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Author Topic: Legal Tender  (Read 5328 times)
Quantumplation
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July 22, 2010, 01:30:15 PM
 #21

Something that I'm curious about actually; is the process of processing transactions / generating new coins the same? I can see the rationale for compensating for transactions at some point, because the cost to generate a new bitcoin will at some point exceed the additional value gained from said bitcoin.

Yes, the current difficulty/generation system being used for creating "new" bitcoins is going to be the same for those future bitcoin blocks, and the attempt to "normalize" the generation of those coins to about one every 10 minutes is at least still going to be attempted to be maintained.

I could imagine a time when most people would be willing to "turn off" the bitcoin generation option simply because of the trivial nature of any new coins that are generated.  If running the generator continuously for an entire year would only earn you $1 in equivalent currency, would it be worth the effort to you?  Even if that was on a 10k server farm attempting to generate coins?  It seems to me that most people and certainly most server farms would simply give up at that point.

You'd make more than one dollar because of the transaction fees.  That's the whole point.  If it got to that point, then everyone would stop generating blocks, as it would be unprofitable, and the system would collapse.

Against my better judgement... 1ADjszXMSRuAUjyy3ShFRy54SyRVrNDgDc
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July 23, 2010, 08:22:40 AM
 #22



If it got to that point, then everyone would stop generating blocks, as it would be unprofitable, and the system would collapse.

That's not how it works. If fewer people generate, then generating will be more profitable because the difficulty will relax.

Not to mention the people who generate because they like to have anonymous easy money, or have substantial Bitcoin savings and want the system to keep working.

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Quantumplation
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July 23, 2010, 01:07:21 PM
 #23



If it got to that point, then everyone would stop generating blocks, as it would be unprofitable, and the system would collapse.

That's not how it works. If fewer people generate, then generating will be more profitable because the difficulty will relax.

Not to mention the people who generate because they like to have anonymous easy money, or have substantial Bitcoin savings and want the system to keep working.

Yea, I was oversimplifying and taking it to the extremes.  Here's how it would REALLY work:

Low value of bitcoins + Difficult target = Pressure to leave the generation business
Low value of bitcoins + easy target = Pressure to enter the generation business

So, this will equalize at some point.  However, the lower the value of bitcoins, the lower the "equalization point".  The lower the equalization point, the lower investment needed to override the system. (If it settles around 100 computers, you only need 100 cores to start duping legitimate people, potentially in the thousands, of your trades.  Obviously numbers will vary, this was just an example).

Thus, transactions fees are introduced to keep this number high enough to make the system reliable.

I hope this helps clarify my point. =)

Against my better judgement... 1ADjszXMSRuAUjyy3ShFRy54SyRVrNDgDc
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July 24, 2010, 02:57:25 AM
 #24

I think we're on the same page. Similarly, the fewer people using the lower the value and therefore the lower incentive to invest resources to cheat.

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July 24, 2010, 03:27:55 AM
 #25

Well, I wasn't talking about people using the system.  That's a whole 'nother variable.  You can use the system without generating blocks.

Against my better judgement... 1ADjszXMSRuAUjyy3ShFRy54SyRVrNDgDc
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August 20, 2010, 04:32:06 AM
 #26

Legal Tender means they only accept them for payment of taxes.They dont care if a merchant accepts gold and silver or wampum beads but if you try and pay taxes with these alternatives you will get a knock on your door!

This ensures there is demand for worthless money.If they accepted whale teeth for taxes there would be a demand for whale teeth.If they made bitcoins legal tender their value would skyrocket because of the limited supply.This is also the reason they don't make gold and silver legal tender.They cant be easily taxed.
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August 25, 2010, 10:25:28 PM
 #27

This is from wikipedia. It may be the author's opinion, but it looks to me as if there is no obligation, in the US, to conduct business in dollars. Unless you are offering credit of some sort.

It also includes things like people who pick up things off your store shelves and go to you at the cash register for payment. It's important to remember that it really does mean all debts.

The corner store can refuse to accept $100 bills because the shopper has not incurred a debt, as no deal has been made.  However, if a formal arrangement of a 'running tab' were agreed to by both parties that did not explicitly exclude payment in $100 bills; then $100 bills would have to be acceptable or the debt is void.

However, if an offer exists to trade in a 'dollar equivalent' method, such as by credit card denominated in US$, then the offer of cash in hand cannot be refused.  I don't carry credit cards, and I had this fight once with an attendent at a tool rental counter at Home Depot.  He simply refused to accept cash for the rental, and called the manager.  Once explained, the manager immediately showed the 'cash option' screen to the attendant; who had never even heard of it in his 10+ years there.  I used the tool and had no issues getting my deposit back in cash upon my return.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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August 26, 2010, 05:35:24 AM
 #28

This is from wikipedia. It may be the author's opinion, but it looks to me as if there is no obligation, in the US, to conduct business in dollars. Unless you are offering credit of some sort.

It also includes things like people who pick up things off your store shelves and go to you at the cash register for payment. It's important to remember that it really does mean all debts.

Creighto please correct me if I'm wrong, but "all debts" is slightly overstated above. It is my understand that it means all agreed debts denominated in dollars.

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.
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August 26, 2010, 10:01:50 AM
 #29

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.

If I have a debt to you of 10 chickens, and If I were to offer to pay you $50 to settle my chicken debt. (Say the market rate for chickens is $5 each)
If you didn't want to take the $50 and instead continued to demand the chickens, the judge would tell you to take the $50 or give up on the debt..
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August 26, 2010, 11:21:59 AM
 #30

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.

If I have a debt to you of 10 chickens, and If I were to offer to pay you $50 to settle my chicken debt. (Say the market rate for chickens is $5 each)
If you didn't want to take the $50 and instead continued to demand the chickens, the judge would tell you to take the $50 or give up on the debt..


These chickens, they had lots of sentimental value to me.

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August 26, 2010, 12:01:19 PM
 #31

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.

If I have a debt to you of 10 chickens, and If I were to offer to pay you $50 to settle my chicken debt. (Say the market rate for chickens is $5 each)
If you didn't want to take the $50 and instead continued to demand the chickens, the judge would tell you to take the $50 or give up on the debt..


These chickens, they had lots of sentimental value to me.

It's a sad thing, this society we live in that so easily puts a price tag on our chicken. How can we do that and sleep at night?
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August 26, 2010, 12:17:25 PM
 #32

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.

If I have a debt to you of 10 chickens, and If I were to offer to pay you $50 to settle my chicken debt. (Say the market rate for chickens is $5 each)
If you didn't want to take the $50 and instead continued to demand the chickens, the judge would tell you to take the $50 or give up on the debt..


Could you fix an interest rate in chickens as well? I lend you 10 chickens today, you give me 11 chickens (or their equivalent in dollars) next year.

Is such contract legal?

18rZYyWcafwD86xvLrfuxWG5xEMMWUtVkL
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August 26, 2010, 12:28:24 PM
 #33

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.

If I have a debt to you of 10 chickens, and If I were to offer to pay you $50 to settle my chicken debt. (Say the market rate for chickens is $5 each)
If you didn't want to take the $50 and instead continued to demand the chickens, the judge would tell you to take the $50 or give up on the debt..


Could you fix an interest rate in chickens as well? I lend you 10 chickens today, you give me 11 chickens (or their equivalent in dollars) next year.

Is such contract legal?

It all depends if the chickens cross the road  Roll Eyes
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August 26, 2010, 04:13:58 PM
 #34

Creighto please correct me if I'm wrong, but "all debts" is slightly overstated above. It is my understand that it means all agreed debts denominated in dollars.

It is perfectly reasonable to make agreements or contract denominated in other commodities. For example, I can loan you 10 chickens and require 10 chickens to repay the debt. I don't necessarily have to agree to a dollar equivalent value of 10 chickens. If I'm hungry for chicken, I can't eat dollars.

Futures markets operate on this principle.

Legal tender really tends to mean, if someone owed your grandfather $100 from 1920, you can't demand 100 silver dollar coins, $100 in silver certificates, 2 $50 gold pieces or any other form specific form of currency. You have to take FRN if they are offered, else the debt is forfeit.

Well, not exactly.  Legal tender laws make the national currency a default 'fallback'.  Unless a contractual agreement explictly excludes repayment in a market value of said chickens, then the offer of repayment in $ of a market value must be acceptable.  Futures markets do depend on this principle *not* being enforced, but that is the standard practice within those fields.  It is for this very reason that many of the LETS don't imply 'dollar equivalency' as that brings the option of paying in actual cash.

As always, IANAL

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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August 26, 2010, 06:46:53 PM
 #35


Could you fix an interest rate in chickens as well? I lend you 10 chickens today, you give me 11 chickens (or their equivalent in dollars) next year.

Is such contract legal?


Legal?  Probably.  It may, or may not, be enforceble.  That would depend on the details.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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