Deflatory nature of Bitcoin - the problem and a possible solution

[thaaanos]

If your, or any, alt coin idea creates a situation where the market assigns different values to different coins as in your case of assigning different values to coins with different "ages" then we are done here.  If that is the case then your coins are not money, they are collectibles.  Money is fungible.  Collectibles require a third party to "grade" them in order to assign value.  I suggest you learn a lot more about Bitcoins, what they are, how they actually work, what makes the system unique and why so many people are inspired by it BEFORE you try to fix it.

Actually it works as new coins debase/obsolete the old, and yes they will not have a face value, an output it will require some *weighting*
however due to the recycling effect the actual value stored in the coin will be it's utility as exchange means, not some artificial scarcity.
On the technical side -watch me take out the duality card-
The numbers in the transaction tree will not represent number of coins but, *weights*. The leaves are where the value will lie (block age) and the trasactions simply create a weighted tree. So output "value" from scalar is vectorized, and yes now coins are semi-fungable, but thats a plus actually as I hope that this semi-fungability will lead to people trading them. That inter-trade is what I bet on to use as a stabilizer.

EDIT: BTW since this is my coin I will call it OURO ȣ

[BurtW]

It appears that you really like your idea so I suggest you run with it and create OURO ȣ

Let us all know when it is available with a white paper, reference client code, miner code (if needed), etc.

[thaaanos]

It appears that you really like your idea so I suggest you run with it and create OURO ȣ

Let us all know when it is available with a white paper, reference client code, miner code (if needed), etc.

First things first I need a mysterious persona, how do you find "Atanashi Anakatoma"?

[porcupine87]

I challenge you to make any of your theory make sense using the equation of exchange, or a modified form of it with a logical proof of why the iteration makes sense.

At a words-level: the oldest deflationary good there is — land — continues to be traded and recommended for investment, even by those who cannot grasp the actual ways that a system like Bitcoin will interact with the remaining economy. Justify that, also, please. (As an investment, meaning you are not using it, merely "hoarding" it, as most land is held, and all is claimed. For most of us, land is the ultimate in an analogy to a 100% pre-mined coin. But its uniqueness is undeniable. This, BTW, is a useful fact for the "ponzi by early adopters / too late to invest" arguments.)

Land is a good analogy. But same you could say about corporate shares or fonds. When they are increasing in value all the time, nobody will sell, ever! Most people tend to hoard there shares and live like a homeless guy and then on death bed they spend it.
Because: Money on the bank is much worthier than a nice TV or a trip to Thailand.

And sure, who will buy a coffee, when you can buy with that bitcoin 5% more coffee in one year? 

[ProfMac]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

[BurtW]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

[thaaanos]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving propably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

[BurtW]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving propably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

There you go.   I think that is it.  That makes sense to me.  My answer was in jest.

[Lloydie]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving propably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

Nowadays there is a better solution than the mattress. It's called bitcoin. It's probably an even better solution than savings.

[Lloydie]

If your, or any, alt coin idea creates a situation where the market assigns different values to different coins as in your case of assigning different values to coins with different "ages" then we are done here.  If that is the case then your coins are not money, they are collectibles.  Money is fungible.  Collectibles require a third party to "grade" them in order to assign value.  I suggest you learn a lot more about Bitcoins, what they are, how they actually work, what makes the system unique and why so many people are inspired by it BEFORE you try to fix it.

Actually it works as new coins debase/obsolete the old, and yes they will not have a face value, an output it will require some *weighting*
however due to the recycling effect the actual value stored in the coin will be it's utility as exchange means, not some artificial scarcity.
On the technical side -watch me take out the duality card-
The numbers in the transaction tree will not represent number of coins but, *weights*. The leaves are where the value will lie (block age) and the trasactions simply create a weighted tree. So output "value" from scalar is vectorized, and yes now coins are semi-fungable, but thats a plus actually as I hope that this semi-fungability will lead to people trading them. That inter-trade is what I bet on to use as a stabilizer.

EDIT: BTW since this is my coin I will call it OURO ȣ

Lets put Thaaanos' statements into perspective. Could we be dealing with a central bank stooge?

Ha we'll see who gets to laugh last.
No just a grade school teacher lol.
I will and when I come, I will have Central Banks to back me! yeah!
and Im gone make your bitcoins worth shit so Hodl.

[BurtW]

Ha we'll see who gets to laugh last.
No just a grade school teacher lol.
I will and when I come, I will have Central Banks to back me! yeah!
and Im gone make your bitcoins worth shit so Hodl.

As we have said many times:  bring on your OURO ȣ alt coin and let's let the market decide.

[thaaanos]

Ha we'll see who gets to laugh last.
No just a grade school teacher lol.
I will and when I come, I will have Central Banks to back me! yeah!
and Im gone make your bitcoins worth shit so Hodl.

As we have said many times:  bring on your OURO ȣ alt coin and let's let the market decide.

I feel I have to apologize for my little Hodling Parrot perched on my shoulder, seems I am not feeding him enough nuts

[Lloydie]

Ha we'll see who gets to laugh last.
No just a grade school teacher lol.
I will and when I come, I will have Central Banks to back me! yeah!
and Im gone make your bitcoins worth shit so Hodl.

As we have said many times:  bring on your OURO ȣ alt coin and let's let the market decide.

I feel I have to apologize for my little Hodling Parrot perched on my shoulder, seems I am not feeding him enough nuts

"Squawkkk, stooge, stooge, stooge.  Squawkkk"  

The parrot only knows what the parrot sees and hears.

[kjj]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving propably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

Money is an abstraction of barter.  You trade wealth you have for wealth you want, but the two halves of the trade don't have to happen at once, they can be spread across time and space, and with different people.

If you are holding money (saving, hoarding, whatever you want to call it), it means that you have given wealth to the world to use, but have not claimed wealth back to complete your trade.

The difference between saving and hoarding is the difference between understanding this and not understanding it.

[BurtW]

That agrees with my own personal definition of what money actually is.  I think money is the state of an unfinished transaction.

[FenixRD]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving probably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

Money is an abstraction of barter.  You trade wealth goods and services you have for wealth goods and services you want, but the two halves of the trade don't have to happen at once; they can be spread across time and space, and with different people. To do this requires the abstraction of an invention we call money.

If you are holding money (saving, hoarding, whatever you want to call it), it means that you have given wealth goods and services to the world to use, but have not claimed wealth back to complete your trade.

The difference between saving and hoarding is the difference between understanding this and not understanding it.

Very, very good. Tweaked and added commentary.

And, indeed, hoarding and saving are the same. The common notion of saving in a mattress vs. saving in a bank is a conflation; a misunderstanding the difference between saving and investing. Saving is saving, investing is investing. Putting money in a bank where the contract permits them to loan and invest it, is investing -- in other humans, in the economy. This is good, and is better than simply saving, unless there is something wrong with the investment process (this is the problem!).

Right now, I can save USD, in a vault or a mattress perhaps, or even by letting it sit in BTC-e as USD: I don't think they're doing much investing with it. Really, most of it is sitting as Bitcoin, but BTC-e is absorbing the difference of appreciation as profit or loss. In fact, I frequently do this exact thing, but with RMB on BTCChina, because the CNY is appreciating against the USD at about 3% annually. This is one reason they are my primary exchange: When my funds are existing as fiat, I want to know they are in a healthy fiat.

Investing is great, too. I regularly invest in many things. BTC can't really be invested in, beyond simply saving as BTC, because Bitcoin functions, more than anything else, like a stock-commodity hybrid, and really, it is mostly a stock. You're investing in a technology, the blockchain-distributed-p2p-cryptocurrency system.

If Google was a purely supranational company with an open-source, tamper-proof, uncounterfeitable share issuance algorithm: with no regulations to prohibit such things we could pay each other in fractions of stock shares, and it would be much like Bitcoin, only our investment would also be an investment in everything else Google does, in addition to that trade mechanism.

Bitcoin, we are investing in the trade mechanism itself, and all the activities of all the humans and companies using Bitcoin. Everyone who benefits from a rise in "stock" price, that's who we invest in by buying and holding Bitcoin. In the future, I expect to be able to invest in more specific groups of humans by buying stocks valued in Bitcoin itself. That is what investing truly is, but we've come very far from being able to recognize it. Shorting of course is betting against them (or at least betting that they aren't as worthy of investment as their current trade price). Naked shorting is another day's commentary, but is very, very bad, for the same reason that money debasement is bad. Shorting Bitcoin, done properly and transparently, does help to stabilize the market, believe it or not; but the key is "properly and transparently". But really, exchanges have the same problem. We could be buying naked long positions. It's pretty obvious that at Gox, dollars are very often held as naked longs, and it's a wonder a run hasn't happened and destroyed them. Only the community's anti-state-intervention tendencies, the distance of the internet, and a little hopeful greed that the price will come true for them, has prevented this.

Since my train of thought has veered that direction, this is why a true, transparent p2p trade system MUST be created. I have been working on one for a while. The only other options are central or voluntary regulation; and people continuing to get burned. I don't like two of the three, and we're pretty far from any voluntary regulation concepts being the norm, though I do believe that is the future.

That's probably enough rambling for now...  

[thaaanos]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving probably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

Money is an abstraction of barter.  You trade wealth goods and services you have for wealth goods and services you want, but the two halves of the trade don't have to happen at once; they can be spread across time and space, and with different people. To do this requires the abstraction of an invention we call money.

If you are holding money (saving, hoarding, whatever you want to call it), it means that you have given wealth goods and services to the world to use, but have not claimed wealth back to complete your trade.

The difference between saving and hoarding is the difference between understanding this and not understanding it.

Very, very good. Tweaked and added commentary.

And, indeed, hoarding and saving are the same. The common notion of saving in a mattress vs. saving in a bank is a conflation; a misunderstanding the difference between saving and investing. Saving is saving, investing is investing. Putting money in a bank where the contract permits them to loan and invest it, is investing -- in other humans, in the economy. This is good, and is better than simply saving, unless there is something wrong with the investment process (this is the problem!).

Since the transaction is not atomic is there not a risk involved that scales with time? Where is that captured in the above definition?

I could ripost that hoarding/saving(not in a bank) then is nothing more that investing in yourself at 0% rate interest.

Wouldnt a rational player hedge the risk of his own single point of failure and pool-hoard/save with others like a savings bank?

[FenixRD]

What is the difference between "hoarding" and "saving?"

I thought saving was important.

Saving is something we are all suposed to do.  If we don't do it then we get slapped.

If we actually find a way to save it is called hoarding.  If we hoard then we get slapped.

Saving probably means save(?) in a Bank, where that capital is recycled in the economy.
while hoarding means save under the mattress, or in a chest or in a hole in the ground, where that capital is retracted by the economy.

Money is an abstraction of barter.  You trade wealth goods and services you have for wealth goods and services you want, but the two halves of the trade don't have to happen at once; they can be spread across time and space, and with different people. To do this requires the abstraction of an invention we call money.

If you are holding money (saving, hoarding, whatever you want to call it), it means that you have given wealth goods and services to the world to use, but have not claimed wealth back to complete your trade.

The difference between saving and hoarding is the difference between understanding this and not understanding it.

Very, very good. Tweaked and added commentary.

And, indeed, hoarding and saving are the same. The common notion of saving in a mattress vs. saving in a bank is a conflation; a misunderstanding the difference between saving and investing. Saving is saving, investing is investing. Putting money in a bank where the contract permits them to loan and invest it, is investing -- in other humans, in the economy. This is good, and is better than simply saving, unless there is something wrong with the investment process (this is the problem!).

Since the transaction is not atomic is there not a risk involved that scales with time? Where is that captured in the above definition?

I could ripost that hoarding/saving(not in a bank) then is nothing more that investing in yourself at 0% rate interest.

Wouldnt a rational player hedge the risk of his own single point of failure and pool-hoard/save with others like a savings bank?

Excellent take. Yes, or put slightly differently, you're betting that compared to your saving/hoarding, you will lose less than the places you could have invested in. It's all relative. Either that's because you didn't have access to places which could have better utilized the money (giving a higher yield) or because you really are the most amazing human ever. It couldn't be zero, though, unless you were wrong. Your savings would appreciate against whatever others did. This means you MUST be already saving in the most non-depreciative asset.

Temporarily, Bitcoin is probably this. It's as close to it as you can get. It won't be forever; eventually you'll want to invest in specific implementations of blockchains, and other ideas. And already there are stocks that yield more that Bitcoin — some of them just out of pure speculation, but others because they really are using that money superbly.

When investing, don't forget to correct for the yield of the underlying asset. As in, investing in Alibaba or Baidu, if yielding a 150% gain YoY in RMB, is actually more in USD, because the USD is -3% roughly since 2005 (annually, not -3% total).

Edit: I rather doubt China considered it this way when they began cracking down on Bitcoin, but as the country with probably the highest actual appreciation of underlying currency value in the world, they have the most to lose economically (or really, the most advantage to give away, not anything being lost technically) by allowing the free flow that is permitted with Bitcoin.

[thaaanos]

Edit: I rather doubt China considered it this way when they began cracking down on Bitcoin, but as the country with probably the highest actual appreciation of underlying currency value in the world, they have the most to lose economically (or really, the most advantage to give away, not anything being lost technically) by allowing the free flow that is permitted with Bitcoin.

I think China is so invested in gold, and propably
A. sees bitcoin as a threat to it's gold reserves
B. Most likely thinks that since in the west there is no more gold it's propably a technological sleight of hand
to fuck them over

EDIT: Especially since US tried to send them fake goldbars

[FenixRD]

Edit: I rather doubt China considered it this way when they began cracking down on Bitcoin, but as the country with probably the highest actual appreciation of underlying currency value in the world, they have the most to lose economically (or really, the most advantage to give away, not anything being lost technically) by allowing the free flow that is permitted with Bitcoin.

I think China is so invested in gold, and propably
A. sees bitcoin as a threat to it's gold reserves
B. Most likely thinks that since in the west there is no more gold it's propably a technological sleight of hand
to fuck them over

EDIT: Especially since US tried to send them fake goldbars

Source?? I guess I wouldn't be surprised -- at least, not surprised that there are fake gold bars in vaults. That's why we can't estimate the surface gold amount to more than a full degree of magnitude in precision (i.e. there may be x surface gold, or 10x surface gold; no one is sure.)

Anyway again, the threat -- if they see it -- is that BTC can be an equalizer between currencies with unequal debasement rates. Thus, our debasement of the USD, by connection via BTC exchange, has a (small but measurable) debasing effect on the CNY, or, looked at inversely, the strength of the CNY trickles to USD (in a small but measurable amount). We're both playing games with our currencies, but the effect of BTC in the mix is to the benefit of the USD, and the detriment of CNY, albeit small (since the BTC market is incredibly small vs. the market caps of USD and CNY).

I've wondered if the interesting and unexpected response in the Senate, and the reversal of China's position since November (when BTC was covered positively on state media) are related. Possibly they fully expected us to ban the whole thing, in which case it WOULD have been a neutral or good thing for China (the currency with the least trade friction is the more attractive currency for making your reserve currency; and China appears to have aspirations of making the CNY a challenger to the USD for other countries' reserve currency).