Topic: Bitcoin trades the inequity of dynastic power for the inequity of early adoption (Read 11076 times)

The Decrits proposal (see sig), among many other fixes for bitcoin's problems, has a section on voting. It was at the very early stages in that document, but I have refined it quite a bit. I think the idea of voting as part of the protocol may be so different that it is shocking to some, but I think it is necessary to avoid the control that the developers would have over the protocol (and perhaps the influence that an exchange, for example, might have over them). Voting power is not determined by held currency or hashpower (though having currency invested is a requirement), but by the people who have provided beneficial and continued service to the network via transferring and validating transactions. Even if there is an Evil Network Takeover (which will take time and lots of money), the network will have the opportunity to split, and the guys on the wrong side will not be allowed to transfer their money to the honest side of the split.

I started a new directory thread so people interested in a stable valued currency can find each other. I'd also like it to serve as an index to all the ideas happening in other threads.

Posting the link here because lots of interested folks have posted in this thread.
https://bitcointalksearch.org/topic/m.1877951

More realistically, assuming there were about 21 trillion bucks around, that would make an IDEAL top of 1M USD per BTC if and only IF Bitcoin replaced the US dollar. But a more correct assumption is to have around hundred of millions of people adopting it in the next few years. That would make average 0.1 BTC per person more realistic than 0.003 that you quote.

It is utopia to assume all 7 billions people in the world would replace EVERY currency in the world with Bitcoins. It is already very optimistic to imagine 100 million people using it. That would put Bitcoin to the level of a national currency. I personally think that it will take hard work to have more than 21 millions people (average 1 Bitcoin each) but is entirely possible in short/medium term.

Bah.. just feel like throwing numbers at a forum.

I don't know fair value

Market value is down but NOT dead

Volumes are up (from mtgox weekly chart) http://wp.me/p3o0fk-1c

In my country IF the Royals still held on to their land and gold, they would be reallllly...reallllly royal.

They could not for a variety of reasons is another story

LOL

If you think the fair value of a Bitcoin is $300k you really have been utterly deranged by avarice.  The hype is dying down, and the Bitcoin market is rapidly running out of 'greater fools'. The fair value of a Bitcoin for most people is zero, because that is the monetary utility it offers them. Whilst the novelty of being able to secure a small number of goods and services with Bitcoin will no doubt sustain the fanatics, it will not maintain the interest of many beyond that group.

This is true but Royal families failed to see the paradigm shift the industrialists create with fractional reserved banking and new forms of wealth ultimately leading them to there demise.  Bitcoin creates a new paradigm shift of equal proportion.  It may even allow for a solutions to the problems Marx's struggled with - reconciling land as property in Adam Smith's free market.

Of all the bitcoins I have ever bought, I have perhaps been "short" maximum 10% of the previous high coincount. So at least in my case, 90% is in cold storage.

Currently bitcoin's value is volatile as the market is trying to figure out whether Bitcoin should replace gold or not. If the answer turns out affirmative, bitcoin's value will roughly stabilize after more and more of the economical activity will be financed through self-liquidating bitcoin-denominated credit, as outlined in Fekete's paper.

(I wonder if Fekete himself realizes that his work will be applied to make Bitcoin the new gold  )

For anyone interested, I think the upper bound for bitcoin's value is therefore the current Gold market cap, about $7,000 billion. So one bitcoin will not be worth more than $300k. Actually the utility of holding bitcoins when that is reached, is about the same as holding gold right now ( = most people think you are a little stupid, no matter how rich you are).

But to get there, the value must increase. Actually we were (in log scale) half there barely a few days ago. With the bitcoin's long term value appreciation of 25%, we can be there sooner than most of us think. Anything over $300k should be regarded as a bubble, even if we are in a "new paradigm", it does not mean everyone will be able to get rich just holding bitcoins, only the early adopters (i.e. every one who buys bitcoins for significantly less than its fair value of $300k).

This is a fascinating read. (As you said) I'm through about half of it so far.

I'm sure the clearinghouse model is used in big business to this day. One of those magic techniques that make real business men smarter than me! :-)

However, I'm struck by how close it is the the Local Exchange Trading System model referenced above. Had no idea its foundations went so far back!

Thanks for the link!



Velocity is awesome. It mitigates the need for large amounts of actual coinage. But that's really the inverse of my question. The gold in Fort Knox hasn't circulated in my lifetime. However, it has appreciated in value along with the high velocity coins and gold directives in circulation.

I'm asking how many bitcoins are in cold storage? (metaphorical Fort Knox) There was a scandal in the 70's were people started to believe Fort Knox gold had been secretly sold and was circulating. I'm wondering the opposite. What if fewer bitcoins are circulating than we presume are. We don't notice because the velocity of the circulating coins is so high.

Compared to world's physical gold storage,
- The actual traded stock of bitcoins is larger
- The bitcoins traded change hands much more often
- Number of bitcoins is increasing at a larger annual rate.

So if you feel velocity is somehow a desirable characteristic for a backbone of a monetary system, at least with bitcoin you get much more of it compared to the current one.

That's a nice derivative. Especially the filtered versions. Obviously people are already trying to figure out when the coins in "cold storage" start to move.

Gold was once a useless yellow metal that wouldn't keep an edge. Just saying.

There's a Bitcoin Days Destroyed graph, but I don't know where to find a Bitcoin Days graph.

This is not a troll. Just really curious.

The premise of this thread is dependent on the inverse of the statistic you give above.
We know exactly how many bitcoins currently exist. Does anyone regularly calculate how many bitcoins DIDN'T trade over any given period of time. I'm sure may of your $1 million coins traded hands multiple times.

Someone crawled the transaction graph a while back and found that a huge number of coins had never traded EVER. They still sat in exactly the same outpoint they were "mined" into. I guess the question is, does anyone graph the total coin age of the system?

They might. I've been gone a while. It's not fool proof. People often move their coins from one personal address/outpoint to another. But it would show what percentage of the coin base is in cold storage.

This argument has gotten repeated on this site since its founding. That doesn't make it logical or correct.

Suppose Satoshi had decreed that their shall forever be only 10,500,000 bitcoins instead of 21,000,000. And instead of deciding to spread the generation over multiple 4 year periods he decreed that all coins would be distributed in the first 4 years. Or in other words, what if the initial distribution of bitcoins was already finished. Everyone in the world had to work with the bitcoins that already exist today.

Now what mathematical law will forever dictate the value of each bitcoin? It's pretty simple and not at all rhetorical. Each bitcoin's value becomes proportional to the total value of external goods/services that humans wish to exchange among themselves using bitcoins to facilitate that exchange.

Current bitcoin owners want to exchange a certain amount of external goods/services among themselves right now. These same people likely have the potential to exchange more external goods/services among themselves. (They could sell each other their cars and houses.) But that group has a finite upper bound. Taking the group of bitcoin owners as a whole, they only own so much stuff. All the upside comes from people who DON'T currently trade their external goods/services using bitcoin.

So say I have 1,000,000 BTC today. That's $100 million today. Say I want to spend $1 million a year. That doesn't mean my BTC will be exhausted after 100 years. The more noobs I convince to use bitcoins the more value my coins have. If the value of BTC goes up exponentially then the number of BTC I have to part with is reduced from linear to logarithmic. In other words, I couldn't spend them all if I wanted too.

That is why with Gold as a currency and land a property Royal families could say Royal for generations.

1 million coins traded over the weekend. How many do you think is enough?! Everybody has their chance to buy, unlike the week before, where every $million invested raised the market cap by more than $10 million. We are in a very healthy consolidation period now, and I see my bids being fulfilled all the way to 82!!

We have had at least 7 flashcrashes taking the price down by 20% or more during the last 7 weeks, sorry I don't have the data it may be last week alone that many. There are lots of opportunities to buy coins, although I am afraid that the rich will get richer, like me, buying coins all the time.

Since the long-term viability of Bitcoin rests in the delicate balance between value appreciation and usage growth, I currently feel that my greatest priority is to distribute coins to new strong hands. If I buy them up, it is not good. I try to net distribute 10x more coins than I buy for me, and that is achieved by having a 10% margin after expenses. I would help with the bitcoin services economy if I could.

Meh, here's the thing about having a lot of bitcoins. If you don't spend them, there's no difference. If you do spend them, you get cool stuff but you also have less bitcoins (and somebody else has more). It's not like the current situation where the rich can position themselves at the output hopper of the printing presses and fill their pockets at will with the proceeds of your savings account.

bitcoins don't magically multiply on their own. You could invest to make more, perhaps but in the process, you have disbursed bitcoins from your stash (and taken a risk).

If you can generate more Bitcoin income than outgoing, however meager, you can save it and know the government can't depreciate your savings at will. That's a damn site better than how things stand at the moment with fiat. I think the people who have allowed that to happen deserve the spoils.

Just to be clear, I consider anyone on this forum today an "Early Adopter". Even if you don't own a single bitcoin yet you have an opportunity that 6 Billion people don't.

This logic only makes sense, right? We are slightly more that 4 years down a timeline that goes to infinity. Because if you consider this "the middle" then bitcoins only has a practical lifespan of 4 more years. If that is the case, why should 6 billion people care?

In fact if you consider the timeline anything shorter that infinite, then the only possibilities are zero or more "next coins". If zero, BTC was a failure. If there is a "next coin" and you grant its "early adopters" the same blessed status..., then isn't it in the best interest of 6 billion people to wait for the next coin?

Xiaoma, I agree completely with everything you've written. But allow me to concentrate on these parts.


That is exactly the conclusion I came to. And philosophically it doesn't seem important which currency is considered primary. But you are correct is only makes sense for a stable value coin to be used as actual currency. If I owe my rent on the 1st of each month, I can't really agree to a 1 year lease priced in volatile coins. Imagine if I agreed to a one year lease priced in bitcoins this past January. WTF!

So if the people who want to use coins to exchange for goods/services have to price and pay in stable coins, what are the volatile coins actually for? They can only be for pure speculation. But speculating on what? It can only be for speculating on how many people want to speculate on volatile coins. But if the only use of volatile coins becomes exchanging for stable coins isn't it fair to call it a (Ponzi, Pyramid, Matrix, Queueing, etc) Scheme?

Not sure I am understanding your concern correctly but I will take a stab at what I though you were questioning. 
I don't think the majority of people think a fixed currency is beneficial, I think the majority like bank interest and seeing their investments appreciate in value, and buy the inflation myth they are fed by politicians and economists.  So I don't see them willingly taking part in Bitcoin.

As for those who see the benefits, the early majority will also see the points raised by the OP.  Reportedly some 6,000,000 Bitcoins had already been mined before they started trading, and over 50% are already mined befor Bitcoin is entering the early majority adoption stage. The benefits of partaking in the Bitcoin Economy translate to a huge amount of wealth that must transfer to the" first" Innovators. 

People use early tech stocks to set a president, but the wealth transfer is many orders of magnitude bigger than those stocks.

Other justifications identify risk and the risks involved are not big relatively speaking, I consider myself among the later innovators or first early adopters and would like to see adoption grow to about 1/5th of the world's population, but it can't because of the distribution of over 50% of coins has already taken place, comming back the the OP.



Capitalist and speculators are still key in distributing the ease in and ease out model; I think the world has more than a couple of thousand capitalists (currently benefiting from Bitcoin) who could help bring crypto currencies to benefit the world.   The current Bitcoin model can't have more than a few thousand at the moment, by contrast we need 100's of thousands if not millions of early adopters to benefit in the early adoption stage in brining this amassing technology to the world. 

When I look at the number of coins in circulation at the exchanges it does look optimistic as it is increasing, the evidence seems to suggest that early coins aren't held by just a few individuals, but without perfect information you can't make perfect predictions.