If Bitcoin became the world (Reserve) currency

[cypherdoc]

a way to do this might be to have an official fixed market price of Bitcoin at a level that fills the debt hole (quadrillions if you include derivatives) similar to the $20 pre 1933 or $35 post.  that obviously would be at a much higher price than where we're at now and would be used for settling balance of payments btwn countries.

then, acknowledge that there will be an unofficial price used for everyday tx's by individuals that would fulfill the great capabilities of Bitcoin.

i think it is in the interest of the US TPTB to consider backing the USD with Bitcoin once it has proven itself with a few more years of longevity.  they need to consider that we may be at the end of an empire.  they need to acknowledge that printing money but preferentially giving it to banks is not fair and is not helping the real economy or the average American.  they need to consider that we're at the end of a multi-decade cycle for suppressing interest rates.  sure we could go to negative rates like the ECB but i don't think that will fly in the US.  they need to acknowledge that the rise of the broadband internet is analogous to the Gutenberg press and will not be suppressed.  the curtain has been pulled back and even Americans don't like what we see despite being in the enviable possession of the world's reserve currency.  oil is back over $100 and at least historically once above that level economic activity grinds to a halt.  they need to consider that America's power abroad is waning, imo.  our influence is becoming anemic and the world looks at the Middle East and what's happening in Iraq and sees the waste and hypocrisy of spending trillions of USD to fight that war.  even our long term alliance with Saudi Arabia is at risk given today's threat by their ambassador.  China has made huge strides in Africa and with Iran and in fact has accumulated a huge gold war chest. 

btw, i'm an optimist about the future.  i think Bitcoin has the potential to really supercharge the world economy if done right.  and despite the heretofore obstructionist activities of the US gov't towards Bitcoin, we still have the chance to perpetuate US prosperity and stay on top if we choose to demonstrate to the rest of the world that we will back our USD with some discipline.  we're in a unique position right now to do this as most of the core devs are American, we have the most full nodes, and the great majority of VC investment and companies has come from here.

TPTB shouldn't see Bitcoin as a threat but as an opportunity.

[cypherdoc]

we already see that Second Market is trying to move to a once or twice daily fixed spot price revolving around Wall St bidders.  Barry has specifically stated this will be an attempt to dampen volatility.  i've been vocally against this but if it meant establishing an official fixed price that could be used as the basis for Bitcoin acting as the backing to the USD system like we had with gold i'd change my mind.

[dennydotco]

Bitcoin won't ever become a world currency. Go look at places below or at the poverty line. They can't afford to own a Bitcoin wallet or have access to one.

My housecleaner in China made $3/hr and had a phone with texting and pictures. Pretty sure a lot of the world can afford a phone.

[lyth0s]

I'm a bull (At present) because long term I think it may end up at $20,000 or so  (that's over 3000% of today's prices) , but I don't think it will become the world reserve currency.

TERA a bull, quoted for reference. As far as $20,000 goes, I think that is a very, very low goal if we look 3-4 years in the future. The USD is going to hell, central banking countries are going bankrupt and when the shit hits the fan, I know exactly what type of currency will take center stage.

[TERA]

I'm a bull (At present) because long term I think it may end up at $20,000 or so  (that's over 3000% of today's prices) , but I don't think it will become the world reserve currency.

TERA a bull, quoted for reference. As far as $20,000 goes, I think that is a very, very low goal if we look 3-4 years in the future. The USD is going to hell, central banking countries are going bankrupt and when the shit hits the fan, I know exactly what type of currency will take center stage.

Yes I know too. It will be food, water, guns, and ammo.

Bitcoin will probably become worthless once people can't even afford internet access or devices and service providers shut down. Before that phase, people wil be dumping as much btc as possible so they can buy survival supplies and metals.

[howardb]

we already see that Second Market is trying to move to a once or twice daily fixed spot price revolving around Wall St bidders.  Barry has specifically stated this will be an attempt to dampen volatility.  i've been vocally against this but if it meant establishing an official fixed price that could be used as the basis for Bitcoin acting as the backing to the USD system like we had with gold i'd change my mind.

LOL, bitcoin has at least 2 or 3 years of wild volatility ahead of it. If Second Market think they can make a market now and fix/set the price they are going to get a severe lesson and a short haircut.  Like trying to tell a bull where to stand while you ride it's back!  

[oda.krell]

Can't believe all the überbears in here...     

Bitcoin becoming the global reserve currency?

Only?


Bitcoin will definitely become the intergalactic reserve currency in ~20 years. Once the SS Rothbard connects us to far away alien civilizations (Alcubierre drive, baby!), they will surely see the light of Bitcoin and become adopters, and of course HODLERS

In this certain future, if you own half a satoshi, you will be considered a millionaire by today's terms! (Yes. "half a satoshi". We had to add extra decimal places at some point.)

[TERA]

Can't believe all the überbears in here...     

Bitcoin becoming the global reserve currency?

Only?


Bitcoin will definitely become the intergalactic reserve currency in ~20 years. Once the SS Rothbard connects us to far away alien civilizations (Alcubierre drive, baby!), they will surely see the light of Bitcoin and become adopters, and of course HODLERS

In this certain future, if you own half a satoshi, you will be considered a millionaire by today's terms! (Yes. "half a satoshi". We had to add extra decimal places at some point.)

This is great news. That means we can all plan for retirement now by simply by opening a bitcoin faucet and collecting some satoshi. Don't even bother buying any btc.

[btcbeliever]

the main problem as i see it is the sustainability of the current fiat system.

with the spread of info the internet has allowed, more and more ppl are aware of the inequities in the business of money production by central banks worldwide and especially here at home by our Fed.  if one is to believe Piketty's work (i do), income inequality is at all time highs as a result and inflation in certain parts of our economy are at ridiculous highs.  as a father of 2 private university students and payer of our families health insurance, i am acutely aware of this.

of course, today's version of our TPTB don't want to change things.  but i think that is more a function of the American TPTB.  elsewhere in the world, i'm seeing an increasing willingness to abandon the USD world reserve currency system with Russia and China being the most visible examples.  so i do think we have a problem that most Americans don't want to acknowledge mainly b/c of our privileged position.

is gold $45 skyrocket today a warning of things to come?  economies always cycle and we are about due for another conflagration as tvbcof likes to say.  depending on how bad this one is will determine alot of what's to come with our monetary system.  assuming Bitcoin's technical worries can be overcome (and this may just be a matter of time vs. a protocol change) along with increasing confidence that it has long term longevity, i don't see any reason why it couldn't become a reserve for the USD system.  if the US wants to stay on top, this may be it's best move to allow this to occur.

technically a reserve currency doesn't have to have a large volume of tx's; only enough to settle international balance of payment deficiencies on a daily basis or even realtime.  this would be a major improvement over using gold where these imbalances were of necessity allowed to build up to unworkable levels culminating with the French calling on Nixon to cough up their gold only to be too late with Nixon saying f*this.  the advantage to the Bitcoin protocol is we could keep 1MB block sizes and the market would drive up the tx fees and tx amounts to levels too high for everyday tx's by individuals.  i know this isn't the vision most Bitcoiner's have and i'm not even sure it's my vision but this scenario would fit with Bitcoin becoming the backing for the current USD system.  the other thing i like about this is that it shouldn't cause a huge disruption to the current system if everything goes well.  but surely the value of Bitcoin would have to rise significantly to be able to back all the USD denominated debt out there plus minus all the derivatives.

the only problem i see is that Bitcoin's distribution curve has not yet completed itself which would be a problem for price volatility.  not sure how to solve that one.

what do you mean by bitcoin's distribution curve?  If you mean the rate of introduction of newly miined coins that drops by 50% every 4 years, how would that be a problem for price volatility?

[cypherdoc]

the main problem as i see it is the sustainability of the current fiat system.

with the spread of info the internet has allowed, more and more ppl are aware of the inequities in the business of money production by central banks worldwide and especially here at home by our Fed.  if one is to believe Piketty's work (i do), income inequality is at all time highs as a result and inflation in certain parts of our economy are at ridiculous highs.  as a father of 2 private university students and payer of our families health insurance, i am acutely aware of this.

of course, today's version of our TPTB don't want to change things.  but i think that is more a function of the American TPTB.  elsewhere in the world, i'm seeing an increasing willingness to abandon the USD world reserve currency system with Russia and China being the most visible examples.  so i do think we have a problem that most Americans don't want to acknowledge mainly b/c of our privileged position.

is gold $45 skyrocket today a warning of things to come?  economies always cycle and we are about due for another conflagration as tvbcof likes to say.  depending on how bad this one is will determine alot of what's to come with our monetary system.  assuming Bitcoin's technical worries can be overcome (and this may just be a matter of time vs. a protocol change) along with increasing confidence that it has long term longevity, i don't see any reason why it couldn't become a reserve for the USD system.  if the US wants to stay on top, this may be it's best move to allow this to occur.

technically a reserve currency doesn't have to have a large volume of tx's; only enough to settle international balance of payment deficiencies on a daily basis or even realtime.  this would be a major improvement over using gold where these imbalances were of necessity allowed to build up to unworkable levels culminating with the French calling on Nixon to cough up their gold only to be too late with Nixon saying f*this.  the advantage to the Bitcoin protocol is we could keep 1MB block sizes and the market would drive up the tx fees and tx amounts to levels too high for everyday tx's by individuals.  i know this isn't the vision most Bitcoiner's have and i'm not even sure it's my vision but this scenario would fit with Bitcoin becoming the backing for the current USD system.  the other thing i like about this is that it shouldn't cause a huge disruption to the current system if everything goes well.  but surely the value of Bitcoin would have to rise significantly to be able to back all the USD denominated debt out there plus minus all the derivatives.

the only problem i see is that Bitcoin's distribution curve has not yet completed itself which would be a problem for price volatility.  not sure how to solve that one.

what do you mean by bitcoin's distribution curve?  If you mean the rate of introduction of newly miined coins that drops by 50% every 4 years, how would that be a problem for price volatility?

well, we've seen plenty of volatility over the last 5 yrs and part of it has to do with the ongoing issuance/distribution of new coins.  that will probably continue going forward but at a decreasing rate as the curve flattens out.  thus, the supply is constantly changing, whereas with gold it for the most part (except for new finds) has stayed steady for hundreds of years and provided a stable supply backing for various fiat currencies.

but like i said above, perhaps if there was an official fixed exchange rate that was high enough to fill up the huge debt hole of USD that the Fed has helped build up, perhaps that would give worldwide investors confidence that the US will finally exert some discipline on what heretofore has been pretty reckless and aggressive expansion of the money supply for hegemonic purposes.

[okthen]

Can't believe all the überbears in here...     

Bitcoin becoming the global reserve currency?

Only?


Bitcoin will definitely become the intergalactic reserve currency in ~20 years. Once the SS Rothbard connects us to far away alien civilizations (Alcubierre drive, baby!), they will surely see the light of Bitcoin and become adopters, and of course HODLERS

In this certain future, if you own half a satoshi, you will be considered a millionaire by today's terms! (Yes. "half a satoshi". We had to add extra decimal places at some point.)

Finally some good sense around!
I offer to draw a picture of a naked lady for one satoshi (my way of guaranteeing my retirement...)

[oda.krell]

Can't believe all the überbears in here...     

Bitcoin becoming the global reserve currency?

Only?


Bitcoin will definitely become the intergalactic reserve currency in ~20 years. Once the SS Rothbard connects us to far away alien civilizations (Alcubierre drive, baby!), they will surely see the light of Bitcoin and become adopters, and of course HODLERS

In this certain future, if you own half a satoshi, you will be considered a millionaire by today's terms! (Yes. "half a satoshi". We had to add extra decimal places at some point.)

Finally some good sense around!
I offer to draw a picture of a naked lady for one satoshi (my way of guaranteeing my retirement...)

We have a deal! I'll even make it 1 MILLION satoshis!

(but it has to be an original drawing of a naked lady!)

[Parazyd]

Can't believe all the überbears in here...     

Bitcoin becoming the global reserve currency?

Only?


Bitcoin will definitely become the intergalactic reserve currency in ~20 years. Once the SS Rothbard connects us to far away alien civilizations (Alcubierre drive, baby!), they will surely see the light of Bitcoin and become adopters, and of course HODLERS

In this certain future, if you own half a satoshi, you will be considered a millionaire by today's terms! (Yes. "half a satoshi". We had to add extra decimal places at some point.)

Finally some good sense around!
I offer to draw a picture of a naked lady for one satoshi (my way of guaranteeing my retirement...)

We have a deal! I'll even make it 1 MILLION satoshis!

(but it has to be an original drawing of a naked lady!)

I'm amazed with people who can draw porn. That's one hell of a talent

[painlord2k]

I'm a bull (At present) because long term I think it may end up at $20,000 or so  (that's over 3000% of today's prices) , but I don't think it will become the world reserve currency.

TERA a bull, quoted for reference. As far as $20,000 goes, I think that is a very, very low goal if we look 3-4 years in the future. The USD is going to hell, central banking countries are going bankrupt and when the shit hits the fan, I know exactly what type of currency will take center stage.

Yes I know too. It will be food, water, guns, and ammo.

Bitcoin will probably become worthless once people can't even afford internet access or devices and service providers shut down. Before that phase, people wil be dumping as much btc as possible so they can buy survival supplies and metals.

The commodities you named make poor money, because they are burdensome, short lived, have not enough high supply/demand ratio (gold is at 70 years now, silver 15 years, oil a lot less than a year).
Bitcoin have a S/demand around infinity (because the demand for consumption is practically zero).

Make peace with your mind, even if civilization took a step back of 200 years (like 1815 - Napoleon was just around) there would be world commerce and with it the need of technology.
It cost less to bring stuff from Shanghai to San Francisca than to bring stuff from New York to San Francisco (or Chicago).

[rocks]

well, we've seen plenty of volatility over the last 5 yrs and part of it has to do with the ongoing issuance/distribution of new coins.  that will probably continue going forward but at a decreasing rate as the curve flattens out.  thus, the supply is constantly changing, whereas with gold it for the most part (except for new finds) has stayed steady for hundreds of years and provided a stable supply backing for various fiat currencies.

but like i said above, perhaps if there was an official fixed exchange rate that was high enough to fill up the huge debt hole of USD that the Fed has helped build up, perhaps that would give worldwide investors confidence that the US will finally exert some discipline on what heretofore has been pretty reckless and aggressive expansion of the money supply for hegemonic purposes.

cypherdoc, I think we are mostly in agreement on the big picture and agree a lot with what you've said. Regarding an official fixed exchange rate, I think that could only happen once bitcoin's value was realized and settled down. Once that happens then nations with x amount of bitcoins can fix an exchange rate to y amount of fiat, but that's largely the only way it can happen.

For example when the US fixed the gold to currency price, it also had enough stored gold to back all of the dollar claims in gold and as a result there was little reason to exchange dollars for physical gold (which you could do at any bank). However once the FED was created and they started to print more and more dollars, entities which could exchange dollars for gold did so in very significant amounts. In the 60s US citizens could not exchange dollars for gold, but foreign nations could, and they started to withdraw significant amounts of gold because it was well known that there was not enough gold to back all the new dollar at the "official" exchange rate. Nixon only closed the gold window because otherwise within less than 10 years the US would have zero gold left and would have gone bust.

That is the problem with fixed official exchange rates, they only work if the fixer sets and honest exchange rate to match the ratio of both assets. The FED could fix an exchange rate, but they then could not print new dollars because doing so would throw off the ratio and start an exit from dollars as more and more people exchange out until the FED ran out of bitcoins. This is exactly what happens every time Argentina or a similar country fixes a dollar exchange rate and then has a currency crisis.

[cypherdoc]

well, we've seen plenty of volatility over the last 5 yrs and part of it has to do with the ongoing issuance/distribution of new coins.  that will probably continue going forward but at a decreasing rate as the curve flattens out.  thus, the supply is constantly changing, whereas with gold it for the most part (except for new finds) has stayed steady for hundreds of years and provided a stable supply backing for various fiat currencies.

but like i said above, perhaps if there was an official fixed exchange rate that was high enough to fill up the huge debt hole of USD that the Fed has helped build up, perhaps that would give worldwide investors confidence that the US will finally exert some discipline on what heretofore has been pretty reckless and aggressive expansion of the money supply for hegemonic purposes.

cypherdoc, I think we are mostly in agreement on the big picture and agree a lot with what you've said. Regarding an official fixed exchange rate, I think that could only happen once bitcoin's value was realized and settled down. Once that happens then nations with x amount of bitcoins can fix an exchange rate to y amount of fiat, but that's largely the only way it can happen.

For example when the US fixed the gold to currency price, it also had enough stored gold to back all of the dollar claims in gold and as a result there was little reason to exchange dollars for physical gold (which you could do at any bank). However once the FED was created and they started to print more and more dollars, entities which could exchange dollars for gold did so in very significant amounts. In the 60s US citizens could not exchange dollars for gold, but foreign nations could, and they started to withdraw significant amounts of gold because it was well known that there was not enough gold to back all the new dollar at the "official" exchange rate. Nixon only closed the gold window because otherwise within less than 10 years the US would have zero gold left and would have gone bust.

That is the problem with fixed official exchange rates, they only work if the fixer sets and honest exchange rate to match the ratio of both assets. The FED could fix an exchange rate, but they then could not print new dollars because doing so would throw off the ratio and start an exit from dollars as more and more people exchange out until the FED ran out of bitcoins. This is exactly what happens every time Argentina or a similar country fixes a dollar exchange rate and then has a currency crisis.

Yes, sounds like we are in agreement.

But do we really have to wait until 2140 before we can get this plan implemented? Which is why I recommend at least trying to set an official exchange rate in the meantime that is high enough to prevent a run on the reserve bitcoin while allowing reasonable levels of fiat lending.

[TERA]

well, we've seen plenty of volatility over the last 5 yrs and part of it has to do with the ongoing issuance/distribution of new coins.  that will probably continue going forward but at a decreasing rate as the curve flattens out.  thus, the supply is constantly changing, whereas with gold it for the most part (except for new finds) has stayed steady for hundreds of years and provided a stable supply backing for various fiat currencies.

but like i said above, perhaps if there was an official fixed exchange rate that was high enough to fill up the huge debt hole of USD that the Fed has helped build up, perhaps that would give worldwide investors confidence that the US will finally exert some discipline on what heretofore has been pretty reckless and aggressive expansion of the money supply for hegemonic purposes.

cypherdoc, I think we are mostly in agreement on the big picture and agree a lot with what you've said. Regarding an official fixed exchange rate, I think that could only happen once bitcoin's value was realized and settled down. Once that happens then nations with x amount of bitcoins can fix an exchange rate to y amount of fiat, but that's largely the only way it can happen.

For example when the US fixed the gold to currency price, it also had enough stored gold to back all of the dollar claims in gold and as a result there was little reason to exchange dollars for physical gold (which you could do at any bank). However once the FED was created and they started to print more and more dollars, entities which could exchange dollars for gold did so in very significant amounts. In the 60s US citizens could not exchange dollars for gold, but foreign nations could, and they started to withdraw significant amounts of gold because it was well known that there was not enough gold to back all the new dollar at the "official" exchange rate. Nixon only closed the gold window because otherwise within less than 10 years the US would have zero gold left and would have gone bust.

That is the problem with fixed official exchange rates, they only work if the fixer sets and honest exchange rate to match the ratio of both assets. The FED could fix an exchange rate, but they then could not print new dollars because doing so would throw off the ratio and start an exit from dollars as more and more people exchange out until the FED ran out of bitcoins. This is exactly what happens every time Argentina or a similar country fixes a dollar exchange rate and then has a currency crisis.

Yes, sounds like we are in agreement.

But do we really have to wait until 2140 before we can get this plan implemented? Which is why I recommend at least trying to set an official exchange rate in the meantime that is high enough to prevent a run on the reserve bitcoin while allowing reasonable levels of fiat lending.

Why would you talk about a time like 2140? Bitcoin will be ancient history by then,EC will be broken, and there will all kinds of technologies 1,000,000 times better. the internet itself will probably be much much different.

[cypherdoc]

well, we've seen plenty of volatility over the last 5 yrs and part of it has to do with the ongoing issuance/distribution of new coins.  that will probably continue going forward but at a decreasing rate as I the curve flattens out.  thus, the supply is constantly changing, whereas with gold it for the most part (except for new finds) has stayed steady for hundreds of years and provided a stable supply backing for various fiat currencies.

but like i said above, perhaps if there was an official fixed exchange rate that was high enough to fill up the huge debt hole of USD that the Fed has helped build up, perhaps that would give worldwide investors confidence that the US will finally exert some discipline on what heretofore has been pretty reckless and aggressive expansion of the money supply for hegemonic purposes.

cypherdoc, I think we are mostly in agreement on the big picture and agree a lot with what you've said. Regarding an official fixed exchange rate, I think that could only happen once bitcoin's value was realized and settled down. Once that happens then nations with x amount of bitcoins can fix an exchange rate to y amount of fiat, but that's largely the only way it can happen.

For example when the US fixed the gold to currency price, it also had enough stored gold to back all of the dollar claims in gold and as a result there was little reason to exchange dollars for physical gold (which you could do at any bank). However once the FED was created and they started to print more and more dollars, entities which could exchange dollars for gold did so in very significant amounts. In the 60s US citizens could not exchange dollars for gold, but foreign nations could, and they started to withdraw significant amounts of gold because it was well known that there was not enough gold to back all the new dollar at the "official" exchange rate. Nixon only closed the gold window because otherwise within less than 10 years the US would have zero gold left and would have gone bust.

That is the problem with fixed official exchange rates, they only work if the fixer sets and honest exchange rate to match the ratio of both assets. The FED could fix an exchange rate, but they then could not print new dollars because doing so would throw off the ratio and start an exit from dollars as more and more people exchange out until the FED ran out of bitcoins. This is exactly what happens every time Argentina or a similar country fixes a dollar exchange rate and then has a currency crisis.

Yes, sounds like we are in agreement.

But do we really have to wait until 2140 before we can get this plan implemented? Which is why I recommend at least trying to set an official exchange rate in the meantime that is high enough to prevent a run on the reserve bitcoin while allowing reasonable levels of fiat lending.

Why would you talk about a time like 2140? Bitcoin will be ancient history by then,EC will be broken, and there will all kinds of technologies 1,000,000 times better. the internet itself will probably be much much different.

If Bitcoin survives that long, surely it will look different than it does today.

But my point is that I believe its volatility is related to the issuance curve as miners scramble to mine as many coins as possible especially as the reward is still relatively high. As the curve flattens out so should volatility. Are they related? I can't say for sure but I think so. Therefore the reference to 2140,  when the last Satoshi will be mined.  

[painlord2k]

But my point is that I believe its volatility is related to the issuance curve as miners scramble to mine as many coins as possible especially as the reward is still relatively high. As the curve flattens out so should volatility. Are they related? I can't say for sure but I think so. Therefore the reference to 2140,  when the last Satoshi will be mined.  

The current inflation rate of Bitcoin is around 10% year. The miners could, increasing the mining power, increase the number of coin mined by 10-20%. But this would require an increase of 10-20% of the hashing power every two weeks. So, the inflation rate could go from 10% to 11% or 12% for a time. But faster they mine, faster the next halving will come. Also, faster the obsolete miners will go out of the mining bitcoin business.

It do not matter when the last Satoshi will be mined. It matter when the inflation rate will be so small to do not really matter to people and investors in their economic calculations.

The first threshold we will get over will be the next halving. The central banks can not inflate less than 5% every year for a long time without crashing this debt based system of fiat currencies. Probably they can not really stop inflating at the current rate, just play with numbers and use external actors to inflate when they pretend are not. The next halving will make bitcoin one of the less inflating or the less inflating currency of the world. The stronger currency of the world probably. Why does keep money in other fiat when bitcoin will anyway lose less value and probably increase its value in the same time period?

The second threshold will be around february 2020 (the successive halving).
This will put the inflation rate of bitcoin around 2-2.5% per year. Lower than the economic growth of the global economy.
You will be able to save bitcoins and they will increase their purchasing power over time without doing anything (it will be a paltry 0.5-1% year risk free).
The interest rate will be around 5-20% year depending on the risks and time.

[cypherdoc]

will go out of the mining bitcoin business.

It do not matter when the last Satoshi will be mined. It matter when the inflation rate will be so small to do not really matter to people and investors in their economic calculations.

absolutely.  thanks for running thru the numbers.

which is why it may be viable to use an official price of Bitcoin after 2020 for backing the USD system at a high enough price to fill the debt hole while not encouraging a run on the reserve Bitcoin.  with that low of an inflation rate plus what hopefully will be significantly reduced volatility, the unofficial price might not vary too much from the official price which would make implementing such a system more credible.