Would you support moving to a system with controled inflation?

[Ian Maxwell]

Being an early adopter is only a benefit if Bitcoin actually succeeds. What you're calling "guilt" is actually concern that Bitcoin won't actually succeed with the current model, if potential adopters are turned off by the fact that most of the wealth is already spoken for.

Anyway, as I said, the difference between 'linear vs. exponential' and 'asymptotically constant vs. exponential' is really not worth concerning myself with. In the long run, ordinary and "inflationary" bitcoin will be nearly equally deflationary. I think 50 BTC forever would be better in several ways (simplicity of calculation, simplicity of understanding for newcomers, increased incentive to contribute to the network) but I think the system in place now is good enough and forking the project at such an early stage would just cause problems.

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[eMansipater]

...if potential adopters are turned off by the fact that most of the wealth is already spoken for.

Please stop spreading this misconception, fellow bitcoiners.  The vast majority of bitcoins are yet to be issued--there is still plenty of time to be an early adopter.  The fact that we have a 12,000 view video on youtube, plenty of exchanges to buy coins at, ample instruction on how to run a bitcoin miner, great community members who will explain parts that you don't understand, etc. adds up to a pretty fair opportunity for people to get involved.

Yeah, yeah, everybody wishes they bought thousands of BTC at .06 cents just like they wish they bought shares in Google.  I certainly do (in both cases).  But there's no reason here for any potential adopter to cry foul--only to get on board.  If Bitcoin takes off there will be a much higher valuation of bitcoins in the future than there is now, and anybody who buys in now will be sitting quite pretty.  My frequent advice to friends and relatives is to put a small amount you're completely willing to lose into bitcoins NOW.  Most of them take me up on it.  None of them complain that they didn't get to buy in 9 months ago.

[Ian Maxwell]

I'm not talking about now. Obviously most of the bitcoins are not yet spoken for.

In 2014, most of the bitcoins will be mined, but "mined" is not "spoken for." There will still be an easy way of getting them: perform a service and charge for it. I'm not talking about what is really going on, I'm talking about perceptions. Speaking for myself, I only started looking at Bitcoin because of the potential near-term gain from mining. This is far from the most useful thing about it, but a point that draws people in is not a point to ignore.

[casascius]

Being an early adopter is only a benefit if Bitcoin actually succeeds. What you're calling "guilt" is actually concern that Bitcoin won't actually succeed with the current model, if potential adopters are turned off by the fact that most of the wealth is already spoken for.

Here is another way to put it:  Would you want to buy a penny stock promoted by pump-n-dumpers?  Of course not.  You know you'll lose money.

You'll lose money because the pump-n-dumpers possess most of the outstanding stock.  That stock sits somewhere, so as their victims buy in, the price goes up.  As soon as they dump, they make off with all the money brought in, and the price quickly drops through the floor.

While a penny stock can't be sent through the Internet like a BTC can, and can't be used to buy socks like a BTC can, one can get ripped off the same way with both.

It's not that I think one of us early adopters will intentionally set out to crash the BTC.  But when only a small fraction of the currency is circulating, it doesn't take a rogue pump-n-dump villain, just takes a couple regular people wanting to cash out.

It's not that I want a "second chance" to buy BTC at 6 cents.  It's that I want to hold BTC that has an honest value, whatever that is, rather than one that is propped up merely by speculators anticipating a 100000% return and which may pop at a moment's notice.

Right now, selling 10,000 BTC (0.2% of the whole BTC circulation) will bring MtGox down to 0.60 USD based on open orders, and erode 25% of the total value of Bitcoins in a flash.  How is that much better than suffering a few percent of inflation per year at the hands of Bernanke?

[kiba]

No matter what, wealth distribution follows a power law.

[ShadowOfHarbringer]

Right now, selling 10,000 BTC (0.2% of the whole BTC circulation) will bring MtGox down to 0.60 USD based on open orders, and erode 25% of the total value of Bitcoins in a flash.  How is that much better than suffering a few percent of inflation per year at the hands of Bernanke?

Changing BTC to inflationary model will not fix this.
BTC with constant block reward will be also very deflationary in practice, and the situations you described can happen as well.
"Inflacoin" would be suspectible to the "early adopter" problem in the same way as BTC is, because that always happens with a rising currency - there are few people who invest in the currency first and they get the most out of it later - you can't avoid that.

And i still think that you have some hidden motive in supporting this.

[grondilu]

"Inflacoin" would be suspectible to the "early adopter" problem in the same way as BTC is, because that always happens with a rising currency - there are few people who invest in the currency first and they get the most out of it later - you can't avoid that.

Yes you can.  All you need is a bunch of bureaucrats who will decide for everyone what money should be used from now on.  Just like we did in Europe with euro.

[grondilu]

Topic: Would you support moving to a system with controled inflation?

What a strange question. Bitcoin already has controlled inflation. No need to move anywhere.

What is it, again all those stupid tricks of giving names to things which are exact opposite of it true meaning? Net neutrality, Copyright, Patriot Act etc...

I think he meant "constant inflation".  But you make a good point.

[casascius]

Right now, selling 10,000 BTC (0.2% of the whole BTC circulation) will bring MtGox down to 0.60 USD based on open orders, and erode 25% of the total value of Bitcoins in a flash.  How is that much better than suffering a few percent of inflation per year at the hands of Bernanke?

Changing BTC to inflationary model will not fix this.
BTC with constant block reward will be also very deflationary in practice, and the situations you described can happen as well.
"Inflacoin" would be suspectible to the "early adopter" problem in the same way as BTC is, because that always happens with a rising currency - there are few people who invest in the currency first and they get the most out of it later - you can't avoid that.

The reason why I think it would fix it is because it would eliminate the disparity between the community size and the circulation.  Right now, 25% of the BTC is in play, but only <0.1% of its community is at the table.  That fact allows one group of people (those here) to grossly exploit those who aren't here yet.  And we all (well not me) seem to be happy with the idea that we're "entitled" to do so, for taking the "risk" (whatever that was), or for being the first (as though that means anything) to get their hands on something that is purported to be more fair than the dollar.  What a lie!  Either we are entitled to grossly enrich ourselves with Bitcoin at newcomers expense, or Bitcoin is "fiat but fair".  It can't be both.  If there were a constant block reward, or at least the length extended to keep the community size in proportion to the total percent circulated, this disparity would be greatly lessened.

And i still think that you have some hidden motive in supporting this.

Since we're on the topic, would you care to narrow it down?  Otherwise it is just a weak ad hominem... don't like the message, attack the messenger?

I also support helping new people mine, which bothers other self-interested people looking for the biggest profit, and seems inconsistent with the rational self interest of someone who is trying to gain something from mining (which you probably know by now I am).  Could my hidden motive be the overall success of Bitcoin?  I mean, why would a miner want to help other miners?  Same deal.

[grondilu]

The reason why I think it would fix it is because it would eliminate the disparity between the community size and the circulation.  Right now, 25% of the BTC is in play, but only <0.1% of its community is at the table.  That fact allows one group of people (those here) to grossly exploit those who aren't here yet.  And we all (well not me) seem to be happy with the idea that we're "entitled" to do so, for taking the "risk" (whatever that was), or for being the first (as though that means anything) to get their hands on something that is purported to be more fair than the dollar.  What a lie!  Either we are entitled to grossly enrich ourselves with Bitcoin at newcomers expense, or Bitcoin is "fiat but fair".  It can't be both.  If there were a constant block reward, or at least the length extended to keep the community size in proportion to the total percent circulated, this disparity would be greatly lessened.

Problem is that nobody would by a constant inflation currency.  I wouldn't anyway.

Nobody forces anyone to buy bitcoins.   I started to buy bitcoins when it was around 0.2$/BTC.  So according to you I was exploited by people who bought at 0.1$/BTC.   And yet I don't complain.  I decided to buy those coins.  On the contrary, I am thankful to satoshi and other bitcoin pioneers.

[casascius]

Problem is that nobody would by a constant inflation currency.  I wouldn't anyway.

I would probably agree with that, the way things are looking

Nobody forces anyone to buy bitcoins.   I started to buy bitcoins when it was around 0.2$/BTC.  So according to you I was exploited by people who bought at 0.1$/BTC.   And yet I don't complain.  I decided to buy those coins.  On the contrary, I am thankful to satoshi and other bitcoin pioneers.

The exploiting I'm talking about hasn't happened yet.

[casascius]

Casascius, think about it. If you play your hand right, just a year or two down the road newcomers will consider you as bad greedy 'early adopter' who hoarded humongous 100 bitcoins and now sits on it gloating at poor newcomers who struggle to earn a dozen BTC per year.

Damn, how dare those greedy bastard to buy GOOG, AAPL, IBM and MSFT shares as penny stock or IPO.

Hopefully those newcomers don't decide en masse to start another block chain, that's all I hope!

[grondilu]

Hopefully those newcomers don't decide en masse to start another block chain, that's all I hope!

That wouldn't bother me, really.  At all.  I'd buy some of this new currency too.

[wb3]

Casascius, think about it. If you play your hand right, just a year or two down the road newcomers will consider you as bad greedy 'early adopter' who hoarded humongous 100 bitcoins and now sits on it gloating at poor newcomers who struggle to earn a dozen BTC per year.

Damn, how dare those greedy bastard to buy GOOG, AAPL, IBM and MSFT shares as penny stock or IPO.

Hopefully those newcomers don't decide en masse to start another block chain, that's all I hope!

First, BitCoins are not like stocks, they don't split.

Second, if in 1900 you saved your $20 bill hoping for it to increase in value, you lost over 90% of your buying power. Paper Money has no value, it will not increase in value over time because the things you buy with it go up in value not down.

Since BitCoin has no system of saving to offset inflationary pressures, the flow of it is more valuable than just saving it.

Use it or Loose it.

[grondilu]

I'm sick of this debate anyway.   Again:  just create a inflacoin, if you want.  It is just one line to comment in bitcoin's source code.

[ShadowOfHarbringer]

I'm sick of this debate anyway.   Again:  just create a inflacoin, if you want.  It is just one line to comment in bitcoin's source code.

Not only that.

You also need to switch to another network, like testnet.
Changing the code you wrote now and running modified client in normal Bitcoin network, should be treated as an actual attack on the network.

Inflationists: Go fork and create your own network. It is just few lines of code.

[casascius]

Inflationists: Go fork and create your own network. It is just few lines of code.

As far as I'm concerned, the fact that I intend to wait for a far more fertile opportunity to do so should not be construed as a concession to the idea that I'm not willing to put my effort where my mouth is.  After all, the recipe has all but been handed to me - but to be done right, more changes should be made (either a fork, or this'll really annoy some of ya: a patch to the mainline Bitcoin client that allows it to participate in a different network with different rules without needing a fork, either with a command line switch, or by being compiled with different compiler flags).

I believe the more times the BTC price takes a huge plummet coming down off highs, the closer that time will be, the draw will be a reduction in volatility.

[ryepdx]

I believe the more times the BTC price takes a huge plummet coming down off highs, the closer that time will be, the draw will be a reduction in volatility.

Troll much? But I'll bite. Adding permainflation to our currency won't help stabilize it. The way I see it, it'll just turn the overall upward value trend into an overall downward trend.

[marcus_of_augustus]

I believe the more times the BTC price takes a huge plummet coming down off highs, the closer that time will be, the draw will be a reduction in volatility.

I don't doubt your motives are good and genuine casacius. Interested to know why you think the current programmed inflation method is contributing to destabilising bitcoin valuations? Is there something you have noticed that can draw a link?

[casascius]

I don't doubt your motives are good and genuine casacius. Interested to know why you think the current programmed inflation method is contributing to destabilising bitcoin valuations? Is there something you have noticed that can draw a link?

First, it's not the inflation method.  I am not calling for perma inflation.  Just a corrective action to deal with the disparity between 25% of the coins being out there for a community that is only less than 0.1% arrived, a disparity that can be exploited the same way scammers exploit a pump-n-dump penny stock.

Second, the most obvious sign I'd point to is how the price of the BTC jumps and falls with such little volume.  What held BTC over the dollar mark temporarily was volume well under 100kBTC, or less than 2% of the entire circulation.

The next most obvious sign is the thinness of the market.  If 0.1% of the BTC gets sold on the open market today, the value crashes to nothing, and the person doing the selling walks away with all the money on the market.  The disparity provides an opportunity for the holders of the 5M+ BTC to do that repeatedly - or as is more likely to happen - incrementally so it's not so obvious.  Not a good thing for longevity and, under such circumstances, certainly not a better place to put wealth than Bernanke Bucks.

The value of the BTC today is more tightly bound to how much it is being hoarded - an artificially scarce supply - rather than the true demand versus supply if it weren't manipulated.  This is part of why I have encouraged so much mining - to grease the free market a little, by putting bitcoins in the hands of people who are more likely tol move or sell them, and less in the hands of those who collectively have millions of them stashed away.

If fewer people were holding tightly to BTC in hopes of getting an outrageous return, more BTC would be flowing freely in the market.  The end result I would expect would be a much lower BTC price, but a far more consistent one.