Monero Economy

[AnonyMint]

Also, the starting points seem arbitrary to me. The internet was not in 30% of households within 5 years of its invention. I doubt the starting year for PCs as well. I think someone chose some arbitrary starting years to tell a story.

If we plot some metric for adoption such as price as I did (which Peter R showed is scaling at square of adoption via Metcalf's law), then we need a log scale vertical access to see the early portion of S shape.

On these percentage charts we should see for logistic a ramp up early, then a flattening to linear by 50% adoption, then a ramp down. Whereas for logistic, we should see a ramp down from the start.

The decentralized ones are clearly logistic and the ones that are heavily regulated are not. For example, the auto started logistic, but them failed to remain so (clearly as government regulation set in, because they require government roads).

The clothes washer is decentalized but not logistic. I suspect it is an issue with replacement goods. The laundrymat replaces that damn thing you can't carry around with you as you move.

Here is another one appears to show 30% internet adoption at about 8+ years. Shows the computer reaching 50+% adoption over 50+ years.

The reason consumption spreads faster today is because of human productivity is exponential and thus goods are becoming a smaller percentage of our income. Remember upthread I pointed out that Iron was a precious metal in the past.

Now we are moving past the physical industrial age (physical goods will become almost free to produce) and towards the knowledge age where we compete on increasing productivity in the intangible realm of knowledge (designs, software, etc).

[1715446859]

1715446859

[1715446859]

1715446859

[drawingthesun]

Anonymint, you post a lot, do you mind if I try to get my head around your argument?

Essentially, you believe that the world needs a decentralized CryptoCurrency that can scale for billions of users without third party services and is fully anonymous, is this correct? (Let's call this endcoin for now, the final coin.)

At the moment you are analysing the current technology and trying to determine if these coins will either become endcoin, or will lead the development of technologies that will be apart of endcoin?

In addition, you believe that Bitcoin will fail and something else will emerge as endcoin?

All these posts swing wildly around the place, earlier there was an entire page of posts dedicated to the Monero donation amount, hence, I am not following very well.

[AnonyMint]

Yeah, I've seen that image quite a bit, thanks. Surprise surprise, it's like a bunch of random noise blew differently through all those curves (which, yes, are generated by some sort of similar underlying human phenomena). And yet what you're basically doing is zooming in on the early part of one of them, where there's likely to be especially big noise, trying to fit a nice elegant little curve anyways, and then making investment decisions based upon that. Sometimes what gives the elegance-seeking part of our intellect great satisfaction just doesn't matter. This particular domain is one where qualitative fundamentals analysis actually seems better than quantitative attempts.

The unifying S curve shape is undeniable for decentralized adoption of technology. There are outliers, e.g. the clothes washer apparently got replaced by the laundrymat along the way and the initial wildwest of autos in the USA got replaced by well regulated government roads and licensing, but that isn't noise it is centralization.

[smooth]

Yeah, I've seen that image quite a bit, thanks. Surprise surprise, it's like a bunch of random noise blew differently through all those curves (which, yes, are generated by some sort of similar underlying human phenomena). And yet what you're basically doing is zooming in on the early part of one of them, where there's likely to be especially big noise, trying to fit a nice elegant little curve anyways, and then making investment decisions based upon that. Sometimes what gives the elegance-seeking part of our intellect great satisfaction just doesn't matter. This particular domain is one where qualitative fundamentals analysis actually seems better than quantitative attempts.

The unifying S curve shape is undeniable for decentralized adoption of technology. There are outliers, e.g. the clothes washer apparently got replaced by the laundrymat along the way and the initial wildwest of autos in the USA got replaced by well regulated government roads and licensing, but that isn't noise it is centralization.

Setting aside whether all the outliers on the graph are explained by centralization (I don't believe they are), I don't see what this has to do with Bitcoin or more importantly Monero.

Both are very much in the innovator phase. Most people have barely heard of Bitcoin and if they have, can't clearly explain what it is or what it does. I don't see curve fitting as being useful on the very first part of the cycle where all of these inventions are close to zero.

If bitcoin gets to say 30-50% then perhaps you can argue that it fits better with the adoption cycle of some of these inventions over others, since they do indeed differ at that point. At the very early near-0% stages, I don't buy it.


EDIT: changed relevant range from 20-30% to 30-50% since the latter is where we see serious deviations from the S-curve model on some inventions such as washing machines, automobiles, etc.

[AnonyMint]

Essentially, you believe that the world needs a decentralized CryptoCurrency that can scale for billions of users without third party services and is fully anonymous, is this correct? (Let's call this endcoin for now, the final coin.)

Yes.

I don't think billions in the third world know they need anonymity. They do need to be set free from the centralized fiat control that enslaves them in poverty. But the problem is that without anonymity I believe we can't scale past KYC, AML and the leverage it gives Peter Thiel et al to take control of it and suffocate it. To get over this hump, in my opinion we need anonymity. But we also need other aspects for decentralized scaling too. Not just anonymity.

At the moment you are analysing the current technology and trying to determine if these coins will either become endcoin, or will lead the development of technologies that will be apart of endcoin?

I don't know if I can lead because of my illness (meaning I am not the same coder I was before when I am feeling sick from peripheral neuropathy and other autoimmunity due to HPV infection in 2006). We will have to see as I am experimenting with treatments, e.g. AHCC, Paleo diet, Iodine, vitamin D3, etc. Yes I do look to see if there is an another effort that meets the objectives. There are many talented people in this world.

In addition, you believe that Bitcoin will fail and something else will emerge as endcoin?

Depends what you mean by "fail". It is already failing to be decentralized. I do think it can succeed to be a reasonably popular feature within Thiel's overall set of businesses that deal with money transfer and social networking. I believe he is correct that social networking and the mobile phone are the focus point.

Note that this is my interpretation of events. Others are extremely annoyed or in disagreement with my view. So don't take it given as fact. It is my thesis, not an accepted fact.

All these posts swing wildly around the place, earlier there was an entire page of posts dedicated to the Monero donation amount, hence, I am not following very well.

Yes we have changed and or intermixed topics of discussion.

I do want to post less because posting means not coding and doing research. But I do also want people to understand my views. So I try to find a balance.

[drawingthesun]

Thanks for your reply Anonymint.

If Monero achieves its objective of being anonymous and we can overcome the IP address association issue, then the last hurdle is scaling isn't it?

[AnonyMint]

drawingthesun, probably I agree (reserving the right to think of something else later) but note scaling involves a lot of things, e.g. not only technical limitations removed but also marketing such as the quality of the mining client.

smooth, it does appear on that chart that the earliest deviation from logistic was the clothes washer at 25%. But what if the plot we are interested in is not Bitcoin but crypto-currency in general. Then we could see many competitors rise and fall, perhaps log-logistically, before reaching 20% adoption for the future of crypto-currency in general. I would need to go find charts of competitors for TVs or automobiles, and or we can consider the different cars and brands that preceded Ford's Model T as a prime example.

So the importance of the curve fit for Bitcoin is showing that its price (and thus square of adoption) is not logistic. In my interpretation, there is no way it is, it already failed and shifted to ramping down shape. In my interpretation, there is no way to go back unless something fundamentally changed with the way Bitcoin is being centralized.

And the importance for Monero is the lesson about how important decentralization is for scaling.

I am curious why you think the demarcation is not decentralization vs. centralization (you don't share my interpretation of the importance of decentralization to scaling)? If you want to share.

Edit: add that I think most (or at least 30%!) of the people who would be interested in Bitcoin in the decentralized form where you needed to download a client and be technical, have already heard of it. In my opinion, the problem is the distribution of Bitcoin was only designed for technical people. And the only way to distribute beyond that was to go through exchanges, KYC, AML and thus ultimately Peter Thiel.

Thus I think Bitcoin reached market saturation for the target market which was to Trojan Horse the techies and keep them preoccupied so they wouldn't interfere with what is coming in terms of fascism and global consolidation of fiat...

Now they can morph Bitcoin with Coinbase and Bitpay and pull in another few 100 million perhaps while also offering other services, such as Paypal, etc..

My opinion is the powers-that-be are pulling in all the various demographics and venues into the digital currency fiat master plan.

[AnonyMint]

There is another potential explanation for the clothes washer— WW2 when the women went to work in factories. So perhaps clothes washing in households was temporarily usurped. Ditto autos being a luxury item and the Great Depression.

[smooth]

I am curious why you think the demarcation is not decentralization vs. centralization (you don't share my interpretation of the importance of decentralization to scaling)? If you want to share.

I don't see a clear distinction in the data, and I also think your definition of centralized is somewhat strained. For example, I don't think laundromats are centralized for the most part, at least not the same way as electricity. And yet, electricity shows only a modest deviation from the S-curve. Telephones are about as centralized as electricity, and in fact influenced by network-effects, yet show a more extreme deviation. Again, you can fit almost whatever narrative you want to this data.

Edit: add that I think most (or at least 30%!) of the people who would be interested in Bitcoin in the decentralized form where you needed to download a client and be technical, have already heard of it.

I think this is extremely wrong. Napster grew to 20-30 million users with people downloading a client and being somewhat technical (using an MP3 player or burning a CD was not a particularly user-friendly process at the time).  Bitcoin does not have anywhere near 30 million users, and the corresponding market (people globally with access to the internet) is far larger than it was in 2001, likely an order of magnitude, or possibly two orders. Bitcoin has perhaps 1 million users, probably fewer if one excludes coinbase-style services (see below), which is approximately 0%.

Whether it ever grows beyond 0% of the real market remains to be seen, but right now you are curve fitting on something that isn't really much of a curve.

I agree that coinbase-style services are more of a competitor than actual adoption of bitcoin.

[smooth]

There is another potential explanation for the clothes washer— WW2 when the women went to work in factories. So perhaps clothes washing in households was temporarily usurped. Ditto autos being a luxury item and the Great Depression.

Yes I agree. And the discontinuity in the rate of air conditioning adoption was likely tied to the energy crisis in the 1970s. These examples and others are why I don't accept that the outliers are necessarily due to centralization, in general.

Something similar may be going on with bitcoin, for that matter, but lacking the perspective of history, we can't see it yet.

[AnonyMint]

I am curious why you think the demarcation is not decentralization vs. centralization (you don't share my interpretation of the importance of decentralization to scaling)? If you want to share.

I don't see a clear distinction in the data, and I also think your definition of centralized is somewhat strained. For example, I don't think laundromats are centralized for the most part, at least not the same way as electricity. And yet, electricity shows only a modest deviation from the S-curve. Telephones are about as centralized as electricity, and in fact influenced by network-effects, yet show a more extreme deviation. Again, you can fit almost whatever narrative you want to this data.

Just before you posted, I posted an alternative reasoning on clothes washers and autos.

Notice how much faster the radio and refrigerator scaled despite the Great Depression, as compared to electricity, telephone, and auto. Stoves and clothes washers we can explain as having replacement options, but radio and refrigerator have no replacements and they are decentralized. Radio is highly decentralized (I built one with my Radio Shack kit) and I suppose highly sought for informational advantage.

Centralization appears to radically slow down the exponent on the logistic curve, or perhaps in some cases (e.g. autos) totally disrupt it. But again my log-logistic point for Bitcoin can also be explained by competitors within a technology adoption.

Edit: add that I think most (or at least 30%!) of the people who would be interested in Bitcoin in the decentralized form where you needed to download a client and be technical, have already heard of it.

I think this is extremely wrong. Napster grew to 20-30 million users with people downloading a client and being somewhat technical (using an MP3 player or burning a CD was not a particularly user-friendly process at the time).

I downloaded it (or some Gnutella thing, I forget). It was easy to use. And I got instant gratification for that hassle, in I immediately recovered lost songs (from CDs I had owned in the past) that I hadn't been able to locate in retail.

So my point is that recovering music from youth is a very popular fad activity for the baby boomers and X-gens who were still energetic 13 years ago.

Now it is even easier with beemp3.com or one of the free online tools to convert youtubes to mp3 audio files. And that is for a pppular mainstream activity and motivation.

This is quite different from convincing me to download a Bitcoin client (which is totally useless now with my CPU) to perform some obscure activity of limited utility to me. I have never done this. The most I've done is acquired some BTC on localbitcoins as efficiently as I could to solve some need to be pseudo-anonymous or receive donations. There was no way I was going to waste my time downloading a Bitcoin client and also place and wait for an order for an ASIC miner to arrive.

Bitcoin does not have anywhere near 30 million users, and the corresponding market (people globally with access to the internet) is far larger than it was in 2001, likely an order of magnitude, or possibly two orders. Bitcoin has perhaps 1 million users, probably fewer if one excludes coinbase-style services (see below), which is approximately 0%.

Whether it ever grows beyond 0% of the real market remains to be seen, but right now you are curve fitting on something that isn't really much of a curve.

I agree that coinbase-style services are more of a competitor than actual adoption of bitcoin.

Everyone who comes in now will come in only through an exchange. No one will be mining.

That is why I say the key driver will be the hunt for 1% which will drive everyone who earns $100,000 to find a safe haven. Then mining will be very important as it is will be easiest way to obtain coin anonymously.

The other big potential demand driver I see is decentralized payments over social networking. Thiel sees this too, which why he busy to try to co-opt with WhatsApp. The issue here could be taxes and KYC paperwork, at least in the west. I suppose he will try to work within exclusions under certain thresholds. With anonymity and decentralized, we could potentially middle finger that.

So if you are going to bring that Napster size market into your crypto-currency, you are going to need your wallet client integrated into social networking.

[AnonyMint]

Radio and internet scaled at roughly the same rate attaining 50% adoption within 8 years. Thus consumerately as Bitcoin is approaching 6 years. As a decentralized communication protocol, it should have reached 20 - 25% adoption by now.

Plonk.

We can see that Bitcoin was growing much faster until the crash from $30. Then the log-logistic slowdown became apparent. Why? Well logistic 100% adoption looks log-logistic when you zoom out. I posit the peak at $30 is where it hit saturation of adoption with those techies who thought it could scale to the world (or were just enamored with the geekiness of it). After that we entered the reality that I explained in the prior post in that it just isn't useful for most people in its decentralized ideal and now it is some sort of basterdized Paypal for speculation where you can buy and sell via an exchange.

[smooth]

Everyone who comes in now will come in only through an exchange. No one will be mining.

No, people will come in through commerce. If you sell an item on ebay or some ebay-competitor, you may prefer to accept payment in bitcoins rather than deal with paypal. Or you may perform services on fiverr or some similar site, and again accept payment in bitcoin. Craigslist posts often call for payment in bitcoin (of course, many craiglist posts seem to be scams, but you get the point).

Or socially, as you say. Most of my friends who have ever touched a bitcoin have received it from me, either as payment for some transaction ("If you download Multibit or Electrum, I can send you bitcoins for that $20 I owe you." "OK, cool, I'll try that."), or as a small gift.

Exchanges have a high barrier to entry (paperwork, etc.) It is actually hard to see what is useful enough about bitcoin for people to want to ever deal directly with an exchange.

As pertains to use of bitcoin (as opposed to speculation in bitcoin -- where certainly people will deal with exchanges), you have this exactly backwards.  

EDIT: As far as mining goes, I think you are overly obsessed with it. Even in the idea of a fully decentralized mining economy, mining will still be competitive which means $100 worth of electricity will be bring you approximately $100 worth of bitcoins. That's not enough to be of particular interest to anyone, at least not anyone in developed countries. Most people will never build mining farms of any kind, whether that involves CPUs, CPUs, ASICs, or anything else. Mining is a narrow subspecialty of interest to approximately no one. My preferred version of mining is simply for a client to turn mining on by default (or with a simple check box once at installation) the way BitTorrent clients upload by default. That alone should be enough to get many millions mining, and provide a very decentralized network, but they won't making a lot (if anything) from it. (Ideally they'd be making nothing, since there would then be no incentive for commercial miners.)

[AnonyMint]

smooth, excellent point. I agree entirely. KYC, AML, and taxes is the wrench in the gears (that gives Thiel the upper hand, he also has his hands in ebay too).

Thus we see that Bitcoin is mature already at 20% of its adoption (but digital currency adoption is still in the innovator phase). Something else is going to have to carry forward to the billions. Thiel is offering his option which is a basterdized Bitcoin + Paypal + what ever he will do with WhatsApp.

Now what are we going to offer?

The other big potential demand driver I see is decentralized payments over social networking. Thiel sees this too, which why he busy to try to co-opt with WhatsApp. The issue here could be taxes and KYC paperwork, at least in the west. I suppose he will try to work within exclusions under certain thresholds. With anonymity and decentralized, we could potentially middle finger that.

So if you are going to bring that Napster size market into your crypto-currency, you are going to need your wallet client integrated into social networking.

[smooth]

smooth, excellent point. I agree entirely. KYC, AML, and taxes is the wrench in the gears.

Thus we see that Bitcoin is mature already at 20% of its adoption (but digital currency adoption is still in the innovator phase).

This is largely contradictory. If it is still in the innovator phase, then it very likely is not at 20% adoption. I argue it is at approximately 0% adoption. But as you point out many technologies do fail at the innovator stage. We can't curve fit only to the survivors.

[AnonyMint]

smooth, excellent point. I agree entirely. KYC, AML, and taxes is the wrench in the gears.

Thus we see that Bitcoin is mature already at 20% of its adoption (but digital currency adoption is still in the innovator phase).

This is largely contradictory. If it is still in the innovator phase, then it very likely is not at 20% adoption. I argue it is at approximately 0% adoption. But as you point out many technologies do fail at the innovator stage. We can't curve fit only to the survivors.

No contradiction. You failed to read or digest what I wrote about the Ford Model T upthread?

Try reading again please.

The point is that the early experiments yielded to the Model T well before large adoption. It was Henry Ford who figured out how to scale the adoption with mass production and paying the workers high salaries so they could buy his cars to jumpstart the economic process.

[smooth]

smooth, excellent point. I agree entirely. KYC, AML, and taxes is the wrench in the gears.

Thus we see that Bitcoin is mature already at 20% of its adoption (but digital currency adoption is still in the innovator phase).

This is largely contradictory. If it is still in the innovator phase, then it very likely is not at 20% adoption. I argue it is at approximately 0% adoption. But as you point out many technologies do fail at the innovator stage. We can't curve fit only to the survivors.

No contradiction. You failed to read or digest what I wrote about the Ford Model T upthread?

Try reading again please.

No I agree with that. But my point is that without knowing the shape of the curve, you can't estimate a percentage of adoption. You have a chart up there of all successful technologies, and they have very different adoption curves even (or perhaps especially) at the early part of the curve. Electricity, automobiles, and dishwashers all have very different early adoption curves. We don't even have graphs for unsuccessful technologies (and it is likely infeasible to ever create one), so we don't even know what failures look like.

Bitcoin is in an extreme early adoption phase where it may look like one of several different successful early adoption curves, or it may look like one of the unseen failure curves, or it may be somewhat unique. I don't think we know.

[AnonyMint]

EDIT: As far as mining goes, I think you are overly obsessed with it. Even in the idea of a fully decentralized mining economy, mining will still be competitive which means $100 worth of electricity will be bring you approximately $100 worth of bitcoins.

Not necessarily. Home miners don't count minute changes to their electricity bill. Their computer is on always any way for social networking.

That's not enough to be of particular interest to anyone,

You forgot my point that the G20 will hunt down the 1% which means everyone with an income of $100,000.

It is difficult to source coin anonymously except by mining. How do I convert my money locked up by capital controls into coin otherwise?

at least not anyone in developed countries.

Correct. They will participate in terms of commerce. Especially social networking. Find my post in the main Monero thread where i linked to that interview for the Coinbase of the Philippines. You can learn much from listening to him.

My preferred version of mining is simply for a client to turn mining on by default (or with a simple check box once at installation) the way BitTorrent clients upload by default. That alone should be enough to get many millions mining, and provide a very decentralized network, but they won't making a lot (if anything) from it. (Ideally they'd be making nothing, since there would then be no incentive for commercial miners.)

Exactly. We have the same vision.

[AnonyMint]

smooth, excellent point. I agree entirely. KYC, AML, and taxes is the wrench in the gears.

Thus we see that Bitcoin is mature already at 20% of its adoption (but digital currency adoption is still in the innovator phase).

This is largely contradictory. If it is still in the innovator phase, then it very likely is not at 20% adoption. I argue it is at approximately 0% adoption. But as you point out many technologies do fail at the innovator stage. We can't curve fit only to the survivors.

No contradiction. You failed to read or digest what I wrote about the Ford Model T upthread?

Try reading again please.

No I agree with that. But my point is that without knowing the shape of the curve, you can't estimate a percentage of adoption. You have a chart up there of all successful technologies, and they have very different adoption curves even (or perhaps especially) at the early part of the curve. Electricity, automobiles, and dishwashers all have very different early adoption curves. We don't even have graphs for unsuccessful technologies (and it is likely infeasible to ever create one), so we don't even know what failures look like.

Bitcoin is in an extreme early adoption phase where it may look like one of several different successful early adoption curves, or it may look like one of the unseen failure curves, or it may be somewhat unique. I don't think we know.

Bitcoin is a virtual communications protocol, thus it should scale very fast like Radio and Internet (which are nearly identical), and not like tangible, big capital items.

We know. And we also know because everyone who was going to mine Bitcoin, has already done it. Rate of new miners coming has probably passed the 50% threshold. All future growth will come from Peter Thiel who has both exchanges and commerce locked up (the sources of further growth). I showed some data in my other thread how he was measurably taking over Bitcoin at an exponential rate of growth for Bitpay.

We see another confirmation in the price fit being log-logistic.

Edit: without AML and KYC Bitcoin would have continued scaling decentralized commerce. When China weighed down on it, that was when log-logistic was confirmed.

[smooth]

How do I convert my money locked up by capital controls into coin otherwise?

Maybe you don't. You head off to the new frontier with just the clothes on your back as many of our ancestors did.