Topic: [Hypothetical] What if Bitcoin were to restart tomorrow? (Read 5086 times)

Why would that be an experiment? It wouldn’t be any different than the current blockchain in hindsight, as the generation curve is identical. In fact, it would even be worse, as Namecoins are consumed and destroyed by registering domains.

Also, it looks like people like you are already buying them up en masse to hoard, probably much more fierce than Bitcoins were bought at the beginning. The only thing that changed is that the mining window for obscene amounts with little computing power got much smaller.

The situation with Namecoin will probably look the same as Bitcoin now in two years, if it makes it that far.

just accounting for currency completely ignores leverage.  i know of several folks who've bought btc on credit.

it would take just a small fraction of the worlds leverage to drive btc much much higher.

I'll just add in reply to te OP that, when everyone is rich, no one is.

I am using the estimates of governments.  They use educated estimates based on things like how much they bust, the size of grow fields in South America, spies in the drug cartels, etc.  Even if they are off by a factor of 4 and the drug economy is 20% of the world economy (A very high number), it still won't allow for increases like the ones we have seen since the beginning of Bitcoin.

You are correct that most of the wealth is not tied up in paper.  But that isn't relevant to the discussion.  What matters is the amount of economic activity measured in existing currency and extrapolating that to bitcoins.  The results are very unlikely to be off by more than a factor of 10, so they are still relevant to fact that bitcoins will  almost certainly never grow larger than 10,000 times their current value.

I'm not being negative, I'm just saying that it isn't going to be like the beginning.  I bought a bunch of bitcoins over the last month, so I do believe that they have a bright future.  But this is tempered with a knowledge on the limits of growth and the size of the whole economy.

You are simply being negative, maybe out of sheer laziness.

You don't need as vast a jump in value of the next few blockchains you get into early because you can instead get into more of them, get a larger piece of them, and work harder, with more experience under your belt of what works, to ensure they do acquire value.

You seem to just be trying to make excuses for not getting into new launches and helping them too to grow.

You probably had plenty of reasons not to become an early adopter of bitcoin too, even if people had made sure you were one of the first to know about it.

Seems likely to be more a case of not going to the station until you are sure the train has left than the train leaving too soon.

-MarkM-

No one can read the future. I like to envision a post-apocalyptic steampunk wasteland where holding a whole bitcoin is equivalent to being a millionaire. Let's meet back here in twenty years.

On a side note, how can draw any conjecture on the size of the 'underground drug economy'? Any number you come up with is complete BS speculation. I have never answered a poll about how much weed I sold last fiscal year, nor can I imagine that many other black market operators did so honestly. Any number that LE of governments throw about are extrapolations based on what they caught, which is impossible to calculate because they have no idea what percentage they missed...

I had a business partner with whom I designed and set up legal (usually) grow spaces in Los Angeles and the surrounding vicinity. Before embarking upon that venture, I had no idea how many lofts and warehouses in downtown were housing 20,000 square foot flowering spaces...and that is just what I have seen and worked on...only in LA. The real numbers have got to be exponentially higher. Only one garden I set up got raided out of dozens. Narcs seized about $50,000 worth of wet product out of a 600 square foot canopy space...and they thought they had made a find. 600<<<<<20,000. The proprietor walked after testimony from cannabis expert witnesses and 16 members of his collective.

I am no economist, but I know your model is oversimplified to the point of irrelevance. The vast majority of the world's wealth is not tied up in paper. I doubt that there will be explosive growth like the month of June again, but I do not doubt a steady stream of takers lining up until some confidence-shattering catastrophe.

I didn't take it into account because it is so small compared to the very rough order-of-magnitude estimates.  Bitcoin can't inflate to more than 2x more than what is currently in circulation since 1/3 of it has already been mined.  Mr. Bernanke can inflate to infinity, but I am comparing in terms of current dollar value.

Anyway, I hope that someday Bitcoin takes over a large part of the economy and not just the underground part.  It would be great to see the central bankers neutered by something like this.  And the economy would benefit as well since wealth would no longer get redistributed to politically connected businesses.

Of course, my main reason for hoping the bitcoin economy takes off is for simple greed

Oh, sure, I would have loved to get in on this a year before I did.

As for the $2.80 number, you haven't taken into account inflation (both of the money supply and of prices).

Very long view indeed.  You may be correct that we are still early adopters, but I very much doubt that Bitcoin will ever see the kind of proportional increase that it has already seen.  Just for some numbers to put in perspective:

The total US M2 money supply this year is around 2 trillion dollars.  There is some controversy over M3, which is much higher but no longer used.  So let's just double M2 and say 4 trillion dollars.  The US is about 1/4 of the world economy so multiply by 4.  That gives a worldwide money base of around 16 trillion dollars.

Now divide that by the total market capitalization of bitcoin at around 90 million dollars, and you get a ratio of around 200,000.  In other words, even if bitcoin replaced every currency in every country in the world and was used for every single transaction, a uBTC would still only be worth around $2.80.  I realize that you can't just derive value from the money supply.  But this is useful for a rough estimate.

For a more realistic number assume bitcoin is used for around 5% of all transactions eventually (which is about the size of the underground drug economy).  That means that the ratio is now around 10,000.  Which just happens to be the original ratio of increase (from 1/4 cent per bitcoin to $25 around the peak)

The time it took the original ratio of 10,000 to take place was around one year.  I find it difficult to believe that bitcoin can take over 5% of the world economy in one year.


So basically, the original early adopters have it better than anyone now can ever hope to get.  Not that we can't do well, but the gravy train has already pulled way out of the station.

Anyone that wants to reset simply has to start their own blockchain.  If you can get a bunch of people over to your chain, then you can distribute however you want.

I admit I'm a bit annoyed that I didn't buy in when I first found out about bitcoins 2 years ago.  I was going to download the client, but since it was peer-to-peer I thought it would clog up my network like BearShare.  Now that I know more about it (too late) I realize that it takes almost no bandwidth at all.  I was going to buy some bitcoins on the market at 1/4 of a cent each instead, but I never got around to it.

That being said, I would be against resetting the bitcoins.  It would be the ultimate moral hazard, and would make you no better than Mr. Bernanke and Co.

This is quite correct. The early adopters had skill and foresight, and that is admirable - but very modest risk, and enormous payoff potential.

The current wave of adopters have far higher risk factors to consider and far higher barriers to entry.

There is nothing more important that the early adopters can do than donate and invest in startups. Even only 10% of the early bitcoin wealth would catapult this next leg of the economy. And, by extension, make their remaining 90% stockpile far more valuable.

If bitcoin restarted tomorrow, nothing would be too much different. Assuming the user-base was the same in this hypothetical situation, there would be instant payouts for the first 2016 blocks, then the difficulty would jump up similar to what it is now.

You're twisting my words and adding no value.  I never once said the current situation is not fair.  In fact, this is what I said:


Obviously a lot of what I said in that original post was based on mistaken information (ie. the MtGox situation).  I've subsequently come out and said I was mistaken.  

I understand that sentiment. As a small business owner, it seems like rule and regulations hamper me ever step of the way. I can't put signs up without a permit, and when I do get a permit they can only be so large. I can't drop off ads in peoples mailboxes so I have to run ads to people's doors which takes much longer. I can't pass out flyers on the streets without paying a vendors fee. I can't put flyers on windshields parked in public places. It seems that every cheap and easy way for me to advertize is prohibited to me. This allows companies with higher advertizing budgets to outdo me even though I'm willing to put in more time and effort. So I really do understand what you are saying. And then, of course, there is self-income tax.

But, on the other hand, did you get a public education? If you were raised poor in a third-world country, you may not have had any education, permanently limiting your upward mobility. Did your parents receive any public assistance? Foodstamps, welfare, ext? This may have helped them get by at a slightly higher standard of living, providing you with more opportunities. Did you use public libraries? Access to information, even if it is just fiction, helps broaden your horizons and integrate you with mainstream society. Did you go to a public college or receive public scholarships or get publicly backed loans? I myself, would not have been able to go to college if i had needed to pay the cost of private tuition out of pocket, and I think many would be in the same boat.

So perhaps the government has stood in your way, and perhaps the issues and items you are concerned about do need to be addressed. I'm not saying government should be given a free pass to do whatever. But failure to acknowledge where the government has succeeded is shortsighted. Lets figure out what the government does right and reinforce that, and figure out what the government does wrong and eliminate that. I simply will not accept the over simplistic answer, 'they do everything wrong'.

PS - I'll try not to hijack the thread anymore.

I agree with the OP. Also, Apple should liquidate all of their shares and redistribute them evenly because it isn't fair that early adopters in 1980 were able to buy their shares so cheap. If Steve Jobs sold all of his stock within 5 minutes, he could make the price go down a lot and it wouldn't be fair to the people who got in after.  

I will say that I grew up poor. So I've seen much of this firsthand.

For the purpose of this discussion, I want to note that the only thing which has stood in the way of my own "upward mobility" has been the government.

I would argue that any government effort to determine who is at their current predicament "through no fault of their own" versus through their own irresponsibility is bound for complete failure.

Government works through bureaucracy; sets of procedures and rules. Human beings easily adjust their behavior to escape the controls those rules are supposed to impose. It's not hard to game a government bureaucracy. There are hundred billion dollar industries built around this (e.g. tax planning).

In the one case where we know someone is not at fault, with children who are born into poverty, subsidizing them has the unfortunate effect of encouraging people to have children that they are not in a position to support. In fact, studies have shown a marked increase in children born out of wedlock with increases in welfare.

If you want to fix the injustices of fate, charity is the way to do that. Personal relationships where the giver and the receiver are in direct communication, or at least have fewer intermediaries between them, creates accountability for those receiving aid, and they appreciate what they're given rather than taking it for granted the way many welfare recipients do.


I have met scores of people who make no effort to fix their life, indulge in the most self-destructive behavior, and live off of government.

This kind of irresponsibility, as far as I've seen, is rampant, and is a direct result of welfare and other forms of government aid.


No one deserves to suffer, but no one deserves to be forcibly made to give up their wealth to fix someone's problem. The government shouldn't directly cause the latter to try to alleviate the former.


Government can't start interfering in people's lives based on what the majority considers is 'fair'. Is it fair someone was born more intelligent than another? Should we tax him at a higher rate to make life more fair?

The way I see it, you can either go down of the road of trying to use government as a tool to make the world fair, which has no ends to how much it will interfere in innocent people's lives to get the funds for this type of 'social justice', or you can have a government that we know maximizes wealth generation: a limited government that enforces contract law and doesn't interfere with people trying to create and expand businesses, or interfere with the incentives (e.g. through a progressive income tax) that motivate people to do so.

The more prosperity there is in society, the more opportunities every one has. The opportunity that someone in the lowest decile of income has this century is orders of magnitude greater than the opportunity that someone in the same decile had 200 years ago, and the cause of this change is the increase in overall economic prosperity.


Well put.

I. Many early adopters neither took risk or had foresight. Running a CPU consuming app for a few days or weeks is something that anyone would do for a project he likes (Now please don’t nitpick me on the bit of electricity consumed or heat or strain on CPU). Then, stumbling upon Bitcoin one year after and finding your wallet.dat also requires neither risk or foresight. All of this just needed a series of coincidences usually called "luck".

The people who indeed took risks and are taking risks are the speculators and the miners who invested money in GPUs.

II. I agree the current distribution is making it difficult to find an equilibrium price, and theoretically the free market would take care of it in the long term, but Bitcoin is a special case, as it is moving with Internet speed. A year ago, one Bitcoin was worth a few cents. Major disturbances become more and more likely as there are individuals with hundreds of thousands of coins, and Satoshi is suspected to own more than a million.

III. I don’t think there will ever be a real solution, to quote Satoshi:
The "problem" will just be postponed and the effect reduced for a while. Meanwhile, trust in Bitcoin as an investment would of course vanish.

IV. In hindsight, the solution would be to alter the distribution curve of Bitcoin into an S-curve, adapting more to the increase of demand. It’s pretty much impossible to time the curve right though, as one can’t predict the future.

Bitcoin does (did) not behave like a precious metal would. Satoshi was the first miner and he received 100% of the reward a few tens of thousands now do. I’m pretty certain that this wouldn’t translate into an analagous situation with the first gold miner, who doesn’t even have a pickaxe.

The supply is totally unelastic because it is unaltered, no matter how much effort is put in. The algorithm rules.

I agree. Restarting the block chain wouldn't help with distribution (if that is even a problem). Assuming not many people left, the difficulty would start up at the same rate as now. 7200 coins made a day, and a majority to the people that have sunk a lot of money into mining. In a year, some people will still have a huge share.