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Author Topic: I know you guys wanted this  (Read 2298 times)
the founder
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September 06, 2011, 05:10:37 PM
 #1

I think this should answer any questions that you might have regarding the issues bitcoins are having.

http://www.flexcoin.com/calc/

I'll put it in the standard flexcoin template later today.  

This is something that everyone needs to have to fully understand what is going on regarding the creation of bitcoins.

I figured it would start a serious debate,  but facts are facts... and that formula is a fact.

the fact is that we need 1.5 million dollars a month pushed into the system or else it will go down from current rates.






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September 06, 2011, 05:12:43 PM
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I'd like to see the formula that explains how flexcoin pays interest to its depositors

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September 06, 2011, 05:15:35 PM
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If all newly mined coins were going straight to market, those calc figures would be spot on
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September 06, 2011, 05:19:27 PM
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This belongs in economics, not Bitcoin Discussion.

And you're formula is incorrect because:

1) not all mined coins are sold
2) Investors and miners choose the price at which they purchase or sell bitcoin. 

You're formula is from an outsider perspective, as though there is some third party setting the price instead of direct exchange between investors.  You're just another speculator trying to keep the price down for the sake of your own ability to mine or buy coins more easily until you prove otherwise.

This page you put up is a strike against you.  You ought to take it down and rethink  Roll Eyes

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September 06, 2011, 05:27:29 PM
 #5

I'd like to see the formula that explains how flexcoin pays interest to its depositors

http://www.flexcoin.com/?page_id=148

that's been there for months...  didn't you ever read it?  I find it fascinating and comical how many people ask the same question but never read it...


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September 06, 2011, 05:28:34 PM
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I figured it would start a serious debate,  but facts are facts... and that formula is a fact.

This formula shows that if value is not added to the bitoin economy, then there should be inflation. But it doesn't show the scale of this inflation.

There is about 7 211 350  bitcoins. About 216 000 is being generated monthly. It means inflation due to emission is less than 3%/month. If nothing is added to the economy, then the inflation would decrease (since amount of bitcoins grows, but amount of bitcoins generated per month is constant). The inflation will decrease even faster when generation bonus is halfed.

But there are good chances that something will be added to bitcoin economy and compensate this decreasing inflation Smiley

In fact, many fiat currencies experience much higher inflation due to heavy use of printing press by their central banks.

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September 06, 2011, 05:29:42 PM
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I figured it would start a serious debate,  but facts are facts... and that formula is a fact.

This formula shows that if value is not added to the bitoin economy, then there should be inflation. But it doesn't show the scale of this inflation.

There is about 7 211 350  bitcoins. About 216 000 is being generated monthly. It means inflation due to emission is less than 3%. If nothing is added to the economy, then the inflation would decrease (since amount of bitcoins grows, but amount of bitcoins generated is constant). The inflation will decrease even faster when generation bonus is halfed.

But there are good chances that something will be added to bitcoin economy and compensate this decreasing inflation Smiley

In fact, many fiat currencies experience much higher inflation due to heavy use of printing press by their central banks.

not to this extent.   We're printing a huge amount of bitcoins, more than Zimbabwe at current rates.


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September 06, 2011, 05:33:10 PM
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This belongs in economics, not Bitcoin Discussion.

And you're formula is incorrect because:

1) not all mined coins are sold
2) Investors and miners choose the price at which they purchase or sell bitcoin.  

You're formula is from an outsider perspective, as though there is some third party setting the price instead of direct exchange between investors.  You're just another speculator trying to keep the price down for the sake of your own ability to mine or buy coins more easily until you prove otherwise.

This page you put up is a strike against you.  You ought to take it down and rethink  Roll Eyes

not even close, it's 100% spot on.  If that dollar figure is not added to the bitcoin economy the price will fall.   The value could be in the form of bitcoins being exchanged for t-shirts, or direct to mtgox for dollars added to buy bitcoins, the end result is however that that value is 100% accurate.  

The problem is that you're looking at it from an Insider perspective and not on a macro economic viewpoint,  at the end the macro level will win every single time.

---

Also it doesn't belong in economics,  it belongs here because economics would imply that it's just regarding dollars added,  but that's not what that formula represents, it represents t-shirts, services, everything added to it.   It's a technical formula not a economic one.



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September 06, 2011, 05:37:48 PM
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not to this extent.   We're printing a huge amount of bitcoins, more than Zimbabwe at current rates.

True: afaik Zimbabwe abandoned its currency and doesn't print any more Smiley But when it had thousands of %% of inflation, its emission was obviously much much much higher than emission of bitcoins )

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September 06, 2011, 05:44:25 PM
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not to this extent.   We're printing a huge amount of bitcoins, more than Zimbabwe at current rates.

True: afaik Zimbabwe abandoned its currency and doesn't print any more Smiley But when it had thousands of %% of inflation, its emission was obviously much much much higher than emission of bitcoins )

I still want to get a Zimbabwe hundred trillion dollar note.   Just to feel rich Smiley

LOL!


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September 06, 2011, 05:52:16 PM
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not even close, it's 100% spot on.  If that dollar figure is not added to the bitcoin economy the price will fall.   The value could be in the form of bitcoins being exchanged for t-shirts, or direct to mtgox for dollars added to buy bitcoins, the end result is however that that value is 100% accurate.

What you are saying is that if amount of bitcoin grows, but amount of goods and services traded for bitcoins doesn't grow, then bitcoins should decrease its value.

This is obviously true and it doesn't depend on bitcion's current price (you can remove it from equation and just show percentage of inflation). To my mind it is not that high for such a risky business, and it will decrease with time Smiley

Moreover, something is being added to the economy every day (people buy bitcoins, goods and services traded for bitcoins, people loose their wallets and many of them expect that in the long term bitcoin economy will grow)... So there are some deflationary factors as well which are hard to estimate. But if you are interested in crashing bitcoin, then focus on inflation, it is understandable Smiley

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September 06, 2011, 05:54:42 PM
 #12

The dollar value is there for a reason, the figures of t-shirts, services MUST equal that amount or else it will go down...  

trust me I know what you are saying..

but it has to be that figure or else the creation of bitcoins will exceed (and currently does) the investment going into it.


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September 06, 2011, 06:01:40 PM
 #13

Thanks for making the calculator, but it rests on the assumption that every mined coin is sold at market price. As long as people realize that assumption is implicit in that calculation, then it's a valuable observational tool.

It needs to be understood, though, that if miners hold all the coins they mine, then exactly $0 new dollars are needed to keep the price flat, (ceteris paribus).

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September 06, 2011, 06:04:20 PM
 #14

Thanks for making the calculator, but it rests on the assumption that every mined coin is sold at market price. As long as people realize that assumption is implicit in that calculation, then it's a valuable observational tool.

It needs to be understood, though, that if miners hold all the coins they mine, then exactly $0 new dollars are needed to keep the price flat, (ceteris paribus).



You can't ignore it by saying "miners will hide it under their mattress"  That dollar figure has to be added each month directly by either direct investment in dollars, silver, gold, Euros whatever... or directly via goods and services sold (not offered, sold).

 

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September 06, 2011, 06:55:04 PM
 #15

The money doesn't have to come directly from new investment now. If the volume of transactions processed increases the value of bitcoin as a product increases, which can be used to settle the deficit in future. The is not happening though

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September 06, 2011, 07:10:47 PM
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So basically flexcoin is a pyramid scheme? it relies on new investors (and not income of its own) to supply the money owed to people?
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September 06, 2011, 07:13:42 PM
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huh?  Where the hell did you get that from?   it's based on transaction fees from income it generates.   Like everything you stated it's the exact opposite.

http://www.flexcoin.com/?page_id=148

Read that than come back..  seriously I am really tired of posting it over and over again...  people need to read how it's formulated.  Better yet I don't think you would understand it...  I'll post it here:


--------------------------

Fees:
Flexcoin to Flexcoin = FREE
Bitcoin to Flexcoin = FREE
Flexcoin to Bitcoin = .01 BTC or one half of one percent (whichever is greater)

- NOTE: the bitcoin miner fees will be distributed from the fees we collect on outbound transfers, not added on.  The fee listed above is the only fee you will pay for an outbound transfer.

70% of the fees collected are disbursed to the account holders as discount payments on any fees already paid or any potential future fees, based on the following formula…

(your account balance / total balance of all flexcoin accounts) * ((all fees collected – miner fees) * 0.7)

It is important to note, as you can see in the formula listed above, MINER FEES WILL BE PAID ON ALL EXTERNAL TRANSFERS. Flexcoin will add appropriate bitcoin transaction fees whenever coins are transferred to an external bitcoin address.  Flexcoin-to-Flexcoin transfers are 100% FREE, and instantaneous.

What This Means: an individual can transfer bitcoins into Flexcoin (from an external bitcoin address / client), and then send and receive coins for free (via Flexcoin-to-Flexcoin transfers). This person would also receive a discount payment, even if they don’t make an outbound transfer (netting them a discount against any future fees for outbound transfers).

This makes a Flexcoin account the world’s perfect bitcoin solution.

---------------------


In simple english,  when someone transfers out to a BTC address 1/2 of 1% is fees.   70% of that goes back to the account holders.  






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September 06, 2011, 07:16:41 PM
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The other issue is that the bitcoin market cap is actually going down.
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September 06, 2011, 07:30:45 PM
 #19

I think this should answer any questions that you might have regarding the issues bitcoins are having.

http://www.flexcoin.com/calc/

I'll put it in the standard flexcoin template later today.  

This is something that everyone needs to have to fully understand what is going on regarding the creation of bitcoins.

I figured it would start a serious debate,  but facts are facts... and that formula is a fact.

the fact is that we need 1.5 million dollars a month pushed into the system or else it will go down from current rates.


Lets say we will have 10 million Btc in a year. Each worth $6. Thats $60 million.
Now its sounds much but It only requires 200.000 to believe in Btc and each put in $300 thats it.

Now the price sounds very easy to hold and achieve.
Even if there are only 100.000 guys who believe in Btc, some of them will buy much more than $300 worth of coins.

And a couple of month ago there were around 60.000 who had accounts at Mtgox. Now since then there are atleast two chinese, a canadian, a british Bitcoin exchange.

So a price of $6 should be easy to hold if the markets thinks its worth it, considering how revolutionary Bitcoins are.



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September 06, 2011, 07:45:15 PM
 #20

Thanks for making the calculator, but it rests on the assumption that every mined coin is sold at market price. As long as people realize that assumption is implicit in that calculation, then it's a valuable observational tool.

It needs to be understood, though, that if miners hold all the coins they mine, then exactly $0 new dollars are needed to keep the price flat, (ceteris paribus).

You can't ignore it by saying "miners will hide it under their mattress"  That dollar figure has to be added each month directly by either direct investment in dollars, silver, gold, Euros whatever... or directly via goods and services sold (not offered, sold).

Erik is correct.  The supply of bitcoins is determined by the quantity offered for sale.  The demand is determined by the quantity requested for purchase.  The current price is simply the point of equilibrium where the demand matches supply.  Hence, all that is required for the price to remain stable is the number of bitcoins offered to balance the number requested for purchase at that price.

As a result of mining, somewhere between 0 and 50 new bitcoins are entering the supply every 10 minutes, but you can't be sure of the exact number.  Your calculation assumes all 50 newly minted bitcoins are being offered for sale every 10 minutes, in which case ~$1.4 million in value would need to change hands to support the price.  Now, if the price does hold steady over a period of a month, then it is true that the notional value of all bitcoins in existence would have grown by ~$1.4 million.  But that's very different than saying $1.4 million new money has entered the bitcoin economy.

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