Topic: = Grand Unified Solution to Lost Coins, Hoarding, Deflation, Speculation = - page 4. (Read 11146 times)

And another quadrillion from me. I want to keep some savings in bitcoin. If wanted them to decay, I would use fiat.

interesting idea for me. But decay only if bitcoins sit in single adress for 10 or more years. People would only need to move their savings from one address to another every 10 years, to prevent their money from decaying.

Just take fiat money or better gift cards then you will have it.
No deflation and by some gift cards you loose the value after a period of time.
But you can loose them also.

+ 1 Quadrillion

this. A thousand times this.

First, OP presumes hoarding is the cause of volatility and that the proposed solution is a clean fix for that, both of which are dubious assumptions. I'll counter that it is the buyers and sellers rushing in and out of poorly operated exchanges, not the hoarders that are causing volatility. Hoarders are generally waiting for the market to stabilize after long term price discovery has become much more efficient.

Volatility, in my opinion, will NOT subside until virtually everyone knows about Bitcoin and has made their decision about whether to participate or not.   Also, it probably needs to survive in some practical form after a government assault. We'll have waves of volatitily, probably for years, until that process is complete. Then we will have true price discovery. The measures OP describes cannot counter those factors; they are fundamental.

Also, it is totally unrealistic to suggest that the Bitcoin community would just collectively adopt these kind of changes. The entire Bitcoin community, by defintion, is voting for the current rules. If the rules are changed it would not be a magical transformation of Bitcoin into Bitcoin 2.0. It would be a fork, and I will stick with the block chain using the original rules and will not participate in the new coin. If they had value I'd sell those Radioactive Bitcoins immediately and buy more Original Bitcoins.

Why not make it voluntary? I can check a box in my client and those coins will be destroyed at the pre-determined rate set by a handful of people. Or would this be a forced issue, where everyone has to participate?

Well, it can be argued that many people like bitcoin because of these things and not despite them. I could take all your arguments "why those are bad things" one by one and present counterarguments "why they are good things".
But your proposal can be somewhat adopted without any changes to bitcoin protocol. Only if the people using bitcoin will want to. All it takes is (enough, majority, some important) merchants taking into consideration coin age. You can open a store with prices in BTC multiplied by age-coefficient. When buying BTC for fiat, you can pay more for fresh coins than for old coins. You can boycott early-adopters and hoarders altogether. If high number of people do this then your demurrage idea will be implemented. If not enough people do it then well... perhaps they disagree with your idea.

I have a great idea in order to do something that would have the same effect.

Instead of encouraging people to spend their money, let's spend it for them!  So here is the idea:  we steal a bit of everybody's money, and we use it to fund all sorts of stuff.  What we do does not matter much.  We can just build stuff like roads or schools.  Those things are always useful so nobody will complain.  If there are already roads, schools or hospitals, we'll just destroy them and build new ones.  We'll just say they were too old and needed replacements.  And if we still need to spend more, then we'll just hire young people as soldiers and we'll send them to war abroad.

How does that sound?

This already exists, it is called Freicoin.



http://freico.in/about/

We already have the software released & ready to download.

The currency that is decays should be sent back into the mining pool less a transaction fee.

The mining output should increase up to a smallish percentage like 5-10%

I assume that quite a bit of the early bitcoins are lost in space. If the lost coins were sent back into circulation at a low but steady pace, it would give an incentive to mine even beyond 2140.
Also, one would know how many BTC's that are actually available, thus giving a more stable price.

I think I agree with one of your general idea: Incentivize Spending (BTC)

IMO, this needs to be done organically. What I mean is, more businesses (and individuals) accepting Bitcoin and fast and easy exchange.
 
The decay solution is complex to implement. Whatever decay rate you choose, there will be fair amount of wallets where either the decay rate is too fast or too slow to make an impact.
As an example (totally theoretical, just to see numbers):
Beta   0.00000001   
1 Day   86400   seconds since last block (lets assume)
Begin   1,000,000   
End   999,136   
Difference   863.6268595   

In one day, 864 coins sent back to network. For a person holding 1 million coins 864 may be smallish.

Lets say you put a restriction, the decay does not kick in after n years. Now how long does it take for all the lost coins to come back into the network? What if significant coins were lost in a small space of time like a year of multiple heists. Then later we'll have years of low BTC supply contributing to more volatility. Usually a currency should get more stable as it progresses in usage.

Interesting proposal, but the negative image it projects can easily relegate Bitcoin back to murky deals when mainstream media picks up this.

Translation: "Join our Cult, adopt all our propaganda, or leave us alone."

This Cult Mentality...
Is why Bitcoin remains an obscure, hoarded commodity (NOT a currency)...
And why several dodgy exchanges effectively control Bitcoin...
And are systematically looting BTC.

This has nor changed since last time I checked in 2011...
Because serious businessmen spend 1-2 days looking at BTC...
And then they just move on.
 

I kinda agree with OP. But decay should only happen to BTC's that have been sitting at the same address for X time.

This would mean that lost money would be re-issued. For hoarders it would only mean that they would have to move their coins to another address they own every X time.

The time would have to be pretty long. 5-10 years, but the decay should be larger, like 2.5%

But then again - the rules are already set, and I doubt they will be changed even though it means that BTC will go extinct by definition some time in the far future.

Welcome to Freicoin.

imho, demurrage makes sense for regional currencies as it encourages local spending, but macro-economically (i.e. on national or global scale) it will have the same effect as inflation: the flight into assets that don't lose value, like stocks, land, real estate, creating all the bubbles we know so well there.

Hoarding is not a problem. The word merely means saving. Saving is virtuous, not a problem to be "solved". I'm not interested in what "mainstream" economists take, give or do. If you want what they are selling, then please just stick with dollars or the local currency of your choosing, and leave us bitcoiners alone.

We want the miners to make lots of profit...they are securing the network and we want the network to be worth securing.

It sounds like the opposite of what bitcoin is trying to achieve. Governments, or in this case miners, stealing your money...

The txn fee is there, as an incentive for miners to keep mining after 2140. Due to the massive amounts of txns, the fees will be extremely low, but still enough for the miners to make a bit of profit.

Plus you will see more and more that merchants are going to set up their own miners / miner clusters, to make sure their transactions are verified quickly, thus helping to secure the network. (as it is in their best interest too)

Everything happening right now, has to do with the fact that it is a new and upcoming currency, this is a stage every currency has to go through and there is no avoiding it. Let itself play out for another 5 to 10 years, it will be much more stable by then. Hence why the beta tag is still used on bitcoin.

They depreciate at the rate of inflation either way.

And it would still be their freedom to do so. But this solution incentivizes spending, which will be good for growing the BTC economy.


No problem. The things I listed, in order, and an explanation for why each needs to be addressed:

Solve the problem of lost coins / lost keys:
Can't really argue that this is a problem. Coins are lost forever in the system never to be found, which means the total coins in circulation will never really be 21 million, and will always be decreasing. On a long enough time scale, they will eventually all disappear.

Prevent hoarding of coins / make it unprofitable in the long run to hoard them:
The economy only grows when money is flowing and changing hands.

Encourage people to spend their coins as a currency:
Bitcoin was intended to be a currency but people are treating it as a collectible because there is no incentive to spend. Merchants will be much more likely to accept Bitcoin as payment if they know people will actually use it as payment. Mass adoption thus becomes more likely.

Prevent over-speculation leading to volatility:
Last 3 days, enough said. The market needs to be stabilized for the public to gain confidence in it.

Create greater incentives for miners and give miners a reason to mine past 2140:
Under the current system, why should anyone mine past 2140? It's also unprofitable to mine, whereas this would make mining more appealing.

Eliminate transaction fees completely:
Transaction fees discourage spending and encourage hoarding.

Solve the problem of deflation, while still preventing inflation at the same time[/quote]
Deflationary currencies don't work for precisely the reasons I already pointed out. People don't spend them. Inflation also has adverse effects, such as when prices go up at a disproportionate pace to wages. It's not easy to solve both these things at once; usually one must be sacrificed for the other.

SolidCoin implemented this idea and it was not well received.