Topic: Bitcoins' Value - page 2. (Read 1382 times)

Thank you for the summary

I don't know about you guys but I'm storing 'em under my bed.

That's my pension fund taken care of ....... 

Exactly. I never understand why people have a problem with people speculating and investing in bitcoin. The only point in investing is to sell some day and realise a profit. Lots of people invest in land and property which are finite resources but they still change hands, people die and people sell up. Do people think that all the bitcoins
will get hoarded away by people that will never sell them and that will be the end of bitcoin??

Why would you own bitcoins if you are never going to sell them? They have no other utility. It doesn't matter what the price of BTC is if you are never going to sell them.

I think Mark Twain said 'Buy land. They're not making it anymore.'
So in 2040 people will be saying the same about bitcoins.
The exchange rates of inflationary and deflationary currencies will always diverge so the value of bit coins relative to inflationary currencies will rise. But the price of bitcoin a relative to something that is finite, such as land, will not necessarily keep rising.

Well, simple - it doesn't *always* go up. It dropped to $55 last week and rose back to ~$135 today. And if you look at the charts the price can fluctuate by 3%+ in a single minute a few times per day. The real world isn't as simple as some economic model you see..

Taking into account human nature isn't that almost bound to happen? There will be a huge disagreement and a splinter group. Could just a few miners decide to strike out on their own and start minting new bitcoins or would it need a certain percentage?

Yes, you are right. Why would I sell my bitcoins, knowing the price will always go up. A market can only exist with a bid-ask side.

That was quite a long time I hadn't heard of asymptotically to zero  . I think I got it: actually it never gets to zero but infinite close to zero. At a certain point, that is 20999999.9769, Miners will just stop mining because the cost of finding will surpass the value of the reward. However, the latter  can be countered as the cost of mining (in USD) will not increase as much as the reward for finding (in Bitcoins), because of the limit restriction Bitcoins can only go up.  

Let's replace 'new bitcoin' with, eg lightcoin. The altcoins are using the same infrastructure as bitcoins (some with minor changes). So, the altcoins are filling in the demand of the community for a 'new bitcoin'?

 

Does anyone see a problem with deflation and massive hoarding after all of them have been printed out?

I believe DannyHamilton answered that in the post above yours.

K.

What happens if the protocol is changed?

For example, the transaction fees could be lowered. Why not accept to release a bit more of money to prevent a excessive deflationism?

Maybe in the future It could be changed.

Actually the most that can be created would be 20999999.97690000

Most people just round up to 21 million when talking about it because it's easier.  Due to some issues early on, there are some bitcoins that were unmined (and now cannot be mined), so the total will actually be less than 20999999.97690000.


That is correct, but the system is designed to require a consensus to make a change.  If every user agrees that more bitcoins should be mined, then more bitcoins will be able to be mined, but convincing every user to agree to such a change is an insurmountable task.

When a miner "solves" a block and includes the mining reward, he broadcasts that block to all the peers he is connected to.  Every peer validates that the block conforms to the protocol rules before they add that block to their blockchain or relay it.  This happens for every peer on the network (both miners and wallet clients).  So if a subset of peers refuse to recognize the increase in block reward that is necessary to mine additional coins, they will simply ignore the block and refuse to add it to their own blockchain or relay it.

If you could get a subset of miners and peers to agree to accept the increased block reward, the blockchain would split.  You'd have one group of users on the "original" bitcoin with a fixed 21 million bitcoins.  They would only accept valid blocks as defined by the original protocol, and would never even see the blocks creates by the other group.  Then you'd have a second group of users on some new blockchain that allowed more than 21 million coins.  They might try to call their network "bitcoin", but there would be a disagreement as to which system was the "true bitcoin".

There would be a lot of confusion as some merchants chose to accept the "new" bitcoin, and some only accepted the "old" bitcoin.  Users would try to make payments not realizing that the merchant they were paying was on the other system.  Eventually after a lot of chaos, at least one of the two systems would likely die off as users migrated toward the one that had the most support.

K.

1) The limit is in place to make coins valuable.
2) The mining reward decreases asymptotically to zero meaning less and less coins are added to the supply approaching the limit of 21 mil total.

Being hardcoded doesn't mean, it cannot be changed. It will only be more difficult as the system needs te be re-engineered. Besides that there are no guarantees, it will never be changed.

There was a time money was linked to gold. The unlinking came only when the system needed more money..

The limit can't be changed, it's hard coded into the software - It will never exceed 21 million.

K.

As widespread currencies, Bitcoins is also dependent on the money supply. The more there are, the less the value will be. I read the system is designed in such order (correct me if I'm wrong) that only 21 million bitcoins can be created.

Let's say it gets so popular that more bitcoins will be generated. This, in fact, will deteriorate one of the core principles and consequently the fiat in the money which could lead to firesales and finally to a run.

Why was there in the first place a limit and what are the guarantees the limit will never be changed? Thanks for helping me to understand..