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Author Topic: Is competition good for bitcoin?  (Read 1528 times)
Gryph
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April 15, 2011, 01:15:02 AM
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We all know that healthy competition drives innovation and pushes products and services to be cheaper and better. But on the flip side there are a few things which seem to work better as a monopoly, like the city's water purification and distribution system. It would be hell to have competing companies all lay down their own pipes to give you water.

I'm just wondering how this applies to bitcoin.

If someone came out with a competing cryptocurrency system; BitShinies, BitIngots or BiteMEs... would the competition between the systems make them better as developers and businesses implement better and more attractive features? or is this one of those things that work better as natural monopolies (albeit a decentralized monopoly)?

Personally i'm leaning toward natural monopoly since i don't like to have to convert between several different currencies. I think the Euro was created to smooth out the problems with multiple currencies.

But i'm not an economist, i probably have no idea what i'm talking about.

What do all of you think about competition? good or bad?

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April 15, 2011, 01:24:59 AM
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There are some people who complain about Bitcoin being unfair because it’s rewarding early adoptors and people who have lots of money/resources. I’d like to see an attempt making a fair currency. There are also some people who advocate an inflationary version.

I am certain that both wouldn’t work (fairness can’t be achieved while being distributed and inflation will never attract significant miners/investors, making the network a weak target) and want to see how they fail/don’t take off. It would only strengthen the trust in Bitcoin in my opinion.

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April 15, 2011, 01:34:54 AM
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It would be hell to have competing companies all lay down their own pipes to give you water.

No, it wouldn't. What's hell is when the government sticks a gun in your ribs and forces you to empty your pockets or give up your land against your will.
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April 15, 2011, 01:52:26 AM
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It would be hell to have competing companies all lay down their own pipes to give you water.

No, it wouldn't. What's hell is when the government sticks a gun in your ribs and forces you to empty your pockets or give up your land against your will.

How would it not be?

Lets say the water pipe is 1 foot wide (its smaller but i'm just trying to give an example) and that's laid down first and serves you and your neighbor. Then company B wants to send you their "mountain springs" water but your neighbor wants to keep company A. So the road is dug up and a second pipe is laid down alongside that pipe.... then company C wants to sell your other neighbor some water.....


So it goes and then you have a 100 pipes from 100 different water companies taking up 100 square feet of cross-sectional area underneath the road. In a city with possibly millions of customers the system will quickly reach some sort of physical limit.

then there is the problem of cost of laying the pipe. The fewer companies there are the cheaper the pipe because a single pipe can serve multiple customers. The economy of scale works out that the cheapest water distribution would come from a single company that lays down all the pipes to serve everyone, rather than multiple pipes to serve specific customers.

Bottled water is different in that you can scale it up to multiple people and have multiple companies very easily. Base costs are relatively constant no matter how many companies and customers you have. In that case competition is good.

How would you implement a piped water purification and distribution system that is conducive to a competitive environment?

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April 15, 2011, 03:57:09 AM
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It would be hell to have competing companies all lay down their own pipes to give you water.

No, it wouldn't. What's hell is when the government sticks a gun in your ribs and forces you to empty your pockets or give up your land against your will.

How would it not be?

Lets say the water pipe is 1 foot wide (its smaller but i'm just trying to give an example) and that's laid down first and serves you and your neighbor. Then company B wants to send you their "mountain springs" water but your neighbor wants to keep company A. So the road is dug up and a second pipe is laid down alongside that pipe.... then company C wants to sell your other neighbor some water.....


Seriously? A company lays down pipe and what 1%, 5%, 20% are unsatisfied for some reason and a different piped water company is what they want? And they are going to pay way more for what difference exactly? They would be a much smaller group paying all the same fixed costs.

More likely they will get water delivered to their tank in a truck, or buy a rainwater system, etc.

Pretending people are going to do insanely unprofitable things if they get free is silly. Sure people will make mistakes, but they will tend to have less capital to mis-allocate in the future.

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April 15, 2011, 08:15:47 AM
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Competition should be welcomed.

And there's no such a thing as natural monopoly.
There's no reason for water supply, for example, to be provided only by a monopoly. Home owners associations could own the neighborhood pipes and then hire the company they want as "backbones". This could work pretty much the same for all network services, like streets, electricity, sewage and so on.
Like in a building... every proprietary of an apartment is partially proprietary of the networks that run through the building.... with free neighborhoods it could work pretty much the same way, each neighborhood being like a condo.

And, of course, as said by FreeMoney, there are always other solutions that eventually may be more interesting than a physical network infrastructure. For sewage, for instance, I wonder if those big holes people used to have underneath their homes for accumulating sewage and then emptying it once in a few years with a proper truck aren't more cost effective than a big net of pipes. Only free market competition could answer which is more convenient to people, actually.

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Gryph
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April 15, 2011, 02:28:07 PM
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It would be hell to have competing companies all lay down their own pipes to give you water.

No, it wouldn't. What's hell is when the government sticks a gun in your ribs and forces you to empty your pockets or give up your land against your will.

How would it not be?

Lets say the water pipe is 1 foot wide (its smaller but i'm just trying to give an example) and that's laid down first and serves you and your neighbor. Then company B wants to send you their "mountain springs" water but your neighbor wants to keep company A. So the road is dug up and a second pipe is laid down alongside that pipe.... then company C wants to sell your other neighbor some water.....


Seriously? A company lays down pipe and what 1%, 5%, 20% are unsatisfied for some reason and a different piped water company is what they want? And they are going to pay way more for what difference exactly? They would be a much smaller group paying all the same fixed costs.

More likely they will get water delivered to their tank in a truck, or buy a rainwater system, etc.

Pretending people are going to do insanely unprofitable things if they get free is silly. Sure people will make mistakes, but they will tend to have less capital to mis-allocate in the future.


Sorry if my appeal to ridicule was completely lost on you. But that was exactly my point, it would be insane to rebuild the infrastructure every time.



And there's no such a thing as natural monopoly.
There's no reason for water supply, for example, to be provided only by a monopoly.

It isn't. You can, if you choose, have your city water turned off and just use bottled water for all your needs. I actually do have a friend that did exactly that. He gets a truck delivering dozens of heavy bottles to his house every week. (Dude even has a swimming pool filled with bottled water.... oh well, his money)

But the vast majority of people i know continue to use city water directly, an occasional few also purify it for drinking but the same source is there.

Seems like a natural monopoly to me, all the citizens can freely use other sources of water, most just choose not to.


But on a different note, I do agree that competition is good with bitcoin, people will choose what works best for them.... But would one system eventually emerge as a natural monopoly?

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April 15, 2011, 05:36:27 PM
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It isn't. You can, if you choose, have your city water turned off and just use bottled water for all your needs. I actually do have a friend that did exactly that. He gets a truck delivering dozens of heavy bottles to his house every week. (Dude even has a swimming pool filled with bottled water.... oh well, his money)

But the vast majority of people i know continue to use city water directly, an occasional few also purify it for drinking but the same source is there.

Seems like a natural monopoly to me, all the citizens can freely use other sources of water, most just choose not to.

It may be a monopoly, but I would bet everything I own that it isn't natural. Let me see, is this city in the United States? If so, city water has to meet enforced standards outlined by the Environmental Protection Agency, and that rules out natural monopoly already.
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April 15, 2011, 05:43:23 PM
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It isn't. You can, if you choose, have your city water turned off and just use bottled water for all your needs. I actually do have a friend that did exactly that. He gets a truck delivering dozens of heavy bottles to his house every week. (Dude even has a swimming pool filled with bottled water.... oh well, his money)

But the vast majority of people i know continue to use city water directly, an occasional few also purify it for drinking but the same source is there.

Seems like a natural monopoly to me, all the citizens can freely use other sources of water, most just choose not to.

It may be a monopoly, but I would bet everything I own that it isn't natural. Let me see, is this city in the United States? If so, city water has to meet enforced standards outlined by the Environmental Protection Agency, and that rules out natural monopoly already.

I think our problem is that we need to define natural monopoly.

Also betting everything you own doesn't actually hurt or help your argument. Only shows your conviction to it. (I can bet everything i own that 1+1=3.... this doesn't make my argument any less wrong)

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rezin777
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April 15, 2011, 05:52:43 PM
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It isn't. You can, if you choose, have your city water turned off and just use bottled water for all your needs. I actually do have a friend that did exactly that. He gets a truck delivering dozens of heavy bottles to his house every week. (Dude even has a swimming pool filled with bottled water.... oh well, his money)

But the vast majority of people i know continue to use city water directly, an occasional few also purify it for drinking but the same source is there.

Seems like a natural monopoly to me, all the citizens can freely use other sources of water, most just choose not to.

It may be a monopoly, but I would bet everything I own that it isn't natural. Let me see, is this city in the United States? If so, city water has to meet enforced standards outlined by the Environmental Protection Agency, and that rules out natural monopoly already.

I think our problem is that we need to define natural monopoly.

Also betting everything you own doesn't actually hurt or help your argument. Only shows your conviction to it. (I can bet everything i own that 1+1=3.... this doesn't make my argument any less wrong)

I didn't imply that it helped or hurt my argument, I simply said I would make the bet. Exactly, my convictions are strong that it isn't a natural monopoly. My argument is completely separate from the bet.

My argument is: if it is in the United States, it isn't a natural monopoly of city water supply, due to the EPA regulations that it has to meet.

I define natural monopoly as a monopoly that occurs in a free market. How do you define it?
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