Topic: Re: Bye bye bitcoin (Split: Morality of Bitcoin vs. Fiat Discussion) - page 2. (Read 5277 times)

It might be backwards, but the point still stands. You think that promissory note has the same purchasing power as bitcoin? Who else is going to accept it?

Think this through. You've exchanged a bitcoin for a bitcoin-backed promissory note. No bitcoin created.

If you're unsure about the meaning of the word "deposit", may I point you to:
http://en.wikipedia.org/wiki/Demand_deposit,
https://bitcointalksearch.org/topic/banks-are-fundamentally-unnecessary-and-actually-dangerous-for-bitcoin-33589,
because I'm not going to explain that in detail.

In short, when I lend you a bitcoin you receive 1 bitcoin, I receive an IOU for 1 bitcoin (the deposit bitcoin), totaling 2 bitcoins. The interest I will take for the loan will come on top of that and is actually the only part of the money supply that's created in the end after the debt's been settled. That interest is not created out of thin air and not artificially valued, but is equal to the lost opportunity value of the bitcoin I've given up (in a perfect market, in reality I will take a little profit, because I'm greedy )


You got it all backwards.
When I'm the one to lend you a bitcoin, I'm also the one who will accept that promissory note over the "real thing".
Why? Because I'll receive interest.

Not true at all.

When I lend a (physical) book, I'm not creating a new book. I need to have that book in my possession, and once it's lent, it's no longer in my possession. Same goes for bitcoin - it has to leave your wallet to be lent.

Not sure what you mean when you say "deposit bitcoins," but if you were actually lending out some kind of promissory note backed by some amount of bitcoin in your wallet, then you weren't lending bitcoin. Who would accept your promissory notes over the real thing?

That's how I see gold. 

Do you think it matters who is in the "small flock of enthusiasts?"  The British Pound is backed by the state and that particular small flock of enthusiasts has the means to ensure that retailers have to accept the pound in their shops.  Gold and bitcoin rely on both parties voluntarily agreeing to use the currency.  Do you think that its that power to coerce use of the Pound what makes it a currency?

There is indeed much more money than goods/services, but all those extra money were hold by the banks and they just hold more and more money and collecting interest from those money to spend

Since the interest of those money are extremely low (like 1%), even the money supply increased by 100%, the real added money supply in circulation is only 1%. That will not trigger any inflation, thus people still trust fiat money, and their trust enabled banks to accumulate huge amount of fiat money in their account

People usually are short sighted, as long as there is no inflation, they don't care how much money banks pocketed. Maybe there is a few brave souls trying to challenge banks' illicit profit method, but they will be overwhelmed by those economists that is brainwashed by the bankers. The bankers have created many misconceptions and illusions regarding money creation to disguise the simple fact that they just print money for themselves

@wingding

Think about asset and value again. Nothing and all can have value. There are some concepts with big value and some goods with small value. Value is just a measurement of market acceptance and request. If enough people are believing and dealing with the same thing, whatever that might be, then it has a value. If the people loose their believe in gold the price will drop on the mining cost level - that might be pretty low according to the existing vast amounts of gold reserves.

Currently I see gold dropping down and Bitcoin raising up.

Bitcoin is not a currency. It can best be compared to rare football game card collecting. It has no value except for the imaginary value assigned to it by a small flock of enthusiasts. (Of course there is an very interesting and new technology behind it, but that is a completely different story)

That is an interesting definition of 'are'.
There are currently just under 12M Bitcoin in circulation. There will eventually be 21M Bitcoin in circulation.
In the next year the amount of Bitcoin in circulation will increase by 10%.
Of course it makes a difference that the other 9M don't actually exist yet.

I suppose if you say "trust" but don't mean 100% trust like bitcoin is meant to be then sure but you are talking about now where transaction quantity is much lower then if bitcoin starts getting accepted at every local coffee shop.  I'm not certain it would be that easy to check against double spends if there are millions of transactions per second.  Also human beings are like water if there is an advantage to be had people will scam for coffee just as easily as they shoplift now.  I just don't see bitcoin being useful or for that matter designed for it when you get 1st confirmation in 10min lower now but could be higher if diff falls of a cliff.  If anything I think the desire to make it more accepted as a payment method instead of something more unique will create more issues.  Sure with larger adoption you get a higher exchange rate which benefits current holders.  The more mass populace jumps into it without going through the learning process of encryption and other unique bitcoin properties the more scams will proliferate which then leads to calls for tighter regulation which then leads to an actual confrontation with governments over such regulation since bitcoin by design doesn't subject itself to easy regulation.  If one wants bitcoin to succeed long term you'd want such a confrontation to come as late as possible to have a larger more distributed network and also much more educated holders who aren't easily swayed by government edict.  If one wants to have the biggest profit possible as soon as possible then promoting bitcoin coffee payments is certainly more profitable.  Now there is an interesting morality question for bitcoin proponents.  Do you want more people to use bitcoin even if they don't get it or don't you?

Very interesting point.

That just 2 posts below my:

There is 0% inflation. There are 21 Million Bitcoins and there will never be anymore. That about 9 million BTC haven't been issued with makes no difference.

If anything there is slight (?) deflation with some Bitcoins are forever untransactable due to the private keys being lost. This deflation is very hard to measure however.

(OT - better split the thread, again!)
Of course you can trust a 0-conf transaction for something like coffee. You can check against most obvious double-spends with software which quickly checks mining queue and blockchain for doublespends, which already exists and is implemented by most services accepting no or few confs. $x coffee, however, is much different than the $xxx-$xxxx transactions you can use personal checks for, which are much easier to defraud with.

The modern concept of credit has empowered a large share of the general population and made our society much more pervious for members of their respective classes. The rise of the middle classes at the beginning of the modern ages compared to the middle ages was largely due to the possibility of acquiring wealth without owning land, enabled by lending.
Interest as part of the process of lending is not, contrary to common belief, a "freebie" for the haves from the have-nots. Also, interest is not created "out of thin air" but well-defined by the opportunity value of the credit.
Lending can make the rich richer and the poor poorer, but it also works the other way round.


The most common misunderstanding about Bitcoin is:

"there will never be more than 21 Million bitcoins". True or false?

Well, unfortunately, false for most use cases.

I've personally lent a bitcoin or two to someone.
For any economist in the world it is clear that i thereby created bitcoins.
Not "physical" or "digital" ones, sure, but "deposit" bitcoins.

In the future, banks might adopt Bitcoin. Let's just assume for the moment that they do, and that they treat it like any other good ol' currency. Legally, they are free to use fractional reserve on bitcoins the same way they do with the Dollar. And you damn well bet they will. After all, that's how they make money and get their little bonuses.
And people will use those "deposit" bitcoins, just the way they use their "deposit" Dollars and Euros today. And why wouldn't they? It served them well. So, for any practical reason, we should not think of the number of bitcoins as being limited to 21 Million. It just doesn't make sense.

We would have to rephrase our statement a little to make it true:
"there will never be a monetary base M0 for the bitcoin currency larger than 21 Million".
True.

Which is what I said in my original reply to you:

This is now - wait for 2033 - then the inflation is very low:


If you compare this curve to the USD inflation curve you will see what I mean.

One remark on the term 'inflation' - we are talking about economics not physics. This term as many others undergoes a process and has never defined scientifically unambiguous - eg. http://bit.ly/16d4Aky. But I see the point ...

On January 29, 2009, Finance Minister Patrick Chinamasa announced that all Zimbabweans would be allowed to conduct business in any currency as a response to the hyperinflation crisis. Fromhttp://en.wikipedia.org/wiki/Zimbabwean_dollar

I could probably dig up dozens, if not hundreds of cases where a government simply had to accept the fact that their currency was no longer accepted by the people, but research is always a little time consuming.

Yes, governments have also reacted differently, namely by outlawing foreign currencies, leading to imprisonment and worse. No use denying that. But speculation on what would happen in the U.S. if it came to it - well,

Ok, but if you are going to use such non-standard meanings for terms, you might as well say so straight off (or find another word for it), to avoid wasting time, as we have just done.
A standard dictionary definition is:
Whereas disinflation is:


In which case I'm still confused as to how you think Bitcoin has a very low level of inflation.
More than 10% per year is not very low.

I see inflation and deflation as independend concepts. Many people see inflation as the rise of prize levels - I just see it as the increasing amount of money (OK - in econmical terms maybe not 100% accurate). Deflation is the process of of an under valued currency adapting to its real buying value due to the limited amount of money (Again - maybe not 100% accurate in economic terms).  Economically the terms inflation (increasing prizes), disinflation (decreasing inflation) and deflation (decreasing prizes) are just bound to the prize level.

If you see inflation as increasing amount of money and deflation as the rising value of money then both concepts can exist side by side without contradiction which makes more sense.

This is absolutely right.  Bitcoin isn't useful for buying milk and potatoes and its never going to be.  Its very useful for doing stuff you don't want to talk about and as such its future is secure.  Just as we have Dollars, Pounds and Euros for use in various situations, we also have Bitcoin for use in the right circumstances.