Topic: Gold collapsing. Bitcoin UP. - page 340. (Read 2032265 times)

This is a better argument than what we usually see here since it focuses on might happen as a result of network effects, rather than you picking a winner and declaring that everyone else should support the winner you picked "because network effect". So, well presented, rocks.

Not sure about fiat being inferior for decades though.

Bitcoin could succeed at being the NWO ledger and an anonymous solution could succeed at being the free market's ledger. But what if the free market doesn't want to give too much power to one ledger because it decides that true decentralization is competing options? What if unit-of-account is less important than meritocracy in this new knowledge era?

It seems you all are fixated on the concept that we need a global revolution into a single ledger. Why? What advantages would it offer to humanity? If the goal is simply to get crypto-currency spread out to most of humanity, we can not presume that the gridlock of "one size fits all" pooling of capital into groupthink catfights is the most efficient.


Nobody cares. What software did you write that we are using? Results are measurable. Claims on education are not.

I really don't feel like I owe any answers to people who have done less work than I to improve economic understanding and financial privacy.

What have you done to make either situation better?

Yep, while gold is also art, display of wealth, a superb electrical conductor, tooth filler, historic money... bitcoin is nothing but pure money. It will nail the money value problem, that gold enthusiasts have quarreled over since the event of fiat.

Positive wealth effect = increase in marketcap : net virgin demand

In CKG case, there was $50k new money wanting in, which ended up raising the marketcap to $500k, making the wealth effect coefficient of 10x.


Yes, you are talking about spinoffs, because in an exit situation to a new ledger, the 90% does not have any allocations in the new ledger that they could sell unless they buy them first, negating your point instead.


I agree that if the old chain survives the initial crash without it causing a descent to abyss (BTC has many examples of survival!), then in the long term the valuations of the chains adjust to represent market perceptions. Yet as the science of determining a correct valuation for a cryptocoin is completely unestablished even in the best minds, not only in the markets, it may well be that in a "successful" 10% exit, the end state is much different than 90/10. I don't claim any reasonable powers to forecast, even after more research on the subject than most.

There is however the case that the old chain is destroyed by the initial exodus of capital and market crash, and the general loss of confidence that results. Just see what has happened to shitcoins.

I agree. This is another factor that prevents altcoins from reaching escape velocity instead of profit taking arbitrage back to BTC.

This is why I say new markets are critical if you want your altcoin to reach critical mass.

When it will be too late to do anything. The Coinbase, Circle, Paypal, etc will already own Bitcoin by then and you will not have the means to fork away. The smartmoney will have been long gone into the anonymous altcoin (assuming one can present the necessary oomph of network effects soon enough). And you may find you've missed most of the wealth effect by that juncture. Who would want to trade back to BTC from an anonymous coin when the wealth effect is headed in the other direction and they would have to comply with KYC by that juncture.

Investing is about foresight. Place your bets now. Religious desire for safety and continuity is not the function of an astute speculator.

I think the best argument for one ledger is network effects. Network effects for money are very very strong. In order to enable a switch to a new money, there has to be a significant improvement over the existing money. Network effects are so strong that people continue to use fiat even though it has been inferior for decades. To me this is the main reason why Monero and other alts will not win, even if they offer some advantages (which I think is debatable), the advantages are not enough to overcome the network effects that are already behind bitcoin (which itself may not be able to beat the network effects of the dollar).

Or likewise trying to suppress potentially-successful solutions to that problem by focusing attention and investment on the one least likely to succeed.

Who are you really working for Justus?

Carlton just let him go. Its not worth a second of your time. As far as I can tell 100% of his posts are statements on how brilliant he is, yet lack any content at all. He is the only one I've put on ignore, and the thread has been a lot cleaner since. Ignore him and he'll go away to the next shinny object.

There exists in society people whose interests are threatened by the existence of a universal, neutral, and incorruptible ledger.

Those of them who are aware of attempts to form one have very strong incentives to prevent that from happening by any means necessary.

Encouraging the development of multiple competing ledgers, either by investing in them directly, or investing in companies that produce them, or investing in propaganda to promote economic anti-knowledge, or investing in disruption tactics to slow down the development of the universal ledger are all actions such people could be expected to take.

To reiterate, my answer was that your theory against arbitrage and profit taking back to BTC, required both a positive wealth effect on the altcoin and a negative wealth effect on BTC. I don't see that negative wealth effect being viable, because the masses will be buying what the smartmoney is selling. Your avalanche can only occur under two circumstances:

1. Negative wealth effect possible because the influx of the masses into BTC has peaked after 2017 (or the smartmoney shifts to the altcoin before the masses start flooding back into BTC circa 2016 - 2017).

2. Negative wealth effect unnecessary because the altcoin drives a new market of mass adoption that is orthogonal to the one Bitcoin already claims (and will dominate because of Coinbase, Paypal, Circle, Facebook, etc) and this market has no desire/utility to arbitrage to Bitcoin.

Btw, I am aiming for a combination of the two.

It seems the actual scenario posed is that 10% (or 20%) are convinced to move, and 90% (or 80%) remain convinced to stay. If we introduce the additional premise that the majority (80-90%) actually has major doubts as well, then I agree that something like what you're suggesting could happen (ignoring the spin-off option for now), though it depends on the degree of doubt.

It still all seems to come down to a more mundane conclusion: "If 10-20% are deadset on exiting and the remaining 80-90% are shaky and considering leaving, a mass exodus may well be in the cards." (Though as I've said I think a spin-off is what would actually happen, or just a hard fork-off with forkbitrage on the exchanges.)


Certainly, but I don't see a scenario where even 10% of bitcoiners would switch to an empty chain, as that would imply a chain with no track record. To switch, there must at minimum be a very compelling reason and also a reassuring guarantee that things would be all right. It takes a lot of testing with large amounts of money on the line to know a chain is secure. (One might even argue that those amounts need to be within something like an order of magnitude of the chain being replaced.)

A chain with a track record that was so promising would already have received significant investment from bitcoiners who keep abreast of such things (and in such a crisis scenario this would be most bitcoiners), with that investment corresponding to the chain's perceived chances of taking over on its fundamentals. So then my original point: The surge for no fundamental reason seems like it should incite these people to sell. "1% chance of takeover, so I want it as 1% of my portfolio...but now it's gone up 8x and is ~8% of my portfolio yet still seems to have a 1% chance of takeover. This is just market irrationality, I benefit by selling a bunch at this price."

I also note that Poloniex just opened leverage, which may mean they will allow shorting soon.


I'm not sure how you're using the term "wealth effect" here. It usually is used to mean "people spend more when their portfolio value rises," but here it sounds like you mean an amplified price effect due to thin markets on exchanges. If that's the meaning, then it seems like it would depend on market depth (relevant if you're generalizing from the CKG example).


I'm actually not talking about spinoffs here. I just used the word "ledger" because that's one of my preferred terms for "coin" or "altcoin." I meant that the 90% will sell their allocations in the altcoin and buy more BTC, for the reasons mentioned above, and that I think this negates the small float effect.


For a more generalized counterargument, presuming I understand what you intend by the term wealth effect, I would say that the scenario you posed relies on an inefficiency in the market, and insofar as we define arbitrage as "rectifying those inefficiencies for profit" we can say the effect should be mitigated/eliminated by arbitrageurs - as long as fairly basic market infrastructure is there.

banks starting to consume each other.  retail clients are sure to get hit soon:

“HSBC charges banks for deposits they hold with us in currencies where negative interest rates apply,” the UK-based lender said in a statement on Tuesday. “Banks affected have been notified and we continue to monitor the situation.”
The unusual steps come after the European Central Bank became the first big central bank to announce a negative deposit rate — in effect a penalty on banks parking their surplus cash — last year.

http://www.ft.com/cms/s/0/6ad3f99a-fe16-11e4-8efb-00144feabdc0.html#axzz3aaO1u93p

For those who gloat in joining that morass and the BTC gains that are coming from joining forces with the TPTB in enslaving the masses (under the ideological lie of decentralized banking, etc), I would cognizant that this system is a cancer on itself and it will likely find a way to expropriate and clawback those gains.

I will take my chances (hedge against possible negative outcomes with Bitcoin) on the concept that the true knowledge age will adopt a money system that has the ideological qualities to sustain:

1. Freedom to produce

2. Freedom of speech

3. Personal permissionless property

4. Meritocracy free market thus not malinvestment and destruction of capital

Those who follow the true path won't get to gloat in 2017 when you Bitcoin HODLers are stacking your 10+X gains (though we might be stacking better gains than that already because smaller things grow faster), but we might (hopefully if we achieve our technological goals) still be standing with our 100+X gains when you all have potentially fallen into the abyss with the cancer.

Since no one can guarantee the future, this is what makes a market. Place your bets.

This is completely wrong in a large number (most probably a majority) of cases. Altcoin developers have generally been motivated by profit, either BTC or fiat profit, but probably BTC profit more often. This pretty much has to be true for the majority of altcoins that have no significant technological value at all (what else would the motivation be). These developers are certainly not people who don't have BTC or late Bitcoin adopters (of course such a thing doesn't exist now).

You really have to ask more about what is the motivation for altcoin investors than developers. For most of the developers, the motivation flows pretty obviously from that. And again in that case I think you are looking at a group of people (the investors) who for the most part just seek BTC/fiat profit.

It is only in very rare cases do altcoin investors or developers think their technology has merit or their coin could possibly be the next big thing (either bigger than Bitcoin or a coexist with the meaningful value). You can probably count those on one hand. Maybe even with missing digits.

Given the relative immaturity and near-total lack of adoption that cryptocurrencies have seen generally I don't really see anything wrong with having a few contenders at this point. If we ever get to the point where a cryptocurrency is widely adopted and you can rationally say it represents something even vaguely resembling a global ledger, then overturning it would likely be very destructive. That doesn't exist now. The closest thing we have to a global ledger is fiat, and overturning that would indeed be very destructive (using the term in a morally neutral sense as in "creative destruction")

Hey guys - you are in my TOP-20 bitcoin theorists. Both. Considering this, the latest replies have been lame.

I have presented a mechanism that may dethrone Bitcoin without asking the majority, the exact same way as it has always happened during monetary transformations in the history (leaving the majority holding the bag), and the same way as Bitcoin gained its valuation, which you and I are not ashamed to enjoy.

I am interested in hearing analytical criticism that could invalidate the theory. What I hear instead is moral criticism that the entire basis of money is subverted if such happens. Fiat subverted the entire basis of gold. Bitcoin subverted the entire basis of fiat. Resisting the change caused losses among the slow adopters, and heaped riches among the early ones. That's the way it goes, and Bitcoin is the archetype of that.

You wish that the world would freeze just because you got it right once and feel entitled to enjoy it forever. I also wished the same up until a year ago, but it is possible to wake up before it is too late.

Moral indignation that the entire basis of my wealth-effect gotten wealth would evaporate the same way it came. Sheesh.

Here's how to do tainting.  I won't even charge a consulting fee.  Start with a statement like this:

"We (govt), in our long tradition of honoring innovation and freedom, are excited about the possibilities of the revolutionary development of 'smart money'.  In order to overcome some of the deficiencies which hold the solution back, our programs are designed to produce a margin of safety necessary for every citizen to enjoy the benefits Bitcoin with confidence."

UTXO's are considered either tainted or not ('addresses' are meaningless.)  The formula is very simple:  If all inputs were untainted, so will be the output.  The definition of 'taint' is simply that whether a transaction was performed by someone who has properly registered the outputs they control (which can be accomplished automatically by using the services of certain proven entities(e.g., Coinbase.))

We (govt) issue charters to entities who have demonstrated the technical prowess to maintain the information needed.  An entity such as Coinbase already maintains the high precision and legally enforceable identity information and would have a big leg-up.  They also may simply supply this information to a partner entity who maintains a government charter.

A tainting authority has the legal authority to 'untaint' outputs.  They can do so, under procedures subject to the pleasure of the state, as a service to their customers.  Individuals who have a legacy stash can easily untaint it by simply documenting the origin with a reasonable degree of precision.  This service will probably be completely outsourced to chartered entities.

Individuals who wish to deploy Bitcoin autonomously ('dinosaurs') are perfectly free to do so provided that they appropriately account for any outputs they produce.  If they fail to do so their outputs will be considered tainted.  Even by this time a majority of users have evolved from the dinosaur phase into a mammalian form (fluffy, bleating) who run 'lightweight' clients on their smartphones.  Such wallets can be easily adapted to cross-check a proposed 'spend' (collection of inputs) and decide whether the output will be accepted (based on whether the inputs are acceptable) prior to payment.  Since networks are fast this validation only adds a second or two to a transaction.  Most people who would object to such a common sense solution are probably criminals and/or dangerous in other ways.

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Although a mere mortal like me (tvbcof) shouldn't be challenging the immense wisdom of an economic guru of Justus's caliber, I would submit that an untainted BTC with the flexibility to be used, un-discounted, at a not unheard of site like Coinbase would command a larger value than it's less flexible cousin.  But what do I know?

edit: spelling

but why would you want to deny them their rightful participation in a new form of money they might actually believe in?  afaict, they aren't trying to change anything about Bitcoin; they just want in.  that can be beneficial for the space.

Justus, you are so spiteful and disingenuous. Rather we prefer freedom to choose over "one size fits all". Your 0 entropy world is hell.

The knowledge age is going to kick slavery money to the curb. That is precisely what we are trying get rid of.

Zangelbert, where did you get your concept of the entire basis of money? Yes the basis for money has been to support usury, fixed rates of return, accumulation by capitalists of stored claims on fungible labor and fixed capital infrastructure (which results in an Iron Law of Political Economics collusion with the State, which the masses enjoin because there is no alternative). Isn't that the non-meritocracy the Knowledge Age and non-fungible knowledge production is killing?