Bitcoin Forum
May 27, 2018, 04:46:32 PM *
News: Latest stable version of Bitcoin Core: 0.16.0  [Torrent]. (New!)
 
   Home   Help Search Donate Login Register  
Pages: 1 2 3 [All]
  Print  
Author Topic: Is crytocurrency hyperinflationary?  (Read 4962 times)
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 03:23:04 PM
 #1

Bitcoin supply is limited. So far so good.

The supply of alternative, competing cryptocurrencies is unlimited. Very bad.

Imagine a world with dozens or hundreds of competing cryptocurrencies. They would each have minimal value.

Bitcoin doesn't look like a hard currency solution to government money printing. It's the ultimate soft currency.

Bitcoins may have a brief moment in the sun as media coverage inflates a bubble of interest. But I doubt it's sustainable.

I'm sure this simple observation will grate with many of you. Sorry.

Spare me your rants. Share your solutions.
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1527439592
Hero Member
*
Offline Offline

Posts: 1527439592

View Profile Personal Message (Offline)

Ignore
1527439592
Reply with quote  #2

1527439592
Report to moderator
1527439592
Hero Member
*
Offline Offline

Posts: 1527439592

View Profile Personal Message (Offline)

Ignore
1527439592
Reply with quote  #2

1527439592
Report to moderator
1527439592
Hero Member
*
Offline Offline

Posts: 1527439592

View Profile Personal Message (Offline)

Ignore
1527439592
Reply with quote  #2

1527439592
Report to moderator
kiba
Legendary
*
Offline Offline

Activity: 980
Merit: 1000


View Profile
May 05, 2011, 03:26:21 PM
 #2

Not a problem.

All the other currencies have to compete and distinguish themselves from the competition. Bitcoin have a massive first mover advantage that will be very hard to dislodge.


robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 03:28:10 PM
 #3

Not a problem.

All the other currencies have to compete and distinguish themselves from the competition. Bitcoin have a massive first mover advantage that will be very hard to dislodge.



Yes you might be right. Time will tell.
wumpus
Hero Member
*****
Offline Offline

Activity: 812
Merit: 1000

No Maps for These Territories


View Profile
May 05, 2011, 03:45:19 PM
 #4

Quote
Spare me your rants. Share your solutions.
Yes, it might blow up in your face. The most obvious solution is to just not invest money in it. It's not meant as a speculation vehicle anyway, but to trade with.

Once services are available that are useful to you, denominated in BTC, you can use it to pay for them. Until then, just sit back and wait where it goes.

Bitcoin Core developer [PGP] Warning: For most, coin loss is a larger risk than coin theft. A disk can die any time. Regularly back up your wallet through FileBackup Wallet to an external storage or the (encrypted!) cloud. Use a separate offline wallet for storing larger amounts.
Timo Y
Legendary
*
Offline Offline

Activity: 938
Merit: 1001


bitcoin - the aerogel of money


View Profile
May 05, 2011, 04:08:09 PM
 #5

There will be competitors.

The hyperinflationary ones won't last.

The winning p2p cryptocurrency might not be Bitcoin, but the concept of a p2p cryptocurrency offers new features that are in high demand with a lot of people in the world, so it's more than just a fun new toy that will lose its appeal after the hype is over.


Why are you so absolutist about Bitcoin's future?  Complete failure <=> Huge success  is a false dichotomy.

There is no reason that Bitcoin can't remain sustainable as a secondary currency such as the CHF or silver, or even as a niche product.


One of the closest things to Bitcoin prior to its arrival was Liberty Reserve.

According to  Google Trends, Bitcoin has already overtaken Liberty Reserve in popularity.
http://www.google.ch/trends?q=bitcoin%2C+%22liberty+reserve%22

Liberty Reserve has been a successful niche product for several years now.  Why can't Bitcoin?

GPG ID: FA868D77   bitcoin-otc:forever-d
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 04:58:39 PM
 #6

There will be competitors.



Why are you so absolutist about Bitcoin's future?  Complete failure <=> Huge success  is a false dichotomy.

There is no reason that Bitcoin can't remain sustainable as a secondary currency such as the CHF or silver, or even as a niche product.



Not absolutist, just questioning.

I agree it could well have a niche that lasts for a long time. So not a "complete failure", as you put it.

But there just seem to be good reasons to believe it's unlikely to go mainstream, or be a "huge success".

robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 05:00:12 PM
 #7

Quote
Spare me your rants. Share your solutions.
Yes, it might blow up in your face. The most obvious solution is to just not invest money in it. It's not meant as a speculation vehicle anyway, but to trade with.

Once services are available that are useful to you, denominated in BTC, you can use it to pay for them. Until then, just sit back and wait where it goes.


This makes sense.

But if everyone does this then it never gains the network effects to make it successful.

So you still need a lot of people to take the plunge.
wumpus
Hero Member
*****
Offline Offline

Activity: 812
Merit: 1000

No Maps for These Territories


View Profile
May 05, 2011, 05:10:22 PM
 #8

But if everyone does this then it never gains the network effects to make it successful.

So you still need a lot of people to take the plunge.
There will always be people with more risk appetite.

How big would a niche have to be to be a "success"? Even if it targeted only fringe libertarians, there'd be enough of those on the world to keep it alive.

The current price might not be sustainable. But I'm pretty sure that BTC will eventually settle at some price.


Bitcoin Core developer [PGP] Warning: For most, coin loss is a larger risk than coin theft. A disk can die any time. Regularly back up your wallet through FileBackup Wallet to an external storage or the (encrypted!) cloud. Use a separate offline wallet for storing larger amounts.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 05:12:40 PM
 #9

@forever-d

Put another way, bitcoin's success could sow the seeds of its ultimate failure.

Copycats and government intervention in other words.
wumpus
Hero Member
*****
Offline Offline

Activity: 812
Merit: 1000

No Maps for These Territories


View Profile
May 05, 2011, 05:17:28 PM
 #10

Copycats and government intervention in other words.
OK, let's say you forked the bitcoin chain right now. Would you expect robm-coin to be more succesful than the main chain? If so, why? If not, why would other copycats be better off?

If you don't agree on a currency you can't trade, it's as easy as that.  Which means that it pays off to use a chain/cryptocurrency that other people use as well.

Bitcoin Core developer [PGP] Warning: For most, coin loss is a larger risk than coin theft. A disk can die any time. Regularly back up your wallet through FileBackup Wallet to an external storage or the (encrypted!) cloud. Use a separate offline wallet for storing larger amounts.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 05:21:40 PM
 #11


How big would a niche have to be to be a "success"? Even if it targeted only fringe libertarians, there'd be enough of those on the world to keep it alive.



A niche would be a "success", but by definition not "huge".

My business targets investors outside the mainstream Wall Street advice. Many would even call themselves "fringe libertarians", including a lot of the people I work with. The guy I share office space with even calls himself an anarchist - basically a libertarian under his definition.

Anyway, it's a very successful niche. But we'll probably never have more than a few thousand customers worldwide.

Some of the stuff circulating about bitcoin seems to point to it replacing all fiat currency and taking over the monetary world. I've learnt quickly that I should ignore that and focus on more realistic aspirations.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 05:24:29 PM
 #12

Copycats and government intervention in other words.
OK, let's say you forked the bitcoin chain right now. Would you expect robm-coin to be more succesful than the main chain? If so, why? If not, why would other copycats be better off?

If you don't agree on a currency you can't trade, it's as easy as that.  Which means that it pays off to use a chain/cryptocurrency that other people use as well.


Who's to say. It would be organic. It will be fascinating to see how it works out. Unfettered libertarian capitalism, for now at least.

eMansipater
Sr. Member
****
Offline Offline

Activity: 294
Merit: 250



View Profile WWW
May 05, 2011, 05:25:02 PM
 #13

The specific reason that cryptocurrencies like BitCoin won't proliferate without heavily differentiated features is security.  Blockchain-based systems become more secure the more people use them, so there isn't a very good reason to use anything but the most secure one out there.  This means that there are very few if any equilibria where similar cryptocurrencies will coexist.  I could see fiatcoins (nondistributed cryptocurrencies with single trusted government issuers like today's paper currencies) and bitcoin carving out separate niches, but for almost any feature that proves worthwhile in a distributed currency it's very likely bitcoin would just add this feature, immediately making that the most secure way to utilise it.  It makes very little sense for there to ever be a competing version of BitCoin unless it is fundamentally different in some respect.

None of this even takes into account the network effects of being already trusted, already accepted, software and services being available for it, etc.  Why weren't there many competing shell currencies in 19th century Africa?  Because only one made sense for a given society at a given time, despite the trivial possibility of more.

Some of the stuff circulating about bitcoin seems to point to it replacing all fiat currency and taking over the monetary world. I've learnt quickly that I should ignore that and focus on more realistic aspirations.
Good!  Such extreme changes in our economic systems are at best very speculative and much longer term (decades or centuries).

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
Visit the BitCoin Q&A Site to ask questions or share knowledge.
0.009 BTC too confusing?  Use mBTC instead!  Details at www.em-bit.org or visit the project thread to help make Bitcoin prices more human-friendly.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 05:40:25 PM
 #14

The specific reason that cryptocurrencies like BitCoin won't proliferate without heavily differentiated features is security.  Blockchain-based systems become more secure the more people use them, so there isn't a very good reason to use anything but the most secure one out there.  This means that there are very few if any equilibria where similar cryptocurrencies will coexist.  I could see fiatcoins (nondistributed cryptocurrencies with single trusted government issuers like today's paper currencies) and bitcoin carving out separate niches, but for almost any feature that proves worthwhile in a distributed currency it's very likely bitcoin would just add this feature, immediately making that the most secure way to utilise it.  It makes very little sense for there to ever be a competing version of BitCoin unless it is fundamentally different in some respect.

None of this even takes into account the network effects of being already trusted, already accepted, software and services being available for it, etc.  Why weren't there many competing shell currencies in 19th century Africa?  Because only one made sense for a given society at a given time, despite the trivial possibility of more.

Thanks this is helpful perspective.

You've just provoked another thought though. If bitcoin is super successful in the crytocurrency space, taking say 90% market share in 10 years time, then it will be time for the antitrust regulators to start getting heavy.

Maybe the technology makes this hard. Maybe the supranationality makes it hard. Maybe the de-centralisation makes it hard. But where there's a will there's usually a way.

Bitcoin hoarding might be an issue as well. Price deflation (measured in bitcoins) would make it a bad decision to ever spend them unless you have no alternative.

Lower transaction volumes would reduce its utility as a form of exchange. Then it becomes more of an investment tool than a transactional tool. Plus it would gravitate towards the hands of a few rich people, as with all forms of wealth since time immemorial.
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
May 05, 2011, 05:46:56 PM
 #15

Bitcoin supply is limited. So far so good.

The supply of alternative, competing cryptocurrencies is unlimited. Very bad.

Imagine a world with dozens or hundreds of competing cryptocurrencies. They would each have minimal value.

Bitcoin doesn't look like a hard currency solution to government money printing. It's the ultimate soft currency.

Bitcoins may have a brief moment in the sun as media coverage inflates a bubble of interest. But I doubt it's sustainable.

I'm sure this simple observation will grate with many of you. Sorry.

Spare me your rants. Share your solutions.

This is my #2 worry, besides a government crackdown.  Might even be #1.  Imagine being able to instantly create something that was just like gold, but green.  Then purple.  Then red.  Then any other color.  And there was just as much of that to be mined as there was gold.  And then repeat 1000 times.  Gold isn't looking that great then.
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
May 05, 2011, 05:49:34 PM
 #16


Bitcoin hoarding might be an issue as well. Price deflation (measured in bitcoins) would make it a bad decision to ever spend them unless you have no alternative.

Lower transaction volumes would reduce its utility as a form of exchange. Then it becomes more of an investment tool than a transactional tool. Plus it would gravitate towards the hands of a few rich people, as with all forms of wealth since time immemorial.

Unless you had no alternative, or ACTUALLY WANTED SOMETHING.  Gee, I'll just live in a cardboard box hoarding my bitcoins since tomorrow they might be worth more.  I guess I won't eat today anything more than cat food and out of a dumpster since I have to eat something, but the I'll save the rest for the magical day that I actually want to spend my bitcoins.
Garrett Burgwardt
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 05, 2011, 05:51:07 PM
 #17

You can make another currency based off of bitcoin, but it wouldn't have the economic backing that bitcoin does. It wouldn't have the network security that bitcoin does. It wouldn't be worth what bitcoin was worth, because it isn't bitcoin. That's like worrying that the US Dollar will hyperinflate because other countries make their money out of cloth with security features as well.

As for anti-trust, there's no trust or company to go after, just a protocol. That's like trying to break up gasoline burning cars because they're almost a monopoly.

All of these arguments are nonsense.

Especially, by the way, the deflationary spiral one. We've hashed that one over way too many times - learn to search, even just the wiki has a dedicated page for it.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 05:51:28 PM
 #18


This is my #2 worry, besides a government crackdown.  Might even be #1.  Imagine being able to instantly create something that was just like gold, but green.  Then purple.  Then red.  Then any other color.  And there was just as much of that to be mined as there was gold.  And then repeat 1000 times.  Gold isn't looking that great then.

You just reminded me of a great "Blackadder" episode in series 2, where Lord Percy tries his hand at alchemy.

He succeeds in creating a blob of "purest green".

Thanks.
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
May 05, 2011, 05:51:34 PM
 #19

Copycats and government intervention in other words.
OK, let's say you forked the bitcoin chain right now. Would you expect robm-coin to be more succesful than the main chain? If so, why? If not, why would other copycats be better off?

If you don't agree on a currency you can't trade, it's as easy as that.  Which means that it pays off to use a chain/cryptocurrency that other people use as well.


They could be more successful if they were easier to use, easier to obtain.  Perhaps the distribution through mining was too steep with Bitcoin.  Perhaps someone creates a slick new client for theirs that is easier for casual users to have.  Perhaps someone markets it better.  I guess you guys are all on Friendster since why would anyone ever displace them since they were first to market.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 06:00:45 PM
 #20

You can make another currency based off of bitcoin, but it wouldn't have the economic backing that bitcoin does. It wouldn't have the network security that bitcoin does. It wouldn't be worth what bitcoin was worth, because it isn't bitcoin. That's like worrying that the US Dollar will hyperinflate because other countries make their money out of cloth with security features as well.

As for anti-trust, there's no trust or company to go after, just a protocol. That's like trying to break up gasoline burning cars because they're almost a monopoly.

All of these arguments are nonsense.

Especially, by the way, the deflationary spiral one. We've hashed that one over way too many times - learn to search, even just the wiki has a dedicated page for it.

New countries a rarely created or destroyed. Only after major upheavals. So the numbers of "normal" currencies are in more or less fixed supply, even if the quantity of "notes" of each of them isn't.

Cryptocurrencies can be created on a whim, just like bitcoin was.

So I don't think your analogy works.

NB you'll have more success spreading the word if you don't hack the arms and legs off potential converts.
eMansipater
Sr. Member
****
Offline Offline

Activity: 294
Merit: 250



View Profile WWW
May 05, 2011, 06:06:57 PM
 #21

Lower transaction volumes would reduce its utility as a form of exchange. Then it becomes more of an investment tool than a transactional tool. Plus it would gravitate towards the hands of a few rich people, as with all forms of wealth since time immemorial.
In the long term, transaction levels and security are correlated.  If bitcoin stops being used, it will decrease in security and eventually go away.

Regarding a tangible real-world example of how currencies function when they are in limited supply and without a backing entity, see the so-called "Swiss dinar" in Kurdish Iraq.

If you found my post helpful, feel free to send a small tip to 1QGukeKbBQbXHtV6LgkQa977LJ3YHXXW8B
Visit the BitCoin Q&A Site to ask questions or share knowledge.
0.009 BTC too confusing?  Use mBTC instead!  Details at www.em-bit.org or visit the project thread to help make Bitcoin prices more human-friendly.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 06:08:18 PM
 #22


Unless you had no alternative, or ACTUALLY WANTED SOMETHING.  Gee, I'll just live in a cardboard box hoarding my bitcoins since tomorrow they might be worth more.  I guess I won't eat today anything more than cat food and out of a dumpster since I have to eat something, but the I'll save the rest for the magical day that I actually want to spend my bitcoins.

My point exactly on actually wanting something.

But let's say you have bitcoins or dollars. Bitcoins are strong and dollars are weak. Why buy your food with bitcoins? Much better to dump your dollars, until you run out.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 06:10:26 PM
 #23

Lower transaction volumes would reduce its utility as a form of exchange. Then it becomes more of an investment tool than a transactional tool. Plus it would gravitate towards the hands of a few rich people, as with all forms of wealth since time immemorial.
In the long term, transaction levels and security are correlated.  If bitcoin stops being used, it will decrease in security and eventually go away.

Regarding a tangible real-world example of how currencies function when they are in limited supply and without a backing entity, see the so-called "Swiss dinar" in Kurdish Iraq.

Thanks. I didn't know this on the transaction / security point.

I'll look at the other thing.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 06:16:40 PM
 #24

@emansipater

The Swiss dinar example you give is very interesting. Key points are the fixed (slightly falling) supply and wide recognition.

But also the lack of alternatives and (paper) cash economy. I suspect the Kurds have very little access to banking, foreign currency, and especially not internet banking or offshore accounts.

So it looks like a more or less closed system within their territory, with no meaningful monetary competition.
Garrett Burgwardt
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 05, 2011, 06:19:42 PM
 #25

You can make another currency based off of bitcoin, but it wouldn't have the economic backing that bitcoin does. It wouldn't have the network security that bitcoin does. It wouldn't be worth what bitcoin was worth, because it isn't bitcoin. That's like worrying that the US Dollar will hyperinflate because other countries make their money out of cloth with security features as well.

As for anti-trust, there's no trust or company to go after, just a protocol. That's like trying to break up gasoline burning cars because they're almost a monopoly.

All of these arguments are nonsense.

Especially, by the way, the deflationary spiral one. We've hashed that one over way too many times - learn to search, even just the wiki has a dedicated page for it.

New countries a rarely created or destroyed. Only after major upheavals. So the numbers of "normal" currencies are in more or less fixed supply, even if the quantity of "notes" of each of them isn't.

Cryptocurrencies can be created on a whim, just like bitcoin was.

So I don't think your analogy works.

NB you'll have more success spreading the word if you don't hack the arms and legs off potential converts.

You're missing the point. It doesn't matter if there are more countries, or if there were new countries created every day. Even if they make a new currency each and flood the market with bills, it wouldn't affect the price of other currencies. Same with bitcoins.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 06:58:47 PM
 #26



You're missing the point. It doesn't matter if there are more countries, or if there were new countries created every day. Even if they make a new currency each and flood the market with bills, it wouldn't affect the price of other currencies. Same with bitcoins.

Half right, half wrong.

All other currencies affect each other. Print a lot and your currency falls versus the others. Control the supply relative to demand and it stays strong.

Currencies are currently more or less bounded by physical borders and a limited number of countries issuing them. Want to buy a burger in Idaho? Don't show up with Swiss Francs (even though Swiss Francs keep their value much better).

So what happens if you remove all physical border constraints (as with cryptocurrencies), but you also remove all constraints on how many currencies exist or can exist?

I don't think this has ever happened before. We've gone from many small communities with many currencies to progressively fewer countries with fewer currencies (think eurozone for recent, albeit disastrous, example).

Slam it in reverse with no constraints (on borders of numbers of currencies) and I don't think we should presume to know what might happen.

Garrett Burgwardt
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 05, 2011, 08:10:54 PM
 #27

Why would people begin to accept other currencies? Without an economy backing them up, they'd be useless. It's like all these crappy little news sites that pop up on the web - it's trivial for them to be setup, so why not do it? But people don't go to them, because they aren't reliable, or just that the bigger news sources are better.
stillfire
Full Member
***
Offline Offline

Activity: 124
Merit: 100


View Profile
May 05, 2011, 08:25:46 PM
 #28

All other currencies affect each other. Print a lot and your currency falls versus the others. Control the supply relative to demand and it stays strong.

This is not so. There is no magical property of currencies that automagically change the value of other currencies. If I started printing bills of a new "robm dollar" currency right now I would not affect any other currency in the world, no matter how many or how few I printed.

If I could convince some people to accept robems for a good, a service or another currency I would open up for some amount of arbitrage. But the amount of such value exchange would be directly proportional to the amount of usefulness of the new currency. E.g. if I said I would sell 10 grams of gold for 1 robem, someone might pucharse 1 robem for an amount of USD lower than what 10 grams of gold costs. And that would technically have 'lowered' the value of the USD since one person wanted to get rid of a small amount.

But it was not the creation of the currency itself that lead to this. It was the creation of new economic opportunity. You can create new crypto currencies all day and it wouldn't make a difference unless you also convinced people to use it.

Lost your wallet password? Try Stillfire's Password Recovery Service.
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 09:35:44 PM
 #29

All other currencies affect each other. Print a lot and your currency falls versus the others. Control the supply relative to demand and it stays strong.

This is not so. There is no magical property of currencies that automagically change the value of other currencies. If I started printing bills of a new "robm dollar" currency right now I would not affect any other currency in the world, no matter how many or how few I printed.

If I could convince some people to accept robems for a good, a service or another currency I would open up for some amount of arbitrage. But the amount of such value exchange would be directly proportional to the amount of usefulness of the new currency. E.g. if I said I would sell 10 grams of gold for 1 robem, someone might pucharse 1 robem for an amount of USD lower than what 10 grams of gold costs. And that would technically have 'lowered' the value of the USD since one person wanted to get rid of a small amount.

But it was not the creation of the currency itself that lead to this. It was the creation of new economic opportunity. You can create new crypto currencies all day and it wouldn't make a difference unless you also convinced people to use it.

I was being deliberately simplistic here, as obviously there are lots of factors affecting currencies on a day to day basis. But over the long run, print more and your currency will get dumped as people switch into (and bid up) others.

Maybe I should have said "existing" or "fiat" currencies to be clear. One that are in use. Obviously if you create one that no one uses it won't affect others. But it there is wealth tied up in it, and that wealth moves away, the value of the currency will fall. Put another way, buyers will pay less to get it and sellers will demand less to sell it.

Think of money like water. It flows between different places. Where it flows determines prices.
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
May 05, 2011, 09:50:44 PM
 #30

Why would people begin to accept other currencies? Without an economy backing them up, they'd be useless. It's like all these crappy little news sites that pop up on the web - it's trivial for them to be setup, so why not do it? But people don't go to them, because they aren't reliable, or just that the bigger news sources are better.

Why would people use Facebook/Myspace?  After all, Friendster has all of your contacts!
robm
Newbie
*
Offline Offline

Activity: 14
Merit: 0


View Profile
May 05, 2011, 10:09:47 PM
 #31

Why would people begin to accept other currencies? Without an economy backing them up, they'd be useless. It's like all these crappy little news sites that pop up on the web - it's trivial for them to be setup, so why not do it? But people don't go to them, because they aren't reliable, or just that the bigger news sources are better.

Put another way, there are too many crappy little news sites, and nothing controlling their proliferation. People read their news where they think they can trust it. Or where the brand is strong.

Which gets back to the original question. If there is no control on the number of crytocurrencies, will we end up with masses of "crappy little news site" equivalents? Or will something (bitcoin or something better) float to the top and keep people engaged?

Maybe bitcoin just becomes a branding exercise. Battling to stay on top of a morass of competition. First mover might help, and might keep it entrenched for a while. Think Microsoft. But it will constantly be under assault if people can come up with something better. Actually that would be a good thing. Good money driving out the less good.

But since there is no central ownership (or so I'm told) who will fund the branding? Maybe the users in an attempt to protect the utility. But equally possible is a competitor currency driven by business people and cryptobankers. Who know how to make it work in a bigger piece of the economy. How to market it. How to work on PR. How to brand it, essentially.

Claiming to know the answer to all this is not really credible. We can only speculate on the outcomes.



Garrett Burgwardt
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 05, 2011, 10:14:07 PM
 #32

Well if a better currency comes along I'd imagine people would move to it over a period of time, similar to what is happening with BTC/USD now.

We can only speculate, but if you're making false assumptions, you're speculating poorly.

As far as branding, it doesn't matter if we don't or do advertise it - once people use it, it advertises itself.
stillfire
Full Member
***
Offline Offline

Activity: 124
Merit: 100


View Profile
May 05, 2011, 10:32:30 PM
 #33

But over the long run, print more and your currency will get dumped as people switch into (and bid up) others.

Yes. If someone could print more Bitcoins, Bitcoins would lose value and be "dumped". But your point was that "The supply of alternative, competing cryptocurrencies is unlimited. Very bad."

Your argument appears to me that infinite competition with an unlimited number of currencies will water down Bitcoin. But as my example illustrates, the supply of other unused cryptocurrencies has no effect on Bitcoin. Only usage of other currencies affects it. And usage is decidedly limited - neither unlimited nor infinite. Usage does not appear in a vacuum, it only comes about due to a new currency being better in some circumstances. And the amount of 'betterness' available to exploit for new currencies is, again, anything but unlimited.

Like eMansipater said, "Why weren't there many competing shell currencies in 19th century Africa?"

Think of money like water. It flows between different places. Where it flows determines prices.

A beautiful analogy to be sure, but a little hard to work with since we're discussing more than one 'water' here. Yes, if there were competing liquids, they would sometimes fill up holes water would otherwise. And the more liquids there would be, the less of any one there would be in the existing holes. But here the comparison becomes thin, because what would the incentive for creating and applying ever new liquids be? Indeed, the opposite incentive exists because most people already have water and keeping what you have is easier than creating anew.

Building up a new currency is hard work with no small amount of catch-22 built in. Why would you start using a new currency when it starts out useless? You have to somehow be convinced there will be future utility greater than that of your current money. Your leap of faith and those of others may eventually fulfil the prophecy. Or it may not.

There may be a million tiny currencies but if there is no improvement in one over the other, the inertia of the existing value of an economy is insurmountable. Smallness in itself is a negative for a currency. All things equal, meaning both currencies are exactly as 'good' in convenience, value store capacity and so on - you will go with the currency useful in the most places - the larger one.

Lost your wallet password? Try Stillfire's Password Recovery Service.
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
May 05, 2011, 11:26:55 PM
 #34

Well if a better currency comes along I'd imagine people would move to it over a period of time, similar to what is happening with BTC/USD now.

We can only speculate, but if you're making false assumptions, you're speculating poorly.

As far as branding, it doesn't matter if we don't or do advertise it - once people use it, it advertises itself.

Drink Kool-Aid much?
Garrett Burgwardt
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 06, 2011, 12:19:12 AM
 #35

Well if a better currency comes along I'd imagine people would move to it over a period of time, similar to what is happening with BTC/USD now.

We can only speculate, but if you're making false assumptions, you're speculating poorly.

As far as branding, it doesn't matter if we don't or do advertise it - once people use it, it advertises itself.

Drink Kool-Aid much?

I obviously know the reference, but not what you're referencing specifically. As shown, the folks who believe that bitcoin can hyperinflate are simply wrong. Until you can come up with a good reason for bitcoins to hyperinflate, then you are beating a dead horse.
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
May 06, 2011, 01:27:19 AM
 #36

Well if a better currency comes along I'd imagine people would move to it over a period of time, similar to what is happening with BTC/USD now.

We can only speculate, but if you're making false assumptions, you're speculating poorly.

As far as branding, it doesn't matter if we don't or do advertise it - once people use it, it advertises itself.

Drink Kool-Aid much?

I obviously know the reference, but not what you're referencing specifically. As shown, the folks who believe that bitcoin can hyperinflate are simply wrong. Until you can come up with a good reason for bitcoins to hyperinflate, then you are beating a dead horse.

It's been explained already.  There is nothing that makes Bitcoin unique among cryptocurrencies.

You are claiming "it doesn't matter about advertising" as well.  You couldn't be more wrong.  Without advertising, no one would be here.
Garrett Burgwardt
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 06, 2011, 01:39:43 AM
 #37

Right - my assertion is that there doesn't need to be someone actively advertising bitcoin as soon as businesses start to accept it - the businesses will advertise it themselves, given that it is a better currency, and people will hear about it more. Especially with the little bitcoin accepted here stickers. So it will be advertised, but there doesn't need to be a campaign. Let it creep over people.

And there is something that makes Bitcoin unique, and something that you still aren't getting. There is an economy behind bitcoins. There is significant hashing power backing up the blockchain. It also has mindshare and people would likely not be willing to change from bitcoin to something else unless there is a significant reason to. Which there might be, I'm not denying, but we haven't even seen a competing CC, unless you count namecoins but those are different.

So yes, there are unique things to bitcoin, so you're wrong on that count.

Advertising will handle itself - wrong there, and I'd appreciate it if you thought things through a bit more before insulting me.

Which by the way, I still don't get your reference to the Kool-Aid. Either you're using it wrong or I'm just misinterpreting it - there's nothing I'm accepting here that doesn't have a logical basis.
NghtRppr
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 06, 2011, 01:44:34 AM
 #38

The supply of alternative, competing cryptocurrencies is unlimited. Very bad.

I think competition is good. There may be be an possibly unlimited number of cryptocurrencies but how many are actually going to be widely used? The incentive for people to flock to new currencies is small as long as Bitcoin is doing what people want it to do.
tomcollins
Full Member
***
Offline Offline

Activity: 182
Merit: 100


View Profile
May 06, 2011, 02:51:15 PM
 #39

The supply of alternative, competing cryptocurrencies is unlimited. Very bad.

I think competition is good. There may be be an possibly unlimited number of cryptocurrencies but how many are actually going to be widely used? The incentive for people to flock to new currencies is small as long as Bitcoin is doing what people want it to do.

It's bad if there are no differences between them.  Competition is good (although bad if you hold a lot of Bitcoins, perhaps).  But the big draw is there are only 21M Bitcoins that will ever exist.  If that number changed to 21B, that would be awful.  Having a clone that could exist with the same features essentially doubles that number.

Sure maybe one would win out, and maybe both would live, but it's a threat.
Garrett Burgwardt
Sr. Member
****
Offline Offline

Activity: 476
Merit: 251


View Profile
May 06, 2011, 02:56:16 PM
 #40

No, since the clone wouldn't be the same as the real bitcoin if it is at all different (say it has the 21b coin limit you suggested). If it is the same, you're using bitcoins!

No matter how you argue it, you're still wrong. Bitcoin will not be hyperinflationary. Period.
barbarousrelic
Hero Member
*****
Offline Offline

Activity: 675
Merit: 500


View Profile
May 06, 2011, 03:12:10 PM
 #41

I wish someone would start a new blockchain just to test this. We'll see if anyone uses it.

Do not waste your time debating whether Bitcoin can work. It does work.

"Early adopters will profit" is not a sufficient condition to classify something as a pyramid or Ponzi scheme. If it was, Apple and Microsoft stock are Ponzi schemes.

There is no such thing as "market manipulation." There is only buying and selling.
ploum
Sr. Member
****
Offline Offline

Activity: 378
Merit: 250



View Profile WWW
May 06, 2011, 03:23:05 PM
 #42


They could be more successful if they were easier to use, easier to obtain.

That's, IMHO, one of the weakest point of Bitcoin. It's really hard to use.

People usually want to send money to someone/some organization and:

- Trust it's the good person
- Be identified as the sender
- Add a message (like "Happy Birthday from your grandma")


Bitcoin does not provide that and, IMHO, it will be a critical step to make bitcoin acceptance easier.

Could we do it on top of bitcoin. Yes, I believe. But it means designing a *protocol* on top of bitcoin. The transport could be XMPP or HTTP, I've wrote some ideas about it there: http://ploum.net/post/building-your-web-identity

Blog posts about Bitcoin - 1KdRBbhjo72CqKTrFsQed6s9NMrvwvrUkq
BitterTea
Sr. Member
****
Offline Offline

Activity: 294
Merit: 250



View Profile
May 06, 2011, 03:29:46 PM
 #43

Do U.S. dollars or gold provide a way to trust the receiver is who they say they are, identify yourself as the sender, or add an arbitrary message?

I would say no to all of the above, in which case, why does Bitcoin the currency need to have those features?
BitLex
Hero Member
*****
Offline Offline

Activity: 588
Merit: 500


View Profile
May 06, 2011, 03:36:58 PM
 #44


Unless you had no alternative, or ACTUALLY WANTED SOMETHING.  Gee, I'll just live in a cardboard box hoarding my bitcoins since tomorrow they might be worth more.  I guess I won't eat today anything more than cat food and out of a dumpster since I have to eat something, but the I'll save the rest for the magical day that I actually want to spend my bitcoins.

My point exactly on actually wanting something.

But let's say you have bitcoins or dollars. Bitcoins are strong and dollars are weak. Why buy your food with bitcoins? Much better to dump your dollars, until you run out.

Ok, let's say you have bitcoins OR dollars,
how would you decide to keep bitcoins and better dump dollars then?

you could also keep your dollars and better NOT get that new computer today, you will get that same computer much cheaper next year,
but that's not what you do, because you want/need that computer now and not in a year.

point is, you can only hoard money, if you don't need to spend it.

I wish someone would start a new blockchain just to test this. We'll see if anyone uses it.
there are some alternative blockchains already for different purposes,
some used as game-currencies (i heard of MartianBotCoins, whatever that is), some as domain-currencies (namecoin), some as test-currencies,
feel free to create anotherone.  Cheesy

ploum
Sr. Member
****
Offline Offline

Activity: 378
Merit: 250



View Profile WWW
May 06, 2011, 03:41:57 PM
 #45

Do U.S. dollars or gold provide a way to trust the receiver is who they say they are, identify yourself as the sender, or add an arbitrary message?

I would say no to all of the above, in which case, why does Bitcoin the currency need to have those features?

For most of the people, it will not really matter. The definition of money is pure rhetoric. But the whole point of bitcoin is to be used mostly online. Is there system that already exist to pay online? Yes: credit card, paypal, wire transfers. Are those system easy to use? More or less, at least there are quite easy for the sender. Do they guarantee who is the receiver, do they allow you to send messages with your payment? Yes. Wire transfer allows you to do that, paypal allows you to do that.


In the online world, a money doesn't exist without a nice "transfer system" on top of it. The dollars or the euro doesn't have such system so some private companies built their own and are now competing against each other.

Bitcoin, as a money, have a basic built-in system. That's really nice but if you want the people to use bitcoin instead of dollar+paypal or euro+IBAN, you have to provide at least the same level of features.

History shown with Linux/XMPP/Firefox that people are not sensible to new features (as astonishing as they could be) as long as they don't have the same features they had in the old system.

Blog posts about Bitcoin - 1KdRBbhjo72CqKTrFsQed6s9NMrvwvrUkq
Pages: 1 2 3 [All]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!