Topic: = Grand Unified Solution to Lost Coins, Hoarding, Deflation, Speculation = - page 3. (Read 11172 times)

The mining costs clearly get passed onto new people entering BTC, ask yourself, how is the person saving BTC paying for ongoing electrical consumption when their wealth is going UP, that is the opposite of paying for something, that's being paid.


Pointing out that I am in the minority is not a refutation, it is a simple logical fallacy that is all.  Further more are am well aware that Keynsianism is not gospel here, rather it the rejection of Keynsianism which is the gospel.  Thus I find it necessary to defend people like the OP and point out the errors of the majority position.

Here is a question, why dose the saver get interest for a loan when it is loaned just to another consumer.  The borrower simply performs the consumption of goods that the lender has deferred, their is no overall reduction of consumption, yet the lender still takes interest.


porcupine87:  I never said that all goods decay, please read what I wrote.  I said that non-decaying goods are a small fraction of the basket of goods necessary to live.  And goods necessary to live are always going to be desired regardless of what money is made of.  When a non decaying commodity is made money then it gives money an unfair advantage over the basket of goods.  All money has time-value because it is universally accepted and can act as a wild-card to satisfy unanticipated needs or to take advantage of unanticipated opportunities.  The holder of non decaying money thus received the benefit of liquidity without paying for it, and they can rent out that benefit to earn interest which is how the magic of loss-less savings happens, it's just an inflow of interest to the money holder.

So you can't eat bitcoins neither. Or gold. Or silver. Or land. There are many good where you don't have decay. Gold and silver are got not because of accident so precious all over the word. Besides other properties like high value-weight-ratio, high fungible, easy to identify, relativ easy divisible etc. gold as the property to be scarce! And because of these properties some goods just qualify to the "the good that everyone accept as part of an transaction = money".

A good that decays do not everybody want. Why? Because of its decay (if there are other good with no decay)!


Like mentioned above there is absolutley no disadvantage with a money which increases in value over time. It is a fact that you can't use bitcoin for something else than spending. You can't eat it, you can't drive with it, you can't wear it. More worth money in your bank account doesn't make you richer. Only if you spend the money, you'll get rich. It is exactly the same as wich stocks. In some day in your life you will sell them, no matter how greatly the value of the stock is rising. Because in some day you are dead.
Otherwise than stocks you don't sell bitcoins, you directly use it as a medium of change.

Yes, thank you.  What was missing from these forums was yet one more person parroting the stock Keynesian party line.  You even share the perversely keynesian habit of confusing money with wealth in one sentence, and understanding them as distinct things in the next.

I don't point out your obvious Keynesianness as an ad hominem, but rather to simplify the refutation.  The school of economic thought that you follow is not taken as gospel here.  Merely repeating what you've found in your textbooks will not win you many arguments here.

At this time, I only wish to address two things specifically.

When you save, you are deferring consumption.  You are holding the the token representation of wealth, rather than the wealth itself.  The wealth itself is then free to go where the price signals tell it to go, whether to someone else's consumption, or to capital formation depending on the overall market.

Boom and bust is indeed bad, or at least sub-optimal.  However, it is not caused by savings, it is caused by meddling in the price signals.  Keynesians tend to forget that everything they preach involves suppressing or enhancing price signals, making it impossible for the market to provide correct information.

There is a carrying cost in bitcoin too. It is the mining cost. It has to be paid with most transactions.
Isn't that enough?

Saving is not the same as INVESTING, saving is simply withdrawing currency from circulation and dose not result in any increase in future production, in fact all evidence points to a reduction in future production when this is done.  An investment is a form of consumption, capital goods are purchased, buildings constructed etc, this adds to the stock of capitol.  On the other-hand saving simply results in an unconsumed surplus of goods (generally consumer goods) and this reduces the returns of those that produced them causing them to lower production, reduce labor costs and scrap excess capital that can't be productive.  Thus some of the collective stock of capitol is destroyed needlessly, years later this must all be rebuilt to accommodate the new consumption, the wasted capitol if it had been utilized would have lead to an even larger production in the future, this is why boom-and-bust is bad.


alexeft:  It is saving without loss that is the problem, if a person saved real goods they would have a carrying-cost to that saved value. 

+1

Truthfully, I don't think we know how this is going to play out. Those who say "a deflationary currency is bad because it prevents spending" are probably right. So what? Maybe the planet needs less wasteful spending. I will spend my bitcoins for things that are worth more to than the appreciation I will get from the coins themselves. What's wrong with that? Right now, I have no incentive to save or be selective in what I consume.

I believe this an experiment worth doing on a global scale. If it does not work, then bitcoin will evolve or one of her modified cousins will dominate.

They may come up with a centralized digital currency, but without the intrinsic values of transparency, anonymity and low transaction cost, I think there will always be a place for the p2p cryptos.

There's some that make it happen, there's some that watch it happen and there's some (probably serious business men) that wondered what the heck happened.

This is a common claim that looters like to make to justify their theft.

It turns out to be exactly 180 degrees from truth.  The reality is that savers are doing a service for the market, not the other way around.  By deferring consumption, you are allowing the market to invest the resources that you would have consumed in the construction of new productive assets.  Growing the productive base is a good thing, and should be rewarded.

I still don't understand how a saver burdens others in a free society be it deflationary, or inflationary. I produce and, after taxation, the result is mine to decide upon.

Trigonometry and 'Knowledge':  Besides the fact I can't eat trigonometry, it and all other knowledge is useful only when it is in the mind of an educated human being, thus this is whats called human capitol.  Human capitol decays when people die, and they must then be replaced by a laborious process of training new people to be mathematicians.

A Lighter is a trivially obvious case of a tool that wears out with usage, anyone who has ever even used a lighter will tell you this, and on top of that is uses fuel.  An item dose not need to be single use to still decay in use value (The knowledge argument was freaking brilliant compared to this drivel).

Money must decay to be equal with goods, because non-decaying money when saved is simply achieving it's apparent magic of loss-less saving by stealing the difference from the people who actually produce.  Money can not do real magic, it can not stop time and violate the law of entropy, all it can do is a create a structural transfer of wealth/value from one group to another, we call that transfer interest and it is a parasitic burden on virtually everyone which is funneled to those that hold money.

I never said saving was bad or should not be done, but their is no reason why a saver should be subsidized by the rest of society.  A small decline in value causes the saver to pay their own way and not burden everyone else and is thus fair.  A hyper-deflationary currency is even more egregious as it funnels not just a modest stream of wealth to offset decay, but an absolute torrent of wealth ABOVE WHAT THE SAVER SAVED, how is this in anyway fair, the transfer of wealth is brazenly obvious here an can not be defended as 'saving' anymore it's simply naked parasitism.

In the end everyone has to find his own equilibrium between saving and spending.
There are many opportunities "not to save" and to spend and consume instead (loans, fiat money, decaying goods, mortages, ...). Someone can go to extreme and enjoy everything in the current present moment on the expense on dire consequences later. Extreme example of this are the drugs. The give you "perfect moments", "absolute flawless present". And the ones who wish to live to this extreme should be able to do so. (They should have both right to do so and the obligation to face the consequences, of course.)
Now, please allow the people wishing to live to the other extreme and shift their equilibrium towards "extreme" saving, keeping value, etc. to have tool to do so. Like inherently deflationary currency, like the bitcoin.

Imagine a dreamer with a dream: I wish my grand grandchildren (in 100 years) will be able to move and live on Mars (all paied by themsleves) and my only wish is to conserve value and wealth for them. Without any loss, without any "taxation" and forceful "for the common good of the society" sharing in the meantime. If a sleeping BTC wallet cannot do this, what can? There should be something what does, don't you think?

Keynesian economics is not economics it is a crime.  Those promoting it should be prosecuted.  Universities promote it because it gets them more money in their pockets.  Jack Lew got a $1.2 million loan as a university administrator all based off student loan debt.  Ask Jack Lew for a $million loan and he will tell you off.

Have you ever tried to read general theory, it is incomprehensible intentionally. That is why the first qualification of fed chairman is to be able to produce the most non-sense that is believable.  That is why Paul Krugman shows up in movies.

Sorry to be so blunt

I just Googled "Savings Account" and...

About 278,000,000 results (0.47 seconds)

Nope, this solution won't work. People like to save their money.

"deflationary spiral" is a ridiculous concept. Deflation is simply a speculative bubble of money. Bubbles pop, and so deflation ends.

As stated Freicoin implements everything Tesala suggests and we believe it will have the effects he describes, plus additional benefits.

Chief amongst those additional benefits is a low, ideally zero rate of basic interest (basic interest is what you pay for a no-risk loan).  The deflationary nature of BTC means a borrower would be assuming a massive risk in taking a BTC denominated loan.  Deflation brings huge UNEARNED windfalls to lenders and is thus very bad because it suppresses lending and investment.  In a Freicoin economy in which money is losing face value over time lending at zero interest is still a gain for the lender as they can defray some or all of their demurrage this way, the borrower effectively pays the demurrage while holding the money and has to come up with more then they borrowed to pay back the loan (to the borrower it's just the same as any loan in this regard).

Now let me address another point that opponents of demurrage often raise.  The desire to store value without loss, they point to this desire as a justification for a money system that will allow savings without cost (like Gold or BTC).  But they rarely ask how this is done in a money system when the 'value' of money is all out their in the real world in the goods and services that the money is competing for.  When they do it usually consists of "well I did not spend my income, thus I consumed less now, entitling me to consume more later".  A bit deeper but your now fully dependent on the marketplace to due two things, first it needs to accommodate your non-consumption (you basically reduced money supply) and then it needs to accommodate your increased consumption later in which you reintroduce your money (expanding money supply).  So the marketplace is doing you a service when you use money in this way, and what are you paying the marketplace for this service?

Perhaps you think this service costs the marketplace nothing, and thus it is fair to pay nothing for it?  But ask, could the same thing be done if you were to "go Galt" and just live on your own without anyone else?  For this exercise we will ignore the obvious division-of-labor that makes you less productive alone and just ask can you 'save' and suffer no losses by just stockpiling things like food, clothing, tools etc.  Obviously these things decay away.  BUT BUT these lumps of rare metal wont rust EVARR!!! Well great job try to survive on those, on you can't, and it looks like they are an insignificant fraction of your total wealth anyways as your sustenance is always dependent on a basket of diverse things, some decay rapidly, some slowly, and just a few not at all.  So total up that whole basket and figure out how much it decays in value per year, you alone alone can't save value any more efficiently then that.

As soon as you realize that goods in the real world are constantly decaying and being made anew by hard working people we can see that 'saving' with money is just an illusion, sure you might have consumed less today to actually have the pile of money but someone else needs to make the goods and services that you intent to purchase again someday.  In essence your asking everyone else to put the goods you didn't consume years ago on a shelf, maintain them against decay at their expense and then provide them too you at a later date.  Now obviously goods are not literally put on a shelf and everyone here knows that, but people seem to have it in their minds that money is like some kind of 'Time-Tunnel' that moves unconsumed goods and 'deferred-consumption' from the past into the present or future.  And in a sense it dose, but the marketplace undergoes disruption to achieve this, first it has unconsumed good to deal with which will result in economic contraction, then it has a shortage as money comes back into circulation and bids up the price of goods.   All this creates losses on the part of other people in the economy and they pay for the time-tunnel magic of the savers deferred consumption.  Demurrage corrects this cost by putting it on the saver ware it belongs rather then on the market overall, this is why it's fair and normal money is not.

As somewhat of a newbie to the intricacies of Bitcoin, I am curious about "lost coins."

Is there a way for us to know exactly how many lost coins there are?  Say coins not circulated in 5-10+ years?

If not, it seems reasonable to have those coins be able to be returned to circulation, somehow.

Also, say some something catastrophic happens, war, earthquake, tsunami, etc.  Hundreds, or even thousands of BTC users wallets are lost forever.  What then?  The coins are lost forever as well?  Will the rest of us know how many are left to circulate? 

A free ride? To save, one must spend less of HIS income and put the remainder into bitcoin. Doesn't that increase the value of it? Doesn't everyone benefit from this value increase? Doesn't everyone benefit from value that is not lost over time?

Contrast the above with fiat and inflation. Nobody saves, everyone borrows and then booom!!! We borrowed the future, including that of our childen, grandchildren etc.

Rushing people into spending their money and not saving at all is a very very bad proposition, as is proven these days. It only helps those on the receiving end, only they forget that that help is only short term.

I agree, but I'll play devil's advocate and say that then they'll mention the free rider problem.

They'll say that since spending is necessary for a healthy economy, by refusing to spend your savings you benefit from a healthy economy generated by others, but you don't contribute to it.

The free rider problem is the magic argument to defend any socialist/Statist view of the world, anyway.

There was a nice rebuttal of the free rider argument somewhere on this forum I think, which was titled "I am a free rider" or something.  The guy was mentioning all the things he selfishly uses all the time without paying one cent for it:   Wikipedia, free software, scientific knowledge, public domain art and so on.

Another day, another ill informed post....come on guys please do some basic research before posting this stuff, most of the answers are out there in plain english already as to what Bitcoin is and is not.



This is a built in feature, not a problem. It allows for appreciation in value over time as they are lost forever. They have already been lost simply because in the past Bitcoin was an experiment, and they were careless with their wallets as Bitcoins wernt really worth anything. They are now though, lost coins will be less of a problem as now losing your Wallet could cost you $1000s instead of nothing now. People are being much more careful.


Impossible. Even if it was, if it was unprofitable to save, no one would.


Absolutely. Moving Bitcoin out of "its the new gold!" phase and into mainstream exchange for goods and servies is key to Bitcoin's proliferation. Bitcoin is an oddity because it right now both acts like a commodity and cash.


Impossible. We cannot choose what the media and economists/speculators say or do. Even if we did, that is fascism. Bitcoin is the anti-control.


Way to early to speculate on the mining trade 100+ years from now. When the last coin is minted in 2140, miners will collect the transaction fees because the network still needs to process transactions. So, Eliminating fees gives miners no reason to continue after the last BTC is found. Fees will likely need an adjustment later on, but who knows when.



Bitcoin is designed on purpose to be deflationary This is an example where basic research would have indicated this. Inflation is curbed by mining model, no matter how much power goes online the rate of new coins entering the system remains the same and only goes down from there to zero sometime in 2140. Unlike our fiats today no one can just "print" more bitcoins and make the rest less valuable. There are only 21 Million, ever. Because Bitcoin has the ability to move it's decimal place around the value of a coin can be indefinitely adjusted to  reflect how much wealth it represents as each remaining Bitcoin becomes more valuable, because there will only be less and less of them.

Bitcoin is entirely self regulating in a way Fiat could never hope to do.