Topic: Current Bitcoin inflation rate = 35%. Price = stable - page 3. (Read 11543 times)

I think you're onto something there. So a money's "soundness" is not necessarily a cost, but some sort of trustworthy assurance about its scarcity (e.g.: open source inflation scheme)... Nonetheless, in the scheme of things, the cost of ensuring that Bitcoin can't be counterfeited seems pretty cheap compared to routine costs that other forms of money might incur, e.g.: bomb-proof ATMs or fuel for transport.

Sure, but then you just get into really complicated calculus that nobody wants to do.  And you of course need to factor in all the human food consumption as well as the electricity they use to sustain themselves.... the whole point is it's way too fucking complicated to use that formula outside of an insulated business setting where you can account for every watt.

Which could be free energy as well.

False.... energy went into producing the equipment to capture your so-called "free" energy.

It's effective as long as you only burn down forest at the rate it regenerates.  That's the point.  EROEI is not a sufficient metric in isolation.


Actually now that I re-read your post this is an important point I meant to address.  We have to make an absolute distinction between renewable and non-renewable resources.  If the energy used to research more efficient oil drilling methods is obtained from solar energy for instance, then it absolutely does not need to be included in any formula.  It is free energy and it doesn't matter in the least whether it is wasted or used efficiently.

Very good if the goal would be to burn down a forrest.

"Energy return on investment (EROI), is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource"

If you intend wasn't the destruction of a forest the energy released wouldn't be useful thus the EROI would be 0%.

Somewhat iron given your (bad) example is that slash and burn WAS (and still is in some parts of the world) an effective way to convert forest to farmland.  One of the reasons is that because as you point out it has a very high EROI.

I think this is basically right, but not quite. 

For example, consider coins in 50 years.  With no more coins issued, the yardstick isn't working.  Or consider the cost to obtain the first few thousand coins, which is practically nil compared to the mining cost today. 

It is theoretically possible for a sound money system to exist under which there was no cost to produce the initial units.

The part that makes it "sound" to me is that the money supply is publicly verifiable.

 

 


   

First:

I appreciate your response and divergence from my opinions.


If I did, sorry to have given that impression.  I do not think it is a synonym for EROEI.


Not entirely sure about the implications here. But, I've found if one digs deeper they find what they think isn't always so and sometimes even surprising.  I took it as you calling me a psychopath tho...  Which is fine. No offense taken.



Rather than me debate this, while I see the point being made, there are two thoughts on the matter:

The Khazzoom-Brookes Postulate

http://www.sciencedirect.com/science/article/pii/S0301421500000306

Basically increasing efficiency increases demand. Which I will grant is not always bad, but can be depending on what efficiency is being increased to obtain.

Also the speed at which resources are used can be accelerated to a point of no return. Cod fisherman became very efficient off of the NE North America til they diminished the cod.

On the other hand, Lobster and Crab fisherman, ah I'll just drop this: http://icesjms.oxfordjournals.org/content/18/3/333.extract

I think those sources should work, shouldn't they?

Again, thanks for the opposing views.

Once again, you're not using the term "efficiency" correctly.  You're using it as a synonym for EROEI.  The term you are looking for is Coefficient of Performance (COP), which is usually over 100%.  In terms of energy usage, oil drilling is always over 100% "efficient" otherwise we wouldn't do it.  In terms of percentage of resource recovered, however, it is always less than 100%.  You are confusing the two.  Pick one and use consistent terminology.


To an economist, perhaps.  To non-psychopaths, it's a metric that is useful within a specific context.

It only takes a single match to burn down a forest.  The EROEI on that would be in the tens of millions.  Sound like a good investment to you?


Alternately, increased efficiency is always good and increased population is not.


This is a ludicrous notion.  Every Bitcoin has to be held at all times by someone.  If it were even possible for everyone to do what you suggest, Bitcoin's value would fluctuate wildly without any velocity to speak of, and it would be worthless as a "transactional currency", which is a fiction anyways.

For money to be "sound", there has to be a yardstick to ensure that there's some cost to obtain it. With gold and silver it's the effort and energy spent mining and smelting. With Bitcoin it's computing power. At least with Bitcoin it can be argued that there's some merit in rewarding processing power because it promotes technological innovation and all that. Whereas with the distribution of natural resources, some countries are simply lucky, or unlucky, through no fault of their people.

I understand that a requirement for high technology to mine BTC implies that poor societies might be locked out. But I've seen lots of things where amazing things can be done on a low budget. Constraints inspire creativity.

In the interests of being green and saving the environment, maybe Wall Street should unplug their exchange servers?

This is precisely why we will never run out of oil. Long before that point the ration will be greater than 1. Which means it will cost more to get it than what you get out of it. Hubbert's Peak is often mis-used to mean that we will run out of oil. We will not run out of oil, we just will stop drilling for it because it costs more to get then you get out of it.

In many regions of the world, the ratio is already greater than 1. Which means the oil price has no way to go but up to bring the ratio below 1 or at least at 1. (er vice versa depending on how one uses the numerator and denominator)

Increasing Efficiency is a method to bring the ratio in line. But, efficiency is not the whole picture as one can't get a 100% Efficiency rate. Some energy will have to be used to get the oil. One can spend tons of energy on acquiring new and more effective drilling methods. The energy used in these endeavors must be used in the formula.

EROEI is the most fundamental metric. It is a foundation for almost everything.

Is there a Bitcoin Peak?

Increase Efficiency is not always good. A balance needs to be maintained. The more out of balance there is the harder the crash when nature corrects it.

Often Increased Efficiency = Increased Unemployment based on current Population   So to increase employment, either decrease efficiency or population.

Bact to BTC.

If EO (ie Money) is less then EI (money), then BitCoin price will either increase or you must increase efficiency to reduce Money In. Ironically, this has already started to happen. CPU -> GPU -> FPGA -> ASIC  

When efficiency is being increased to keep the ratio in line, this means the 'easy to get' Bitcoins are gone and foretells inflation. Many make predictions on being able to increase efficiency over time with new technology. I think this is a little naive. Moore's Law is often used. I wish Moore's Law was true over time but it to me is like saying: "Jump out of an airplane and divide the distance to the ground by 2 each time you reach a midpoint and you will never hit the ground."

The cool thing is that once a BTC is mined it is mined. It's usefulness doesn't disappear with use as does Oil. However, there is a cost for this usefulness. Attrition (lost coins), and EI (Energy In) doesn't go away. To use them as designed requires energy (i.e. mainly electricity). To counter Attrition many say you can infinitely divide them as to never run out. (IF that is true, think about it.)
The energy required to use them is a concern for people that don't have energy.

Because of the above, IMO, BitCoin is the most useful as a transactional currency (quickly in and out of BTC for payments) that can be the first truly international payment system. People saving BTC is not totally unwarranted but a watchful eye should be kept on the market. (Because the last Buggy Whip produced was the most expensive one.) Then all those people saving Buggy Whips were a little disappointed they were saving something that nobody wanted.

OK, just realized I went on a little rant. Sorry. Rather than delete it, I'll just hit .

NOOOOOOOOOOOO.  This is exactly backwards.  This implies that the wasteful drilling methods of the past were more "efficient" than those today, which is absolutely false.  Oil extraction today is far more advanced and efficient, recovering a far greater portion of the total potential supply than in the past.

EROEI is a useful metric, especially for renewable energy sources, but it is not synonymous with efficiency when dealing with finite sources.

Of course it counts.  And until we have enough solar panels to cover the oceans, phytoplankton at 0.5% efficiency is one of the most economically beneficial activities on Earth.


And this is of course one of the most wasteful, of which I am perfectly aware.


It does qualify as a use, but please take note that it is not a natural energy flow except in a few areas.  So it is not an economical use as far as I'm concerned.


Efficiency affects the "percentage of natural energy flows captured and used," so yes of course it must be included.  But in many cases, solar for instance, efficiency has zero bearing on the fact of whether those natural energy flows are captured and used, so it is in those cases nearly irrelevant.  1% of anything is more than 10% of nothing at all.

Well one way to look at it is that (almost) all energy in a form which is usable to us based on our current level of technology comes from the sun.  Even hydrocarbons are simply the concentration and storage of sunlight.  A one time "cheat card" which allowed the human race to not just harness a % of the current solar energy but to use up the solar energy banked over millions of years by geology.

Although fossil resources are finite (how finite is the only source of debate) the efficiency in which we use those resources can be calculated:


http://en.wikipedia.org/wiki/Energy_returned_on_energy_invested

And good answer   However it raises other questions..  when is a natural energy flow "used"  ?  Surely the phytoplankton are capturing solar energy, and doing "useful" things such as creating oxygen and feeding the food chain, does that count?  Further, the burning or "flaring" of stored energy from natural gas quickly destroyed on the order of half or more of all hydrocarbon energy stored on the planet.  While this could be considered a "use" (in this case making way for oil extraction) it demonstrates that some kind of efficiency of use should go into the calculation?   Not easy questions, sorry.   

Cheers - 

BTC price is the most difficult thing to predict...

If someone can create a very demanded product/service which is only payable in BTC, it will push the BTC price to cloud

Some possible candidates of these services:
Medical insurance
Jobless insurance
Pension fund

If you tell your friends that BTC is the first P2P currency in the world, he might not care about it at all. But if you tell your friend that he can buy an extra medical/jobless insurance using BTC, then he might be showing some interest

Yeah, good question.  Ask an economist and she will give an answer that translates to increase in complexity, risk, and nearness to breakdown and collapse.

I for one define economic growth as growth in the percentage of natural energy flows captured and put to use.

Qualifiers are quite useful in language.  I agree with your definition here (nicely put in bold earlier by someone in the thread)  but in general  "inflation" is ambiguous, dangerously so if this forum is any judge.  Are we talking space-time inflation?  No, you mean monetary inflation.  Price inflation is another thing.  Very easy, just use a qualifier and the arguments are over. 

Now that we have the easy part out of the way, lets tackle a harder question.  What is this thing you folks are referring to as "economic growth"? 

 

It's cool... I'm a cocky bastard too, so I know sometimes people just need knocked down a notch.  I can appreciate that you can acknowledge your faults.  Carry on...

I am sorry. Asshats put me in a very sour mood. It was wrong of me to involve you when you hadn't shown any signs of asshattery. I sincerely apologize. It is true that I am extremely arrogant.