Edit: I will no longer accept BTC as payment, USD only please.
I know diehards are going to resist the point of
my immediately prior post, but the fact is that for money to become widely accepted by the masses, it must lose its "no debasement" store-of-value qualities. I explained this in great detail else where on this forum (from memory only see my debate with MoodShadow in the Peter Schiff thread in the Economics sub-forum, also my thread "No Money Exists Without The Majority", and all my debates with forum member bitfreak! in his Mini Block Chain threads, and with bitfreak! in my "Failure to..." thread in the Bitcoin Discussion sub-forum). You can find data to back up my arguments in those prior discussions. Let me attempt now another superior summary.
The delusion of the goldbugs (which apparently Satoshi strategically understood) is that debasement is bad for the masses. The truth is the antithesis. Fact is that wealth is power-law distributed[1], thus if money isn't debased the masses become enslaved to the rich.
So society tries to redistribute from the rich to the poor, but this is crony capitalism because of the power vacuum of democracy[2]. Instead of redistributing capital from the (less knowledgeable) rich to the knowledge-intensive entrepreneurs, the collective action actually distributes from the (upper middle-class) entrepreneurs to the poor. The elite capture the collective action and rule it.
So the problem is not debasement. The problem is who controls taxation and debasement, which are the elite. This natural system is basically that the biggest fish eat all the smaller fish.
This is disastrous because it concentrates capital away from those who have the most knowledge capital and towards the top-down fatcats and the unproductive lazy poor.
It is important to understand the reason that the rich are less knowledgeable than the smaller entrepreneur and also this is why smaller things grow faster than larger things. The reason is fitness, which I covered in great detail in the "
Information is Alive!" essay on my blog. I elaborated on these concepts in my two essays which CoinCube has linked from his OP in the
Economic Devastation thread. I am not saying a rich man isn't smarter, rather I am pointing out a natural law of physics, which is that information can't travel instantly. If the speed-of-light were infinite, nothing would exist and the universe would collapse into a single infinitesimal point in time, because the past would be communicated to the present instantly and thus time would cease to exist. Friction is required for existence. This is explained more analytically in "
The Universe" essay on my blog.
You can understand this less abstractly by noting that a manager can't possibly keep track of all the details that his workers are doing. And this is why until you learn to make your own decisions, you can never sustain wealth. The point is that each person knows about opportunities which are local to his/her environment which the fatcat capitalist can't possibly know. Also there is the issue of economies-of-scale, the fatcat can't double his investment in a year because the investments of size don't grow that fast, but the guy who sells mineral water on a hot scalding day, can triple or more his capital outlay.
You see that
only productivity sustains wealth. There is no such thing as storing wealth without it losing its value. That couldn't possibly exist in any framework that you could envision. This is a high IQ point and most readers will still not get it after reading the above over and over. If you get this point, pat yourself on the back, it means you are very smart.
The key is that you as a very productive knowledge entrepreneur can grow your wealth faster than the fatcat, so if money is debased by say 5% per year, then you gain relative wealth as compared to the fatcat. That is if the debasement isn't being gamed by that damn power vacuum of democracy crony capitalism. You can also say arithmetically that no debasement is required for you to gain against the fatcat for as long as the power vacuum isn't in control of society, but the problem with that is there is no way to fund the security of a decentralized crypto-currency without debasement. Transaction fees are one of the big Achilles Heels of Bitcoin, because it incentivizes the capture of transactions by those who want to centralize control of mining (this is actually happening now but it is very subtle and hard to prove because 3 pools already control > 50% of mining).
After realizing this, I set out to try to figure out how to design crypto-currency in way that it couldn't be taxed and that would also naturally redistribute the money from the fatcats to the mining entrepreneurs in a competitive framework that rewarded innovation. And I realized that cpu-only would distribute the debasement to the most innovative.
This is because the home miners would mine at a loss and not know it, thus economies-of-scale for marginally lower electrical cost, e.g. in East Washington wouldn't make the datacenter mining very profitable. Rather it would incentivize innovative miners to locate high vertical head and flow stream microhydropower which is almost free energy. The fatcats would hate that, because it doesn't have high economies-of-scale. This is probably why many developed nations outlawed unlicensed moonshine (ethanol) and hemp cultivation. It actually takes individual brawn, search, and effort. As well, such a properly designed cpu-only proof-of-work would not gain economies-of-scale from Tilera CPUs and other ways of applying large capital to mining. Algorithmic check mate on fatcats.
Note one of the very important reasons that mining at a loss is still valuable is because it can be the way to convert fiat to coins without any third party involved, which is very powerful veto on corrupt exchanges and governments, e.g. it nullifies regulation and confiscation. It also makes the personal computer a form of
autonomously issued cash, while the governments are trying to eliminate cash so they can track everything digitally.
Note that money isn't all the wealth, e.g. assets such as land are wealth, but as I pointed out above that debasement of all the wealth happens naturally if the power vacuum of democracy isn't allowed to stomp on entrepreneurs with taxation and regulation. Thus entrepreneurs gain relative wealth! And doing a crypto-currency correctly is a key factor in making that a potential reality. Unfortunately Bitcoin as designed can never do that.
Bitcoin already lost its potential to change the world in that positive way, for example the mining is already centralized. The adoption pattern and future of Bitcoin is already set in stone.
So I hope I have explained to you why money should not be a store-of-value, and hinted to you how we can improve crypto-currency so that money isn't controlled by the fatcats and the destructive power vacuum of democracy.
Next you may want to hear about specific technological details. Some can be revealed now and others soon.
Note, my blog domain expired which I just renewed but there will be up to a 24 hours delay for the nameserves to propagate again so in the meantime use
this link instead.
[1] A. Dragulescu and V. Yakovenko.
Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States.
[2] Eric S. Raymond discussing Mancur Olson's
The Logic Of Collective Action in
Some Iron Laws of Political Economics.
