts became money. The banks could run fractional reserves by printing more receipts than they had deposits (of gold and silver). Thus the natural centralizing inertia went to the banks.

Cryptocurrencies based on distributed mining eliminate this centralizing inertia.

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November 08, 2013, 01:57:16 AM
 #88

Lock-in network effects are not a foregone conclusion in every market.

It varies depending on the natural inertia.
...

I disagree with your arguments, not the result.

Inertia doesn't effect this in the way you suggest. High inertia would fight the lock-in since people would rather stay at where they are than to move to the one central item.BluRay vs HD DVD was very euqual and its huge inertia would have prevented a system to win so fast. Think of the billions invested in it.

As my icecream example it just depends on similarity and cost to run both. If BTC to altcoins would be similiar it would be the only crypto, but it isnt. There is also a huge inertia preventing people to completly moving completly from crypto to the other so that argument is invalid.

EDIT: Regional codes prevent people from the US to watch european DVDs so that inertia doesn't explain that we haven't HD DVDs in Europa and BluRay in the US.

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November 08, 2013, 02:04:56 AM
 #89

Lock-in network effects are not a foregone conclusion in every market.

It varies depending on the natural inertia.
...

I disagree with your arguments, not the result.

Inertia doesn't effect this in the way you suggest. High inertia would fight the lock-in since people would rather stay at where they are than to move to the one central item.BluRay vs HD DVD was very euqual and its huge inertia would have prevented a system to win so fast. Think of the billions invested in it.

Sorry I think I am correct.

That is decentralized choice. Any individual can upgrade from VHS to VCD to DVD to BuRay at their own individual decision.

The reason HTTP is standardized is because client-server is not individual choice, i.e. the client can't dictate to the server which protocol to use. Rather all clients and servers have to agree on a set of protocols.

Don't conflate an individual's inertia (which is a decentralized effect, i.e. the inertias are diverse and not moving together in unison, thus they are small and move independently thus low NET inertia) with a centralized inertia. The latter is a much higher NET inertia.

Wikipedia degrees-of-freedom.

It is actually the same as potential energy. I can cite a reference if you don't believe.

P.S. I have slept maybe 15 hours in 5 days. I am not mentally sharp right now.

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November 08, 2013, 02:16:47 AM
 #90

HD DVD isn't DVD.

They are more or less equal in features.

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November 08, 2013, 02:19:16 AM
 #91

I don't see altcoins as a direct threat to bitcoin. There's really not much incentive to move from bitcoin to another crypto and at this point I don't ever see there being an incentive to move unless something disastrous happens to bitcoin. I think it's a bit silly to be majorly involved in another crypto as no alternative will ever catch up to BTC as long as BTC is still afloat. For those whining about it's obvious bias towards bitcoin; wasn't that the point of the article? I pretty much agree with the article although I disagree with the so called competition of alternate crypto currencies.

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November 08, 2013, 02:43:45 AM
 #92

It is actually the same as potential energy. I can cite a reference if you don't believe.

Inertia is the resistance of any physical object to any change in its motion while potential energy is the energy of an object or a system due to the position.

They are not the same, but I get what you want to say.

Inertia doesn't stop a ball to roll down a hill, and the potential energy is usually causing the acceleration, not preventing. A minimum in the potential funktion could be interpreted as "inertia", but that's not the first thing to come in mind talking about inertia and potential.


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November 08, 2013, 02:59:08 AM
Last edit: November 08, 2013, 03:14:04 AM by AnonyMint
 #93

I don't see altcoins as a direct threat to bitcoin. There's really not much incentive to move from bitcoin to another crypto and at this point I don't ever see there being an incentive to move unless something disastrous happens to bitcoin.

You think you will never need anonymity to survive the G20 hunting down all wealth. Well most people don't see what is coming, so you are not alone. Your perspective could change drastically over the next few years when you see you can't keep any of your money without being anonymous. I can't guarantee it will get that bad, but it might.

You think there is no chance that the majority will be using a different coin than Bitcoin, thus you think you will never want to change. But you can't be sure that a CPU-only coin or PoS system wouldn't get coins in more hands faster than Bitcoin has at only 350,000 in 4 years. That is rather slow. My CoolPage.com web page editor went from 0 to 1 million downloads in less than 2 years from 1999 to 2001 when the internet was 1/10 the size it is now. I believe Facebook adoption was much faster than Bitcoin, but verify that for me please.

You think Bitcoin can survive with a bloated blockchain design that can't scale to Visa-scale, except if the mining is done by large corporations. I call that centralization and thus death, since the whole point of cryptocurrencies is to be decentralized to avoid control by the government. Large corporations and the government are in bed together for natural reasons.

I could go on, but I think you get the point.

I think it's a bit silly to be majorly involved in another crypto as no alternative will ever catch up to BTC as long as BTC is still afloat. For those whining about it's obvious bias towards bitcoin; wasn't that the point of the article? I pretty much agree with the article although I disagree with the so called competition of alternate crypto currencies.

FUD. Can you provide a logic?

Whining? I think you are whining. We are simply analyzing the logic.

It is easy to have bravado when no altcoin has yet seriously challenged Bitcoin, because no altcoin yet has been serious enough (apparently).

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November 08, 2013, 03:07:07 AM
Last edit: November 08, 2013, 03:17:45 AM by AnonyMint
 #94

It is actually the same as potential energy. I can cite a reference if you don't believe.

Inertia is the resistance of any physical object to any change in its motion while potential energy is the energy of an object or a system due to the position.

They are not the same, but I get what you want to say.

Inertia doesn't stop a ball to roll down a hill, and the potential energy is usually causing the acceleration, not preventing. A minimum in the potential funktion could be interpreted as "inertia", but that's not the first thing to come in mind talking about inertia and potential.

I was precisely saying that inertia is opposing degrees-of-freedom. Individual inertias which vary independently have a much higher potential energy than a centralized inertia which varies monolithically, because they collectively resist less a change in configuration of their arrangement (because they vary independently).

The NET inertia is not the sum of the individual inertias, when they vary independently. This is why smaller things grow faster, because they have better fittness to diverse opportunities, e.g. a poor person can triple his capital on a hot day selling cold water, yet a billionaire never can do that in a day.

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November 08, 2013, 10:04:35 AM
Last edit: November 08, 2013, 10:21:26 AM by AnonyMint
 #95

Don't conflate an individual's inertia (which is a decentralized effect, i.e. the inertias are diverse and not moving together in unison, thus they are small and move independently thus low NET inertia) with a centralized inertia. The latter is a much higher NET inertia.

Wikipedia degrees-of-freedom.

It is actually the same as potential energy. I can cite a reference if you don't believe.

Here is the citation:

http://en.wikipedia.org/w/index.php?title=Energy&oldid=435292864

Quote
Stored energy is created whenever a particle has been moved through a field it interacts with (requiring a force to do so), but the energy to accomplish this is stored as a new position of the particles in the field—a configuration that must be 'held' or fixed by a different type of force (otherwise, the new configuration would resolve itself by the field pushing or pulling the particle back toward its previous position). This type of energy 'stored' by force-fields and particles that have been forced into a new physical configuration in the field by doing work on them by another system, is referred to as potential energy. A simple example of potential energy is the work needed to lift an object in a gravity field, up to a support.

And here follows what I wrote about this concept in terms of higher-level semantics for a computer language which makes software more reusable, but you can apply the same concept to the freedom-to-innovate which is what we are concerned with in this thread. I relate this to the power vacuum as described by Mancur Olsen in The Logic of Collective Action. I am thinking on very abstract conceptual terms here.

Quote from: Shelby aka Anonymint wrote 3 years ago
Fitness

Fitness is how well a particular configuration of a system fits the desired solution, e.g. how well a particular program fits the desired semantics.
For example, there would be gaps (i.e. errors in fitness) between a bicycle chain and a curved shape it is wrapped around, because the chain can only freely bend (i.e. without permanent bending) at the hinges where the links are joined. Each hinge is a degree-of-freedom, and the reciprocal of the distance between hinges is the degrees-of-freedom per unit length. Employing instead a solid, but flexible metal bar, the metal would remain fit to the curve only with a sustained force. The resisting force is a reduced degrees-of-freedom and an error in fitness. Permanent bending to eliminate the resisting force, reduces the degrees-of-freedom for future straightening some of the bend for wrapping to larger curves or straight shapes.

Higher-level semantics are analogous to adding more hinges. Cases in the higher-level semantics which don't compose, i.e. aren't unified, or where the high-level semantics don't fully express the desired semantics, are analogous to permanent bending.

Efficiency of Work

Efficiency of work is the ratio of the work output (i.e. performed) divided by the work input, i.e. the efficiency is 100% minus the work lost to friction.
The lower the friction, then less power is required to do the same work in a given period of time. For example, pushing a cart on wheels, requires much less power than to push it without wheels, or to push it uphill on wheels. The ground rubbing against the bottom of the cart, or gravity, are both forms of friction. The rubbing is analogous to the permanent bending of the metal bar in the Fitness section, because the top of the ground and the bottom of cart are permanently altered. The gravity is a form of friction known as potential energy.

Given the friction is constant, then the input power (and thus input energy) determines the rate at which work can be completed. If the type of friction is potential energy, then the more work that is performed, the greater the potential energy available to undo the work. This type of potential energy is due to the resistance forces encountered during the work to produce a particular configuration of the subject matter. For example, a compressed spring wants to push back and undo the work performed to compress it.

Since the goal is to get more configurations (i.e. programs) in the software development system with less work, then these resistance forces must be reduced, i.e. increase the degrees-of-freedom so that fitness is closer to 100%. Visualize an object held in the center of a large sphere with springs attached to the object in numerous directions to the inside wall of the sphere. These springs oppose movement of the object in numerous directions, and must be removed in order to lower the friction and increase the degrees-of-freedom. With increased degrees-of-freedom, less work is required to produce a diversity of configurations, thus less power to produce them faster. And the configuration of the subject matter which results from the work, thus decays (i.e. becomes unfit slower), because the resistance forces are smaller. Requiring less power (and work), to produce more of what is needed and faster, with a greater longevity, is thus more powerful (efficient) and explains the wisdom of a forgotten proverb.

Google can't even find a wise proverb, “if you use your power, then you lose it”. The equivalent form, “absolute power corrupts absolutely”, is probably popular because it is a common misperception that power is useful (i.e. to be idoled). The utility of power exists only because there are resistance forces, i.e. friction and inefficiency. This generative fact applies to everything. For example, the power vacuum (i.e. the need for more power to get work done) that gives rise to central authority is due to the (resisting forces caused by) vested interests, bickering, selfishness, and complacency (laziness) of the governed.

Knowledge

Knowledge is correlated to the degrees-of-freedom, because in every definition of knowledge one can think of, an increase in knowledge is an increase in degrees-of-freedom and vice versa.
Software is unique among the engineering disciplines in that it is applicable to all of them. Software is the process of increasing knowledge. Thus the most essential characteristic of software is that it does not want to be static, and that the larger the components, thus the fewer the degrees-of-freedom, and the less powerful (i.e. efficient) the software development process.

Communication redundance (i.e. amplitude) is a form of power, because its utility exists due to the friction of resistance to comprehension, i.e. due to noise mixed with the signal. The signal-to-noise ratio (SNR) depends on the degrees-of-freedom of both the sender and the receiver, because it determines the fitness (resonance) to mutual comprehension.

The difference between signal and noise, is the mutual comprehension (i.e. resonance) between the sender and the receiver, i.e. noise can become a signal or vice versa, depending on the fitness of the coupling. In physics, resonance is the lack of resistance to the change in a particular configuration of the subject matter, i.e. each resonator is a degree-of-freedom[1]. Degrees-of-freedom is the number of potential orthogonal (independent) configurations, i.e. the ability to obtain a configuration without impacting the ability to obtain another configuration. In short, degrees-of-freedom are the configurations that don't have dependencies on each other.

Thus increasing the number of independent configurations in any system, makes the system more powerful, requiring less work (and energy and power since speed is important), to obtain diversity within the system. The second law of thermodynamics says that the universe is trending to maximum entropy (a/k/a disorder), i.e. the maximum independent configurations. Entropy (disorder) is a measure of the relative number of independent possibilities, and not some negative image of violence or mayhem.

This universal trend towards maximum independent possibilities (i.e. degrees-of-freedom, independent individuals, and maximum free market) is why Coase's theorem holds that any cost barrier (i.e. resisting force or inefficiency) that obstructs the optimum fitness will eventually fail. This is why decentralized small phenomena grow faster, because they have less dependencies and can adapt faster with less energy. Whereas, large phenomena reduce the number of independent configurations and thus require exponentially more power to grow, and eventually stagnate, rot, collapse, die, and disappear. Centralized systems have the weakness that they try to fulfill many different objectives, thus they move monolithically and can fulfill none of the objectives, e.g. a divisive political bickering with a least common denominator of spend more and more debt[16].

Thus in terms of the future, small independent phenomena are exponentially more powerful than those which are large. Saplings grow fast into trees, but trees don't grow to moon (nor to end of the universe). The bell curve and power law distributions exist because the minority is exponentially more efficient (i.e. more degrees-of-freedom and knowledge), because a perfectly equal distribution would require infinite degrees-of-freedom, the end of the universe's trend to maximum disorder, and thus a finite universe with finite knowledge. It is the mathematical antithesis of seeking knowledge to have socialism (equalitarian) desires for absolute equality, absolute truth, or perfection in any field.

The organization of matter and natural systems (e.g. even political organization) follows the exponential probabilistic relationship of entropy and the Second Law of Thermodynamics, because a linear relationship would require the existence of perfection. If the same work was required to transition from 99% to 100% (perfection) as to transition from 98% to 99%, perfection would be possible. Perfection is never possible, thus each step closer to 100% gets asymptotically more costly, so that perfection can never be reached. This is also stated in the Shannon-Nyquist sampling theorem, wherein the true reality is never known until infinite samples have been performed (and this has nothing to do with a pre-filter!). The nonexistence of perfection is another way of stating that the universe is finite in order, and infinite in disorder, i.e. breaking those larger down to infinitely smaller independent phenomena.

Copute attempts to apply these concepts to software, by increasing the independence (orthogonality) of software components, so they can be composed into diverse configurations with less work. Independent programmers can leverage independent components with less communication and refactoring work, thus Copute is about increasing cooperation.

[1] http://en.wikipedia.org/w/index.php?title=Resonance&oldid=432632299#Resonators

A physical system can have as many resonant frequencies as it has degrees of freedom.

http://en.wikipedia.org/w/index.php?title=Resonance&oldid=432632299#Mechanical_and_acoustic_resonance

Mechanical resonance is the tendency of a mechanical system to absorb more energy [i.e. less resistance] when the frequency of its oscillations [i.e. change in configuration] matches the system's natural frequency of vibration [i.e. natural change in configuration] than it does at other frequencies.

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November 08, 2013, 10:07:37 AM
 #96

LTC is just an imitation of BTC but PPC is a completely different cryptocurrency. I'm not promoting the coin but the idea of Proof of Stake (PoS) is just genius. Not only does it save energy that could've went to other meaningful and productive calculations but it also gives coin generation power to every coin holder ANYWHERE he/she may be in the world. Homeless people, uncivilized tribes, etc. would have a fair and equal coin generation capability.

I wanted to mine bitcoins before but my country is really far away from those ASIC manufacturers. I didn't want to risk my money to pre order hardware. I believe Satoshi Nakamoto created bitcoins to give anybody with a computer generate significant amounts of bitcoins. From what I am seeing today, that is no longer the case. Bitcoins are no longer completely decentralized. Eventually, the people who has the most mining power will rule it. Many may not share this view especially those people who have access to the new ASIC miners. I trully believe that PoS in coins is an innovative solution for the geographical problem. Mining will become the fundamental problem with bitcoin. It is unsustainable, wasteful, volatile, easily manipulated by strong enough players, geographically selective in terms of hardware availability and electricity rates. The author of the article makes great points against altcoins but is incredibly biased on bitcoins.

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November 08, 2013, 10:37:43 AM
 #97

LTC is just an imitation of BTC but PPC is a completely different cryptocurrency. I'm not promoting the coin but the idea of Proof of Stake (PoS) is just genius. Not only does it save energy that could've went to other meaningful and productive calculations but it also gives coin generation power to every coin holder ANYWHERE he/she may be in the world. Homeless people, uncivilized tribes, etc. would have a fair and equal coin generation capability.

But then why are PoS altcoins not growing fast and catching up to Bitcoin or are they?

My guess is because people fundamentally understand that getting something for doing nothing (i.e. redistributing the new coins based on share of the collective) is communism. But let me hear the logic of others, because I want to understand this better.

Also PoS does nothing to help you get your initial coins without a fiat exchange. And you can't increase your share by being more proactive, innovative, and risking your capital on mining.

Without risk, no new knowledge is created. Ponder that.

I wanted to mine bitcoins before but my country is really far away from those ASIC manufacturers. I didn't want to risk my money to pre order hardware. I believe Satoshi Nakamoto created bitcoins to give anybody with a computer generate significant amounts of bitcoins. From what I am seeing today, that is no longer the case. Bitcoins are no longer completely decentralized. Eventually, the people who has the most mining power will rule it. Many may not share this view especially those people who have access to the new ASIC miners. I trully believe that PoS in coins is an innovative solution for the geographical problem. Mining will become the fundamental problem with bitcoin. It is unsustainable, wasteful, volatile, easily manipulated by strong enough players, geographically selective in terms of hardware availability and electricity rates.

Very much agreed. Inclusiveness is very important. Facebook is available every where, even on my cell phone in a third world Asian country.

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November 08, 2013, 11:15:03 AM
 #98

I prefer Altcoins as Bitcoin already priced too high.... although it is likely to hit $1000 but litecoin is likely to hit $50 maybe?

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November 08, 2013, 11:28:23 AM
 #99

My guess is because people fundamentally understand that getting something for doing nothing (i.e. redistributing the new coins based on share of the collective) is communism. But let me hear the logic of others, because I want to understand this better.
Communism isn't the right way to describe it. It could be seen very capitalistic, you get paid for helping the blockchain. Bitcoin isn't different since there the miners get paid to secure the chain. The only difference is that miners have to waste resources while POS is wasteless. I rather see someone getting rewards for free than to just to waste stuff.

There is no redistribution of wealth, so the rich stay rich and the poor stay poor. Everyone has all chances so it's the way capitalism should be. It's the redistribution that kills any eco system. We now have redistribution to the rich and it will destroy capitalism in the same way than communism got killed by redistribution in the other direction.


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lumierre
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November 08, 2013, 11:30:29 AM
 #100

My guess is because people fundamentally understand that getting something for doing nothing (i.e. redistributing the new coins based on share of the collective) is communism.
People actually do something to get new coins. As Sunny King has said if my understanding is correct, keeping coins to get coins is actually "saving". You lose the ability to spend your coins in exchange for having more coins in the future. Well, if that is communism, then I'd rather have that than see unproductive capitalism. Imagine a third world country entrenched with capitalism spending resources on mining hardware and energy rather than agriculture, infrastructure, or whatever just because it is more profitable. It just doesn't make the world any better.

 
Also PoS does nothing to help you get your initial coins without a fiat exchange. And you can't increase your share by being more proactive, innovative, and risking your capital on mining.

Without risk, no new knowledge is created. Ponder that.
You could always trade physical goods get your initial coins. It brings REAL world innovation. A person could do or produce something innovative and ask for coins. The coins become an asset that generate recurring income. I'm not quite sure about the "risk" you are speaking of but people use a currency because they TRUST it. People use fiat currency because they believe that the risk is so low that it is worth representing value. When there is risk that the USD, for example, would collapse, people stay away from using it. Therefore, when there is less risk, the currency has more value. I think PoS coins haven't caught up yet because people aren't aware of it yet. I feel that the transition would be mainstream fiat currency to BTC then in the long run BTC to PoS coins but I may be mistaken.

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