moriartybitcoin (OP)
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May 19, 2014, 05:01:23 PM |
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One thing that most people don't seem to understand is that after 21 million Bitcoins have been produced, the TOTAL number of Bitcoins in circulation will decrease in a LINEAR fashion each year. Why? Because a consistent number of people (maybe 0.05%) will always - ALWAYS - lose their private keys. This is inevitable.
So with the number of Bitcoins DECLINING (after 21 million) and the demand RISING, classical economics tells us that the price will SURGE.
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micaman
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May 19, 2014, 05:03:17 PM |
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That's why it's deflationary.
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Gummo
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May 19, 2014, 05:04:19 PM |
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Not if the economy is contracting.
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whtchocla7e
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May 19, 2014, 05:13:21 PM |
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One thing that most people don't seem to understand is that after 21 million Bitcoins have been produced, the TOTAL number of Bitcoins in circulation will decrease in a LINEAR fashion each year. Why? Because a consistent number of people (maybe 0.05%) will always - ALWAYS - lose their private keys. This is inevitable.
So with the number of Bitcoins DECLINING (after 21 million) and the demand RISING, classical economics tells us that the price will SURGE.
The demand will be satisfied by alternate digital currencies. This is already happening.
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Crindon
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May 19, 2014, 06:03:52 PM |
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Losing private keys must really suck, but I see your point. Isn't there someway to protect it? That would be good, but a difficult problem to solve because it means sharing trust with other site operators.
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DannyHamilton
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May 19, 2014, 06:04:14 PM |
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One thing that most people don't seem to understand is that after 21 million Bitcoins have been produced, the TOTAL number of Bitcoins in circulation will decrease in a LINEAR fashion each year.
This is very unlikely. Here's why: with the number of Bitcoins DECLINING (after 21 million) and the demand RISING, classical economics tells us that the price will SURGE.
This means, to hold the same value of bitcoins, individuals will be holding less and less actual bitcoins. Therefore, when they lose their private key, less bitcoins will be lost. As such, the TOTAL number of Bitcoins in circulation will decrease in an ever shrinking fashion each year.
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DannyHamilton
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May 19, 2014, 06:04:47 PM |
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Losing private keys must really suck, but I see your point. Isn't there someway to protect it?
Yes. Create backups.
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BurtW
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May 19, 2014, 06:08:10 PM |
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One thing that most people don't seem to understand is that after 21 million Bitcoins have been produced, the TOTAL number of Bitcoins in circulation will decrease in a LINEAR fashion each year. Why? Because a consistent number of people (maybe 0.05%) will always - ALWAYS - lose their private keys. This is inevitable.
So with the number of Bitcoins DECLINING (after 21 million) and the demand RISING, classical economics tells us that the price will SURGE.
You post this like you discovered something new that has not been discussed hundreds of times before.
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Bit_Happy
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May 19, 2014, 06:35:10 PM |
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Losing private keys must really suck, but I see your point. Isn't there someway to protect it? That would be good, but a difficult problem to solve because it means sharing trust with other site operators.
People dramatically increase their security competence as prices go higher. In 2010 it was common to forget about hard drives with literally 1,000's of BTCs. The odds of that happening today are very low. Speaking of old hard drives, I wonder if many recyclers are taking time to check for old wallets? The odds of finding a good one would be low, but it would be amazing...like buried treasure. ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif)
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beetcoin
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May 19, 2014, 07:13:48 PM |
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i don't think decreasing bitcoins will have a huge impact on bitcoin.. there are always alt cryptos, so if people feel the asking price for a bitcoin is too high, businesses will begin to incorporate other cryptos. that's why i disagree with people who think alt cryptos are 100% speculative... i think it's 99% speculative, but those currencies will have a place in the ecosystem, especially if cryptocurrencies will become widespread.
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CEG5952
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May 19, 2014, 07:18:18 PM |
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I agree that this effect will perpetually decrease. I also think it will forever be extremely difficult to gauge its effect on supply since we could never know which coins are truly lost.
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DeathAndTaxes
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Gerald Davis
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May 19, 2014, 07:19:50 PM |
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If 1% of coins are lost each year how many years before all the coins are lost?
Linear loss rates don't make sense. That would imply people are as careless with a 10KG gold bar as they are with a US penny. As value rises people will become more careful with their holdings. At one time 2,000 BTC was worth $1. Pretty easy to see how someone might be careless with thousands of BTC possibly leaving them in an unencrypted wallet on an unraided drive with no backup. If you had 2,000 BTC today would you be as careless?
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jonald_fyookball
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May 19, 2014, 08:51:18 PM |
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Even if 1% of coins were lost each year, so what? I don't see that being a problem since bitcoins are divisible.
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PolarPoint
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May 19, 2014, 08:59:44 PM |
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This is nothing new, it has been pointed out hundreds of times before. There is no way to estimate percentage of lost coins though. Coins haven't been moved for months or years could still be owned by someone.
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beetcoin
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May 19, 2014, 09:01:36 PM |
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Even if 1% of coins were lost each year, so what? I don't see that being a problem since bitcoins are divisible.
he didn't imply that it would be a problem. i think his point was that bitcoin is inherently deflationary... as in, over time, bitcoin will be worth more since the supply is diminishing.
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jonald_fyookball
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May 19, 2014, 09:02:24 PM |
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This is nothing new, it has been pointed out hundreds of times before. There is no way to estimate percentage of lost coins though. Coins haven't been moved for months or years could still be owned by someone.
Correct. Yet the effect on price increase is similar because those temporarily frozen coins are unavailable to the bitcoin Economy.
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Meuh6879
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May 19, 2014, 10:24:13 PM |
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Losing private keys must really suck
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Cryptopher
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Keep it dense, yeah?
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May 19, 2014, 11:10:21 PM |
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DannyHamilton and Death and Taxes provide the most-insightful responses once again.
Of course, once 21 million bitcoins are minted there will be a strictly non-increasing rate. People will lose access to some coins, but that rate will surely diminish as worth (note: not value) increases. There are so many variables, and while economics can tell us a lot about what may happen, there is too much uncertainty around what will happen.
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pepto
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May 19, 2014, 11:52:52 PM |
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One thing that most people don't seem to understand is that after 21 million Bitcoins have been produced, the TOTAL number of Bitcoins in circulation will decrease in a LINEAR fashion each year. Why? Because a consistent number of people (maybe 0.05%) will always - ALWAYS - lose their private keys. This is inevitable.
So with the number of Bitcoins DECLINING (after 21 million) and the demand RISING, classical economics tells us that the price will SURGE.
I wonder how old I'll have to get to be to participate in that surge
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tspacepilot
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May 20, 2014, 12:11:02 AM |
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One thing that most people don't seem to understand is that after 21 million Bitcoins have been produced, the TOTAL number of Bitcoins in circulation will decrease in a LINEAR fashion each year.
This is very unlikely. Here's why: with the number of Bitcoins DECLINING (after 21 million) and the demand RISING, classical economics tells us that the price will SURGE.
This means, to hold the same value of bitcoins, individuals will be holding less and less actual bitcoins. Therefore, when they lose their private key, less bitcoins will be lost. As such, the TOTAL number of Bitcoins in circulation will decrease in an ever shrinking fashion each year. I think you're quite right (and a very astute observation!) that the lossage probably won't be linear. Nonetheless, even if we assume that the lossage isn't linear and isn't perfectly asymptotic towards zero, then many bitcoins will be lost. In enough years, supply could become so limited as to cripple the usage of btc. I suppose this problem is so far off that we needn't worry about it too much now, though. I can also image a kind of solution where some percentage of bitcoins is assumed to be lost each year and mining starts creating new coins again. The idea would not be to make the currency an inflationary one, just to stabilize it a bit if it ever overall lossage ever actually became a problem. You know, another thing that might happen is that computing power goes through the roof and in 10 years all new bitcoins and all old bitcoins that anyone actually cares about need to be regenerated with a larger keypair. Then, you might have a bitcoin "salvage" business where all of those old coins with only 256 size keys can be 'dug up' by someone interested in finding them.
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