Why I think the 21Million hard limit will never be reached - deflationary spiral

[asdf]

Yes but I think people have said that the processing and storage needs of the blockchain will be able to keep increasing due to Moore's Law.  Although I don't think Moore's Law can continue as it is and will inflex (excuse my terminology) during the Technological Singularity (https://en.wikipedia.org/wiki/Technological_singularity) predicted sometime after 2030-2040.

This has been predicted numerous times and revised. It's not gonna happen and is more of a pseudoscientifc joke to anyone involved in natural sciences or cybernetics.
If you wanna have a entertaining read look up The Omega Point, aka The Singularity.
The idea originates in the transhumanist movement, a circle jerk of wanna-be elitists who couldn't make it in academia.

For what reason do you believing the singularity won't happen? We are already developing rapidly in the field of nanotechnology, AI, 3D printing, genetics, neuroscience ...

As far as I'm concerned, the the only necessary element is production of AI machines at or greater than the level of humans. Once we can cheaply produce machines that are smarter than ourselves, or at least augment humans to be much smarter, technology will explode and I don't see any limit.

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[ElectricMucus]

As far as I'm concerned, the the only necessary element is production of AI machines at or greater than the level of humans. Once we can cheaply produce machines that are smarter than ourselves, or at least augment humans to be much smarter, technology will explode and I don't see any limit.

The singularity states that infinite progress will be reached within a finite amount of time.
While I agree that the potential for progress is infinite, I see the above statement as impossible.

If you lookup the term I mentioned above (The Omega Point) there is but one possibility this can happen.
But this is metaphysics, not science.

[herzmeister]

The singularity has already long happened. [vid]

[asdf]

As far as I'm concerned, the the only necessary element is production of AI machines at or greater than the level of humans. Once we can cheaply produce machines that are smarter than ourselves, or at least augment humans to be much smarter, technology will explode and I don't see any limit.

The singularity states that infinite progress will be reached within a finite amount of time.
While I agree that the potential for progress is infinite, I see the above statement as impossible.

If you lookup the term I mentioned above (The Omega Point) there is but one possibility this can happen.
But this is metaphysics, not science.

The technological singularity does NOT state "infinite progress". You made a nice mess of that straw man though while dodging the actual question. Do you think we will not soon produce machines that are smarter than humans? Can you not appreciate the implications of this?

[ElectricMucus]

it does mean infinite progress in a finite amount of time.
The theory states that literally, the term is not by me.


sauce: http://www.mindfully.org/Technology/2003/Singularity-Bell1may03.htm

The Technological Singularity is to Cybernetics what the Perpetuum Mobile is to Physics.

[hashman]

As far as I'm concerned, the the only necessary element is production of AI machines at or greater than the level of humans. Once we can cheaply produce machines that are smarter than ourselves, or at least augment humans to be much smarter, technology will explode and I don't see any limit.

The singularity states that infinite progress will be reached within a finite amount of time.
While I agree that the potential for progress is infinite, I see the above statement as impossible.

If you lookup the term I mentioned above (The Omega Point) there is but one possibility this can happen.
But this is metaphysics, not science.

The technological singularity does NOT state "infinite progress". You made a nice mess of that straw man though while dodging the actual question. Do you think we will not soon produce machines that are smarter than humans? Can you not appreciate the implications of this?

I cannot appreciate the implications.  The reason why is that "smarter" is not clear.  Does this mean better at doing fast mulitplication?  Machines are already smarter.  Holding memory?  Computing hashes?  Already smarter. 

And what is this so-called progress?  Desertification?  Toxification?  Squandering of resources?  Or just the spread of mental illness?   

[realnowhereman]

I cannot appreciate the implications.  The reason why is that "smarter" is not clear.  Does this mean better at doing fast mulitplication?  Machines are already smarter.  Holding memory?  Computing hashes?  Already smarter.  

And what is this so-called progress?  Desertification?  Toxification?  Squandering of resources?  Or just the spread of mental illness?    

This is not to agree or disagree with either side in this argument, but I believe that the "smarter" part is important because of this reasoning (and "smarter" is used to mean "more capable of designing artificial intelligences):

If humans of intelligence level X, manage to design an AI of intelligence level "X+1", then the machine of intelligence level "X+1" would have been able to design itself (since it is smarter than the humans that did design it).  By implication then, it would be able to design an intelligence of level "X+2", etc, etc.

Personally I find the logic of a technological singularity lacking; I don't really see that the implication is true: who says that "X" intelligence is always capable of designing "X+1" intelligence AIs?  Perhaps it gets exponentially harder to make smarter and smarter designs, in which case there would be no rush to "infinite" intelligence, but instead a rush to "maximum intelligence".  What's more, what if humanity is already "maximum intelligence"?  The assumption that we can design an intelligence cleverer than us is just that: an assumption.

[caveden]

I don't think there is anything in the bitcoin protocol that states on exactly 21Million bitcoin will ever be made.  No just that the block reward will keep half'ing.  So if bitcoins value goes up and more decimal places are and keep getting added as the value of bitcoin goes up then the block reward can keep getting paid.  Even if the block reward gets really small as long as the value of bitcoin keeps rising and more decimal places are added then a valuable block reward can keep being paid.  At some point in the future the amount of newly created bitcoins entering the market will be similar to the amount of gold entering the gold market.  As where we are at now with such a high block reward is like a gold-rush.

In this reasoning you're implying that the value of bitcoin will, in average, double at each 4 years, so that the block reward inflation keeps having the same value.
That sounds too much optimistic to me.

[asdf]

I cannot appreciate the implications.  The reason why is that "smarter" is not clear.  Does this mean better at doing fast mulitplication?  Machines are already smarter.  Holding memory?  Computing hashes?  Already smarter.  

And what is this so-called progress?  Desertification?  Toxification?  Squandering of resources?  Or just the spread of mental illness?    

This is not to agree or disagree with either side in this argument, but I believe that the "smarter" part is important because of this reasoning (and "smarter" is used to mean "more capable of designing artificial intelligences):

If humans of intelligence level X, manage to design an AI of intelligence level "X+1", then the machine of intelligence level "X+1" would have been able to design itself (since it is smarter than the humans that did design it).  By implication then, it would be able to design an intelligence of level "X+2", etc, etc.

Personally I find the logic of a technological singularity lacking; I don't really see that the implication is true: who says that "X" intelligence is always capable of designing "X+1" intelligence AIs?  Perhaps it gets exponentially harder to make smarter and smarter designs, in which case there would be no rush to "infinite" intelligence, but instead a rush to "maximum intelligence".  What's more, what if humanity is already "maximum intelligence"?  The assumption that we can design an intelligence cleverer than us is just that: an assumption.

You're only thinking in one dimension. For example, we could be mass producing cheap human equivalent AIs, which communicate with each other through networks. They could, in turn, produce who-knows-what.

If there is a maximum intelligence, then the singularity is impossible. This is a tautology.

@mucus
"Technological Progress Grows Exponentially and Reaches Infinity in Finite Time". This is a contradiction. The exponential curve reaches y=infinity @ x=infinity. So the referenced page fails to define exponential growth.

You can't have "infinite progress in finite time". I agree that this is impossible.

Lets define the singularity as "technology growth reaches the rate of x2 per day.". Do you think that this is impossible?

[johnyj]

Very good observation by OP, if we could continously add decimal places after each block reward drop, and BTC value doubles at the same time, then the amount of BTC value added each year will be constant

At the same time, it means that the existing BTC holders will get their holding value doubled at each block reward drop, which gives them even more incentive to hold BTC as an electronic medium of saving, and when they accumulated enough amount of BTC and go for retire, then they will get ever-increasing value of saving to spend

For example, if I'm holding 1000 BTC as my saving (worth 1million dollar in future), and every four years I spent half of them, then my consumption power will keep the same all the time

Then very natually, many pension fund will consider their investment in BTC, because the scarcity of this medium will make sure the value will be ever increasing, at least better than some government bonds, 100% return in 4 years are not bad

No matter what, BTC has the potential to bring some craziness, but first it has to gain more acceptance and understanding

[caveden]

and BTC value doubles at the same time,

That's a damn big IF.

[Vladimir]

Ever tried to google "asymptotically approaching" ?

[matthewh3]

I don't think there is anything in the bitcoin protocol that states on exactly 21Million bitcoin will ever be made.  No just that the block reward will keep half'ing.  So if bitcoins value goes up and more decimal places are and keep getting added as the value of bitcoin goes up then the block reward can keep getting paid.  Even if the block reward gets really small as long as the value of bitcoin keeps rising and more decimal places are added then a valuable block reward can keep being paid.  At some point in the future the amount of newly created bitcoins entering the market will be similar to the amount of gold entering the gold market.  As where we are at now with such a high block reward is like a gold-rush.

In this reasoning you're implying that the value of bitcoin will, in average, double at each 4 years, so that the block reward inflation keeps having the same value.
That sounds too much optimistic to me.

(Total number of bitcoins in circulation) x exchange rate != Bitcoin value.

Total Bitcoin value is a tricky thing to estimate. Since value is very subjective and hard to quantify, I'd try a different angle.

How about counting the number of people for whom Bitcoin has some value. Let's say that number right now is 1M (it might be more, might be less).
How many people are there in the world? ~7000M? Therefore, Bitcoin would have to spread and become valuable to 7000 times more people, or just under 2^13 times, to cover today's population.
If Bitcoin keeps surviving, at some point its ubiquity will plateau (it will have the same problem as "McDonalds"), but there will still be a little bit of inflation.

I put bitcoin and a city of 235,00 people called Salford which is within a larger conurbation (city) of Greater Manchester of 2.4million people and the 235,000 population city of Salford had a higher average trend then bitcoin.  I currently think the amount of people holding some bitcoins is below 100,000 and all the people who have ever even heard of bitcoin well below 10,000,000.  Long way to go but if bitcoin did catch on as a major form of payment transfer rather than mainly just a commodity that it is now then each bitcoin could end up worth over £10,000 (not including inflation adjustment) each within our lifetimes.  If bitcoin adoption just keeps continuing at the rate it is now then it should still beat the inflation of the £/$.  I'm guessing a bitcoin will be worth up to and below $7 at the end of the year and up to and below $10 at the end of next year if things just keep plodding on as they are.

[MoonShadow]

I don't think there is anything in the bitcoin protocol that states on exactly 21Million bitcoin will ever be made.  No just that the block reward will keep half'ing.  So if bitcoins value goes up and more decimal places are and keep getting added as the value of bitcoin goes up then the block reward can keep getting paid.  Even if the block reward gets really small as long as the value of bitcoin keeps rising and more decimal places are added then a valuable block reward can keep being paid.  At some point in the future the amount of newly created bitcoins entering the market will be similar to the amount of gold entering the gold market.  As where we are at now with such a high block reward is like a gold-rush.

In this reasoning you're implying that the value of bitcoin will, in average, double at each 4 years, so that the block reward inflation keeps having the same value.
That sounds too much optimistic to me.

(Total number of bitcoins in circulation) x exchange rate != Bitcoin value.

Total Bitcoin value is a tricky thing to estimate. Since value is very subjective and hard to quantify, I'd try a different angle.

How about counting the number of people for whom Bitcoin has some value. Let's say that number right now is 1M (it might be more, might be less).
How many people are there in the world? ~7000M? Therefore, Bitcoin would have to spread and become valuable to 7000 times more people, or just under 2^13 times, to cover today's population.
If Bitcoin keeps surviving, at some point its ubiquity will plateau (it will have the same problem as "McDonalds"), but there will still be a little bit of inflation.

I put bitcoin and a city of 235,00 people called Salford which is within a larger conurbation (city) of Greater Manchester of 2.4million people and the 235,000 population city of Salford had a higher average trend then bitcoin.  I currently think the amount of people holding some bitcoins is below 100,000 and all the people who have ever even heard of bitcoin well below 10,000,000.  Long way to go but if bitcoin did catch on as a major form of payment transfer rather than mainly just a commodity that it is now then each bitcoin could end up worth over £10,000 (not including inflation adjustment) each within our lifetimes.  If bitcoin adoption just keeps continuing at the rate it is now then it should still beat the inflation of the £/$.  I'm guessing a bitcoin will be worth up to and below $7 at the end of the year and up to and below $10 at the end of next year if things just keep plodding on as they are.

The block reward cuts in half in Januarry of 2013, so the inflation rate literally cuts in half.  I suspect, then if things just keep plodding along as they have lately, somthing that I consider very unlikely, then the value of a bitcoin in December of 2013 would be closer to $15.

[ElectricMucus]

"Technological Progress Grows Exponentially and Reaches Infinity in Finite Time". This is a contradiction. The exponential curve reaches y=infinity @ x=infinity. So the referenced page fails to define exponential growth.

You can't have "infinite progress in finite time". I agree that this is impossible.

Alright then.
Keep in mind that the site just quotes the book on the subject. So this is an "official" position.

Lets define the singularity as "technology growth reaches the rate of x2 per day.". Do you think that this is impossible?

I can't tell if it is possible.
It also could 12233x per month or 0.12x per second or whatever.

But that's irrelevant hence the above definition of it. What you are proposing is something else, just a point on a slope not a singularity (hence the name (!) )

[matthewh3]

I don't think there is anything in the bitcoin protocol that states on exactly 21Million bitcoin will ever be made.  No just that the block reward will keep half'ing.  So if bitcoins value goes up and more decimal places are and keep getting added as the value of bitcoin goes up then the block reward can keep getting paid.  Even if the block reward gets really small as long as the value of bitcoin keeps rising and more decimal places are added then a valuable block reward can keep being paid.  At some point in the future the amount of newly created bitcoins entering the market will be similar to the amount of gold entering the gold market.  As where we are at now with such a high block reward is like a gold-rush.

In this reasoning you're implying that the value of bitcoin will, in average, double at each 4 years, so that the block reward inflation keeps having the same value.
That sounds too much optimistic to me.

(Total number of bitcoins in circulation) x exchange rate != Bitcoin value.

Total Bitcoin value is a tricky thing to estimate. Since value is very subjective and hard to quantify, I'd try a different angle.

How about counting the number of people for whom Bitcoin has some value. Let's say that number right now is 1M (it might be more, might be less).
How many people are there in the world? ~7000M? Therefore, Bitcoin would have to spread and become valuable to 7000 times more people, or just under 2^13 times, to cover today's population.
If Bitcoin keeps surviving, at some point its ubiquity will plateau (it will have the same problem as "McDonalds"), but there will still be a little bit of inflation.

I put bitcoin and a city of 235,00 people called Salford which is within a larger conurbation (city) of Greater Manchester of 2.4million people and the 235,000 population city of Salford had a higher average trend then bitcoin.  I currently think the amount of people holding some bitcoins is below 100,000 and all the people who have ever even heard of bitcoin well below 10,000,000.  Long way to go but if bitcoin did catch on as a major form of payment transfer rather than mainly just a commodity that it is now then each bitcoin could end up worth over £10,000 (not including inflation adjustment) each within our lifetimes.  If bitcoin adoption just keeps continuing at the rate it is now then it should still beat the inflation of the £/$.  I'm guessing a bitcoin will be worth up to and below $7 at the end of the year and up to and below $10 at the end of next year if things just keep plodding on as they are.

The block reward cuts in half in Januarry of 2013, so the inflation rate literally cuts in half.  I suspect, then if things just keep plodding along as they have lately, somthing that I consider very unlikely, then the value of a bitcoin in December of 2013 would be closer to $15.

I hope it is $15 but the block reward half'ing in January will take a while to have a hit on the amount of bitcoins available.  I know it will half the supply of new bitcoins entering the market but they will still already be 9,000,000 of them in circulation.  So I think it will take a good few months to filter through but it might make speculators buy more in the months before therefore increasing the price now.  What I think bitcoin needs is to be used to back local community currency's, in places like Africa for instance were they currently use Mpesa and also for something like BitInstant to really compete with PayPal or Western Union and eventually SWIFT and/or VISA  

[FreeMoney]

The new coins each day are being absorbed by new demand and the price is still for quite some time. Assuming new demand keeps showing up at about the same rate the halving will have a strong effect. The only way I see this not happening is if a lot of current demand is thinking this way. In that case demand would drop around the halving and people thinking like that will start to unload.

But I think it all gets swamped by the demand that's going to show up as people realize that bitcoin is here to stay.

[matthewh3]

The new coins each day are being absorbed by new demand and the price is still for quite some time. Assuming new demand keeps showing up at about the same rate the halving will have a strong effect. The only way I see this not happening is if a lot of current demand is thinking this way. In that case demand would drop around the halving and people thinking like that will start to unload.

But I think it all gets swamped by the demand that's going to show up as people realize that bitcoin is here to stay.

I think the reward drop is a strong incentive to some people to invest more in to bitcoin then they normally would.  Like the long term bitcoin investors as its better to buy more bitcoins while there only $5 then potentially $10.  Although I suspect a lot of the new buying power that is keeping bitcoin at $5 will be speculators looking for a quick profit early next year.  So it may take until after Easter next year for price to settle after the volatility of speculators dumping a lot of bitcoins as soon as bitcoin shows any major flattening of growth after January. 
So to cut it short I think the bitcoin price will become very volatile in the first few months of next year.  As it seems to have been pretty stable over the last twelve weeks and around $5 since the start of the year.     

[matthewh3]

The new coins each day are being absorbed by new demand and the price is still for quite some time. Assuming new demand keeps showing up at about the same rate the halving will have a strong effect. The only way I see this not happening is if a lot of current demand is thinking this way. In that case demand would drop around the halving and people thinking like that will start to unload.

But I think it all gets swamped by the demand that's going to show up as people realize that bitcoin is here to stay.

I think the reward drop is a strong incentive to some people to invest more in to bitcoin then they normally would.  Like the long term bitcoin investors as its better to buy more bitcoins while there only $5 then potentially $10.  Although I suspect a lot of the new buying power that is keeping bitcoin at $5 will be speculators looking for a quick profit early next year.  So it may take until after Easter next year for price to settle after the volatility of speculators dumping a lot of bitcoins as soon as bitcoin shows any major flattening of growth after January. 
So to cut it short I think the bitcoin price will become very volatile in the first few months of next year.  As it seems to have been pretty stable over the last twelve weeks and around $5 since the start of the year.     

I know this isn't the speculation board but I can bitcoin spiking to at least $9 and maybe as high as $14 in the start of next year before settling to $7>$9 and then slowly growing again.  That's just how it looks to me tho.

[asdf]

"Technological Progress Grows Exponentially and Reaches Infinity in Finite Time". This is a contradiction. The exponential curve reaches y=infinity @ x=infinity. So the referenced page fails to define exponential growth.

You can't have "infinite progress in finite time". I agree that this is impossible.

Alright then.
Keep in mind that the site just quotes the book on the subject. So this is an "official" position.

Lets define the singularity as "technology growth reaches the rate of x2 per day.". Do you think that this is impossible?

I can't tell if it is possible.
It also could 12233x per month or 0.12x per second or whatever.

But that's irrelevant hence the above definition of it. What you are proposing is something else, just a point on a slope not a singularity (hence the name (!) )

Well... a few weeks after that point, it will be x2 per second. So, close enough. It's just a trend line, not an exact mathematical exponential function.

I don't think "singularity" is meant to be taken literally. The idea is that growth, at some point, will be so absurdly fast that it will represent an unimaginably profound shift in society/human existence. Think of it in terms of "paradigm shifting events". See this resource to get an impression of this:
http://www.singularity.com/charts/page17.html

All it's really saying is that the next "event" is coming within our lifetime. Considering the exponential nature of technological growth (growth is proportional to size. f(x) = df/dx), it seems pretty inevitable to me.

Sorry for being so off topic.