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Author Topic: The current Bitcoin economic model doesn't work  (Read 81258 times)
Anonymous
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June 03, 2011, 07:03:17 PM
 #281

Let them assume what they wish. In the end, we'll be the wealthy ones.
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June 03, 2011, 07:15:00 PM
 #282

Let them assume what they wish. In the end, we'll be the wealthy ones.

You're not supposed to say that explicitly, Atlas. You're supposed to pretend that "deflation is fine" or that "it will all balance out in the end". You've just broken every Ponzi rule by declaring your sinister intentions out loud.
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June 03, 2011, 07:20:11 PM
 #283

Let them assume what they wish. In the end, we'll be the wealthy ones.

You're not supposed to say that explicitly, Atlas. You're supposed to pretend that "deflation is fine" or that "it will all balance out in the end". You've just broken every Ponzi rule by declaring your sinister intentions out loud.

That would be true, if this were a ponzi scheme.

"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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June 03, 2011, 07:27:57 PM
 #284

That would be true, if this were a ponzi scheme.

Supporters of the current design lose the debate either way. If the price..
1. Keeps rising forever, then it's a Ponzi scheme which will collapse at some point.
2. Keeps rising sharply then falling sharply forever, then it's an unstable currency subject to severe manipulation and speculation.

I'm still begging for one argument against my proposed stable-price system.
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June 03, 2011, 07:29:43 PM
 #285

Let them assume what they wish. In the end, we'll be the wealthy ones.

You're not supposed to say that explicitly, Atlas. You're supposed to pretend that "deflation is fine" or that "it will all balance out in the end". You've just broken every Ponzi rule by declaring your sinister intentions out loud.

What he is expressing is his strong feeling that Bitcoin will succeed. He is saying "we'll be the wealthy ones as opposed to the others who did not invest". This is not at the expense of any individual, as others who buy at higher prices are doing so because they value the Bitcoin concept. It is in fact a valuable service to take risk by buying now to sell at a higher price later, when it is seen as less risky.
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June 03, 2011, 07:37:09 PM
 #286

What he is expressing is his strong feeling that Bitcoin will succeed. He is saying "we'll be the wealthy ones as opposed to the others who did not invest". This is not at the expense of any individual, as others who buy at higher prices are doing so because they value the Bitcoin concept. It is in fact a valuable service to take risk by buying now to sell at a higher price later, when it is seen as less risky.

I understand that. And my question was: How is this supposed to end? Will the price keep rising forever or not? Think well before answering because you lose both ways.
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June 03, 2011, 07:40:52 PM
 #287

That would be true, if this were a ponzi scheme.

Supporters of the current design lose the debate either way. If the price..
1. Keeps rising forever, then it's a Ponzi scheme which will collapse at some point.
2. Keeps rising sharply then falling sharply forever, then it's an unstable currency subject to severe manipulation and speculation.

I'm still begging for one argument against my proposed stable-price system.

You do realize that 1 & 2 are the same exact scenario, just stated differently, right?  And both of them are also internally illogical.

Perhaps you shouldn't be investing in anything.

"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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June 03, 2011, 08:45:49 PM
 #288

That would be true, if this were a ponzi scheme.

Supporters of the current design lose the debate either way. If the price..
1. Keeps rising forever, then it's a Ponzi scheme which will collapse at some point.
2. Keeps rising sharply then falling sharply forever, then it's an unstable currency subject to severe manipulation and speculation.

I'm still begging for one argument against my proposed stable-price system.

3. Rises to a point of equilibrium, and is used as an easily stored and transmitted gold-like asset. Over time, the purchasing power of Bitcoin will increase at a rate equal to the rate of the growth of it's economy. People will accept that even though their paycheck may be decreasing denominated in bitcoin, the amount of goods and services they can buy stays the same or increases. In addition, massive amounts of debt are no longer needed, as people can easily defer consumption and save, which benefits them in the future and provides the necessary capital for investment in infrastructure.
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June 03, 2011, 09:22:13 PM
 #289

You do realize that 1 & 2 are the same exact scenario, just stated differently, right?  And both of them are also internally illogical.
By 1 I meant a hoped perpetual deflation scenario. By 2 I meant a perpetual bumpy-price scenario. Neither of them is illogical, one of them is inevitable.

Perhaps you shouldn't be investing in anything.
Don't worry, I'm not investing. I'm hoarding.

3. Rises to a point of equilibrium, and is used as an easily stored and transmitted gold-like asset. Over time, the purchasing power of Bitcoin will increase at a rate equal to the rate of the growth of it's economy.
Really? So for instance its user base increase between 2017 and 2018 is supposed to be only 1.5% simply because the increase in bitcoins would be about 1.5% during the same period? That's nonsense. The natural human population growth exceeds that figure. Millions of people would have joined the internet for the first time and learned of bitcoin by then. And what about by 2025, when the new bitcoins produced would be almost nill? Should the Bitcoin economy's growth hault by then so that the purchasing power of Bitcoin increases at a rate equal to the rate of the growth of its economy?

People will accept that even though their paycheck may be decreasing denominated in bitcoin, the amount of goods and services they can buy stays the same or increases.
In addition, massive amounts of debt are no longer needed, as people can easily defer consumption and save, which benefits them in the future and provides the necessary capital for investment in infrastructure.
And what exactly would their incentive be for spending a currency which gains 20%+ of real annual interest when they can spend fiat instead and hoard that currency year after year only to be given to a new hoarder? Bitcoin's limited supply model is any hoarder's wet dream come true: Ridiculously high interest money coming out of thin air. Who the heck would wanna spend this unless he's trying to escape an eminent price collapse?
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June 03, 2011, 09:40:03 PM
 #290

Really? So for instance its user base increase between 2017 and 2018 is supposed to be only 1.5% simply because the increase in bitcoins would be about 1.5% during the same period? That's nonsense. The natural human population growth exceeds that figure

"In 2009, the estimated annual growth rate was 1.1%."
- http://en.wikipedia.org/wiki/Population_growth

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June 03, 2011, 09:47:21 PM
 #291

Why is it so hard to believe that these "problems" are taken into account in the price of bitcoins. Why does everybody assume that the speculators are wrong? The increase in the price of bitcoin is not credit driven, nor even inflation driven. There is no reason for there to be a cluster of errors specifically in bitcoins. There are no policies favorable to buying bitcoins in place by the government. Nobody is giving out massive loans to people who aren't good debtors in order to buy bitcoins. All the reasons for a bubble are absent in bitcoin.

According to Austrian Theory. Mainstream economics has a different explanation of what causes bubbles, and it happens in a community of people who think prices can only go up.

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June 03, 2011, 09:47:57 PM
 #292

"In 2009, the estimated annual growth rate was 1.1%."
- http://en.wikipedia.org/wiki/Population_growth


You're looking at newly born babies sir. Those don't use bitcoin. You should look at the natural increase of eligible users.
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June 03, 2011, 09:54:56 PM
 #293

Why is it so hard to believe that these "problems" are taken into account in the price of bitcoins. Why does everybody assume that the speculators are wrong? The increase in the price of bitcoin is not credit driven, nor even inflation driven. There is no reason for there to be a cluster of errors specifically in bitcoins. There are no policies favorable to buying bitcoins in place by the government. Nobody is giving out massive loans to people who aren't good debtors in order to buy bitcoins. All the reasons for a bubble are absent in bitcoin.

According to Austrian Theory. Mainstream economics has a different explanation of what causes bubbles, and it happens in a community of people who think prices can only go up.

To some extent, there is truth in what both of you say.  Government policies, excessive debt-financed purchases, etc., are not necessary for a speculative bubble to emerge.  On the other hand, there may be some truth to the argument that a Bitcoin bubble is "less" likely to exist or crash hard if it is not debt-financed.  If the Bitcoin "bubble" just represents a lot of reasonable speculation (lets say 100,000 people all put $1,000 of their assets, without using debt financing) into Bitcoins on the hopes of higher prices, the "bubble" or "price increase" or whatever you want to call it may be more sustainable and may not end as badly as it would if people are buying with debt, for obvious reasons.  

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June 03, 2011, 10:45:50 PM
 #294

That would be true, if this were a ponzi scheme.

I feel compelled to respond to creighto's remark here.

People in general, me included, have a difficult time believing that out of the ashes of the recent economic collapse (the RE market collapse as well as the Madoff-like, greed based ponzi schemes) something as awesome, beautiful and as powerful could arise as the result of the efforts of a single, or perhaps and more likely, a group of technically/economically minded/skilled individuals.

The automatic, default response to anything novel and revolutionary, is at first, denial and ultimately, acceptance while pretending nothing new ever happened.

A perfect example of the emotional/psychological/thought/belief-based roller coaster that we all go through when faced with something so big and so 'surreal' is captured in this just as awesome, beautiful and powerful quote as BitCoin is, by William James:

Quote
When a thing is new, people say: "It is not true".
Later, when its truth becomes obvious, they say: "It's not important."
Finally, when its importance cannot be denied, they say "Anyway, it's not new."

Now, I've personally known a few people in my time who have achieved something revolutionary, not because they had any idea how to do it when they set out to do it, but because they all had the following things in common at the level of whom they were being:

1) an intention to create something Good (Good here is defined according to my Judeo-Christian belief system)

2) a complete surrender of their personal philosophy/worldview/doctrine in lieu of another's philosophy/worldview/doctrine. They answered their God-given Calling.

3) they executed and finished it

Steve Jobs... is one of these people.  Bill Gates... is another one of these people. In my view, Satoshi, whom as far as I am concerned at this point in time might as well be Keyser Söze, is one of these people as well.

I choose to create a personal relationship with Satoshi by starting with a $100 USD investment into BTCs, much in the same way I have created a personal relationship with Steve Jobs by owning a MBP, or Akio Toyoda, by owning two Toyota vehicles, mine and my wife's.

My trust in BitCoin, vis-a-vis, Satoshi, is 100%. I risk getting screwed over by BitCoin/Satoshi. Upon reading the whitepaper, I am confident that Satoshi's intentions are noble, despite any imperfections BitCoin's heuristics may have.

My suggestion to everyone here is to trust Satoshi until he cannot be trusted any longer.  I know this doesn't sound "revolutionary", but in fact, all of these skeptics and naysayers are actually PRETENDING to know that Satoshi is a scammer, and thus BitCoin is a scam. Fact is - they don't know anymore than I know that he is genuine. They want to peek around the corner of time when the only way to find out is to play the game. If indeed he turns out to be a scammer, the people with the highest levels of greed today risk getting screwed the most anyway. The other ones can shrug off the loss. One thing I am certain of, if Satoshi is proven to be a scammer, he will be no more, much like Bin Laden, or Ratko Mladic.

Barring any serious technical analysis of Satoshi's BitCoin heuristics/algorithm that can prove it logically unstable or easily defraudable by a large entity with much time/cash to spend on a systematic attack toward this purpose, I welcome you to the new world currency - BitCoin.

Dive in, the water's just fine (for now!)  Cool
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June 03, 2011, 10:47:56 PM
 #295

"In 2009, the estimated annual growth rate was 1.1%."
- http://en.wikipedia.org/wiki/Population_growth


You're looking at newly born babies sir. Those don't use bitcoin. You should look at the natural increase of eligible users.

I have no idea what you're talking about now, but your original statement was about the rate of human population growth and was promptly disproven.

(UN medium scenario projects a max global population of somewhere between 9-10 billion at the year 2050-2070 and then decreasing)



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June 03, 2011, 11:19:01 PM
 #296

I have no idea what you're talking about now, but your original statement was about the rate of human population growth and was promptly disproven.
That point is so trivial we shouldn't be arguing about it. I was simply telling you to reflect upon the natural increase of eligible bitcoin users rather than the sheer increase in population which is based on newly-born babies.


(UN medium scenario projects a max global population of somewhere between 9-10 billion at the year 2050-2070 and then decreasing)
Bitcoin's rate of generation will continue to decline beyond 1.1% reaching practically 0% long before 2050 if that makes you happy. Add to that that its user base grows much faster than that of human population, eligible or total. To cut it short: Deflation is inevitable.
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June 03, 2011, 11:27:04 PM
 #297

The automatic, default response to anything novel and revolutionary, is at first, denial and ultimately, acceptance while pretending nothing new ever happened.



I can't say I understand what point that you were trying to make, but I can say for certain that not all people react in the above generality.  I am an INTP, it's not in my personality makeup to reject new data lightly, nor to take much stock in the opinions of others.

"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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June 03, 2011, 11:41:35 PM
 #298

I just want to add one more inquiry to my previous characterization of BitCoin -

the value add of having a decentralized currency does not come without some other, less visible/obvious costs.

Namely, all the good, bad and ugly stuff that human beings are able to do with centralized currency, will still be possible with BitCoin, once the gold/BitCoin fever is over and the currency is used en masse.

Thus, I assert that BitCoin is NOT a solution to the ethical/moral problems that arise in society. After all, the first thing one will do with an anonymous currency that can be sent to anyone in the world is abuse it for immoral purposes. By 'immoral', I am using my personal Judeo-Christian belief system here, which has been around for 4000 years or thereabouts, BC and AD combined. Apparently, some of this has already been done.

The cost of being able to transfer currency at will, to anyone and anywhere in the world, is an apparent shift/increase in responsibility from the group (e.g. "centralized") to the individual.

Now, the question is - if responsibility to make "bad" (e.g. self-destructive or destructive to others) decisions is given via means of BitCoin - will that eventually result in the massive corruption of the whole, e.g. the few or one bad apple will spoil the whole good bunch?

Or, does personal responsibility eventually, once all the "bad bunches" have been eliminated by self-destruction or mutual-destruction, result in increased responsibility for all people combined?

I know there is no easy answer to this type of ethical inquiry - however, I want people to beware that NOTHING comes without a COST - not necessarily a MONETARY one at that, and that eventually, "scary" or "pleasant" as it might be, we ALL get exactly what we are asking for. Whether we like what we get or not, in the end, is open to debate.

I am not denigrating or putting down BitCoin by any stretch of the imagination, merely adding some _human_ perspective to it and the kind of problems it will solve as well as create at the same time as a result of this transfer of responsibility.


Barring any serious technical analysis of Satoshi's BitCoin heuristics/algorithm that can prove it logically unstable or easily defraudable by a large entity with much time/cash to spend on a systematic attack toward this purpose, I welcome you to the new world currency - BitCoin.

Dive in, the water's just fine (for now!)  Cool
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June 03, 2011, 11:44:58 PM
 #299


Suggester has been wrong for 18 months, why should we believe anything will change?

It must suck knowing that you could have been a pizza delivery boy just once in your life, see 2 pizza for 10,000 BTC, and you would be well ahead right now.

These grapes are getting too sour to even look at, can someone close this thread already?

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June 03, 2011, 11:49:10 PM
 #300

Suggester has been wrong for 18 months, why should we believe anything will change?

Just a reminder of how "wrong" I've been for 18 months:


Doesn't look like perpetual deflation. Doesn't look like a crazy horse. Doesn't look like a speculators' den. Doesn't look like a nerve-wrecker with each single transaction. No, It's a perfectly sensible stable currency with a promising future.
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