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Author Topic: Why bitcoin supply will NOT cap at 21M BTC [NOT PLAUSIBLE]  (Read 4107 times)
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June 18, 2014, 10:28:51 PM
 #41

Assumptions for such a fictive day in the future:
(...)
    • the bitcoin community has become ideology-free due to mass-adoption
    (...)
    [/list]
    When the mainstream come on board and recognise the benefits of decentralised currency, they'll also recognise the ideology that made it work and want to defend that.  They'll know by then that printing masses of fiat money out of thin air by banks and governments was just a con.  The only ones to see any benefit from the creation of fiat money were the ones reaping all the interest because the money was, in reality, just debt.  A continuous loop of theft to transfer wealth from the bottom to the top.  They won't want to go back to that once they've seen the light.

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    June 18, 2014, 10:32:05 PM
     #42

    I'm talking about bitcoin, this is covered by:

    So the bitcoin community will face a choice:
    • Stick to the fixed supply model and get banned from legal commerce. This would destroy BTC value and bitcoiners would lose a lot of money (or more precisely: wealth) within short time.

    What you suggest (gov starts its own altcoin) will only open a possibility for bitcoiners to flee the sinking boat
    As discussed in this very thread and in hundreds of other threads just like this one:  The total number of Bitcoins specified in the Bitcoin protocol cannot be changed.  Bitcoin will end up with (slightly less than) 21 million coins, end of story.  The only thing you, the government or anyone else can do to get more is to change the protocol to allow more coins but in doing so a hard branch will be created.

    Even if there are only a handful of people left in the entire world mining, using and doing transaction on the original blockchain - the one with the 21 million coin limit - that chain is still Bitcoin by definition.  Even if the value goes to $2.00 per BTC some of us will still mine it, use it, and support it, just like we did the last time it was $2.00 per BTC.

    There are already what, over 100 alt coins?  There will be more and maybe someday a government controlled and backed one.  It is all good.  Let the market decide which coins live and which coins die.

    The protocol could be changed in the event that the miners were to agree to the changes.

    Now the question of would the miners agree to this type of change, no almost certainly not.

    The question of is this a realistic scenario, also no.
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    June 19, 2014, 01:13:05 AM
     #43

    [...]
    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.

    The old deflation problem. We have solved that problem, the dominators are wrong. Proof: There are always two parties to a trade. The seller would not wait, he will hurry to sell his warez. Why, because later he will get only 2. Maybe he proposes 2 1/2, and maybe you accept. It's only a half more, and you need not wait.


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    June 19, 2014, 05:39:42 AM
     #44

    [...]
    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.

    The old deflation problem. We have solved that problem, the dominators are wrong. Proof: There are always two parties to a trade. The seller would not wait, he will hurry to sell his warez. Why, because later he will get only 2. Maybe he proposes 2 1/2, and maybe you accept. It's only a half more, and you need not wait.



    Why would anyone operate a business under these circumstances?  Deflation is bad for business
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    June 19, 2014, 07:28:11 AM
    Last edit: June 19, 2014, 07:48:49 AM by brenzi
     #45

    [...]
    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.

    The old deflation problem. We have solved that problem, the dominators are wrong. Proof: There are always two parties to a trade. The seller would not wait, he will hurry to sell his warez. Why, because later he will get only 2. Maybe he proposes 2 1/2, and maybe you accept. It's only a half more, and you need not wait.


    No proof at all. If a seller is ready to offer a discount of 17% today he will be ready to offer the same discount tomorrow (or your example is not sustainable). So if the price is 2.5 today, it will be 2.08 tomorrow.

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    June 19, 2014, 07:32:08 AM
     #46

    [...]
    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.

    The old deflation problem. We have solved that problem, the dominators are wrong. Proof: There are always two parties to a trade. The seller would not wait, he will hurry to sell his warez. Why, because later he will get only 2. Maybe he proposes 2 1/2, and maybe you accept. It's only a half more, and you need not wait.


    No proof at all. If a seller is ready to offer a discount of 17% today he well be ready to offer the same discount tomorrow (or your example is not sustainable). So if the price is 2.5 today, it will be 2.08 tomorrow.

    Ok, let's play the same game with inflation (in prices). Why would the seller sell anything for 2, when he can get 3 tomorrow?


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    June 19, 2014, 07:35:56 AM
     #47

    When the mainstream come on board and recognise the benefits of decentralised currency, they'll also recognise the ideology that made it work and want to defend that.  They'll know by then that printing masses of fiat money out of thin air by banks and governments was just a con.  The only ones to see any benefit from the creation of fiat money were the ones reaping all the interest because the money was, in reality, just debt.  A continuous loop of theft to transfer wealth from the bottom to the top.  They won't want to go back to that once they've seen the light.
    Deflation is a transfer of wealth from the bottom to the top as well. Whoever has the possibility to save money today will be richer tomorrow. The poor need to eat today, they can't wait until tomorrow.
    Inequality can't be addressed by monetary policy alone.

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    June 19, 2014, 07:40:59 AM
     #48

    [...]
    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.

    The old deflation problem. We have solved that problem, the dominators are wrong. Proof: There are always two parties to a trade. The seller would not wait, he will hurry to sell his warez. Why, because later he will get only 2. Maybe he proposes 2 1/2, and maybe you accept. It's only a half more, and you need not wait.


    No proof at all. If a seller is ready to offer a discount of 17% today he well be ready to offer the same discount tomorrow (or your example is not sustainable). So if the price is 2.5 today, it will be 2.08 tomorrow.

    Ok, let's play the same game with inflation (in prices). Why would the seller sell anything for 2, when he can get 3 tomorrow?
    With pleasure: Because the 3 he can get tomorrow will be worth the same as the 2 he gets today if he gets 50% interest on his savings.
    In the case of deflation, nobody will accept negative interest, because they're better off by just hoarding the cash. So unfortunately this problem is not symmetrical.

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    June 19, 2014, 08:02:20 AM
     #49

    [...]
    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.

    The old deflation problem. We have solved that problem, the dominators are wrong. Proof: There are always two parties to a trade. The seller would not wait, he will hurry to sell his warez. Why, because later he will get only 2. Maybe he proposes 2 1/2, and maybe you accept. It's only a half more, and you need not wait.


    No proof at all. If a seller is ready to offer a discount of 17% today he well be ready to offer the same discount tomorrow (or your example is not sustainable). So if the price is 2.5 today, it will be 2.08 tomorrow.

    Ok, let's play the same game with inflation (in prices). Why would the seller sell anything for 2, when he can get 3 tomorrow?
    With pleasure: Because the 3 he can get tomorrow will be worth the same as the 2 he gets today if he gets 50% interest on his savings.
    In the case of deflation, nobody will accept negative interest, because they're better off by just hoarding the cash. So unfortunately this problem is not symmetrical.

    Ok, I give up for now. We now set out to prove that it is wrong, with a non-inflating currency.

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    June 19, 2014, 08:03:43 AM
     #50

    [...]
    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.

    The old deflation problem. We have solved that problem, the dominators are wrong. Proof: There are always two parties to a trade. The seller would not wait, he will hurry to sell his warez. Why, because later he will get only 2. Maybe he proposes 2 1/2, and maybe you accept. It's only a half more, and you need not wait.


    No proof at all. If a seller is ready to offer a discount of 17% today he well be ready to offer the same discount tomorrow (or your example is not sustainable). So if the price is 2.5 today, it will be 2.08 tomorrow.

    Ok, let's play the same game with inflation (in prices). Why would the seller sell anything for 2, when he can get 3 tomorrow?
    With pleasure: Because the 3 he can get tomorrow will be worth the same as the 2 he gets today if he gets 50% interest on his savings.
    In the case of deflation, nobody will accept negative interest, because they're better off by just hoarding the cash. So unfortunately this problem is not symmetrical.

    I give up for now. Let's see what happens when we have implemented the non-inflating currency.

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    June 19, 2014, 08:14:40 AM
     #51

    Isnt it hardcoded with 21mio cap?
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    June 19, 2014, 08:27:24 AM
    Last edit: June 23, 2014, 05:57:50 PM by brenzi
     #52

    Isnt it hardcoded with 21mio cap?
    Of course, but its software. Change the code, convince 51% of the hashpower to use the new code and its done.

    edit: You need to also convince the majority of nodes, not only the miners.

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    June 19, 2014, 09:27:48 AM
     #53

    When the mainstream come on board and recognise the benefits of decentralised currency, they'll also recognise the ideology that made it work and want to defend that.  They'll know by then that printing masses of fiat money out of thin air by banks and governments was just a con.  The only ones to see any benefit from the creation of fiat money were the ones reaping all the interest because the money was, in reality, just debt.  A continuous loop of theft to transfer wealth from the bottom to the top.  They won't want to go back to that once they've seen the light.
    Deflation is a transfer of wealth from the bottom to the top as well. Whoever has the possibility to save money today will be richer tomorrow. The poor need to eat today, they can't wait until tomorrow.
    Inequality can't be addressed by monetary policy alone.

    But with deflation, the cost of eating goes down so the poor can save more.

    The reality is that inflation hurts the poor the most and helps the rich. Most of the wealth held by wealthy people is in the form of assets such as real estate and companies. Poor people hold most of their wealth in cash. Inflation helps wealthy people at the expense of poor people because the values of assets go up and the value of cash goes down.

    Wealthy people such as bankers and politicians love inflation.

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    June 19, 2014, 10:58:07 AM
     #54

    But with deflation, the cost of eating goes down so the poor can save more.
    No, the salaries go down as well. Zero-sum game. If you never get the chance to save, you'll never profit from price deflation (or at least less than the wealthy).

    The reality is that inflation hurts the poor the most and helps the rich. Most of the wealth held by wealthy people is in the form of assets such as real estate and companies. Poor people hold most of their wealth in cash. Inflation helps wealthy people at the expense of poor people because the values of assets go up and the value of cash goes down.

    Wealthy people such as bankers and politicians love inflation.
    I agree that price inflation hurts the poor more than the wealthy. But so does price deflation.

    But I think we're getting off-topic here. There are a lot of threads around discussing the good and the ugly of inflation and deflation. I suggest we stop at this point and keep discussing the OP

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    June 19, 2014, 12:33:50 PM
     #55

    Let's use some realistic scenarios. The price does not swing 50% one way or the other in a single day. Figure a 2% yearly deflation, what would happen? Everything would continue as it does now, with the exception that saving money makes more sense than spending money. Deflation would be bad for people with multi-year loans and good for savers, thus making people more likely to only spend money they have. It would be good for the common man and bad for bankers. Which is why we have inflation.

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    June 19, 2014, 03:11:08 PM
     #56

    The day we create more than 21Million BTC is the day the first 21Million are valueless.
    Not true. Value comes from trust. Some people's trust will drop to zero if the money supply formula is changed in the source code and a hard fork has taken place. Those can stick to the old code and run the 'old' chain.

    But other people will trust a centrally controlled BTC fork, because:
    • they don't care about centralization (or just don't understand what all the fuss is about)
    • it would be the only fork that can be used for purchasing goods legally


    There is no need whatsoever to change the total number of coins. It is an arbitrary number and does not matter. Even if there were only 1 BTC it would work.
    Think of bitcoin as more like a pie we are cutting into slices. The number of slices is irrelevant.  
    This is true if you see bitcoin only as a store of value or a medium of exchange. But it doesn't make sense if you want to use it as a unit of account.

    If a good costs 3 BTC today and you expect it to cost 2 BTC tomorrow, you'll probably wait until tomorrow with purchasing that good if you can. Today's central banks are doing what they can to avoid such a deflation. And that is why they will certainly want to regulate crypotocurrencies if they become relevant.
    I see what your saying, however I think that a centrally controlled bitcoin would have zero following. I certainly have no interest whatsoever in someones coupons. That is all they would be. Basically frequent flier miles. The supply, the price, even distribution would be controlled. The fact that BTC is beyond the control of any entity is the single most important aspect of bitcoin. And I'm quite moderate. Many around here would DDOS the hell out of any site that used them.

    As far as the second point I have to disagree that it only applies to hoarders. I have used BTC as a payment network for years. I do not "invest" in bitcoin, I use bitcoin. In fact I have not made a purchase online with a credit card this year. I exclusively use bitcoin online. I don't care about the price of a bitcoin today or tomorrow, I'm still going to use it no matter what. I also don't care if it is made illegal. There is nothing that will dissuade me from using it except any kind of control being exerted over bitcoin. In that case I will divest 100% and move on to crowdfunding investments.

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    June 19, 2014, 03:55:43 PM
    Last edit: June 19, 2014, 04:11:21 PM by BurtW
     #57

    Isnt it hardcoded with 21mio cap?
    Of course, but its software. Change the code, convince 51% of the hashpower to use the new code and its done.
    I am getting a bit tired of fixing this lie, which is a still a lie no matter how often you repeat it.

    Let's get more specific shall we?  The proposal is an incompatible change to the coinbase rules.  Specifically, instead of cutting the subsidy in half on predefined block numbers the subsidy would be set on a periodic basis by a central authority “hopefully the UN”.

    Now you claim that by just getting 51% of the miners to change their coinbase rules you can change Bitcoin.  This is not true.
      
    First, the effect on the remaining 49% of the miners and the entire Bitcoin network of somehow convincing 51% of all the miners to produce incompatible blocks would be identical to simply turning off 51% of the miners.  Block confirmation times would slightly more than double from about 10 minutes per block to about 20 minutes per block until the next difficulty adjustment time which would be pushed out from about 14 days to about 28 days.  So after having to suffer with 20 minute confirmation times for about 28 days the remaining Bitcoin network would be back to normal operation with half the hashing power it had before.

    Now let’s look at the miners you somehow convinced to change their coinbase rules.  First, they have to find each other and form their own peer to peer network.  Oops, without changes to their code all the nodes on the network are going to reject the incompatible blocks produced by all these miners!  OK, you can solve this by somehow convincing some/most/half of the nodes to change their coinbase rules to accept the incompatible blocks.  Perhaps you promise to pay them for doing it, or, it may be easier to just fire up your own collection of new full nodes all around the world that support the new rules.  (One node inside each bank that wants to participate in the new system would do it.)  So we end up with one network of nodes and miners that support Bitcoin and a second network of nodes and miners that support the new alt coin.

    Now let’s look at it from the user’s perspective.  They get to keep their Bitcoins as if nothing happened (well they have the 28 days of slow response time) and they also instantly get an equal number of the new alt coins.  Not a bad deal for them.

    So, in summary, no, you cannot change the Bitcoin protocol by simply changing the rules for 51% of the miners and even if you do convince some percentage (any percentage) of miners and nodes to change the rules it only creates a new alt coin that shares the coin history with the Bitcoin blockchain at the time of the hard fork.

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    June 19, 2014, 07:57:01 PM
    Last edit: June 23, 2014, 05:58:39 PM by brenzi
     #58

    I am getting a bit tired of fixing this lie, which is a still a lie no matter how often you repeat it.
    [...]
    Let's get more specific shall we?  
    [...]
    You blow into the same horn again, and I agree to most of your reasoning. But not to your conclusion, because it lacks one critical point.

    Please answer this and prove me being wrong:
    [...]
    Where will the security come from? If 90% of the hashpower goes to the legal fork, how easy will it be for those miners to perform 51% attacks on the genuine-bitcoin chain that now only has 10% of the original hashpower?
    There is no chance that multiple bitcoin forks or altcoins based on the same mining algorithms can coexist long term. The biggest one will win because it's the only secure network.

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    June 19, 2014, 08:12:53 PM
     #59

    [...]
    There is no need whatsoever to change the total number of coins. It is an arbitrary number and does not matter. Even if there were only 1 BTC it would work.
    Think of bitcoin as more like a pie we are cutting into slices. The number of slices is irrelevant.  
    This is true if you see bitcoin only as a store of value or a medium of exchange. But it doesn't make sense if you want to use it as a unit of account.
    [...]
    [...]
    As far as the second point I have to disagree that it only applies to hoarders. I have used BTC as a payment network for years. I do not "invest" in bitcoin, I use bitcoin. In fact I have not made a purchase online with a credit card this year. I exclusively use bitcoin online. I don't care about the price of a bitcoin today or tomorrow, I'm still going to use it no matter what.
    [...]
    That doesn't oppose my point. You are using bitcoin as a medium of exchange, but almost certainly not as a unit of account. How do you judge the price of a good you intend to buy? You might see a price written there in BTC but that doesn't help much these days. You need to check how many dollars,euros or whatever fiat that equals to decide if the price is right. So your unit of account is de facto still a fiat currency. And I guess you still earn your living in fiat. That will stay your reference.

    All this might change. If my assumptions in the OP are fulfilled, BTC might become a unit of account. But then we're back at the OP and the reasoning there.


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    June 19, 2014, 09:10:55 PM
     #60

    Isnt it hardcoded with 21mio cap?
    Of course, but its software. Change the code, convince 51% of the hashpower to use the new code and its done.
    This lie is the one I am currently addressing.  In this scenario you have somehow convinced 51% of the miners to jump to the new alt coin in addition to creating the necessary alt nodes, wallets, exchanges etc.

    To do this you must have convinced these miners they are going to make more income on the alt chain than on the Bitcoin chain.

    Now you are going to turn around and ask all these same miners to take a loss in revenue and go back to hashing on the Bitcoin network with the hope of performing some sort of attack?  Not only does this leave no hashing power to run the new alt coin, if your attack works and the value of BTC drops because of it you are asking these miners to take a total bath on all the Bitcoins they mine during the attack.

    Getting 51% to join some sort of centrally UN controlled inflato coin is a total pipe dream.  Getting 90% to join is not even worth talking about.

    BTW: the idea of a centrally contolled coinbase subsity rule requires a central point of control which in turn is a weak point in the system and an obvious point of attack for those that don't like the idea.  In other words a distributed Bitcoin network with half the hashing power is still more secure than the centrally contolled UnCoin due it its central control.

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