Bitcoin is a Zero-Sum Game - Long-term interest bearing instruments viable? - page 11.

Adrian-x

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Quote from: SgtSpike on September 18, 2012, 05:54:42 PM

... As the deflationary rate increases, the number of potentially good investments decreases, and the number of investments made decreases as a result.

Correct, once the economy has reached it's optimal size, only new innovation causes price deflation (or economic growth) the effect you describe ensures the economy scales appropriately to prevent boom bust bubbles.

justusranvier

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What people who are worried deflation really want is passive income. The idea that they will have to work to earn all the value themselves just doesn't compute.

dissipate

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Quote from: SgtSpike on September 18, 2012, 05:54:42 PM

But every business investment is a risk. No business investment can be truly guaranteed - only treasury bonds hold that status, and who knows how much longer that will be.

Bitcoins in the pocket, however, are risk free, as long as you can keep them safe.

My point is, there WILL BE less investment whenever purchasing power is increasing, however you look at it. Even when looking at higher-yield investments, the potential earnings of those investments would have to be discounted by 3% (or whatever the deflationary rate is), then reevaluated vs the potential risk. An investment with a potential to default of 50%, but potential earnings of 53% might be a good investment in inflationary USD, but a bad investment in deflationary BTC. As the deflationary rate increases, the number of potentially good investments decreases, and the number of investments made decreases as a result.

It depends on what you call an 'investment'. In a deflationary economy with a fixed money supply, you are making an investment even if you are just saving your coins. Why? Because you are just investing in the general economy! Whatever you produced to earn the coins is out there creating more gains in the economy and you earn interest on that. So by saving you are just saying you want to make the average return. Many people might go for the average return, but many would want more than that, so they would invest in individual companies.

SgtSpike

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Quote from: dissipate on September 18, 2012, 05:45:36 PM

Quote from: SgtSpike on September 18, 2012, 04:57:38 PM

Quote from: dissipate on September 18, 2012, 04:42:02 PM

Quote from: SgtSpike on September 18, 2012, 02:59:01 PM

Quote from: Melbustus on September 18, 2012, 02:35:14 PM

Quote from: SgtSpike on September 18, 2012, 02:04:02 PM

Interesting argument, I'll have to take that into consideration. I'm no economist by any means, but it just makes sense to me that the optimal economy would be one in which the money supply does not affect the decision to spend or save (or take on debt).

But would an economy in which the money supply dynamics are fully defined and well known with perfect information for all participants affect someone's willingness to invest negatively? Wouldn't the known money supply dynamic just become the backdrop on which people still evaluate whether they can put capital and labor together to yield more than the sum of those costs?

Sure, savings would grow purchasing power over time, but investing would bring in profits that also grow purchasing power over time... Doesn't this even out?

It seems to me that the key is perfect money supply information. People are exceptionally conditioned to a generally inflating (at variable rates) money supply right now, so if we get brief periods of deflation (or deflation expectations), of course people hoard because they know the supply is just going to inflate again soon. But again, if the supply dynamics are perfectly well known to everyone, it should just come back to sound business decisions without any of the macro-forecasting shenanigans that pervert investment incentives.

Bitcoin is the first feasible monetary system ever proposed that credibly offers perfect information to all participants. That changes (purifies) the calculus quite a bit.

Let's continue with the maths then.

Say I am looking at a potential investment in a company that has a 95% chance of succeeding, and if it does succeed, it'll grow my investment at an average rate of 7% per year, but if it doesn't succeed, then I lose everything. I might value that investment as a potential 2% growth on my money.

Now, say that I know that prices are dropping at a rate of 3% per year (purchasing price increasing, due to deflation in the monetary supply).

Why would I invest in said business with my money to make 2% per year, when I could just keep the money in my pocket and make a certain 3% per year?

I can know everything about the specifics of the money supply, but that wouldn't change the fact that 3% > 2%, and thus saving instead of investing is the wiser business decision.

The question I cannot answer is whether the expected 7% return would have been greater in the inflationary economy vs in the deflationary economy. If that is the case, then perhaps my argument would be nullified.

HuH? A business making 2% a year is fine, because that would be 2% a year in a currency that is appreciating in value 3% a year. I invest 100 BTC and I make 2 BTC the first year. Let's say the interest doesn't compound so I make 2 BTC again the next year. That 2 BTC will be worth 3% more than the 2 BTC I made the year before. I don't see the problem.

That's only true if the company itself is also growing its productivity at a rate of 3%/year.

For example, assume the company sells 10,000 widgets in year 1 at 1 BTC each, thus generating 10,000 BTC in revenues, and assume my payout of that is 2 BTC. The next year, assume that the same company sells the same 10,000 widgets in year 2, but this time, because the purchasing power of BTC went up, buyers are only willing to pay 0.97 BTC per widget (i.e., 3% less than they did the year before, due to the 3% rise in purchasing power). Now, the company only generates 9,700 BTC in revenues, and my payout is reduced to 1.94 BTC.

If the company sold 10,300 widgets (an increase of 3%), then they could "keep up" with the deflation and still meet the requisite 10,000 BTC in revenues.

Of course, this is a very simplistic example with many factors left out, but it should give you an idea of what I mean...

I see what you are saying. In reality, however, only investments that were 'guaranteed' and paid out less than 3% would go out of business. Any business that could potentially reap returns above the 3% savings rate would still get investment, even if in some years it didn't have a 3% return. The reason of course is because of lack of information. Who knows which businesses will have above average returns and which ones will have below average returns?

But every business investment is a risk. No business investment can be truly guaranteed - only treasury bonds hold that status, and who knows how much longer that will be.

Bitcoins in the pocket, however, are risk free, as long as you can keep them safe.

My point is, there WILL BE less investment whenever purchasing power is increasing, however you look at it. Even when looking at higher-yield investments, the potential earnings of those investments would have to be discounted by 3% (or whatever the deflationary rate is), then reevaluated vs the potential risk. An investment with a potential to default of 50%, but potential earnings of 53% might be a good investment in inflationary USD, but a bad investment in deflationary BTC. As the deflationary rate increases, the number of potentially good investments decreases, and the number of investments made decreases as a result.

dissipate

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Activity: 288

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Quote from: ffe on September 18, 2012, 05:42:08 PM

Quote from: evoorhees on September 18, 2012, 04:29:44 PM

You are ignoring all the work that man did to acquire those coins. You're looking only at a slice of time and saying he is being a bad economic participant. Plug time into the equation, and you discover the benefit he created happened in the past, and that must be factored into your equation of whether he is "useless". His holding of 100,000 BTC represents the amount of production he provided to the world in the days prior. You should thank him, not scorn him.

And indeed, if he starts spending it, it will drive up prices, making goods more scarce and more difficult (costly) for others to acquire.

So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that. Many people could learn a lesson from his life.

Owning a fixed fraction of all coins -> his "reward" for the production he provided in the past will continue to grow as the economy grows. I guess here is where I differ in valuing what he did in the past. I think if he produced 10,000 pairs of shoes for those 100,000 coins, then, if he holds them for 10 years, he should only be able to buy 10,000 shoes with them.

You feel that if the economy grows, then in 10 years he should be able to buy 20,000 shoes - even though he never contributed an iota to the growth over the last 10 years.

He did contribute to the growth over the last 10 years though, by not pulling goods and services out of the economy. He earns a general interest rate of return. All those shoes he produced are in the economy, creating even more growth. Hence, by not spending his coins he is investing in the general economy.

dissipate

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Activity: 288

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Quote from: SgtSpike on September 18, 2012, 04:57:38 PM

Quote from: dissipate on September 18, 2012, 04:42:02 PM

Quote from: SgtSpike on September 18, 2012, 02:59:01 PM

Quote from: Melbustus on September 18, 2012, 02:35:14 PM

Quote from: SgtSpike on September 18, 2012, 02:04:02 PM

Interesting argument, I'll have to take that into consideration. I'm no economist by any means, but it just makes sense to me that the optimal economy would be one in which the money supply does not affect the decision to spend or save (or take on debt).

But would an economy in which the money supply dynamics are fully defined and well known with perfect information for all participants affect someone's willingness to invest negatively? Wouldn't the known money supply dynamic just become the backdrop on which people still evaluate whether they can put capital and labor together to yield more than the sum of those costs?

Sure, savings would grow purchasing power over time, but investing would bring in profits that also grow purchasing power over time... Doesn't this even out?

It seems to me that the key is perfect money supply information. People are exceptionally conditioned to a generally inflating (at variable rates) money supply right now, so if we get brief periods of deflation (or deflation expectations), of course people hoard because they know the supply is just going to inflate again soon. But again, if the supply dynamics are perfectly well known to everyone, it should just come back to sound business decisions without any of the macro-forecasting shenanigans that pervert investment incentives.

Bitcoin is the first feasible monetary system ever proposed that credibly offers perfect information to all participants. That changes (purifies) the calculus quite a bit.

Let's continue with the maths then.

Say I am looking at a potential investment in a company that has a 95% chance of succeeding, and if it does succeed, it'll grow my investment at an average rate of 7% per year, but if it doesn't succeed, then I lose everything. I might value that investment as a potential 2% growth on my money.

Now, say that I know that prices are dropping at a rate of 3% per year (purchasing price increasing, due to deflation in the monetary supply).

Why would I invest in said business with my money to make 2% per year, when I could just keep the money in my pocket and make a certain 3% per year?

I can know everything about the specifics of the money supply, but that wouldn't change the fact that 3% > 2%, and thus saving instead of investing is the wiser business decision.

The question I cannot answer is whether the expected 7% return would have been greater in the inflationary economy vs in the deflationary economy. If that is the case, then perhaps my argument would be nullified.

HuH? A business making 2% a year is fine, because that would be 2% a year in a currency that is appreciating in value 3% a year. I invest 100 BTC and I make 2 BTC the first year. Let's say the interest doesn't compound so I make 2 BTC again the next year. That 2 BTC will be worth 3% more than the 2 BTC I made the year before. I don't see the problem.

That's only true if the company itself is also growing its productivity at a rate of 3%/year.

For example, assume the company sells 10,000 widgets in year 1 at 1 BTC each, thus generating 10,000 BTC in revenues, and assume my payout of that is 2 BTC. The next year, assume that the same company sells the same 10,000 widgets in year 2, but this time, because the purchasing power of BTC went up, buyers are only willing to pay 0.97 BTC per widget (i.e., 3% less than they did the year before, due to the 3% rise in purchasing power). Now, the company only generates 9,700 BTC in revenues, and my payout is reduced to 1.94 BTC.

If the company sold 10,300 widgets (an increase of 3%), then they could "keep up" with the deflation and still meet the requisite 10,000 BTC in revenues.

Of course, this is a very simplistic example with many factors left out, but it should give you an idea of what I mean...

I see what you are saying. In reality, however, only investments that were 'guaranteed' and paid out less than 3% would go out of business. Any business that could potentially reap returns above the 3% savings rate would still get investment, even if in some years it didn't have a 3% return. The reason of course is because of lack of information. Who knows which businesses will have above average returns and which ones will have below average returns?

ffe

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Quote from: evoorhees on September 18, 2012, 04:29:44 PM

You are ignoring all the work that man did to acquire those coins. You're looking only at a slice of time and saying he is being a bad economic participant. Plug time into the equation, and you discover the benefit he created happened in the past, and that must be factored into your equation of whether he is "useless". His holding of 100,000 BTC represents the amount of production he provided to the world in the days prior. You should thank him, not scorn him.

And indeed, if he starts spending it, it will drive up prices, making goods more scarce and more difficult (costly) for others to acquire.

So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that. Many people could learn a lesson from his life.

Owning a fixed fraction of all coins -> his "reward" for the production he provided in the past will continue to grow as the economy grows. I guess here is where I differ in valuing what he did in the past. I think if he produced 10,000 pairs of shoes for those 100,000 coins, then, if he holds them for 10 years, he should only be able to buy 10,000 shoes with them.

You feel that if the economy grows, then in 10 years he should be able to buy 20,000 shoes - even though he never contributed an iota to the growth over the last 10 years.

Adrian-x

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Quote from: evoorhees on September 18, 2012, 01:54:33 PM

...
If you believe that wealth and prosperity result from consumption, you will hate Bitcoin. If, on the other hand, you believe that wealth and prosperity result from production, you will love Bitcoin.

Many will argue, "but you can't have production without consumption" and this is nonsense. I can go produce things without there being a buyer. Yet, I cannot consume things without there being a seller. Consumption is the effect - the result of - production, though unfortunately we live in a world in which people have come to believe the opposite.

@evoorhees
Is it paradoxical that the value of the Bitcoin economy is created by the consumption of Bitcoins?

Dalkore

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Mining since 2010 & Hosting since 2012

Quote from: evoorhees on September 18, 2012, 04:24:14 PM

Quote from: Dalkore on September 18, 2012, 02:43:47 PM

Quote from: evoorhees on September 18, 2012, 02:40:02 PM

Quote from: Dalkore on September 18, 2012, 02:24:58 PM

Over time if someone is getting interest "rent", it has to come from somewhere and as evoorhees correctly said, Bitcoin is a limit asset.

In a properly functioning market, interest comes from future profits, and that's healthy. The fact that there is a limit to the number of bitcoins doesn't mean this dynamic doesn't work.

1) I loan you 10 btc for your business. Terms are you pay back 11 btc in a year.
2) You start your business, and earn back enough to pay the loan.
3) You pay the loan off, and all is well.

There is no requirement for the money supply to be perpetually increasing for this to work.

Yes and where did these profits come from? (agreeing with you). The extra 1 BTC you earned by getting my to see value in your service and price.

You forget the element of time. Imagine I owe a debt of 100 bitcoins, but there are only 50 bitcoins in the whole world. Can I pay off that debt? Yes. I just have to produce, earn bitcoins, and pay off over time. Each single coin can pay off n amount of coin debt over time. Money moves around, it circulates.

This is true. The other factor to keep in our thoughts the that Bitcoins are similar to gold in this regard, they are both wealth reserve assets. Bitcoins being even more so because you can find more gold in the ground but not more BTC.

This makes it well suited as a stateless savings vehicle which lends itself to more saving (hoarding) that you would see other instruments like currencies which have inflation baked in so you need to put the money to work or have its value eroded over time.

Adrian-x

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Quote from: SgtSpike on September 18, 2012, 04:57:38 PM

....Of course, this is a very simplistic example with many factors left out, but it should give you an idea of what I mean...

Yes you are correct, but keep in mind there will be no deflation if there is no increase in production. so it looks like a Zero-Sum Game - investment is still only viable if there is inflation - a shrinking in the economy.

SgtSpike

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Activity: 1400

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Quote from: dissipate on September 18, 2012, 04:42:02 PM

Quote from: SgtSpike on September 18, 2012, 02:59:01 PM

Quote from: Melbustus on September 18, 2012, 02:35:14 PM

Quote from: SgtSpike on September 18, 2012, 02:04:02 PM

Interesting argument, I'll have to take that into consideration. I'm no economist by any means, but it just makes sense to me that the optimal economy would be one in which the money supply does not affect the decision to spend or save (or take on debt).

But would an economy in which the money supply dynamics are fully defined and well known with perfect information for all participants affect someone's willingness to invest negatively? Wouldn't the known money supply dynamic just become the backdrop on which people still evaluate whether they can put capital and labor together to yield more than the sum of those costs?

Sure, savings would grow purchasing power over time, but investing would bring in profits that also grow purchasing power over time... Doesn't this even out?

It seems to me that the key is perfect money supply information. People are exceptionally conditioned to a generally inflating (at variable rates) money supply right now, so if we get brief periods of deflation (or deflation expectations), of course people hoard because they know the supply is just going to inflate again soon. But again, if the supply dynamics are perfectly well known to everyone, it should just come back to sound business decisions without any of the macro-forecasting shenanigans that pervert investment incentives.

Bitcoin is the first feasible monetary system ever proposed that credibly offers perfect information to all participants. That changes (purifies) the calculus quite a bit.

Let's continue with the maths then.

Say I am looking at a potential investment in a company that has a 95% chance of succeeding, and if it does succeed, it'll grow my investment at an average rate of 7% per year, but if it doesn't succeed, then I lose everything. I might value that investment as a potential 2% growth on my money.

Now, say that I know that prices are dropping at a rate of 3% per year (purchasing price increasing, due to deflation in the monetary supply).

Why would I invest in said business with my money to make 2% per year, when I could just keep the money in my pocket and make a certain 3% per year?

I can know everything about the specifics of the money supply, but that wouldn't change the fact that 3% > 2%, and thus saving instead of investing is the wiser business decision.

The question I cannot answer is whether the expected 7% return would have been greater in the inflationary economy vs in the deflationary economy. If that is the case, then perhaps my argument would be nullified.

HuH? A business making 2% a year is fine, because that would be 2% a year in a currency that is appreciating in value 3% a year. I invest 100 BTC and I make 2 BTC the first year. Let's say the interest doesn't compound so I make 2 BTC again the next year. That 2 BTC will be worth 3% more than the 2 BTC I made the year before. I don't see the problem.

That's only true if the company itself is also growing its productivity at a rate of 3%/year.

For example, assume the company sells 10,000 widgets in year 1 at 1 BTC each, thus generating 10,000 BTC in revenues, and assume my payout of that is 2 BTC. The next year, assume that the same company sells the same 10,000 widgets in year 2, but this time, because the purchasing power of BTC went up, buyers are only willing to pay 0.97 BTC per widget (i.e., 3% less than they did the year before, due to the 3% rise in purchasing power). Now, the company only generates 9,700 BTC in revenues, and my payout is reduced to 1.94 BTC.

If the company sold 10,300 widgets (an increase of 3%), then they could "keep up" with the deflation and still meet the requisite 10,000 BTC in revenues.

Of course, this is a very simplistic example with many factors left out, but it should give you an idea of what I mean...

Adrian-x

legendary

Activity: 1372

Merit: 1000

Quote from: justusranvier on September 18, 2012, 04:42:26 PM

Quote from: evoorhees on September 18, 2012, 04:29:44 PM

So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that. Many people could learn a lesson from his life.

The people who oppose savings will never respect that man, because they want to dictate who benefits from his deferred consumption instead of letting him decide based on who he freely chooses to trade with.

If he dies with his brain wallet, benefit goes to everyone.

justusranvier

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Activity: 1400

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Quote from: evoorhees on September 18, 2012, 04:29:44 PM

So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that. Many people could learn a lesson from his life.

The people who oppose savings will never respect that man, because they want to dictate who benefits from his deferred consumption instead of letting him decide based on who he freely chooses to trade with.

dissipate

sr. member

Activity: 288

Merit: 251

Quote from: SgtSpike on September 18, 2012, 02:59:01 PM

Quote from: Melbustus on September 18, 2012, 02:35:14 PM

Quote from: SgtSpike on September 18, 2012, 02:04:02 PM

Interesting argument, I'll have to take that into consideration. I'm no economist by any means, but it just makes sense to me that the optimal economy would be one in which the money supply does not affect the decision to spend or save (or take on debt).

But would an economy in which the money supply dynamics are fully defined and well known with perfect information for all participants affect someone's willingness to invest negatively? Wouldn't the known money supply dynamic just become the backdrop on which people still evaluate whether they can put capital and labor together to yield more than the sum of those costs?

Sure, savings would grow purchasing power over time, but investing would bring in profits that also grow purchasing power over time... Doesn't this even out?

It seems to me that the key is perfect money supply information. People are exceptionally conditioned to a generally inflating (at variable rates) money supply right now, so if we get brief periods of deflation (or deflation expectations), of course people hoard because they know the supply is just going to inflate again soon. But again, if the supply dynamics are perfectly well known to everyone, it should just come back to sound business decisions without any of the macro-forecasting shenanigans that pervert investment incentives.

Bitcoin is the first feasible monetary system ever proposed that credibly offers perfect information to all participants. That changes (purifies) the calculus quite a bit.

Let's continue with the maths then.

Say I am looking at a potential investment in a company that has a 95% chance of succeeding, and if it does succeed, it'll grow my investment at an average rate of 7% per year, but if it doesn't succeed, then I lose everything. I might value that investment as a potential 2% growth on my money.

Now, say that I know that prices are dropping at a rate of 3% per year (purchasing price increasing, due to deflation in the monetary supply).

Why would I invest in said business with my money to make 2% per year, when I could just keep the money in my pocket and make a certain 3% per year?

I can know everything about the specifics of the money supply, but that wouldn't change the fact that 3% > 2%, and thus saving instead of investing is the wiser business decision.

The question I cannot answer is whether the expected 7% return would have been greater in the inflationary economy vs in the deflationary economy. If that is the case, then perhaps my argument would be nullified.

HuH? A business making 2% a year is fine, because that would be 2% a year in a currency that is appreciating in value 3% a year. I invest 100 BTC and I make 2 BTC the first year. Let's say the interest doesn't compound so I make 2 BTC again the next year. That 2 BTC will be worth 3% more than the 2 BTC I made the year before. I don't see the problem.

Adrian-x

legendary

Activity: 1372

Merit: 1000

Quote from: evoorhees on September 18, 2012, 04:29:44 PM

So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that...

+1

dissipate

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Activity: 288

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Quote from: 2_Thumbs_Up on September 18, 2012, 03:09:12 PM

By the way, there is one kind of inflation that is harmless according austrian theory that could eliminate all price deflation. That would be a completely even distribution of the newly created money. We could let the money supply double at the end of every year, as long as the newly created money is distributed proportionally according to how much money you currently have (the value of each bitcoin adress is simply doubled). All this would cause is that prices would instantly double as well (and lending contracts would start compensate for this). No one would lose or gain any purchasing power.

In fact, someone could even create an inflationary bitcoin client without even forking the block chain. Just change the unit of representation in the UI at the end of each year, without changing the underlying code. So at the 1 of January every year, everyone's balance doubles. Thinking about it, this would actually be a really good idea to shut the inflationists up. Just give them their inflation client, where they can pick their own rate of inflation.

That is the same as moving the decimal place. That does absolutely nothing except for perhaps arcane psychological effects.

evoorhees

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Democracy is the original 51% attack

Quote from: ffe on September 18, 2012, 03:33:11 PM

But there is a requirement that the money not be worth a lot more in the future. "Terms are you pay back 11 btc in a year." would never be acceptable to a borrower if bitcoin is increasing 20% a year in value. The borrower would have to make a 30% return just to break even.

If a mutually-agreed interest rate cannot be determined, then a loan will not happen. That's okay. Debt is not a prerequisite for growth and development (sometimes it can help, when used wisely, but it is not a prerequisite).

Quote from: ffe on September 18, 2012, 03:33:11 PM

There are few things more useless to the economy than a man hoarding 100,000 bitcoins.

You are ignoring all the work that man did to acquire those coins. You're looking only at a slice of time and saying he is being a bad economic participant. Plug time into the equation, and you discover the benefit he created happened in the past, and that must be factored into your equation of whether he is "useless". His holding of 100,000 BTC represents the amount of production he provided to the world in the days prior. You should thank him, not scorn him.

And indeed, if he starts spending it, it will drive up prices, making goods more scarce and more difficult (costly) for others to acquire.

So in fact, rather than being "useless to the economy," the thrifty, productive saver will go to his grave having produced more for humanity than he consumed, and he should be respected for that. Many people could learn a lesson from his life.

evoorhees

legendary

Activity: 1008

Merit: 1023

Democracy is the original 51% attack

Quote from: Dalkore on September 18, 2012, 02:43:47 PM

Quote from: evoorhees on September 18, 2012, 02:40:02 PM

Quote from: Dalkore on September 18, 2012, 02:24:58 PM

Over time if someone is getting interest "rent", it has to come from somewhere and as evoorhees correctly said, Bitcoin is a limit asset.

In a properly functioning market, interest comes from future profits, and that's healthy. The fact that there is a limit to the number of bitcoins doesn't mean this dynamic doesn't work.

1) I loan you 10 btc for your business. Terms are you pay back 11 btc in a year.
2) You start your business, and earn back enough to pay the loan.
3) You pay the loan off, and all is well.

There is no requirement for the money supply to be perpetually increasing for this to work.

Yes and where did these profits come from? (agreeing with you). The extra 1 BTC you earned by getting my to see value in your service and price.

You forget the element of time. Imagine I owe a debt of 100 bitcoins, but there are only 50 bitcoins in the whole world. Can I pay off that debt? Yes. I just have to produce, earn bitcoins, and pay off over time. Each single coin can pay off n amount of coin debt over time. Money moves around, it circulates.

Adrian-x

legendary

Activity: 1372

Merit: 1000

@ Dalkore
To date the only investments I have see value in, in the Bitcoin economy, are a mining investment.
And even then the rate of return is dismal compared to investing in GPU's for an old PC and running it yourself.

Keep in mind the money supply is not yet fixed so even though there is money inflation, the economy is growing so there is price deflation (meaning Bitcoin increasing in value)

Dalkore

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Mining since 2010 & Hosting since 2012

I am glad to read all these responses. With this information, it will allow us to analysis business propositions in a more astute manner. People who are trying to offer gains in only Bitcoins on an ongoing basis that are not based on another currency to fix the value should be scrutinized much harder for the fact we are dealing in a fixed asset.

Topic: Bitcoin is a Zero-Sum Game - Long-term interest bearing instruments viable? - page 11. (Read 14626 times)