Topic: Limited coins and hoarding - page 4. (Read 8859 times)

No you said this is what happened not what could have happened.

Then again I don't have wealth envy.  No economic system will be perfect.  The "early rich" will either cashout and eventually no be rich or they will never receive the benefits of that wealth.  You are just the type of person who is upset someone has more than them.  The same time of person who believe in redistribution of wealth (as long as it is from someone else not you).  Meh.  It is sad.

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

You can believe that all you want, but your beliefs are based on ignorance. It is fallacious logic.

I argue that we cannot know, therefore we must assume that these situations are possible based on the information we have.
You argue that we cannot know, therefore we must (or should) assume that these situations aren't possible in spite of the information we have.

Do you see the difference? I say "this is what CAN happen" based on what we know, you say "this is what MIGHT HAVE happened" based on what we have no way of knowing.

Which form of logic passes the test?

Do you have any proof wealth is that concentrated.

That none of the early adopters simply turned off their computers and deleted their wallet.dat assumming that the coins were an interesting but worthless experiment?

That none of them cashed out rapidly as the price rose because they never had the longterm vision?

That none of them lost any of the coins over the years through system issues, corrupt wallets, wallet stealing trojans, failed hard drives, etc?

That none of them were defrauded aka MyBitCoin.Com?

I believe the wealth is far less concentrated that you believe.  Even if 1 or 2 millions coins were held by early adopters and never sold, lost, or defrauded that is 5% to 10% of the economy.  If some people are richer than me ... I don't really care.  Unlike some I don't have wealth envy.

A currency can't solve the fact that there are a limited amount of resources to go around. The problem that the Austrian school has with fiat currency is that central banks inflate the supply by giving those who already have wealth cheap access to new currency first. Everybody else down the line has to pay more value in to take on debt. This benefits them doubly.

For example: Bank of America gets a 0.25% interest loan from the central bank for 1 million dollars. Bank of American turns around and loans 95% this money directly to consumers at a 4% interest rate.
Not only does Bank of America profit by the interest made on the loan, they also profit on the 5% they didn't loan that can buy products and services right now before the value of the dollar reflects the fact that 1 million dollars has been created. A big part of the 5% example would be paying CEOs.

Pretending that just giving away 10-20% of all the money to ever exist to a few dozen people is a better system is downright ridiculous. You don't like banks making all the profit off of inflation, but you're totally cool with some anonymous fart knockers doing it? The bitcoin elite are akin to bank CEOs with their ridiculous paychecks that are earned by essentially taking value away from everyone else. All in all, it is the exact same scenario except that hopes and wishes say that the bitcoin CEOs will cash out all their chips at once and let the economy work itself out. Except they already proved that that's not what they intend to do by the $30 run-up. They PROVED it. Yet many of you are still unwilling to believe that the bitcoin CEOs are just looking for that gigantic paycheck just like the bank CEOs, and the only way they can do that is by taking value away from others. Except now instead of a system that is at least somewhat accountable to the people, they are anonymous overlords that can do whatever they want, whenever they please. Perhaps they will only trickle in and let their descendants profit for ages to come; perhaps they will decide that they really want that island, and they don't particularly care if they crash the economy.

Since they waited so long, and since the distribution is so ridiculously flawed, there is really no way they can do anything to fix it. They are guaranteed to, at some point, steal a metric fuckton of wealth from everyone who invests into bitcoin. If they sell a huge chunk now, the economy is likely to collapse and never recover as all faith is lost. If they trickle in, they are the same as bank CEOs vulturing from the economy at will. The only way they can really solve it is by destroying coins. Let me know in what parallel universe that happens.

A) Destroy the economy in one shot (for each person that has a big chunk of coins)
B) Be a bank CEO
C) Destroy coins

A means it's a pyramid/pump n dump. B means it's effectively no different from fiat currency (the pyramid just has different overlords). C is not something that is likely to ever happen.


Isn't it so great how you can use the appeal to ignorance for basically every argument for bitcoin? Why is it that I don't know what those with a large bitcoin position do or do not contribute to bitcoin? Oh yeah, because the creator(s) made every effort to be COMPLETELY FUCKING ANONYMOUS. And the design of the protocol itself and the fact that the exchanges are anonymous in the protocol certainly doesn't help.


there are so many new types of fallacious arguments that need to be described just for bitcoin. It is like a petri dish for logicians.

You'd have to extrapolate such a situation, what people adopting bitcoin at this point would be able to obtain. Then the differential looks way more steep. Also the problem is not that under a scenario where bitcoin value would rise dramatically large holders could exchange it for a large sum of fiat money, but rather the effect on bitcoin itself.
There is now way around it, someone owning a significant portion of the total supply is not desirable, at any point. Now it is less drastic but it has to change in order (and what I see from your theory it might) to enable the development of a healthy economy.

I see it from that perspective:  Carlos Slim doesn't own a significant portion of the worlds wealth.

Bitcoin for me is a closed system.

I was under the impression that you agreed that a currency cannot solve this problem?

You don't know what those with a large Bitcoin position do or do not contribute to Bitcoin. They sure have the highest incentive to see Bitcoin succeed. Yes there may be some that expect to get something for nothing, but unfortunately that's life. On the other hand many of the early adopters are developers for example.

I agree, but mainly because it would be much less useful.

I don't think that it is fair to call Bitcoin a less preferable system due to its wealth pyramid. Even the largest Bitcoin holder owns currently less than 1 million USD worth of Bitcoin. That's less than 0.001% of the currently largest USD holder and "only" about 10,000 times the yearly income of the poorest people on this planet. In fiat currency the disparity between richest and poorest is more like 100,000,000:1

One single Bitcoin would have to reach a value equal to about 150,000 USD in order to make the person with the most Bitcoins equally rich as Carlos Slim. Apart from the fact that this will simply never happen, the Bitcoin distribution would almost certainly become less skewed on the way to such price levels. I am dead certain that most of the non-lost coins mined in 2009 would be sold well before 1 BTC reaches 10,000 USD. Please don't forget that even IF Bitcoin would one day become extremely valuable, it would still be a very bumpy ride (certainly not a straight way up) - this makes it even more unlikely that somebody clings to his coins till the very last.

Bitcoin is not as fair as it should be, but its wealth distribution will certainly always be fairer than that of the dollar.

I don't think that a limited supply necessarily leads to this scenario. It enables it yes but until now, in any limited commodity this was prevented by the impossibility to move, store and protect the asset for a single individual. If you take gold as an example, one could store a large amount of wealth in one place but it would be impossible to move it out of the way if an attacker approaches, could not use a significant fraction of it to pay for a very large transaction and since it is a physical object it cannot be stored away for eternity.

I think if bitcoin would mimic some of those limitations we wouldn't see people with 5-6 figure wallets.


I agree that if nothing changes with the bitcoin wealth pyramid it would be a less preferable system than even the current system, this however might change. What would be needed is an incentive to use these large holdings not for hoarding but for spending, way before the price reaches anywhere near that numbers. If this never happens then we would either face a dire future were the imminent threat of economic cornering would lead to violence or the failure of bitcoin be used as originally intended.

The problem of unequal wealth distribution can't be solved by a currency. The problem of the currency facilitating this distribution can, or at least it can be mitigated, if you agree with the Austrian school of thought that a government/bank controlled money supply really only benefits those with existing wealth. However...


"Initial distribution is largely irrelevant" is a fun factoid that everybody loves saying around here. Someone hoarding from the start does not need to sell his coins only once if he holds a huge portion of the total supply to ever be produced, that in fact would be silly in a totally fixed supply of money. As I pointed out earlier in the thread, it would currently take about 1% of the total supply in existence to drop the market value of BTC in half.

Now, the bigger the market depth, the less BTC it takes to pull a fortune of wealth out of the economy (assuming hoarders continue to hoard anyway). If BTC were worth $1000 each, it would take 1,000 coins to be a millionaire. Assuming the economy continues to slowly adopt BTC as its currency of choice, the 1.6 million bitcoins mined at a difficulty of 1 could be spread over generations and generations of descendants who would never have to lift a finger to become incredibly wealthy. This is the solution to fixing the wealthy who stay wealthy in fiat currency?

All it does is change one Man for another, it doesn't solve anything (lol except payment processing). And it encourages misguided individuals to believe they might be part of a new wealthy elite for doing nothing but "smart, early investing" with a few dollars of electricity and so they do the advertising work for the even earlier adopters. "The Bitcoin Dream" lol. Congratulations on continuing to be pawns for somebody else.

I never understood why deflation is supposed to be so horrible. We have massive other problems with money, what's the big deal in some initial liquidity troubles?

Initial distribution is largely irrelevant; someone hoarding from the start can sell his coins only once. So it will happen a few times, lol volatility. Life goes on. Speculators will have to take this into account and do some calculating, then the problem will fade as someone figures it out. A bit of the money will go to these speculators. Oh well.

What's the big mythical problem here? The problems with international payment are huge, it's nowhere near the scale of some money supply trouble.

What is more, it's all out in the open. Once people know how the market behaves, rules won't suddenly change as they did in the Euro in the last years. This is very, very, extremely important! I can live with quite a few issues if I get clear and stable rules in return. The deflation issue just isn't that important.

Well, at first the geometric series could have been chosen differently, awarding early adoption on one thing, making them a new elite is another. The block reward could start low, increase steadily and then decrease again at the end of the distribution cycle.
If I would ever advocate an alternate cryptocurrency as a replacement this is what I would vouch for. But I am still not convinced the problem can't be solved in the current blockchain. The falling prices might do something about that, or not or possibly another incentive which brings me to my second point:

As for the inherently presence of a wealth differential in society we would need a system triggering rapid economic growth by enabling ever person to participate on equal terms, this has to be done from day 0 and the development would have to be either so fast that a substantial part of the world economy joins the new system within a single day (the media would bring critical mass within 3 days) or it would have to be so subversive that the hierarchical paradigm suspects nothing until it is too late.
The first is pretty much out of reach for bitcoin but the latter might still be a possibility once we return to a smaller, more involved community.

I think you've hit the nail on the head.  Rich people will buy most of just about anything which pops up.  A fascinating aspect of  Bitcoin, for me, is that it is ultimately supported by users and they can withdraw that support much more practically than they could under a gold-backed system or one enforced by entrenched political apparatus.

My idea for a solution:

1) consider and treat BTC (and other currencies) as a solution for transferring value rather than holding it.

2) use BTC as a 'backing store' for an almost endless variety of cryptocurrencies which evolve and are adopted based on their usefulness to the end user.

Being the grand-daddy of cryptocurrencies with a strong existing block chain, a good history of security, and being 1/3 through it's development into maturity (once the time domain is switched to inflation), it is a natural choice as a backing store.

The value that BTC would have would be in lending support to alternate crytocurrencies, and the successful cryptocurrencies will be the ones which strike a good balance of reward to all of the users of the system as a whole...particularly the end-users.  The holders of BTC will be forced into competition with one another and the more 'altruistic' they are, the stronger their competitive edge will be.

How do you think the problem of somebody owning a large amount of Bitcoins could be solved?

It can be argued, that the 2009 miners acquired their coins at negligible cost and this is an inherent disadvantage for everybody wanting to acquire coins now. The sad fact however is, that there are many many people on this world, who could just buy, say 100k BTC, at (for them) negligible cost even today. Once any potential new currency started to take off, expect the big players to jump on and buy huge chunks of the pie.
It is completely irrelevant how such a currency would be designed - even if you somehow made sure that every person on this planet gets a fair share initially - once they gain in value, the wealthy would just exchange some of their assets (fiat, gold, real estate, food,...) to acquire large chunks of the new currency.

I think the basic problem you would have to solve is that of the highly unequal wealth distribution on this world and while I wished nothing more than for this problem to go away, I fear you won't succeed.

This problem is however nothing Bitcoin or any other new currency could do anything about. I would be happy to hear your ideas however!

It sure does seem like you are pretty dumb. What does linking dividends have to do with your claim that supply and demand do not affect the prices of stock? Why is insolvent Groupon still worth money?

Do you understand that: 1) if early adopters release cash, it is inflating the money supply, thus "fixing" a deflationary spiral 2) this can only be done so many times and each time generally to a lesser degree 3) ergo I understand what I said and I said what I meant rather clearly. There is no permanent fix for a deflationary spiral in the bitcoin economy. Other than "people don't believe in a value of what they need to pay for things" from the esteemed wiki.


Apparently you haven't a clue. What a surprise coming from a mouthbreathing bitcoin proponent. http://en.wikipedia.org/wiki/Dividend


Where did I say gold was infinte? Do you think that by putting words in my mouth you somehow invalidate what I actually said? I said there is "NO YET KNOWN FINITE SUPPLY". As in, we don't yet know how much there is. Perhaps my wording wasn't as clear as it could be (finite was a bit ambiguous), but you'd have to be among the dumbest on the planet to infer that I meant the supply was infinite. Or you think I'm among the dumbest on the planet, but you don't even know what a dividend is so I'll leave it at that.

How many times do you think these guys can cash out? It's part of the volatility of the new market. You don't seem to understand that a one-time event has no real bearing upon bitcoin unless that one event is the cracking of SHA-256.

Stock gains value independently of the demand for those stocks? Really? Do you understand how a stock market works? And basic supply and demand economics? Good, now put the two together.

Gold is most definitely finite. Do you understand how quantification works? Do you agree that the earth is not infinitely large? Good, now put the two together.


Refer to the above.








Side Note:
MoonShadow, I dug the history lessons.

Huh? That's practically the bare minimum any business would need, regardless of the industry. Sure, it's not something that your average middle-class person could do on their own, but in the business world, that's cheap - almost pocket change.

If you're inferring that a competitor needs to operate in several countries in order to compete with Bit-Pay once they do, that's wrong. That business is one such that each local subsidiary would be pretty much independent. The only things gained in the industry that Bit-Pay is in by serving additional countries is that you don't need to re-write your site's code, and the marketing efforts aren't wasted toward people who live in countries that you don't serve. A good part of the code problem would go away if someone released open-source code that does what they do, and the marketing problem doesn't matter all that much if you're targeting your ads properly.

Nobody is hoarding bitcoins. They are cheaper than dirt and there's a huge surplus for sale.

There is a problem with hoarding bitcoins too much but I don't think limited supply is the main reason it is done so much.

In comparison to gold it is also very much hoarded but also used for circulation. The difference with gold is however there are no penalties for hoarding too much.

With gold after a certain amount it becomes too cumbersome to move it around and this also somewhat sets it's value. With gold you can still do any reasonable sized transfer of wealth for almost all purposes.
And while buying something like a larger house or spot of land is and was always possible to transport comfortably with bitcoin there are no limits.

Once bitcoin would become a major currency it would be possible to comfortably buy up whole industries with it, that is something that was never before possible. I impute that the large hoarders are planning exactly for such a coup, which is why I am against a wide spread adaption till these problems are solved.

Drama queen. 2% of sales are not fraudulent (wikipedia says 0.07%). Again, just because 2% of YOUR sales in a high-risk, fraud prone market were fraudulent does not mean that this is the average. POS transactions carry nowhere near the risk, and since the 90s almost all merchants require zip codes and CCV codes which undoubtedly has lowered the risk since.

Most data I can find shows 1.5-1.8% is the typical percentage fee, and 0.15-0.21 (new maximum as of october) is the swipe fee. Yes there are other fees and time and paperwork, but the more business you do with CCs, the less of an impact this has.

Every news article I have found shows that about $2 of every $100 goes to credit card fees (this would include chargebacks and other risks as these costs must be passed on to the consumer), and this obviously includes cash transactions too since products are priced with the costs of accepting CCs in place.

And again, regulation can try to take away banking profits that they feel they deserve, but banks will find another way to stick it to the consumer.

TL:DR

Sounds like OP wants to do something fishy but I'm not accusing him of anything.. Keyword "sounds like"

Either way hoarding will provide more value to bitcoin however... the problem is there is nothing to spend that value until you convert to fiat.



So I will say this

LESS SPECULATION MORE PRODUCTS AND SERVICES!!!!