Topic: If max bitcoins represented the global economy today (Read 5135 times)

+1

Very well said.

Gah, no it doesn't.  You are confusing coercive centralization with market-based centralization. Bitcoin moves us away from the former, but there is nothing wrong with moving toward the latter, because it is market-based (voluntary).

Further, the fact that most people won't use home clients with full blockchains is absolutely fine. We don't need every grandmother to be wired into the full distributed network. So long as the number of "full nodes" doesn't drop into the hundreds or double digits, then Bitcoin remains very much decentralized. Even if the only full nodes were 500 global companies with the massive blockchain sitting on their servers around the earth, that'd still be just fine. It's still decentralized according to any meaningful sense of the term.

We need not fear natural, market-based evolutions of how Bitcoin is operated, and such evolutions will occur necessarily toward efficiency. 

The idea of bitcoin is that there are no regulatory means of preventing participation in mining and relaying transactions. Increasing hardware requirements to run a full node is nothing compared to licensure barriers that prevent participation in regulated industries.

that undermines the whole idea of bitcoin. it adds centralization and lowers security.

And if a pc will not able able to use the client because of the size of the blockchain, that could be an indication that the current system still has some improvements to be made. And i know these improvements will never be made because of the sheer amount of moaning and groaning people would do because all their fortunes would be useless. and what i am suggesting is checkpoint blocks(all coins associated with all accounts are listed out, so no previous blocks would be required. then when you need to reinstall the client, it would come with the most recent checkpoint block).

Over all i have given up on bitcoin, development as essentially stopped, and there are no forks that implement any features beyond playing with block times and the max amount of coins possible. and if a newer and better implementation comes along, i don't want to be stuck with worthless bitcoins. Although it does work great for sending money through the internet  .

evoorhees, after 2 seconds thinking about after reading your post, yes, money supply would be the more accurate figure to use.  i would think though, that total global money supply would be best, not just physical money.


ok, i haven't come across any information that said said that can be done.


i would agree.  already waiting for it to sync is a minor annoyance.

The fact is that Bitcoin can be changed to use more than 8 decimals. From this point of view it can support any economy imaginable. There are other issues Bitcoin would run into MUCH earlier though. The system doesn't currently scale well to a billion dollar economy, it is completely unusable for a trillion dollar economy. Even if the whole world used Bitcoin, there are other issues related to scaling that need work before we have to worry about the decimals.

So far I haven't seen anything that can't be overcome though. Processing and verifying Bitcoin transactions will be more and more server-based in the future and I have a hard time believing that server processing power, bandwidth and disk space will be insufficient for Bitcoin, especially when we use compression methods to make it better. There are actually some compression enhancements coming to Bitcoin very soon.

It's important to take into account that servers get better all the time. Disk space is cheaper, bandwidth is cheaper and faster, processors get faster etc. Overall it's very unlikely that Bitcoin can't be scaled to work, it'll just be a bit different than it is now. Once Bitcoin gets bigger we'll have more client-server type wallets in use because regular PC's won't have the capacity to run full node Bitcoin anymore, not conveniently at least. This doesn't kill the decentralization either, anyone can run a server as well.

The future is in web wallets such as Blockchain.info, Windows/Linux clients such as Multibit and Electrum, and Android clients such as Bitcoinspinner. I predict that within 5 years regular PC's can no longer conveniently use the official Satoshi client, in fact one could argue that it's quite inconvenient already. That is just the way it is and should be accepted, fighting it is simply delaying the inevitable.

This calculation has been done many times, and is kinda silly for a number of reasons.

First, when people use the term, "size of the economy" what they're referring to is GDP, which is a measure of how much money was spent that year. GDP itself is a frightfully terrible way to measure economies, but we use it because governments like to show that when they spend money, the economy grows. Any "valuation" of Bitcoin derived from any GDP figures is already going to be pretty useless.

Second, the GDP figure measures spending, but most monetary units spent during the year are spent numerous times. If GDP is $1 trillion, and each dollar is used ten times, then "valuing" the dollars would more appropriately be $1 billion/number of dollars in existence. Your equation completely ignores this, and it's extremely relevant. I believe the proper term here is "monetary velocity." There are also issues of fractional reserve, credit expansion, and derivative instruments which change the supply of money far beyond its actual supply, and much of this would still occur under a Bitcoin-based monetary system.

Third, none of the above to criticisms even matter, because the main problem with this equation is that the value of something cannot be determined solely by seeing how much it is used. The value of any item, whether it's cows, cars, dollars, or bitcoins, derives from numerous factors which are typically distilled down to the phrase "supply and demand." How widely something is used influences this, but it's only a part of the valuation and not even the majority.

In other words, it's fun to make that calculation, and attach a figure of dollars to what a Bitcoin "would be worth if everyone used it." But it's a completely fallacious figure, and if indeed everyone used Bitcoins only, I promise the price would be far higher, or far lower, than your estimate, which makes it not a very good estimate at all

i know there is just slightly less than 21,000,000 bitcoins that can ever be issued, but since we don't have an exceedingly accurate number for the global economy equivalent, i'm just using 21m. 

so max number of bitcoins (21,000,000), divided by smallest unit of each bitcoin (.00000001) gives us the max bitcoin units (2.1 × 10¹⁵).

wikipedia gives a 2010 est global economy of 74 trillion (USD equivalent), which we divide by the max number of the smallest unit of bitcoins to find the current value of the smallest unit of bitcoin today, if all bitcoins were in circulation and representing the full global economy.

74,000,000,000,000/(21,000,000/.00000001)=0.0352380952

so just under 4 cents per .00000001 bitcoin, or $3,523,809.52 USD per BTC

with currency markets and exchange offering fractions of a cent precision, is bitcoin capable of becoming a global currency?  yes, i know it would be a good problem to have, but that really isn't much of an answer to a potential technical issue.

disclaimer: i may have screwed the math up as i threw this together pretty quick.  any necessary revisions are very welcome.