Topic: Bitcoin major fail - doesn't allow credit creation (aka deflationary currency) - page 13. (Read 22207 times)

Let me try again.

Population growth needs to be matched by production growth just to keep the living standards at the same level. It's simple math: the more people need to be fed, the more farms need to be built or existing farms need to expand production. For farms to expand, they need credit.

A company builds cars and competes in the market with other 10 companies so it needs to continuously improve its cars to stay competitive. To improve the car, the company needs money to set aside for R&D, create new lines of production, upgrade existing lines, etc. To achieve this growth, it needs credit.

We all want Bitcoin to succeed, so ...


 ... so, if the definition of success is not general acceptance or International currency status like USD or EUR then ishtar is right; the whole question has zero relevance.

 

The whole question has zero relevance.

Unless there is a law for a country to ONLY use Bitcoin, Bitcoin will never 100% replace local currencies.

You look at Bitcoin as if it would have a monopoly and be the only currency.

Than your fear would had relevance. Now thats not the case.

People will allways want and need local currencies to keep trade in their area etc and governments will allways want that kind of power. So they will keep demanding taxes to be paid in their currency.

This means, that you will have both kinds of currencies.
So you can have it your way with creditcreation and still own Bitcoins.

What would be the point of Bitcoin if it was like every other currency?
Who would controll the creation of new currency? In a decentralized manner?
How would it be controlled?

There is a very high risc that those two questions would open up Bitcoin to someone to game the system.

Lets imagine you want to trade with someone over a couple of years.

In one currency you have no idea how many units of that currency will be created.

In another currency you know exactly how many units there will be.
This gives you a knowledge of exactly how much of that currency you own and will own in a couple of years.
No matter what.

If noone of you can control this, you will trade on 100% equal terms.

Listen to this:
http://www.youtube.com/watch?v=ltIidNNcVgo

He describes systems with two kinds of currencies one that holds it value and one that dont.

I'm not sure, and I'm probably going to end up demonstrating my own lack of understanding but...

I've always assumed that when bitcoin reaches mainstream use we will find there are "banks" where you can safely deposit your bitcoin into an insured account.  I figure the main driving force behind this is the average persons lack of ability and motivation to learn to protect their bitcoin from accidental loss and theft.  These accounts will likely find a way to collect a small fee based either on the storage of these coins or on the use of these stored coins.

Assuming this ends up happening, transactions between members of an individual bank will no longer require movement of any bitcoin on the blockchain at all.  The bank will simply credit one account in their own database and debit another.  The entire balance stored by the bank will be safely secured offline in addresses owned by the bank itself.  Furthermore, transactions between banks can wait a predetermined amount of time (perhaps daily?) before the banks settle up their accounts.  So if various members of bank-A send 1,000,000 BTC to members of of bank-B, and other members of bank-B send 1,000,001 BTC to members of bank-A, then at the end of the day bank-B sends 1 BTC via the blockchain and everything else is handled internally by the two banks.

Using this system, wouldn't it be possible for those banks to engage in fractional reserve?  Assuming that the members of the bank are willing to allow fractional reserve in exchange for lower account fees, couldn't the banks potentially loan some percentage of their holdings to business for growth?  Wouldn't this be "credit creation" and allow for the "existence" of more that 21 million BTC?

With technological advancements you can do the same with less or you can do better (higher quality) with the same. So it doesn't necessarily mean growth.

Growth was only needed to pay the interest on the money we borrowed. With Bitcoin the economy will start converging to balance instead of growth and that's exactly what we need in the current situation.

Does growth cause "technological evolution" or does technological evolution cause growth? Is growing a business always the best way to make it more efficient? Should government policies act to prevent possibly undesirable population growth or should they encourage it? I dunno that whole post is filled with correlation not equal to causation and other fallacies. I'm not sure you have thought these positions through.

People want many various things to varying degrees, it is all very complicated. A good way to get those things is from other people. A good way to do that is with an intermediary 'counter' that is durable, easy to transfer, easy to identify. Bitcoin totally fits, unless it turns out that one of the main things most people want is to see a bigger number and not more or better stuff and experiences.

Not stupid but it opens another can of worms. So, let's assume growth is a bad thing. Can you separate Growth from Technological evolution? Don't think so. So are we saying that growing a business and making it more efficient is bad? Invention and new products is bad?

Ok, let's look at it from another perspective. Do you want your kids to live better? Also, should all countries on Earth have the 2 kids maximum policy? So that the population on Earth stays the same, so that we don't need extra goods or resources, so that companies just produce the same amount of goods and services, so that there shouldn't be a need for growing and new jobs. With no growth in production and yet a growing number of people that require resources and jobs, we'll end up with social unrest, right?

True, however what I meant was that it's entirely possible to have a billion-bitcoin economy. Even 1 billion bitcoins worth of economic activity on a daily basis.

Maybe the invention of "credit" is a bad thing?

OP I am wondering why you think this is a stupid or uninteresting perspective since you seem to have skipped over it.

I think the fact that Bitcoins are currently actually made up of 100 million Satoshi's  each should be part of the basic introduction to this way of transacting. That means that there are potentially 2100 trillion currency units available. And you can always add more decimal places...

If you want credit, YOU have to create something (a good promisse to pay back), not the issuer.

Lol.

Now seriously, can we not turn almost every thread here on mockery?

Oh snap, we overlooked this major fail. Wrap it up guys.

Yeah, I know. Don't we all hate when noobs just go out and create new topics on existing info?

I found a couple of threads (i.e. the deflationary one right here, in this section) but they were only "side talking" about the credit option needed or not. And this forum is huge, with a lots of topics that have for example deflationary as the searched keyword in them. I can't possible read them all. Sorry. I had to take a shot at creating a new one laser targeted on what I strongly feel is a drawback of Bitcoin.

If you already found/bookmarked topics that talk about the same thing, do share. Thanks.

Is it too much to ask for people who think they've discovered a major, obvious flaw in Bitcoin to maybe search the forum and see if there aren't already a billion threads discussing this very thing?

Maybe, just maybe, you aren't the only person bright enough to come up with the same question.

Indeed, fractional-reserve bankster paper did seem to make sense 100+ years ago on the basis that gold was (is) heavy and awkward to move around. Today, however, paper is not easier to shift than BTC so that logic largely no longer applies. Nonetheless, theoretically there is no reason why people couldn't agree to trade BTC promissory notes if they really wanted to.

Growth isn't necessarily always a good thing... look at everyone complaining about global warming, etc. If the company really is a good investment they will find investors.

Wouldn't having a fixed amount pretty much prevent that? It's not like I can give you some BTCs if I don't actually have them in my wallet.dat file.

Or you're talking about the creation of some paper IOUs that have BTC value? Err, isn't that creating a new currency then? Let's call it USD It's like going back to the flawed system that we have now.

There is nothing preventing fractional reserve banking and credit, based on Bitcoin, just as in the past it was done, based on gold.