Topic: Deflation and Bitcoin, the last word on this forum - page 5. (Read 135972 times)

Actually there already were some ideas lingering before bitcoin. Most notably: http://www.weidai.com/bmoney.txt  (1998)

I don't dismiss it, I simply have my own ideas on how a complete rework should be. Since this topic is long and has multiple considerations, I'd rather discuss on concrete stuff like money supply (as when I opened this thread: https://bitcointalksearch.org/topic/cryptocurrencies-and-monetary-supply-growth-rates-108964 ). I sincerely believe time-based reputation is in general counter-productive. Anyway if there was something concrete I'd be willing to give it a look. I'm sceptical that a blockchain currency can be secured properly without proof of work, I'd like to see that working. Note that if the system can be feasibly gamed it will be.

I don't remember discussing it with you. A quick check of posting history suggests all you've done is dismiss it because it's "too complicated". If you want to have relative stability even in the face of market expansion, which imo is a very necessary thing if you want businesses and people to use your money, you are going to have to really gut the ideas of bitcoin and start over. So, again imo, it is worth it to gut the rest of the crap that is inefficient while you're at it. Nobody presumed bitcoin was possible until Satoshi did it; it's really not that far-fetched to rework the same idea from the ground up. And it's a lot easier if there are multiple people involved.

We have discussed about it before. Your proposal adds a lot more unrelated to this particular topic.

Under point #1:

"If they anticipate a future decline of their selling proceeds, they will bid down present prices of factors of production, thus assuring profitable production and paid employment for everyone willing to work. This is exactly what happened in the few periods of modern history in which deflation was not prevented through inflationist counter-measures."



"A fiat money regime considerably facilitates the re-distribution of resources within society. It allows the owners of the printing press and their political and economic allies to enrich themselves far quicker and at much lower cost than any other producer in any other field. This explains why governments have for centuries sought to establish a paper currency. And it explains why, after they had achieved this goal in the 20th century, governments and their business allies set off on an exponential growth path. The welfare state has exploded in the 20th century, and Wall Street and the banking sector grew quicker than almost any other sector of the economy.

This would not have been possible on a free currency market, because nobody would accept banknotes the purchasing power of which depends on the whim of its producer. And indeed paper money has never existed in a truly free currency market.

...

Deflation brings in the fresh winds of the free market."

How does free market currency = deflation? Especially as he defined, multiple times throughout the article, as a decrease in the money supply? (I assume per person though he never actually says that and leads me to believe he thinks that money will disappear.) Unless free market currency = gold, then it's not particularly free market, it's gold. Gold can't compete with itself.

Anyways, I don't have time to critique some tard who writes an article on the internet.


If you want stability, the template is in my signature bro.

Deal :-)

Before we start a fork we should add some additional simple (!) modifications that would add some value (like increased security through delayed transactions, saving accounts ...).

Deflation: The Biggest Myths

4% is still significant. The point is that we wouldn't have a stable scenario in our lifetimes. We would be in transition all the time. As an experiment it would suck, but if you have enough faith in it I guess it's worth trying.

I'd happily start a fork but my day job has me really busy these days. If nobody has tried it next year I may give it a shot.

If the idea is to modify bitcoin I don't think we can possibly gather the necessary support. Forget about that.

Inflation of 4% is reasonable and expected in 25 years ... we could try live that long.
The value of a currency is also usually expressed in relation to other currencies. So if other currencies have a higher inflation we could get a relative deflation even with positive money supply and not necessary because of speculations.

A fixed block reward would render an ever diminishing inflation rate, just gradually and very slowly. The only problem with that model is that we wouldn't live to see <1% inflation (this would happen in 100 years). But in the (very) long run it wouldn't make a massive difference. Supposing a currency with this model had at least moderate success, its underlying growth would be faster than currency supply most of the time.

You don't want a currency to be constant. The inflation or deflation rate of a currency balances immediate consumption (investment) against deferred consumption (saving). Inflation encourages immediate consumption and investment. Deflation encourages deferred consumption and savings. This needs to float based on market conditions, not be artificially fixed. In a healthy economy with a free market, a currency with a fixed value will just be out-competed by currencies that gradually deflate. (Why would I hold a currency that decreases in value if I don't have to?)

Everytime that a fork of the code that permits this has been attempted, it has failed.  Every time. 

Feel free to try it yourself, though.  Really, we won't mind.

Yeah, I think you're right. And even if it limped along for a while due to its other benefits (p2p, privacy, no/low transaction fees, etc.), I think someone would have eventually copied those elements that worked and come out with a capped-quantity alternative that would have siphoned away market share.

I believe it would have been very hard to "bootstrap" this currency- there wouldn't have been much incentive for speculation or early adopting, and nobody would have wanted to buy BTC for $$/€€ so the project would have probably failed.

If Bitcoin simply stopped reward halving, it would eventually operate much the same as a fixed-supply currency.  From year 1 to year 2, the number of bitcoins in existence increased 100%.  From year 2 to year 3 the number increased 50%.  From year 3 to year 4, 33%.  If we kept the reward constant, after a hundred years, the annual rate of increase would be only 1%.  (And it would just keep getting smaller.  The annual percentage increase is given by 1/x where x is the number of years from the start.)  At that point, the tiny increase in the supply of bitcoins would not be enough to offset the deflationary forces created by economic growth.  So it sounds like what you really want is exponential growth of the money supply.  Fortunately for you, a currency like that has already been invented.

http://goldseek.com/news/GoldSeek/2007/7-24mh/4.gif

(But I think I'm going to stick to Bitcoin.)

But I have been trying to figure out "how bad" it would be if Bitcoin had been designed such that the number of bitcoins grew at, e.g., a constant 2% a year.  It would certainly be better than the current situation with fiat because it would be entirely predictable.  And the new money wouldn't simply be printed and distributed to the politically well-connected.  It would instead by earned by a presumably-competitive industry of miners who would in fact be providing value.  Thoughts?

It's lucky that people like you who have no idea what they are talking about don't decide about such matters.

What btc need to do is to stop the halving of the reward and have no upper limit. Hopefully keep btc constant.

Sure your free market competing currency option would be more democratic, but in an environment lacking in basic education it would more likely result in feudal warlords who manage the food, my proposal would be more akin to a benevolent dictator transitioning to a free market based on a fixed currency.

Your post would be easier to read if you could write better than a 3rd grader.

That aside, wouldn't it be far easier to simply offer bitcoin as a source of payment alongside current online payment options? Sounds simpler and less like manipulation of some poor African nation to your own ends.

I will create an initially BTC-based virtual economy using stocks of startup companies. But if BTC will flacuate too much I will have to fork it to a newer more stable version. Later I will convert the economy to a micro nation :-)

I realise this is a topic for another forum as it not related to deflation. But pondering that thought I see a solution something like this: you export some large amounts of a staple commodity X (eg ground corn) to a defunded African contrary where the currency has collapsed - one that has good mobile penetration. (if there is no mobile penetration build a raspberry pi mesh network funded by a US churchs - and include an audio digital bible and a copy of Wikipedia.)  You then give the device and the X staple commodity away (possibly partner with an NGO or charity) if there is a demand for your product you then start to ration the X staple commodity, through the use of Bitcoin, and you start to organise labour projects in exchange for Bitcoin, no drought the X staple commodity will become currency in the local economy, however BTC  will be used to triad with the NGO - and the labour force acquires it by building their own infrastructure. (you will have to build a java app for symbian or something or a pi device - maybe perfect the brain wallet idea)  once they can produce a global commodity of moderate value say rubber or wool, or art, you start trading that commodity for Bitcoin, and use the BTC to import the base X staple commodity.  The result is a stable base economy for Bitcoin and it grows from there. In essence someone with a lot of Bitcoin could become powerful thelantrapist the idea would take 5 or so years but i think is would build teh BTC curancy bace from theground up.