Topic: Block Reward changing to 25 BTC in November-December 2012 - page 3. (Read 14834 times)

Hmm. The problem is that at the moment, Bitcoin's exchange rate is highly variable. Nobody can actually tell whether the money supply is growing faster or slower than the economy. If they did, you wouldn't have arguments on this very board about what the "fundamental" value of 1BTC is.

In real-world economies, you don't normally see that kind of volatility. I suspect that this has to do with a combination of (1) real-world economies' sizes being easier to determine, thanks to taxes and import/export laws and so forth, and (2) the immaturity of the economy making it harder to derive a "fundamental" BTC price from the market price (the significant percentage of Mt. Gox volume coming from Bitcoinica speaks to the degree to which speculation is ruling the exchanges right now).

But the upshot is that whether or not people would choose to save instead of spend if they know their money will appreciate, they can't know that in Bitcoin today. Their money may or may not appreciate on the short-term scale. Maybe tomorrow the price of Bitcoin goes up to $10! Maybe it goes back down to $3! There's no confidence in Bitcoin prices except in those people who "believe it will succeed", who are looking 10 years down the line (too far for Keynesian theories of hoarding to apply, whether or not Keynesian economics accurately describes reality). So the current economic growth doesn't really work as a counterexample when talking about how the Bitcoin economy will behave when it "matures".

It'd be better to talk about the examples of emerging economies in the real world. But I'm not familiar enough with the topic to provide good examples there.

There you go again..  


SAYS WHO?! HOW DO YOU KNOW ALL THIS?! FKING STOP SPREADING BS WITHOUT EVIDENCE. Did you know that there's an entire economic school of thought out there that completely DISAGREES with every single word you just wrote there? Stop making bogus statements and start supporting them with evidence and proof otherwise please, just STFU.


You know people, according to SgtSpike savings are BAD! So you better not save, you better not think of using money that has properties which will cause it to appreciate cause you're going to destroy the economy. Unless of course you're saving in a depreciating currency, then by all means, save away!

What utter nonsense.

I'm sorry but seeing how it is you who is making these wild claims about how currencies work and what kind of currency Bitcoin is and how it's all going to work out or not, the burden of proof for all these wild claims lies solely with you. I don't have to prove a damn thing. I'm perfectly comfortable pointing out that you're merely making statements without any evidence pretending as if you're teaching us some sort of facts of reality.

Yeah, I agree.  Perhaps I extrapolated too far on that statement.  I was thinking along the lines of a deflationary currency causing lower demand, companies producing fewer goods in response to that lowered demand, companies having poorer economies of scale, and thus, having to charge higher prices for the same goods.  But you're right, you also have the effect of lower demand lowering prices, just from a supply/demand curve standpoint.  And that effect is probably greater than the effect of lowered economies of scale.

The Bitcoin economy has thus far been hyperinflationary by a money supply perspective.

In game theory, one defines utility as the value of an asset such that two assets worth the same as one have the sum of utility same as the utility of the one. Under this simplified definition, money has current utility equal to the greatest utility that can be purchased with it. If deflationary economies are common, this does encourage postponing postponable spends.

Economically, a reduced demand leads not to higher prices but to lower ones. This pseudo-deflationary-spiral (or QDS, as I like to refer to it as) increases the purchasing power of currency.

The Bitcoin economy is laughable.  It has zero correlation with the real world economy.  The Bitcoin economy will show growth or shrinkage according to whether more or fewer people use it - it has nothing to do with GDP or monetary velocity, etc.  The real effects of a deflationary money supply (which Bitcoin isn't yet, since new coins are still being generated) wouldn't be seen unless Bitcoin saw massive adoption.

I am not "spouting BS I merely heard being spouted by some other human being."  Seriously, if you don't agree with my ideas, that's fine.  But don't say that I am spouting off what I heard from someone else, when I am not.  Don't say that I am not critically thinking, when I am critically thinking.  Don't say I lack respect for the scientific method, when I do have respect for the scientific method.

If you want to refute what I say, then refute it.  But don't say I am wrong just because you think I am wrong, without any sort of logic or evidence to back it up.


Matters with regards to economics.  If you have too much saving in an economy, you stifle economic growth.  And a deflationary currency encourages too much saving.  If you want to have a national economy with very little investment in new ideas because of lack of incentive to make investments, then that's fine.  All I am saying is, compared to the economy we have today (which is actually over-invested because of inflation), we would see far less innovation and progress if a deflationary currency was used.

Matters to who? You?

In case you're interest, to me it's irrelevant. What actually really matters to me is that my purchasing power isn't being stolen by some third party counterfeiting the currency.

You are right this definitely is a simple and also fallacious logic. The Bitcoin economy has so far shown the complete opposite of your simple logic!


I get furious with people who just spout BS they merely heard being spouted by some other human being having zero evidence and facts to back it up. And it's this kind of irresponsible lack of critical thinking and lack of respect for the scientific method that has the whole world convinced of soo many ridiculous beliefs such as religions, statism and the con that is fiat money and central/fractional reserve banking.

Yeah, that's true...


But, you forget about lost coins and GDP, which will make Bitcoin deflationary.  Technically, it is not inflationary or deflationary, but when you account for lost coins, as well as GDP growth, it will end up acting like a deflationary currency.


It's simple logic.  Why would I spend money today if it'll be worth twice as much tomorrow?  I'll hold out and spend money only when absolutely necessary, and so will most other people.  This would lead to economic restriction, lack of consumer spending, and ultimately, higher prices on your everyday goods.  We'd end up spending the same money on fewer goods, effectively lowering the purchasing power of our currency.

Also, leave the personal insults out.  It reflects poorly on your character, and doesn't really compel me to respond to your inquiries.

Great post by miscreanity. You are a valuable asset to this community.

I strongly agree! That lecture is one of the most important arithmetic lesson one could possibly learn from, especially when you daily hear our overlord saying their target inflation is 2% annually.

I discovered this guy watching this video :
http://www.albartlett.org/presentations/arithmetic_population_energy_video1.html

It is a MUST watch !

Outstanding post, sir!

CPU->GPU->FPGA->ASIC->?

Fixed

Ah, yes - the delayed reaction. Have to agree there as well. I still see external capital inflows amplifying those processes until Bitcoin has gone mainstream, so things will probably be more pronounced and volatile than anyone would expect for quite a while no matter what. Lots of factors to consider.

"The greatest shortcoming of the human race is our inability to understand the exponential function."
Albert A. Bartlett, Ph.D
Professor of Physics at the University of Colorado at Boulder

I agree with you that a decline in mining would affect the exchange rate in Bitcoin's favor, but there are other factors as well - capital flows from larger economies' currencies could very easily cause another spike in demand for Bitcoins which would result in an equally large rise in the exchange rates.

CPU->GPU->FPGA->ASIC certainly looks to be a natural progression for Bitcoin's future.

I'm fascinated how people so easily make bullshit bogus statements like this probably merely repeating something they heard or read somewhere from someone else. How the fk do you know what a deflationary currency encourages? Did you do an experiment to confirm your hypothesis? And if not, why the pretense this is a fact of reality. Pisses me off.

In the history of this planet we haven't had a deflationary currency. And I'm referring to the currency supply deflation not the aftereffect of price deflation. Even fking gold is inflationary. And you little fart want to pretend and make statements of how the reality really works and what kind of currency would be best??!

Precisely, except under this type of an inflationary system ALL the savers benefit, while under a fiat currency central bank's inflation those who get the new money first(government, government contractors, big banks and big crops) benefit and the small savers get punished. This is THE problem humanity has today.