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Author Topic: Ideas for more efficient distribution of money?  (Read 13042 times)
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AnonyMint
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November 26, 2013, 03:41:53 PM
 #81

Maybe the term is inaccurate but not sure.  What happens if no new debt is created and even is paid back?
In a ponzi if people start pulling out and nothing new flows in... same thing.

When a real estate bubble pops prices are falling but they don't drop to zero (as in a Ponzi) because real estate has utility beside mere speculation and it can be used according to its intended purpose, i.e. for living. In the case of a fiat currency its utility consists in the goods and services which you can exchange for it. So if a debt bubble pops you will see the currency purchasing power diminish in proportion with its commodity content just like the real estate loses its value after burst down to its real demand. Bubble popping strips the asset price of its speculative part

Whereas in a Ponzi scheme no real component in the underlying "asset" is present...

Correct unless all the confidence in the currency is lost, the government can't sell bonds, and the value of the currency plummets to its intrinsic value of 0, e.g. Wiemar (Communist) Germany, Zimbabwe. The intrinsic value of fiat relies on society maintaining confidence in its government and financial system. Hyperinflation only occurs in thoroughly, abjectly broken societies where the only remaining power of the government is to print money and that is why we will not see hyperinflation of the US dollar (nor equivalently Bitcoin entirely replacing the dollar with a runaway market price, singularity). Rather what governments do during end game debt crises where the society still functions and trusts the government, is "debt is future taxation", i.e. the government hunts down all wealth in a deflationary spiral. The currency GAINS value relative to other peripheral currencies (watch all emerging market currencies other than Yuan implode 2016+), yet production implodes and purchasing power falls for everyone. Strange brew of inflationary, deflation. This is the most dangerous outcome and can precipitate a Dark Age.

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November 26, 2013, 04:09:04 PM
 #82

Maybe the term is inaccurate but not sure.  What happens if no new debt is created and even is paid back?
In a ponzi if people start pulling out and nothing new flows in... same thing.

When a real estate bubble pops prices are falling but they don't drop to zero (as in a Ponzi) because real estate has utility beside mere speculation and it can be used according to its intended purpose, i.e. for living. In the case of a fiat currency its utility consists in the goods and services which you can exchange for it. So if a debt bubble pops you will see the currency purchasing power diminish in proportion with its commodity content just like the real estate loses its value after burst down to its real non-speculative demand. Bubble popping strips the asset price of its speculative part

Whereas in a Ponzi scheme no real component in the underlying "asset" is present...

True- after a housing bubble bursts you still have the houses. Most stocks the same.
The fiat debt though isn't really an asset. It's value is based on that the government will back it- forcefully if it has to.

"We are just fools. We insanely believe that we can replace one politician with another and something will really change. The ONLY possible way to achieve change is to change the very system of how government functions. Until we are prepared to do that, suck it up for your future belongs to the madness and corruption of politicians."
Martin Armstrong
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November 26, 2013, 04:18:17 PM
 #83

True- after a housing bubble bursts you still have the houses. Most stocks the same.
The fiat debt though isn't really an asset. It's value is based on that the government will back it- forcefully if it has to.

Yes, you still have the houses which are now less expensive. The same holds true for a debt currency, you still have the currency which has depreciated. And as long as you can pay taxes with it would retain some "intrinsic value" (as AnonyMint would incorrectly say), so it can still be considered as an "asset"...

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November 26, 2013, 04:22:13 PM
 #84

Correct unless the all confidence in the currency is lost, the government can't sell bonds, and the value of the currency plummets to its intrinsic value of 0, e.g. Wiemar (Communist) Germany, Zimbabwe

TLDR. As I said before as long as government accepts taxes paid in the currency it will retain some value above zero...

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November 26, 2013, 04:27:19 PM
 #85

To distribute money more efficiently all you need to do is ensure that 'mining' (the process itself, not its results) has a net positive effect (involves expenditure on renewable goods and services) instead of a net negative one (energy waste). It's simple as that.

(quoting myself here...)

OK it's not quite as simple as that, because you have to factor in time horizons and the early adoption phase, in which coin production costs are marginal (thus not allowing for efficient distribution). With BTC the design was such that a great deal of coins were produced during the early phase for a very low cost (the first 1,000,000 BTC were mined for a cost of what it would take to mine less than 1 BTC today, roughly speaking).

More efficient distribution would thus require (aside from finding a way to make mining a net positive process) a shorter early adoption phase in which production costs are trivial, so that we could arrive at the point where mining produces tangible positive effects more quickly. However, the early adoption phase should still last long enough and be lucrative enough for the coin to gain popularity.  

Efficiency in the context of this thread is the rate (relative to the maximum possible rate) of adoption of the currency as a currency and not as an investment asset. Very few people in normal times (before sovereign debt crisis safe haven demand) considered holding dollars long-term (in your mattress, i.e paying no interest) as an investment. A hallmark feature of a currency is you rarely concern yourself with its exchange value.

I am asserting that the challenge is to design an upstart crypto-currency which has enough near-term investment appeal to drive excitement and investment adoption, while simultaneously driving synergistic adoption for spending which eventually subsumes the investment gains.

Some here are challenging my assertion.

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November 26, 2013, 04:31:08 PM
 #86

True- after a housing bubble bursts you still have the houses. Most stocks the same.
The fiat debt though isn't really an asset. It's value is based on that the government will back it- forcefully if it has to.

Yes, you still have the houses which are now less expensive. The same holds true for a debt currency, you still have the currency which has depreciated. And as long as you can pay taxes with it would retain some "intrinsic value" (as AnonyMint would incorrectly say), so it can be considered as an "asset"...

I said its intrinsic value is 0, the value only exists because of the confidence the people have in the government retaining control and yes the ability to tax.

Do you argue that the intrinsic value of fiat is not 0? Confidence is not a quality you can depend on independently of all things, rather dependent, ephemeral one even if on long time scales.

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November 26, 2013, 04:35:51 PM
 #87

I said its intrinsic value is 0, the value only exists because of the confidence the people have in the government retaining control and yes the ability to tax.

Do you argue that the intrinsic value of fiat is not 0?

There is no such notion as "intrinsic value" in economics (there is some in finance but it has very specific scope of usage and surely it is not what you meant by it). I would prefer that you use correct well-established terms...

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November 26, 2013, 04:40:14 PM
 #88

I said its intrinsic value is 0, the value only exists because of the confidence the people have in the government retaining control and yes the ability to tax.

Do you argue that the intrinsic value of fiat is not 0?

There is no such notion as "intrinsic value" in economics (there is some in finance but it has very specific scope of usage and surely it is not what you meant by it). I would prefer that you use correct well-established terms...

Eat humble pie:

http://en.wikipedia.org/wiki/Intrinsic_theory_of_value

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November 26, 2013, 04:46:52 PM
 #89

Correct unless the all confidence in the currency is lost, the government can't sell bonds, and the value of the currency plummets to its intrinsic value of 0, e.g. Wiemar (Communist) Germany, Zimbabwe

TLDR. As I said before as long as government accepts taxes paid in the currency it will retain some value above zero...

Incorrect. The government can't enforce taxes if the people and the bond investors are running from the currency, because the government can't pay the police, tax collectors, etc.. The government hyperinflates attempting to do so.

In short, fiat hinges on confidence. This is why the government will always squash any competition which would threaten confidence.

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November 26, 2013, 04:51:30 PM
 #90


"This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed"

There were many economic theories throughout history of human thought. The prevailing theory and most researched one in economics nowadays is the subjective theory of value where the notion of "intrinsic value" has no meaning...

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November 26, 2013, 04:52:12 PM
 #91

Correct unless the all confidence in the currency is lost, the government can't sell bonds, and the value of the currency plummets to its intrinsic value of 0, e.g. Wiemar (Communist) Germany, Zimbabwe

TLDR. As I said before as long as government accepts taxes paid in the currency it will retain some value above zero...

Incorrect. The government can't enforce taxes if the people and the bond investors are running from the currency, because the government can't pay the police, tax collectors, etc.. The government hyperinflates attempting to do so.

In short, fiat hinges on confidence. This is why the government will always squash any competition which would threaten confidence.

On these 2 points  at least I agree with AnonyMint.  Will they want to squash it? Will they be able to?  Will they find a way to use it or live with it?  Nobody has that answer.

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Martin Armstrong
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November 26, 2013, 04:57:23 PM
 #92

The idea of bitcoin distribution is not to hand them out as broadly as possible. It is a system to reward people who run their computers to help secure and operate the network. It is not a free lunch program. Miners do work and are paid for it.

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November 26, 2013, 04:59:46 PM
 #93

Incorrect. The government can't enforce taxes if the people and the bond investors are running from the currency, because the government can't pay the police, tax collectors, etc.. The government hyperinflates attempting to do so.

I didn't quite get what you meant by "the government hyperinflates attempting to do so". To do what?

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November 26, 2013, 05:00:45 PM
 #94

In short, fiat hinges on confidence. This is why the government will always squash any competition which would threaten confidence.

I never claimed anything to the contrary...

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November 26, 2013, 05:10:11 PM
 #95

The serious players know damn well they won't have anything lasting if they don't play ball with the governments.

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Destroying decentralization is not honest, it is selling out. And it is exactly what I expect them to do. A ponzi failure could possibly be a cover for making the transition to government control. It may be disguised as "proof-of-stake".

To what extent have you tried to analyse your own biases about governments? The usual short summary among Libertarians on this forum seems to be: "they're basically evil and should be kept to a bare minimum". Ditto Anarchists and Voluntarists. Even the Zeitgeist people don't seem too keen on allowing mere humans to be in charge of anything. However, the incentives that apply to governments at the individual and group level seem to be the same as the ones applying to everyone else:

-Some hunger for power and/or comfort, and various subjective needs. Money seems to be a great enabler for many things, regardless of employment sector.
-Intellectual energy conservation, and the resulting dogmatism, principles, and belief systems. Mental plasticity burns a shit-load of energy. Once a person or group "figures out how the world works", they face a decision: keep burning energy by adjusting that model whenever pressure is applied, or conserve energy by accepting it as good enough?

Now, unless you use a fundamentally different model of person for government employees versus non-govt people, why should the game theory be any different? Granted, incumbent power structures tend to have various monopoly resources at their disposal, such as a giant police force or a system of laws, but I see the potential threats as unconvincing.

Could you explain the reasoning (or lack of reasoning) that an evil government would follow by co-opting or seeking to destroy Bitcoin?

Competition and greed are not the problem, rather it is the power vacuum that enables centralizing power. The government bureaucrat doesn't know how to compete in a granular market.

Governments, cartels, and monopolies exist because there is a power vacuum that can't be dominated by more granular competition. (Will write another time about why granular yields better fitness and less waste)

Those vested interests will always squash or co-opt any decentralization (movement or technology) which threatens to make granular competition dominant.

The World Without Web would have occurred if key scientists at DARPA had not "lied through their teeth". The vested interests have fought back on many fronts, e.g. outlined in revelations from Snowden.

But they are still losing the war overall, as every time they shut something down, the hackers make it stronger. Thus I think they are going to lose the electronic currency war, but it is possible there will be two: the Bitcoin-morphed government currency and a hackers' currency. Most people use the government sites, e.g. Facebook, Google, etc.. The hackers have decentralized hangouts, e.g. Git, Mercurial.

I believe the hacker culture will spread and it is taking over the future economy. So steady growth of the hacker coin would be fine with me.

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November 26, 2013, 05:39:39 PM
 #96

Incorrect. The government can't enforce taxes if the people and the bond investors are running from the currency, because the government can't pay the police, tax collectors, etc.. The government hyperinflates attempting to do so.

I didn't quite get what you meant by "the government hyperinflates attempting to do so". To do what?

Facing widespread dumping of the currency, hyperinflates to continue to fund its mercenaries, ahem I mean police, tax collectors, and other "useful" bureaucrats. It is a futile attempt to maintain control over the loss of confidence.

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November 26, 2013, 05:44:00 PM
 #97

On these 2 points  at least I agree with AnonyMint.  Will they want to squash it? Will they be able to?  Will they find a way to use it or live with it?  Nobody has that answer.

Government pays salary to its employees. They can run from the currency only if they leave civil service. If they do leave, there is no public staff, then there is no government, no state, right? The confidence being referred to is not confidence in the money as such but rather it is confidence in the state and its government...

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November 26, 2013, 05:45:46 PM
 #98

Facing of widespread dumping of the currency, hyperinflates to continue to fund its mercenaries, ahem I mean police, tax collectors, and other "useful" bureaucrats. It is a futile attempt to maintain control over the loss of confidence.

Do you mean seigniorage or what? I still don't get where you're going. If the loss of confidence you refer to is caused by diminishing purchasing power due to the currency inflation (but could it be caused by anything else?) then there wouldn't be such loss among police, tax collectors and other civil service employees for rather obvious reasons...

Weimar Germany didn't plunge into anarchy, neither did Yugoslavia nor Zimbabwe for the same reasons...

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November 26, 2013, 05:48:58 PM
 #99

Where can I throw a post that was deleted from another thread.

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The Robo ATM is going to require a palm scan and a face scan with government-issued photo id.


They have a RoboCoin ATM in Vancouver and my friends and I have used it many times.  It *only* requires a palm scan and this is just for Canadian AML/KYC compliance.  You do not have to give the machine any other information.  It does not scan your licence, require your name, and you could wear a paper bag over your head and still buy coins, if you were so inclined.  In fact, I bet you could buy a cadaver's hand from a crooked mortician and use that!  Seriously, it is pretty low key and relaxed.  

Are you serious?

It will not remain so casual. All small things look great, and as they become more widespread society expects certain things.

I listened to the interview with the principle of that company and he said the design requires all those 3 I mentioned to comply with KYC laws.

The operators of each machine decide, based on guidance from the company. So it is possible that operator is being more lax, but the government can clamp down at any time. The government would be wise to wait until the Robo ATMs are widespread and depended upon, before clamping down and requiring the full capabilities of the design.

http://www.activistpost.com/2013/11/social-logins-for-government-services.html



Quote from: Bitcoin Forum
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Quote
I don't have time to read all of that but I will hit the key point:


This is the second time I've caught Evoorhees in a logic fail.

Intrinsic, useful, or quasi-universal, it makes no difference what we call it. Fact is that gold is rare, can't be replicated, Bitcoin can't have those assurances. A currency can't be rare, otherwise it can't be distributed and behave as a currency.

The only reason that Bitcoin can ever have quasi-universal acceptance (valuation) is if it can become a currency, and it can't because it is being valued for a delusion about it being rare with a companion delusion about it being (or becoming) a currency which is an antithesis of the first delusion.

The usefulness of Bitcoin as a cheaper and less regulated money transfer is very ephemeral. The Spiraling Transaction Fees design of Bitcoin will kill the cheapness over time, as well the government regulation is coming and the spy agencies are recording all your transfers and identities and taxman cometh later to destroy the delusion ex post facto with nice penalties and treble rates.

You were a terrorist trying to move your money outside of the country or to another person avoiding the $600 1099 reporting requirement?! How dare you. Show your paperwork. Ah we find your paperwork is lacking. Confiscated. Done.


Whether or not the pyramid or ponzi scheme terms are misused by pedantic definitions does not provide an argument against bitcoin being a * scheme. It is a "bitcoin scheme" which closely resembles a pyramid scheme but has a few twists.

28%. Wow we are making headway in the consciousness of the audience.

The key characteristics of anything that resembles a ponzi or pyramid scheme are:

1. No intrinsic value, it is all a willful delusion of the participants.

2. Viral adoption as deluded participants scurry to induce greater fools by word-of-mouth.


Physical gold investment most certainly has an intrinsic value and you will always have that rarity and tangible value (that you can hold in your hand) and thus it can't go to 0. Bitcoins are not rare, because...





All of those features are very important and we discussed their implementation in the Mini-block chain thread.

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November 26, 2013, 05:56:07 PM
 #100

The idea of bitcoin distribution is not to hand them out as broadly as possible. It is a system to reward people who run their computers to help secure and operate the network. It is not a free lunch program. Miners do work and are paid for it.

1. Distribution of coin rewards is halving every 4 years, thus diminishing towards 0. Half of all coins went to adopters in first 4 years.

2. ASICs means PC owners can't leverage their existing assets. Thus not a widely distribution coin.

3. PC mining need not be a free lunch, could also secure the network.

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