How divisible are bitcoins and other market/economic questions

[BlueSky]

How divisible are bitcoins? Can I divide a bitcoin? as in could I spend 0.5 or 0.01 of a bitcoin?

I ask this question as practically the production of new bitcoins is finite & will become too expensive in terms of time & power in the future and if the system becomes more popular there will be more goods than BC's.

What about dwindling supply?
The current supply will eventually begin to dwindle as people lose their wallet's(removing coins from the system) & governments attempt to drain coins out (either by scamming or creating coins themselves and simply hoarding them)of the system. This is inevitable (government action against BC) as no government worldwide will allow the existence of such an anonymous currency system out of their control or supervision.

What about the need for banks?
Actually I don't think there would be a need for banks to get interest on savings, simply holding onto BC's they will increase in value as more users come into the system. So technically you'll get interest just for keeping them under your bed.

How are BC's valued(this is more of a question for NewLibertyStandard)?

As I see it(thusfar) the value of bitcoins(as in their exchange rate or the goods they can buy) is not in how much energy/time it takes to create them (this simply ensures a limited supply) but that they are accepted for goods & services.

The more goods & services that can be bought with BC the less coins it will require per good.

For example there are 2 Million BC in existence, and only one person accepts BC, & is willing to sell a single t-shirt. Then the BC value of that shirt is 2Million BC, if it we're 2 t-shirts then each shirt would cost 1Million and so forth.

Of coarse this may never happen exactly like this, a person would look at the electricity cost of making 2Million BC's(in lets say US$) and the cost of buying the t-shirt(again in US$). If it costs $100 of electricity to make 2Million BC's then of coarse the customer will just use US$ and pay $10 for the t-shirt.


 

[NewLibertyStandard]

Bitcoins are divisible by 100. So when you generate ฿50.00, you are getting 5000 bitcoin cents.

The New Liberty Standard Exchange Rate includes an explanation of how it is calculated. BlueSky, how much are you willing to sell your bitcoins for and how much are you willing to pay for someone else's bitcoins?

Bitcoins can be lost, but for the foreseeable future there will continue to be more than enough bitcoins available to keep playing the game.

Each person is their own bank. Although I suppose that if a friend of mine wanted to buy some bitcoins and didn't have a computer or Internet, I wouldn't mind keeping track of their balance.

[BlueSky]

That is pretty divisible(enough for the moment), which means that ฿ serves all the functions of money- "Money is a matter of functions four, a medium, a measure, a standard, a store." That is, money functions as a medium of exchange, a unit of account, a standard of deferred payment, and a store of value."-wikipedia

I must thank Satoshi for his work (although the groundwork was done during the 80's, algorythms etc. this is the first useful implementation and it's effects are profound).

I live in PRChina, combining Freenet, Tor, I2P there is the framework for free,anonymous discussion and transfer of information(something that is prevented here, sometimes with serious penalties). Add to this BitCoin and we now have an underground market free from the tyrany and scrutinising eye of the state. This will allow an alternative, free China to develope under the nose of the state machinery.

My understanding is that Bitcoin cannot be suppressed without suppressing the internet as a whole, is this correct?

I would like to give Satoshi a donation, but sadly R&B(ReminBi, literally "The Peoples Money") is not a world traded currency and sending a payment in a foreign currency is expensive & complicated. If I could give a gift, to a value of R&B500(about $70US)? Or if wished open a currency exchange for ฿/R&B?

One thing I will do is have some computer science students translate the application to Chinese, after Spring Festival.

NewLiberty-
The lazy way would be for me to peg my exchange rate to yours and let you do the calculations. Otherwise I would need to know the total amount of ฿ in circulation and the amount of goods that can be purchased with it(this is a Austrian economist view of measuring the value I think?), just what is the amount in circulation?

What do you mean "keep playing the game"?

Also, what do you sell more, ฿ or $US?

[BitcoinFX]

...Otherwise I would need to know the total amount of ฿ in circulation and the amount of goods that can be purchased with it(this is a Austrian economist view of measuring the value I think?), just what is the amount in circulation? ...

From the FAQ:

How are new Bitcoins created?

New coins are generated by a network node each time it finds the solution to a certain calculational problem (i.e. creates a new block), for which an average solution time can be calculated. The difficulty of the problem is adjusted so that in the first 4 years of the Bitcoin network, 10,500,000 coins will be created. The amount is halved each 4 years, so it will be 5,250,000 in years 4-8, 2,625,000 in years 8-12 and so on. Thus the total number of coins will approach 21,000,000 over time.

What's the current total amount of Bitcoins in existence?

The number of blocks times the coin value of a block. The coin value is 50 bc per block for the first 210,000 blocks, 25 bc for the next 210,000 blocks, then 12.5 bc, 7.25 bc and so on.

As of October 30th 2009, there are about 26,000 blocks in the block chain, which means 26,000 * 50 bc = 1,300,000 bitcoins in existence. You can see the up-to-date number of blocks in the status bar of the Bitcoin main window.

Current Block count as of 06th Feb. 2010 - 3.15 PM - GMT is 38,660 blocks. You can do the math

[Suggester]

What about dwindling supply?
The current supply will eventually begin to dwindle as people lose their wallet's(removing coins from the system) & governments attempt to drain coins out (either by scamming or creating coins themselves and simply hoarding them)of the system. This is inevitable (government action against BC) as no government worldwide will allow the existence of such an anonymous currency system out of their control or supervision.

That's an excellent point. If this occurs, it might be a good idea to remove or extend the 21M million limit in later versions and freeze the difficulty of generating new coins (by not making it exceedingly difficult to make new ones). Granted, BTC will not be an excellent investment as it is now (because currently we expect its price to multiply in the future), but then again if it turned out to be that popular, the "investment" incentive will not be the main reason people are rushing to use it.

[BlueSky]

Removing or extending the 21M limit would be a disaster, it's the finite supply of this digital cash that makes it useful as money.

Allowing for the currency to be further divided would solve that issue. No one loses the value of any of their currency held(devaluation or debasing), while at the same time being able to break off smaller pieces of a ฿ to trade.

Besides, the whole point is that there is no (central)control over the supply, this would allow it to be extinguished by governments or abused by a central authority (like today's central banks & governments)

I am wondering Satoshi, what would be the technical difficulty of implementing  ฿ as 0.000(or more zeroes) instead of 0.00?

This is not a request since there is no need for it yet, but may wish to acommadate a larger user base in the future.

[satoshi]

Eventually at most only 21 million coins for 6.8 billion people in the world if it really gets huge.

But don't worry, there are another 6 decimal places that aren't shown, for a total of 8 decimal places internally.  It shows 1.00 but internally it's 1.00000000.  If there's massive deflation in the future, the software could show more decimal places.

If it gets tiresome working with small numbers, we could change where the display shows the decimal point.  Same amount of money, just different convention for where the ","'s and "."'s go.  e.g. moving the decimal place 3 places would mean if you had 1.00000 before, now it shows it as 1,000.00.

[BlueSky]

Future proof.
All my concerns answered. What files in the source version control are the labels for the interface(So that I can translate)?

Please point me to any page you would like to have translated to Chinese for the project.
Perhaps having a Chinese howto and explanation would be usefull(manual/helpfile?)  

Also what would you like for a gift?

Moved the translation discussion into a new thread.
sirius-m

[fergalish]

Nobody has really answered the OP's question about what happens if governments start a serious attempt to buy up all BTC and destroy them.  I mean, if the men-in-black offered someone $Lots, then they may well happily set up an exchange with a good rate and fudge the figures on the front website to make it look genuine.  Eventually, the rest of the net might figure out that all coins that had passed through that exchange eventually disappeared but with enough resources they could probably run the exchange for long enough to damage the BTC economy.

[xc]

Once bitcoins become widely accepted as a money, exchangers would matter far less because presumably bitcoins could be exchanged directly for more tangible goods and services.  Therefore, in order for such a government plan to work, bitcoin owners would have to desire whatever governments are offering (fiat inflationary paper) over the goods and services (production of the free market) that have presumably made bitcoin acceptable as a money.

Ultimately, even if governments succeeded in destroying some of the bitcoins, the value of all remaining bitcoins would simply adjust by increasing in purchasing power.  It really doesn't matter how many bitcoins there are, so long as they remain divisible enough to allow for such adjustments. 

Even after bitcoins can no longer be created, in a deflationary environment all bitcoins equally appropriate increased purchasing power.  In an inflationary environment (i.e. USD), on the other hand, purchasing power is redistributed from all dollar holders to those first receiving the newly created dollars - generally government and government-connected institutions.

XC

[fergalish]

> Therefore, in order for such a government plan to work, bitcoin owners would have to desire whatever governments are offering (fiat inflationary paper) over the goods and services (production of the free market)

So, don't you think powerful governments might have something to offer that BTC owners would prefer?  Damn, they might even offer the same goods and servives, but cheaper, just to get control of the economy again.  See the thread "how stable will bitcoin be" - governments are powerful and resourceful, and they won't like underground un-taxable economies.  But then, I'm not the first to note that, am I?  No reply needed.

[sirius]

The men-in-black who offer a lot of money for every coin would be effectively just backing up Bitcoin and giving huge publicity to it. I wouldn't mind that. Even if they eventually managed to get 99% of all the coins and that somehow hindered the economy, we could always start using Bitcoin with a new block chain and see how long they're going to pay us.

[Anonymous]

There needs to be a  p2p mesh network created so that the internet is distributed and you dont have to go through an isp to access it.I mean you can use freenet but you still have to go through an isp gateway of some description.

[llama]

How was the 21 million number decided?  J/c...

[infraspace]

The men-in-black who offer a lot of money for every coin would be effectively just backing up Bitcoin and giving huge publicity to it. I wouldn't mind that. Even if they eventually managed to get 99% of all the coins and that somehow hindered the economy, we could always start using Bitcoin with a new block chain and see how long they're going to pay us.

Governments could simply outlaw Bitcoin, as I think they have done to most other "unofficial" currencies. They wouldn't "offer" you anything but the chance to stay out of jail.

[sirius]

Governments could simply outlaw Bitcoin, as I think they have done to most other "unofficial" currencies. They wouldn't "offer" you anything but the chance to stay out of jail.

The situation with Bitcoin is comparable to p2p filesharing networks. Both can be used for legal and illegal purposes. Shutting down illegal filesharing in the p2p networks has proven very difficult technically and politically, despite the best efforts of some strong interest groups. Outlawing the whole p2p networks (even for legal files) hasn't been even seriously proposed. I don't think that legal or illegal use of Bitcoin can be successfully stopped either, at least not in the western countries.

[mpkomara]

But don't worry, there are another 6 decimal places that aren't shown, for a total of 8 decimal places internally.  It shows 1.00 but internally it's 1.00000000.  If there's massive deflation in the future, the software could show more decimal places.

Maybe not massive deflation, but a robust deflation over a long period of time would spur the need for more decimal places than eight.  Ease some minds of the potential early users of the currency that it's not a future technical roadblock to add more.  What is this software you speak of?

[marcotheminer]

Eventually at most only 21 million coins for 6.8 billion people in the world if it really gets huge.

But don't worry, there are another 6 decimal places that aren't shown, for a total of 8 decimal places internally.  It shows 1.00 but internally it's 1.00000000.  If there's massive deflation in the future, the software could show more decimal places.

If it gets tiresome working with small numbers, we could change where the display shows the decimal point.  Same amount of money, just different convention for where the ","'s and "."'s go.  e.g. moving the decimal place 3 places would mean if you had 1.00000 before, now it shows it as 1,000.00.

Damn! The one and only satoshi!
I wish you were still active!

[4mherewego]

If it gets tiresome working with small numbers, we could change where the display shows the decimal point.  Same amount of money, just different convention for where the ","'s and "."'s go.  e.g. moving the decimal place 3 places would mean if you had 1.00000 before, now it shows it as 1,000.00.

This would be better than the bits thingy!

[Bit_Happy]

Satoshi told us to move the decimal place 3 places!