Topic: I just created 100 pennies.. and loaned them out, you owe me 101 pennies….. - page 3. (Read 6066 times)

You mixed the cause and the result: It is demand created competition, and competition in turn increased the cost. In 2009 it cost almost nothing to get bitcoin since there was no serious demand

Fiat money on the other hand is a monopole system, no matter how high the demand is, there is no open competition to produce fiat money, thus the production cost will always be zero

Just because something costs money to obtain doesn't make it valuable.
If I charge you $4000 for a $2000 computer I've spent a week beating to a pulp with a sledgehammer, you didn't get a great deal.  Even though a week of my time is worth $2000, and the computer did cost me $2000.  I didn't create value, I have *destroyed it*.

Just like you spending $2000 on thumb-twiddling machines & burning $2000 of electricity doesn't create $4000 of value, it merely *destroys* it.

Bitcoin is like gold, you must pay real resources to get it. Fiat money is a trick, central banks pay nothing to get it. Fiat's backing is based on a consensus, so does bitcoin, bitcoin can be backed by armies, cows, cars, etc... as long as that consensus is reached

Change the 100 pennies to 100 trillion pennies, same principle applies

Velocity of money has nothing to do with money creation. You move a dollar one million times between your left pocket and your right pocket, and voila you are now a millionaire  

Indeed, that's the whole point that kills that recurring story about "asking interest implies the need for printing continuously money".

Because that's not how it works. There are far more "pennies" in circulation. It's true that debts exceed the money supply but that's not neccissarily a problem since each "penny" can be spent more than once. In fact, if I remember correctly, the velocity of money in the US (how often each unit of currency is spent in a year) is around 4.

I didn't know you were bullish

Except hardfork
*BTW, my poop is immuned to being hardforked u kno

1 BTC = always the same % of participation in the total of 21 million coins in the blockchain. This is unbreakable and what makes it the objective superior payment of the future, without no one being able to tweak that. Thats why massive suicides will ensue on the future after people realize they had a long time of cheap 1 BTC participations inside this monumental, mathematically perfect network.

No more than a blockchain is a central authority.  For a fee (think of it as the price of mining), I'll let you congregate in the sewer below my house & [fairly] fight it out amongst yourselves for bits of my valuable poop.


At this point, yes.  Poop as world currency is still in its nascent stages, these problems will all be eventually solved.  Just like Bitcoin's 7 transactions per second limit.  Have faith!


Lol, do you know what the proposed sidechains are?

You would act like a central authority, what if u decide to loan all of your existing turds? How could we repay debts?

Also, turds are easy to counterfeit, difficoult to divide, to storage, to transfer, and prone to degradation over time.

But, Hey! We could use the blockchain technology to make a turd backed coin, so the turds can never move and only change their ownership...but... at this point, Do we really need turds? It's a waste of resource to storage all this turds instead of using them for power generation or to fertilizze camps , so.... I think bitcoin is still better.

KNC, an ASIC manufacturer, mines.  It mined @1200, and is mining now.  If they're not terrible now, they must have been pretty awesome @1200.
Re. market feedback minimizing margin:  The feedback loop has ~6 months of lag.  Negative feedback loops with a time delay--that's what an oscillator is.

As long as they have customers, they are not stupid !

After all, the risk is taken by the miners, not those that sell the equipment.... as long as they sell it of course

But it is not because you can take a 5% margin for your efforts that you are necessarily stupid.  You're just doing hard business like anyone else.

In every highly competitive market, there is a small margin to take.  If the margin is bigger, it attracts more competitors, and the margin goes down.  If the margin is too small, people leave the business, and the competition diminishes.  The only difference in mining is:
1) the total sum of business to take is finite and pre-determined (the market cannot grow)
2) the total sum will diminish over the years (the market will shrink !).
at least, concerning the block rewards.

The fees, that's something else: that's normal business that can grow.

Within a market, the margin is determined by your efficiency.  If you are highly efficient, you can obtain a decent margin, where your competitor who is less efficient is dying.  But given that the efficiency is essentially given by the ASIC manufacturers, and that there are not so many independent ones, the room for efficiency for individual miners is small - mainly the price of electrical power I guess.

I have no idea about the margins right now made by miners, but my feeling is that they are not terrible.

If you think that major ASIC manufacturers & their backers are stupid, I got nothing.
If you feel that the same mining concerns that mined @1200/coin are getting the same profit margin while mining @230/coin, I got nothing.

Don't you think they are ?

Of course there will be a small margin of benefit, because otherwise you don't go into the business.  But if the margin is larger, then more people will go into the business, increase the difficulty, until the margin gets so small that it isn't worth doing any more.

No. If mining cost approached BTC price, megamines would be an exercise in stupidity.  Why take risks with no reward potential?

Isn't it ?

Well, that sure was Satoshi's prediction, unfortunately it didn't quite work out that way, did it?

You seem to have missed my point, that being: both fiat and Bitcoin are created "out of thin air."  Caveat: fiat has an existent economy behind it, "stuff" backing it--armies, cows, cars, etc., etc.  Bitcoin, OTOH, does not.  It merely dilutes the currencies of existent economies, much like counterfeit money.

The 21mil BTC limit is neither here nor there, that can easily be changed with a hardfork.

There is another fundamental difference, and that is there is no seigniorage. The miners have costs that are approximately the same as the value of the coins they produce. In fiat, the seigniorage is approximately 100% (in case of debt issuance), which goes to the state and the friends of the state. So even (for a hypothetical different bitcoin) with a continuous inflation, there will be no transfer of value from old holders to receivers of new money. Both gains and losses in case of fluctuations in value, will be spread over all holders.