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Topic: Bitcoin major fail - doesn't allow credit creation (aka deflationary currency) - page 4. (Read 22242 times)

hero member
Activity: 532
Merit: 500
FIAT LIBERTAS RVAT CAELVM
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population.
Well, you are forgetting 17th century southern Europe when Spain imported so much plundered gold from the New World that it caused widespread inflation.
This raises an interesting questions: Is bitcoin (or something like it) the final nail in coffin of nationalism? Once everyone's using the same money... doesn't that largely remove the need for government beyond the local level?
By itself, no.

Yeah, there are other reasons for nation-states more pressing than a unified currency. However, it does severely hamper that nation-state's ability to collect taxes non-voluntarily. So it's not the final nail. But it is a nail.
hero member
Activity: 518
Merit: 500
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population.

Well, you are forgetting 17th century southern Europe when Spain imported so much plundered gold from the New World that it caused widespread inflation.

This raises an interesting questions: Is bitcoin (or something like it) the final nail in coffin of nationalism? Once everyone's using the same money... doesn't that largely remove the need for government beyond the local level?



I would hardly call bitcoin the last nail in the coffin. It is a step in the right direction, but there is plenty of other stuff in the way of peace besides just which money people are using.
legendary
Activity: 1708
Merit: 1010
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population.

Well, you are forgetting 17th century southern Europe when Spain imported so much plundered gold from the New World that it caused widespread inflation.

This raises an interesting questions: Is bitcoin (or something like it) the final nail in coffin of nationalism? Once everyone's using the same money... doesn't that largely remove the need for government beyond the local level?



By itself, no. 
sr. member
Activity: 420
Merit: 250
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population.

Well, you are forgetting 17th century southern Europe when Spain imported so much plundered gold from the New World that it caused widespread inflation.

This raises an interesting questions: Is bitcoin (or something like it) the final nail in coffin of nationalism? Once everyone's using the same money... doesn't that largely remove the need for government beyond the local level?

legendary
Activity: 1372
Merit: 1000
@Richy_T
I think it cuts both ways, if you have good profit (or a monopoly) you are not motivated to innovate, if you have a drive for more you are motivated to innovate, or if you have a treat of less you are motivated to innovate.
legendary
Activity: 2576
Merit: 2267
1RichyTrEwPYjZSeAYxeiFBNnKC9UjC5k

And the gold rush of 1849, which caused an inflationary blip, too. But these things tend to settle out a hell of a lot faster when there's no printing press going full-speed.

It's also self-correcting somewhat. Once the price of gold falls in such a scenario, the incentive to mine/conquer more drops greatly

Correction, -  the incentive to mine more increases (motivation for innovation), but one's ability to mine more is diminished by the decrease in value (without innovation). Ones will to mine the same amount for a lower return is diminished, hence in the absence of innovation, mining more gold is diminished and the self-correcting equilibrium is restored.

You put the cart before the horse. The motivation for innovation is to reduce costs. It tends to create an increase in production which in turn suppresses prices (in a properly competitive system).
legendary
Activity: 1372
Merit: 1000

And the gold rush of 1849, which caused an inflationary blip, too. But these things tend to settle out a hell of a lot faster when there's no printing press going full-speed.

It's also self-correcting somewhat. Once the price of gold falls in such a scenario, the incentive to mine/conquer more drops greatly

Correction, -  the incentive to mine more increases (motivation for innovation), but one's ability to mine more is diminished by the decrease in value (without innovation). Ones will to mine the same amount for a lower return is diminished, hence in the absence of innovation, mining more gold is diminished and the self-correcting equilibrium is restored.
legendary
Activity: 2576
Merit: 2267
1RichyTrEwPYjZSeAYxeiFBNnKC9UjC5k
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population.

Well, you are forgetting 17th century southern Europe when Spain imported so much plundered gold from the New World that it caused widespread inflation.

And the gold rush of 1849, which caused an inflationary blip, too. But these things tend to settle out a hell of a lot faster when there's no printing press going full-speed.

It's also self-correcting somewhat. Once the price of gold falls in such a scenario, the incentive to mine/conquer more drops greatly
hero member
Activity: 532
Merit: 500
FIAT LIBERTAS RVAT CAELVM
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population.

Well, you are forgetting 17th century southern Europe when Spain imported so much plundered gold from the New World that it caused widespread inflation.

And the gold rush of 1849, which caused an inflationary blip, too. But these things tend to settle out a hell of a lot faster when there's no printing press going full-speed.
legendary
Activity: 4522
Merit: 3426
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population.

Well, you are forgetting 17th century southern Europe when Spain imported so much plundered gold from the New World that it caused widespread inflation.
hero member
Activity: 532
Merit: 500
FIAT LIBERTAS RVAT CAELVM
The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks.

Well, not easily, anyway, and when they do, it's easy to spot, or has some significant risks, or both.
newbie
Activity: 27
Merit: 0

So how can Bitcoin have a future if it is a deflationary currency with a set in stone number of coins?

The idea that currencies have to be inflationary in nature to succeed is false. Inflation robs purchasing power from savers and transfers the wealth to those given the power to create money. A tool i consider to be unjust and immoral. The world has used gold as money for thousands of years because its purchasing power cannot be inflated away by governments and banks. Gold is mined at roughly the same pace as the increase in world population. Bitcoin does one better, after the cap is reached, holders on bitcoins would see an increase in purchasing power due to their increasing scarcity.

my 2 bitcents Smiley
donator
Activity: 2772
Merit: 1019
A person's bitcoins are only as secure as the computer system where said coins are stored.  Given the number of stolen coins from individuals and services.  It seems that a bank might be where people start looking to store their bitcoins for them.  They will charge some storage fee and usage fee to use their terminals to make transactions.  It will have to be both physically secure like a bank of today and Internet style secure at the same time.  Such a business would seem really expensive to run though.

Shawn Roll Eyes



I think hardware wallets are a better solution for securing coins against theft (as an example here the thread about slush and sticks one: https://bitcointalksearch.org/topic/m.1317706) and easy to use and also easy to secure against loss.

No need to trust a bank.
sdp
sr. member
Activity: 470
Merit: 281
A person's bitcoins are only as secure as the computer system where said coins are stored.  Given the number of stolen coins from individuals and services.  It seems that a bank might be where people start looking to store their bitcoins for them.  They will charge some storage fee and usage fee to use their terminals to make transactions.  It will have to be both physically secure like a bank of today and Internet style secure at the same time.  Such a business would seem really expensive to run though.

Shawn Roll Eyes

hero member
Activity: 532
Merit: 500
FIAT LIBERTAS RVAT CAELVM
Or at least, give up on the idea that FRB is a good idea.

Plenty of currencies manage to do just terrible without any help from the federal reserve bank. Which is neither a bank nor federal.

All of them are centrally managed fractional reserve benking schemes, though.  No contrary example persists since the Europeans strongarmed the Swiss into dropping their gold standard.

Well put, but I meant "fractional reserve banking", anyway....
legendary
Activity: 1708
Merit: 1010
Or at least, give up on the idea that FRB is a good idea.

Plenty of currencies manage to do just terrible without any help from the federal reserve bank. Which is neither a bank nor federal.

All of them are centrally managed fractional reserve benking schemes, though.  No contrary example persists since the Europeans strongarmed the Swiss into dropping their gold standard.
newbie
Activity: 56
Merit: 0
Or at least, give up on the idea that FRB is a good idea.

Plenty of currencies manage to do just terrible without any help from the federal reserve bank. Which is neither a bank nor federal.
hero member
Activity: 532
Merit: 500
FIAT LIBERTAS RVAT CAELVM
If you give up the idea of fractional reserve lending then a deflationary currency makes perfect sense.
Or at least, give up on the idea that FRB is a good idea.
newbie
Activity: 56
Merit: 0
If you give up the idea of fractional reserve lending then a deflationary currency makes perfect sense.
legendary
Activity: 1264
Merit: 1008
Bitcoin is completely compatible with liberal central bank directed credit creation. The bank just needs to have 51% of hashing power. Then it can charge demurrage and give the demurrage fees to banks to lend out.



Aren't the digital coin-miners already a near-perfect mirror image of central banks? Nearly all of them currently adhere to a gold-like standard called Bitcoin. Instead of printing soft-money as fast as they can, they're all digging for a scarce common resource as fast as they can. There are a few plucky hold-outs -- let's call them the "Axis of Evil" -- who are brazenly trying to subvert the Bitcoin monetary system by making fiats that they will dig for something else instead. Cheesy



Not quite.  If the miners could only get their block of currency by making a loan and waiting for the interest payments, your analogy would be better. 
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