Topic: Limited coins and hoarding - page 3. (Read 8887 times)

Lol I'm not being catty, I'm just pointing out that you are not making an argument against my idea, but against all currency. I can't solve everything, ya know.


Gold lost 60% of its value because most of its value was, surprise surprise, based on demand. Just like bitcoin. Just like gold's value is now. Now is a fairly terrible time to buy gold unless you think that faith in fiat currency will continue to drop and continue to drive demand to gold. Speculation. Gold didn't drop below its cost to produce. Its cost to produce is a huge portion of the value of gold when it isn't inflated by speculation.

Now imagine a commodity that is relatively unlimited (electricity) but is extremely difficult to pack into a currency (processing cycles + time), but anyone can do it. The people control the direction of the currency.

Reversibility comes at a cost. A reversible transaction is essentially an insured irreversible transaction.

Insurance isn't free, you know?  Some people would rather not pay insurance because they trust the merchant.  With your Visa card, you are forced to purchase this insurance and you are forced to bail out people who use their visa card irresponsibly.

Real life example: The shop where I buy electronics is a "bare-bones" merchant. Very limited customer service, very low margins, and so on. That's why they can afford to charge 10-20% less than the high street merchants.  The also charge 3% extra for credit card transactions as compared to cash-in-hand because that is how much it costs them, and it's the type of shop that likes to pass the savings to the customer. 

Some low-cost airlines do the same thing.

Just because most merchants effectively subsidize credit card customers, don't assume that all of them do and don't assume that some customers don't want that choice.

There's no need to get catty. I'm just trying to understand your idea.


Now, why would you assume it would bottom out at $300? Gold prices lost 60% from top to bottom in the eighties. Why would I hold something at $300 that might drop to $150 but only increase to $340? Even if the market didn't lose all faith and it went to zero, you'd still have huge swings based on confidence. Am I missing anything?

Uhh I hate to break it to you, but every currency is based on faith that someone else wants it in lieu of a real good. Fiat, gold, bitcoin. This is not an argument against making a currency that works similarly to gold, it is an argument against currency period. If the price fluctuates between $300 and $340, it is still within a reasonable range that merchants do not have to worry about daily swings or what have you, and thus can always charge a consistent price, just like they do with fiat (though obviously it eventually increases as the supply is almost always outgrowing economic activity). If the price is on the low end, people are encouraged not to sell unless they've lost faith in the currency. Low price does not equal low faith, just high supply.


Actually, the main reason is time. The supply of gold can only increase by about 2% per year unless many more people devote time and effort into mining gold. Bringing up new mining operations costs a lot of money, takes a lot of time, and will have to wait many years before seeing a ROI. Allowing easily accessible ways to mine ENC means that the demand will never (maybe) get too far ahead of supply. And if it does, holders are encouraged to sell because the price will get back to parity (cost to produce + return on investment) much quicker than with gold.

Okay, I can understand the analogy. Let's say any computer can make an ounce of gold for $320. Many people will make gold and sell it into the market until the price is $320.

Now I wouldn't want to own gold in this world. I have downside (everyone might lose faith in Gold, so it might fall in value), but no upside (its price won't go above $320). I would sell immediately upon realizing this, and so would others. The price might go to 0 or it might hover somewhere between 0 and 320 and fluctuate as confidence in gold waxed and waned. Either way, no stability.

Why don't the same arguments apply to gold as it stands? The main reason is that the price of gold deposits under the ground varies with the price of gold, and they're scarce. Also, as you mine the easier $320 gold, you only have the $330 gold left to mine.

I was always first concerned with whether or not I could get away from the block chain because that was necessary to separate the security of the network from the creation of currency. If I couldn't achieve one, there was no way I could achieve the other. That is why the majority of the proposal is based around explaining it while the scarcity aspect is only a small portion.


The simple correlation is to gold. It still isn't the same, but it is closer than bitcoin's correlation. Gold costs about $320/oz to mine, this price does not change easily. Imagine now where gold is like $1500/oz because of high demand due to currency volatility that you could turn on your computer to mine gold. It still costs you $320/oz to mine, but it is accessible to everyone. Eventually the price for gold will come down to $320/oz. If gold is selling for less than $320/oz, anyone who tries to mine will do so at a loss. In bitcoin, people do not have the power to bring the price down because the supply is fixed and measured. So even if bitcoins were reasonably distributed, eventually an 80/20 type scenario will emerge where the wealth is concentrated in the hands of a small number of people. I'm not saying this is bad, it is just reality. Now that small percentage that controls 80% of the supply controls the price of the currency. This is bad. You need an unfixed supply to counter this. Unfixed does not mean unscarce.

I don't envy you that problem. I'm probably not the right person to help you with it. I have the humility to understand that had someone handed me Satoshi's paper 2 years ago, I would have dismissed it without reading it, snorting coffee through my nose, 'Who is this fool who thinks he can create p2p money! I shan't waste my time looking into that!'
I'm an early adopter, but not that early!

If someone tells me they have a perpetual motion machine, I ask 'How do you overcome the laws of thermodynamics?'. If I can't understand the answer, I assume the answer doesn't make sense.

So I ask you 'How do you stablize the value of something without scarcity?' and 'How to you stabilize the value of a currency without billions of dollars?'. You should have some snappy answers to those questions at the very least. Assume fixed energy prices, and zero inflation - those only complicate the matter without addressing the fundamental concerns.

The only reason people would hoard money is if the market is in chock. Something has happened like a natural disaster or more commonly some form of government intervention like creating inflation.

In such a scenario the best thing to do is to hoard money until trade slowly picks up again and entrepreneurs can see what the demand actually is. So this is not a problem.

In a stable market you will be getting a higher risk weighted return from your money if you save them then if you hoard them and saving money just means they will end up in capital goods and technologies instead of in consumer goods. Hoarding money for most people that (have filled there desire for emergency cash and aren't Scrooge McDuck) is a terrible value payoff. It is the very last option only resorted to if all savings are very risky and you don't know what you will need in the immediate future...

By arguing with the choir, those in the chapel can hear it and make their own decisions, rather than only seeing one-sided group-think.


Herein lies the problem--I'm not claiming to be infallible. I need people to come in and give opinions and ideas. As of yet, Red is the only one who has provided any kind of counterpoint. By dumbing it down further, the only responses I am likely to get are "this is cool when's 1.0?" or "this is lame, bitcoin is better." Neither is helpful in the least. If you are worried about how it tries to achieve stable value, the only two sections you have to read are those on moore's and koomey's laws. They do need to be discussed with a fine-toothed comb, but I can only do so much discussing with myself. I'm not sure what "authority" you expect to back up this claim, but you have a serious chicken-and-egg problem if you wont risk your time unless there are a lot of people behind it.

I am working on making it easier to digest, that's why I have switched to a wiki rather than a proposal. I'll probably be doing a few youtube videos or powerpoint slides soon to help aid the digestion further. But it all takes time. And until this latest proposal, I was very unsure about a lot of the properties of the system. Now I know at least that everything I write about is possible (from a technical standpoint), and I believe the system behind it is sound. But it still needs tweaking and discussion, and other viewpoints can and have already enlightened my understanding of ways to do it better.


Yes, but this thinking comes from the fact that there has been only one successful cryptocurrency. The status quo is never the only way to achieve something; thinking that way is a great barrier to progress.

Etlase2, I wonder if you'd be better off spending your time explaining why your new coin is superior rather than arguing with the choir about the inequity of BTC distribution.

I, for one, am interested in your idea but based on the skimming I've done it looks like it is too complicated for me to understand without investing significant time in it right now. I'm not prepared to put that time in because you're making some pretty bold claims (being able to stabalize its value and that this coin will retain value without scarcity). If there were an authority backing up that claim, or a lot of people behind it, I might risk my time on it and maybe become a believer. I'd suggest you create an 'Idiot's Guide' for your new coin to help spread your idea.

As far as BTC inequality goes - I think it has helped the spread of BTC more than it has hindered it so I think of it as a necessary aspect of a successful crytocurrency.

I fully agree but I am personally also convinced that this will change (see above). As for the effect on Bitcoin itself: the price would surely plummet if somebody quickly sold 500k BTC, up to the point where many people might start questioning the future viability of Bitcoin. But for one thing, this is a one-time problem, it simply cannot be repeated again with Bitcoin's limited total quantity and for another, Bitcoin's price might crash for so many other reasons as well - I really feel Satoshi selling off is not the greatest danger for Bitcoin. Besides, once it was done, people might actually gain more confidence, immediately starting the next bubble

No he doesn't, but neither does one with a few 100k BTC unless 1 BTC equals more than 1 million USD and by that time I honestly believe that there won't be any one left with a few 100k BTC anymore.

But I fully agree that somebody owning a significant portion of the total supply is not desirable!

I don't think a bank is going to take payment in snickers bars in lieu of the BTC you signed a contract to pay back.

pay it back with a snickers bar.

There have to be mechanisms to absolve debt in any system, the ones in a deflationary system are just different than those in an inflationary one.

Wait, so this can only possibly go one way but not the other? There are many possible scenarios for the future of bitcoin, I wouldn't limit myself to discussing only one. If the currency were reasonably distributed, it is very well possible that the deflationary spiral would never happen as there will (likely) always be alternative currencies. But that would concede that bitcoin has failed at being a better currency if people need to switch to another to properly exchange money. This effect is already obvious in so many services popping up to resolve the BTC->USD issue more quickly for merchants.

Alright. So stop talking about early adopter/large holders like they can actually affect things long term.

Deflationary spiral not 

You still haven't addressed how one-time events can continue to affect prices after the sell off. When someone cashes out, they can never cash out again. Distribution of wealth solved.

These topics remind me about conspiracy theory discussions. They always end up with people discerning proof and neither party being able to provide one.
Amazing isn't it?  

Thanks for proving the point.  You have absolutely no idea how concentrated the wealth is.  None what so ever.

When at first you don't succeed