[CHART] Bitcoin Inflation vs. Time - page 43.

whitslack

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Quote from: hgmichna on November 06, 2013, 07:44:24 AM

I still think that the deflationary tendency of bitcoin is damaging, for example because it creates speculative price bubbles.

What creates price bubbles is not the deflationary nature of Bitcoin (which we aren't even observing yet); it's the fact that the supply is perfectly inelastic. With most commodities, when a speculative price bubble begins to form, profit motive drives production to increase, and the increasing supply counteracts the growth in price. But Bitcoin is different: no matter what the price does, the production is always at an approximately constant rate. Thus, there is no moderating effect on an increasing price, and we get speculative price bubbles. I personally believe we will continue seeing this "plateau-ramp-crash" cycle throughout Bitcoin's adoption. However, I do think it will moderate in amplitude as the market grows.

hgmichna

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Quote from: deisik on November 06, 2013, 07:12:12 AM

No, deflation is flat out damaging for the economy (Great Depression as an obvious example). The same is not true for inflation

This is certainly true for hyper-deflation. It is not true for moderate deflation.

One example is the deflation we currently have on computer-based products. The argument that people do not spend their money in a deflation, because the money will be worth more in the future, is simply not true. If people thought that way, they would never buy a computer or a mobile phone, but they do.

Add to that the fact that human life is of limited length, so humans have to spend their money before they die. You cannot always wait for tomorrow.

I still think that the deflationary tendency of bitcoin is damaging, for example because it creates speculative price bubbles. I wish that Satoshi Nakamoto had thought of that and dropped the idea of halving production every four years. I believe bitcoin would have worked better without any halving.

deisik

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Quote from: whitslack on April 29, 2013, 12:13:19 PM

Regarding the assertion that the amount of money in circulation should grow in proportion to the population, although on the surface that seems like a reasonable system, it actually steals wealth from individuals. The key point to realize is that, even if prices are holding absolutely steady over time, it can still be true that your wealth is being stolen from you. The natural tendency, given advancements in technology and improvements in efficiency of production, is for prices to decline. We see that natural tendency most exemplified in the high-tech sector. Computers are continually getting cheaper. This is only because the high-tech sector is advancing at such a rapid pace. The slower moving sectors of the economy do not demonstrate price deflation because monetary inflation is offsetting it. If we had a constant money supply, everything would be getting cheaper over time. The fact that we are seeing prices remaining relatively stable indicates that we are having our wealth stolen from us insidiously through monetary inflation. I opted out of that dishonest system by moving most of my savings into Bitcoin. I don't want to see Bitcoin fall into the same criminal pattern as the fiat currencies

The fallacy of this logic is that it doesn't take into consideration the other part of the equation. You take just one side - the side of the Consumer and keep away from the side of the Producer

deisik

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Quote from: townf on April 29, 2013, 02:23:37 AM

Inflation and deflation are 2 sides of the same coin. Both are bad for participants in the economy, through no fault of their own. Either way, some sectors of the economy benefit unfairly and some suffer unfairly. You can't say that deflation is good and inflation is bad. It doesn't work like that. They're both bad

No, deflation is flat out damaging for the economy (Great Depression as an obvious example). The same is not true for inflation

Quote from: townf on April 29, 2013, 02:23:37 AM

The changing itself of the value of money up or down as the change works its way unevenly through the economy is what hurts people. Both inflation and deflation change the value of money.

Not quite so. The changing value of money may hurt some people, it may even hurt the majority of people, but at the same time it may be healthy for the economy as a whole, being a lesser evil. Actually it all depends

deisik

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Quote from: Jobe7 on March 22, 2013, 09:03:55 AM

By your calculations, 2030 could possibly be the year that bitcoin will be 100% the dominant currency, fiat will be completely obsolete, hopefully used as toilet paper. This would also be the point where those initial single 1 bitcoin pieces will be worth a small fortune.

Old post (still reading) but it seems that the utmost problem of bitcoin (the fatal depth of which people don't understand yet) lies in its deflationary nature, so its ultimate doom appears to be some marginal asset like gold (if it doesn't fade into non-existance entirely) - costs a lot but fails as a currency

rampalija

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thx for graphs, if they could only tell us the price of BTC Cheesy

DannyHamilton

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Quote from: wachtwoord on October 29, 2013, 01:59:39 PM

Quote from: DannyHamilton on December 28, 2012, 07:26:47 AM

Quote from: johnniewalker on December 27, 2012, 10:13:20 PM

Eventually that little line on your graph will level out. Once all BTC are mined and in the hands of bearers, inflation will be impossible because the amount of BTC is FINITE!

True, but since that is approximately 127 years away, can we assume that the bitcoin supply will be inflationary for the entire lifetime of anyone alive today?
I suppose it depends on whether you count "lost coins" as a reduction in supply against the generation of new coins, and how high the rate of lost coins is in any given year.

No, we can assume Bitcoin is not inflationary at all but has a constant of 21M BTC outstanding. That some of the Bitcoins haven't been given out yet is irrelevant.

I don't think that's how markets work.

wachtwoord

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Quote from: DannyHamilton on December 28, 2012, 07:26:47 AM

Quote from: johnniewalker on December 27, 2012, 10:13:20 PM

Eventually that little line on your graph will level out. Once all BTC are mined and in the hands of bearers, inflation will be impossible because the amount of BTC is FINITE!

True, but since that is approximately 127 years away, can we assume that the bitcoin supply will be inflationary for the entire lifetime of anyone alive today?

I suppose it depends on whether you count "lost coins" as a reduction in supply against the generation of new coins, and how high the rate of lost coins is in any given year.

No, we can assume Bitcoin is not inflationary at all but has a constant of 21M BTC outstanding. That some of the Bitcoins haven't been given out yet is irrelevant.

polarhei

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Firing it up

I think the being is based on gold. Only deflation will be.

Silver also be,too

But not crude oil and polythene based as there are ways for absolutely inflation by using germs,plants and iterations for it.

DannyHamilton

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Quote from: nuffsaid420 on October 02, 2013, 03:55:04 PM

Ok, I am not exactly sure how this works, so please excuse my ignorance.

Not a problem. None of us know anything until we learn it. Just try not to be so confrontational when you know that you aren't exactly sure how something works. It might have been better to simply ask why it would take 127 years and skip the whole "Let's revisit this statement in another year shall we" part.

Quote from: nuffsaid420 on October 02, 2013, 03:55:04 PM

Would it not be possible to bring online with new technology some mining rigs that do Petahash/s(PT/s) soon?

Sure. And at first they'd solve blocks very quickly. Then within 2016 blocks the difficulty would be adjusted so that blocks would return to occuring at intervals of approximately 10 minutes each.

Quote from: nuffsaid420 on October 02, 2013, 03:55:04 PM

and after that... the machines catch up to and surpass the difficulty level?

Difficulty level just adjusts again every 2016 blocks. The faster the network is hashing, the higher the difficulty. The opposite is also true. If it takes more than a fortnight to create 2016 blocks, then the difficulty will be adjusted down to speed the block creation back up to 2016 blocks per fortnight.

Quote from: nuffsaid420 on October 02, 2013, 03:55:04 PM

So Bitcoin was inherently created to only give out so many BTC based on TIME not difficulty??

Yes, bitcoin is designed to give out so many bitcoins per block, and is designed to try to keep the average time between blocks as close to 10 minutes as can be done with adjustments made every 2016 blocks.

Difficulty is used to adjust the average amount of time it is likely to take to solve a block, so it plays a roll.

Quote from: nuffsaid420 on October 02, 2013, 03:55:04 PM

So even if we find ourselves with a machine that can do 600000000000 MHash/s it would still take 127 years?

Approximately (give or take a few years), yes.

whitslack

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Quote from: nuffsaid420 on October 02, 2013, 03:55:04 PM

Ok, I am not exactly sure how this works, so please excuse my ignorance.
Would it not be possible to bring online with new technology some mining rigs that do Petahash/s(PT/s) soon? and after that... the machines catch up to and surpass the difficulty level?
So Bitcoin was inherently created to only give out so many BTC based on TIME not difficulty??
So even if we find ourselves with a machine that can do 600000000000 MHash/s it would still take 127 years?

The monster machine would very quickly chew through as many as 2016 blocks (at most), at which point the difficulty would readjust, and the monster machine would be back to creating one block every ten minutes. It would barely affect the pace of bitcoin production overall.

nuffsaid420

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Quote from: DannyHamilton on October 02, 2013, 08:58:20 AM

A reasonably good understanding of the bitcoin protocol. And a decent ability to handle basic mathematics.

The subsidy that releases new bitcoins into the bitcoin network started at 5,000,000,000 satoshi.
It is reduced by half (rounding down to the nearest full satoshi) every 210,000 blocks until the subsidy is 0.
If you do the math, you'll find that the last satoshi will be mined in block number 6,930,000
So far there have been 261,273 block (as of the writing of this post).
That leaves 6,668,727 blocks until the last satoshi is mined.
The protocol adjusts the mining difficulty every 2016 blocks to attempt to keep the rate of block creation as close to 2016 blocks per fortnight as possible.
6,668,727 divided by 2016 is 3,308 fortnights.
There are 26 fortnights per year.
3,308 divided by 26 is 127 years.

Which part of that did you think I got wrong?

Quote from: nuffsaid420 on October 02, 2013, 12:57:29 AM

Let's revisit this statement in another year shall we?

If you like, sure. I don't expect the subsidy rules of the protocol to change significantly in a year, do you?

Ok, I am not exactly sure how this works, so please excuse my ignorance.
Would it not be possible to bring online with new technology some mining rigs that do Petahash/s(PT/s) soon? and after that... the machines catch up to and surpass the difficulty level?
So Bitcoin was inherently created to only give out so many BTC based on TIME not difficulty??
So even if we find ourselves with a machine that can do 600000000000 MHash/s it would still take 127 years?

whitslack

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Due to the error between the actual hash rate and the hash rate upon which the difficulty is based, it's likely that we will reach block 6,930,000 a little bit ahead of "schedule," but not by much — maybe a year or two.

DannyHamilton

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Quote from: nuffsaid420 on October 02, 2013, 12:57:29 AM

So you think it will take another 127 years to mine??

Give or take a few years, yes.

Quote from: nuffsaid420 on October 02, 2013, 12:57:29 AM

What makes you think it will take another 127 years to mine the rest of the bitcoins?

A reasonably good understanding of the bitcoin protocol. And a decent ability to handle basic mathematics.

The subsidy that releases new bitcoins into the bitcoin network started at 5,000,000,000 satoshi.
It is reduced by half (rounding down to the nearest full satoshi) every 210,000 blocks until the subsidy is 0.
If you do the math, you'll find that the last satoshi will be mined in block number 6,930,000
So far there have been 261,273 block (as of the writing of this post).
That leaves 6,668,727 blocks until the last satoshi is mined.
The protocol adjusts the mining difficulty every 2016 blocks to attempt to keep the rate of block creation as close to 2016 blocks per fortnight as possible.
6,668,727 divided by 2016 is 3,308 fortnights.
There are 26 fortnights per year.
3,308 divided by 26 is 127 years.

Which part of that did you think I got wrong?

Quote from: nuffsaid420 on October 02, 2013, 12:57:29 AM

Let's revisit this statement in another year shall we?

If you like, sure. I don't expect the subsidy rules of the protocol to change significantly in a year, do you?

hgmichna

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Quote from: nuffsaid420 on October 02, 2013, 12:57:29 AM

… And like some one else has already stated "lost coins" aren't truly lost, we just don't care or have the technology yet to recover them.

As things are, there is no possible way of detecting "lost coins", short of asking every person and every computer in the whole world whether any apparently "lost coins" are his or hers or its.

We would need new and very different rules to determine what a lost coin is, for example, that all bitcoins have to be moved from one account to another at least once every year. Then we could state that a bitcoin that has not been moved in a year is a "lost coin".

nuffsaid420

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Quote from: DannyHamilton on December 28, 2012, 07:26:47 AM

Quote from: johnniewalker on December 27, 2012, 10:13:20 PM

Eventually that little line on your graph will level out. Once all BTC are mined and in the hands of bearers, inflation will be impossible because the amount of BTC is FINITE!

True, but since that is approximately 127 years away, can we assume that the bitcoin supply will be inflationary for the entire lifetime of anyone alive today?

I suppose it depends on whether you count "lost coins" as a reduction in supply against the generation of new coins, and how high the rate of lost coins is in any given year.

So you think it will take another 127 years to mine?? Let's revisit this statement in another year shall we?

What makes you think it will take another 127 years to mine the rest of the bitcoins?

I agree with the rest of your post. And like some one else has already stated "lost coins" aren't truly lost, we just don't care or have the technology yet to recover them.

Best

mangox

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whitslack

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Quote from: ?? on ??

Well, when the block halves again, Bitcoin might not be so valuable to mine anymore. Unless Bitcoin somehow gets saved (which it won't) the next halves will deter new users......

Could you explain your reasoning for your second sentence? Why would a reduction in the profitability of mining deter new users? The overwhelming majority of Bitcoin users do not mine, nor should they. Are you presupposing that the subsidy halving will cause a hike in transaction fees? I do not see a connection. The transaction fees are purely a function of the on-chain transaction load and the maximum block size limit. They are the "price of real estate in the block chain." You pay a transaction fee in order to secure a place for your transaction in the block chain. The price you must pay varies only as the transaction load varies or if the maximum block size limit is altered. Changes in the profitability of mining (such as due to varying difficulty, varying energy costs, block subsidy halving, etc.) do not affect the supply or demand of space in the block chain, so they do not affect the price of space in the block chain (i.e., the transaction fees).

KonstantinosM

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Life is a taxable event

Quote from: whitslack on August 30, 2013, 03:52:59 PM

Quote from: Viscera on August 30, 2013, 09:31:34 AM

I agree, the drop at the end of 2013 looks frighteningly fast. I'd like to learn more about when this big change will occur. Thanks to the OP for sharing these charts.

The big drop was at the beginning of 2013, and it actually occurred a few months ahead of schedule. It was when the block subsidy dropped from 50 BTC to 25 BTC.

Right after the reward drops from 25 to 12.5 the price movement will most definitely be felt....

Any such events will have an impact on the currency.... The next 2 ones will be the remaining biggest halving events....

After that halving isn't really going to affect the market in any serious way since most BTC will be out there trading instead of waiting to be mined!

Is there a clock to the next halving set up already?

whitslack

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Quote from: Viscera on August 30, 2013, 09:31:34 AM

I agree, the drop at the end of 2013 looks frighteningly fast. I'd like to learn more about when this big change will occur. Thanks to the OP for sharing these charts.

The big drop was at the beginning of 2013, and it actually occurred a few months ahead of schedule. It was when the block subsidy dropped from 50 BTC to 25 BTC.

Topic: [CHART] Bitcoin Inflation vs. Time - page 43. (Read 1079797 times)