Topic: Deflation and Bitcoin, the last word on this forum - page 32. (Read 135933 times)

It's not impossible. Hoarding doesn't mean "nobody exchanges coins". It simply means that in case coins were exchanged, there's a high probability that the buyer is buying for the sole purpose of later profiting. And the seller is selling because he either needs money immediately or he's afraid the price will drop and had enough profit, so he exits the market safely. By the way those two reasons are exactly why I plan to liquidate some of my own coins soon.

I never denied there were real transactions either, but I said there would be more of those if the price was stable. People won't have to worry about spending coins because they're afraid the price would spike soon after they spend them, nor would they worry about a price drop after earning a coin so they won't have to rush and liquidate them. What exactly is your problem with a stable price system?

Would replacing "number" with "volume" make you happy? You people got nothing to say to address the real issue so you worry about silly definitions. I'm still waiting for a decent rebuttal against my proposal.

This is your stance. Then you relay to the trade history on MtGox to maintain that stance. Yet that same trade history shows that since mid April, pretty much since the price spiked above $2, that MtGox has been experience a 30d volume consistently within 900,000 to 1 Million BTC, and now the price is on its way beyond $15. The 30d expected inflation through mining is anywhere between 200,000 and 300,000 BTC. This means that on a month and half span, about 1.5 millions "old" BTCs have changed hands (without accounting for the freshly mined coins in that period), which is over 1/4th of the total "old" BTC supply. According to your hoarding theory, this is impossible. Now I suggest you reflect on your stance.

Well then I hope you learn that an economy is not proportional to the number of transactions.

oxygen, not oxigen

Are you saying that stabilizing the price wouldn't increase the number of transactions and/or the percentage of real transactions (i.e the ones not aimed at hoarding and speculation)?

And deflation. That 20% (19% to be exact) is built into the system assuming the number of users stays constant. If the number of users double, the demand doubles, and the price skyrockets. That's called deflation. My proposal was to increase supply with demand to prevent that.

That's also true. Which is why a flexible-supply system beats a fixed-supply one. The flexible supply doesn't give speculators any incentive because the price is constant anyway.

Gold is a total different story. Had humanity run out of gold within 16 years of its discovery there would have been perpetual deflation. Nobody would've spent their gold except for emergencies. They would've used silver or seashells or grain while carefully keeping their gold under the mattress.

Bitcoin isn't useless. But currently it's only good for "hit and run" transactions. You can't wait for too long (too long being about 12+ hours!) before liquidating your received coins lest the price dives down. You'd also be worried if you spent them now lest the price doubles in a month. What sort of currency is this? We need stability. Why do some people have a problem with that?

On average, it is. Sure, maybe 20% of users control 80% of transactions, but if the number of users double then on average the number of transactions will double accordingly with another 20/80.

I hope you understand that an economy is not proportional to the number of people in it.

It's not deflation what is rising $/BTC right now.

BTC deflation has a 20% rate, not a 10000% rate. What is bullying the market is especulation.

More and more people think that it could be possible that this currency is going to get mainstream. They especulate about it.


If we just had discovered gold, wouldn't that happen too? I'm just saying. Right now BTC is a small very modest commodity that can be used to pay some things. Will BTC suceed as currency? We'll see. If it suceeds, it won't be without bumps on the road.

I mean, what if in 2-4 years Bitcoin  is worth 10 billion dollars maintaining the actual price/difficulty rate? what if it moves then more than 80 millions each day? Would you start to take it seriously? I would, for sure. And because I think it's possible, I'm willing to put my money where my mouth is.

No, you're just completely blind to the fact that even though the price of Bitcoin is 15 times what it was in early March, we're still seeing lots of days with high volume. Trade history on Gox directly contradicts your wishful thinking.

´nuff said.

You're talking like it's a God-given rule which cannot be changed. But it can. Just roll out Bitcoin 0.4 and we're all set!

Really? So why don't we generate a totally random number of bitcoins every minute and give it to a random user and see what happens? Or maybe we should just square the number of coins in everybody's wallet and see if it helps or not. Did you also consider playing with the hash difficulty to make it a function of the temperature in Mumbai? Hey, it's just a social science. Nobody can predict what will happen so why don't we try it and see?

I hope you understand the correct definition of inflation here. If the population (thus the economy) doubles with the money supply also doubling there will be no inflation. Everything just goes x2. The workers earn the same salaries and the goods/services cost the exact same prices.

I'm all for a stable currency. That's exactly what my proposed model is all about. But a perpetually deflating currency? That's called a pyramid scheme. Had that been the case in any internationally-recognized currency like the US dollar (and I'm talking about double-digits deflation here like in Bitcoin's case), everyone in the world would be hoarding that currency essentially forever only to be sold to another investor/hoarder when they badly need money. Come on Nefario, we all know that. You know that. Stop hiding behind the it's a social science so nobody really knows anything argument. And if you don't believe me, check out the price history so far https://mtgox.com/trade/history

I wish for deflation to increase even more because I mined quite a bit of coins last year and I'm sitting on them. The only problem is that it's too good to be true. Nothing keeps rising forever, period. You're committing the same sin of modern governments who keep borrowing and think it can go on forever, just in reverse. Stability is the keyword here. The hell with deflation AND INFLATION. Nobody takes a currency which skyrockets ten-fold in a month then drops to half in 10 days seriously.

No.
What causes price deflation in bitcoin is the increasing demand. That demand is based on business acceptance (and expectations of future acceptance).
Mining is driven by demand and not the other way around. Well, difficulty increases security and that increases business acceptance, but deflation won't stop mining.    


It is true that price deflation encourages hoarding. But that's why merchants will have to accept other currencies to keep on selling.
That currency competition will decrease the value of bitcoin as a medium of exchange, decreasing demand, decreasing deflation.
Since bitcoin is not the only currency on earth, deflation can't kill it.  

It is true but nothing to do with. Difficulty is normalized BY DESIGN for number of miners with current hardware to be constant and small FOREVER.

So that various new goods, services, technologies, etc, that people sell/buy for $, in real world, -> become just NEW ATI GPU cards in bitcoin world. Because in deflation scenario with constant number of society members, $/BTC exchange playing is always more profitable than ANY business, including even mining.

Mining difficulty changes every 2 weeks, so that's not a problem. It's just that difficulty has to follow price, otherwise a bubble will be created (and it will explode).

You could see accumulating bitcoins more profitable than mining, but mining gets you actual brand new bitcoins and you don't have to sell them all just when you get them.

Bitcoin's deflation has been starteed 2 months ago. And nearly constant number of bitcoin users DOES maintain bitcoin currency 'on the fly'.
Bitcoin IS already stable, but very tiny economics. With no change to grow.

So I agree,  Bitcoin is just modern deflation experiment in one tiny Bitcoin society.

Deflation in bitcoin society starts when mining difficulty starts to be too high for profitable mining to average miner. It has already started!

Dollar-based economy is growing (between crisises) inflationarily, because people around a world DO mine gold-equvivalent in NEW goods, services, technologies, etc., in rate at least constant (but actually exponential). For this new THINGS, US goverment DO print new 'paper' dollars.

In bitcoin, mining difficulty DOES exponentially DEPRESS the profit for sell/buy NEW goods, services, technologies, etc., for BTC.

Just keep, accumulate bitcoins & play on BTC exchanges - it simply MORE profitable than ANY business that uses bitcoin as currency, including even mining itself.

Why don't you all guys understand it?

Have you locked that thread?

I think I could convince him that bitcoin won't die because of deflation.
I've also learned recently (with the help of some people of this forum) the dangers of a flexible monetary base (beyond the transfer of wealth which is used now by central banks to tax) and maybe I could help him to understand them.
Like him (and unlike most bitcoiners), I want an interest free money. I think that thread would be a better place to talk about it than this one.

I've sent him a message, but others who think like him won't be able to read it.
Should I post my reply to that thread here?

TOPIC:

There's more economic thinkers different from Mises and Keynes.
I think that price deflation can cause financial problems that are "bad to society" and I don't like Keynes's solutions at all.

I expect bitcoin to lead the worldwide monetary revolution that will define the century but not to be the best we will see.
Should I be out of bitcoin because of that?
In fact, I expect ripple to be more revolutionary than bitcoin.
Can I be a bitcoiner and read Gesell?

By the logic of the anti-deflationary crowd:

Gold is deflationary, nobody should buy gold.

Even if bitcoin will deflate, bitcoins are still being added to the supply at a fast rate until about 2017 at least. So if you don't want to use a deflationary currency, just sell all your bitcoins in 2017 before deflation kicks into effect. It's not that difficult. 

I am an opportunist.   

http://bitcoinweekly.com/articles/one-apple-today-two-apples-tomorrow-or-how-i-stopped-being-afraid-and-learned-to-love-deflation

+1

please lock this topic now before trolls pop out.