Topic: Serious flaws in Bitcoin monetary policy - page 2. (Read 7095 times)

Yea i think he is afraid of the government, as they can charge him with some bogus charges , like money creation without authorization, and that only CB are allowed to create currency, and common people are not.

He would be probably constantly surveiled and threatened by the governments throughout the world.

It was a really big step to do this and he surely took a big risk to stand up against the global banking cartel... 

So he is respected, and let's respect his privacy aswell.

Maybe his intentions are good, but don't you think if Satoshi came out and said "yes I have a lot of BTC, but I am committed to spending them, not for disposal, but for day to day purchases and in new innovative niche markets" then everyone would have a lot more confidence the growth of users long-term bottom up.
It would be akin to the majority stakeholder CEO endorsing his company rather than hiding in the shadows. that would be a company worth the majority considering investing in.

i dunno if it was mentioned anywhere in the above pages (TLDR), but one of the things I think you forget is network consensus / forking

at any given point in time, for whatever reason, an alternate version of bitcoin core can be released that modifies the total amount of coins. This current experiment could run its course, and when 1.2 btc or whatever are trickling out, the world (because its all connected to bitcoin) could go "yeah this aint workin", and then participants download and install the new core and then vavooom, all of a sudden block rewards go up again.

(I think this is true).

Thus, it really is a decentralized central bank that the people control.

Of course, if such a fork were to happen (im assuming its some future where bitcoin (or some variant) is the global / solar-system wide currency), people would vote with their nodes / hashpower. Hence why real effort needs to be put into finding a way to decentralize mining.

Yes, but just think about Africans, there are not many internet connections there, so we have to think about everyone. Even if we survive the collapse with the internet intact (which we will, the internet is the last thing to go away, your pension savings will be the first  ), still you will have poor villages without acces to it, where the BTC Note as I call it would come handy, and they can just redeem that whenever they want in an exchange, to their wallet, if they get acces to internet.

Besides, i think the fallout games exagerate a little bit, i didnt played them but I sawed videos, so I think people in USA exagerate about those FEMA camps and survival kit and whatnot. Even the 1929 collapse wasnt that horrible, so it wont be worser than that, because we can recover from it much quicker with the internet intact.

If the dollar will collapse and it will, then the internet trading and bartering economy will grow by atleast 5 orders of magnitude 

I mean you will see people in Facebook trading stuff because the local shops will be bankrupt and closed, and they will use postal service or whatever courier to exchange goods, that is how it will be.

It wont be a post apocaliptic world where armed vigilant mobs will be on the streets because you still have an army which would keep relative peace. It will be just that normal shops will be closed and a lot of services bankrupt.

So twitter,facebook, youtube and other social sites will become the global exchange 2.0 

So do will be BitMessage and OpenBazaar.

So don't exxagerate, I know that people are scared and stuff but, really we need to put things in perspective, the majority of the collapse will only hit banksters, because they inflated the 1.6 quadrilion derivative bubble, and still they own the majority of it, so if it will pop, only they lose their money mostly . Middle strata and poor people doesnt have much to loose, but only gain freedom of commerce and trading, by bartering peer-to-peer and they would become much richer than before the crisis because there will be no central power to steal from them.

No, you can test the private key, if it corresponds to the address.

You can also test if the address contains bitcoin.

After you accept the paper coin you quickly transfer it to another address, and wait for 1 confirmation.

Also remember it's not you who would issue the notes, it would be a trusted 3rd party, so you would not know the private key unless you would scratch it, but then if you do then the note would be compromized and it could not be traded.

So you see you just buy that note from a 3rd party who would keep the private keys safe like blockchain.info, and you can trade the note, until you dont scratch it, because when you do then it is already compromized, like this:



======================

Another way of doing it, if the previous version seems flawed,

Is to just issue a paper currency which would be denominated in BTC. The note would be exactly pegged to BTC, and would have watermark and other security features like normal notes, to prevent counterfeiting .

And of course 1 BTC NOTE can be redeemed for 1 BTC from anyone, so if you just happen to live in a zone where you have no internet, you could just use the BTC NOTE, and then when you get to an area with internet you can redeem it from an exchange to real BTC into your BTC wallet.

Or just have both versions, nothing is impossible , there are many creative and innovative people in bitcoin who thought about this

Bottom up is certainly right. It will never happen top down because commerce wont support it without a market to tap into.
The only way that market will be created is if people spend their BTC rather than save it.
So when you say 'Bitcoin as saving account during transition to a full Bitcoin world', the only way that transition will happen is if you dont just use it as a speculative savings account.

If you spend it, they will come.
Problem is, when playing in the same market as fiat, it's detrimental to spend our BTC.

Stan I like the link, innovation into new markets rather than competing with current ones is the only way BTC can thrive.


P.S. One last point that worries me. If I was BTC's creator and had a huge proportion of supply. I would want to encourage the adoption of my new technology by spending my BTC. Instead Mr Creator remains anonymous.
Is it to hide what he's really doing? That being maybe sitting on his BTC while hoping it gains traction through the support of others.
If Mr Creator came out and confirmed that he is not spending his BTC, then we'd all lose confidence very quickly and BTC would die.

Yes I saw you guys above making good points about being a consumer based currency. You are right, because if people were to use bitcoins for commerce, then by default the value of it would appreciate, as the value of the goods and services would flow into Bitcoin.

The problem now is that they just buy bitcoin and then even if they buy good with it, the jerks merchants quickly converts it back into fiat.Which will just pump out all of its value back into fiat and help the USD grow.

The only industry that is growing is perhaps the gambling industry and bitcoin based investments, but this is a very small percentage, the others either sell it through merchants or hoarding it, and doing nothing with it.

So at the moment there is not much you can do with it.

However when the USD collapses that would be a different story.

You can already see barter going on with bitcoin on a peer-to-peer basis at localbitcoins and similar places, so if the global enomy would be devastated, which it will (i dont know hold long the FED can hold a 77:1 leverage on its balance sheet without popping), then people would lose confidence in everything centrally controled, and would again return to small community trading, where BTC is perfect.

Yea some of you can come up with the argument that without electricity and internet BTC is worth nothing, well not so fast.
You can easily create "paper bitcoin". How to create a 1BTC worth paper bitcoin?

Easy just write the address down on a paper which contains 1 BTC, then write on the other side the private key, and put another black paper on the private key to hide it and glue it down, so that it can be see only if it is removed.

See, you can easily create an offline paper bitcoin note in 5 minutes which can be traded in a non-internet community.
You can use a mobile phone to verify if that address contains BTC or not, and can be easily used to barter

Like this:


Of course you need to hide the private key initially, but it can work

They buy the bonds if nobody else does. Why would the treasury issue bonds if nobody need them, is because they desperately need funds to do this or that, and if you cant force it into the population or external investors then the FED is the only one that can buy it.

In my country, they pay the pensions from deficit money, so if the bond market were to collapse here, you would see many grandpas on the streets protesting...

QE is not a failure, its just a tool, it depends on how is used, again I pointed out, if the QE is used to pay wreckless spending of the government, then its badly used. If it's just used to control the price then it's goodly used.
But QE seems like a well of infinite money, and can be easily abused, so its a very delicate tool.

I am a libertarian.

My MS thesis was about the relationship between price volatility and market liquidity in the financial markets, so this is kind of my forte. I`ve studied the flexibility of the monetary base for quite along time.


Who said that the institution of the CB is correct?

It's not the QE's fault that it was used badly, QE was needed because the whole fractional reserve banking, which I don't support. Perhaps a 1:1.25 Leverage at most, but definitely not a 1:77 leverage as now is used by the FED.

Leverage can sometimes be good to boost the speed of innovation, by giving out more money, with extra risk. Of course this should only be used with competence, only competent banks should be able to use leverage.  I think a rating agency is needed which would rate Banks, and only A tier banks could use leverage based on their performance.

Otherwise with 1:1 Leverage, you would not have huge inflation, it would always be under 1%, which is tiny and tolerable.

QE would be hardly needed, however, if there is an liquidity crisis, then it's needed, so you can't just throw it away.

Agree you're English isn't bad at all. We British are often the worst
I completely agree that spending beyond your means is a bad thing, and I for one never do so.
But unfortunately if we spend less with BTC (however sensibly) in favour of saving for future gains, the Amazons of this world will never switch from the fiat that we spend so freely.

As Stan says, maybe the only way that BTC can really compete with fiat in terms of consumer usage, is if there are products that can only be purchased in BTC, and then BTC can operate in a niche market.
The thing is, someone sooner or later would tap into that market with fiat and we will then inevitably stop using BTC.

The sad truth is that fiat currencies are more adaptable to market conditions so will always win. Survival of the fittest innit.

Exactly, if I see that by not transacting today I will have more value in my pocket tomorrow then I'd be stupid to transact.
In fact I'd never transact unless I had to or I really really wanted to buy something.
When that happens I'd think "if only there was another way to get that thing I really want without me having to spend my increasingly valuable BTC...oh wait there's those £'s I have knocking around that are not doing anything for me. Happy days! I can keep my cake and eat my newly purchased cake"

Irrefutable I'm afraid.

And this reinforces my point. Currently in the world of fiat we see the folly of saving, so we are taking on cheap debt to enable us to spend more (or some of us look for inflation beating investment opportunities). Business loves this and encourages it because we will buy more of whatever they are trying to sell.
Bitcoin needs big business to adopt and encourage BTC, and while many argue that low transaction costs provide enough incentive, what they really need is volume of spenders.
But BTC's increasing demand:supply will encourage us to save not spend, so companies won't be able to sell their products to us in BTC when people have the option of using £.
Then companies will drop BTC and pop!

Consumer driven spending economies are based around the fact that deflationary currency is a bad thing because it deters spending (slightly).
If Bitcoin is to succeed it needs to become a Consumer driven spending economy. But Bitcoin is destined to be deflationary, and that coupled with the other option of spending inflationary fiat instead, will mean that sensible people will never spend BTC.

So in my example do you really think most people will do A rather than B?? because if BTC is to succeed this is what needs to happen.

In your analogy, those who spend spend spend in a growing economy are the sheep that represent the 99% that push every economy to a bubble. Those who invest fare better until the bubble bursts and debt is made cheap to save the sheep from oblivion.
This is how capitalism works, it is fuelled by consumer debt and designed to suck money from sheep debt while never allowing the sheep to die.

If you spend your BTC amidst rapid price appreciation, and spent less as it falls, you will always lose money in relative terms.

But I am inclined to invest in the next bubble because I'm willing to bet that most people won't realise this and spend BTC regardless.
That and my ££ is going nowhere at the moment so I may as well take a punt on humanities stupidity.

Completely agree with Greenstox. In fact I has just joined to post the same realisation.

I want Bitcoin to succeed, I want to invest in it, but it is inherently economically flawed as a large scale currency replacement.

While I see the potential for Bitcoin to reach even $1,000,000 in value looking at market share projections. It is wishful thinking over reality because those projections can never come to pass.

Bitcoin is designed to appreciate. Yes sure there's is inflation currently in place through mining control, but everyone knows there is a limit to supply. So everyone knows that as demand increases through adoption, then the price will always increase.

That's when reality hits, in that people wont spend a rapidly appreciating asset which will be a massive barrier to capturing market share.
Lets be honest, say you want to buy a TV, you could A) spend $400 worth of your Bitcoin even though it may be worth $1000 the following year.
Or B) you could spend $400 from your dollar account knowing that due to controlled inflation it would be worth say $395 the following year in real terms.
So anyone sensible would do B and hold onto their BTC, and this is the reason I cannot see it taking off no matter how much we want it to.


Bitcoin will just destined to be a series of bubbles until all confidence is lost.


P.S I would love to be wrong

I proposed some change to the monetary system of NXT platform. (if you don't know about it : http://nxt.org/about/monetary-system/ . It's basically PoW for repartition of coin when PoS secure the network)

It would solve your "second problem". --> Difficulty never go down so no inflation if price is already too low

Introducing the Monetary System of NXT which solved this issue;




https://bitbucket.org/JeanLucPicard/nxt/issue/205/monetary-system-documenation

So, What is the value of NXT?



http://nxter.org/the-value-of-10-nxts/

"Elastic" means that the price doesn't change much as the supply or demand changes. One ideal for a currency is for the value to remain constant (a.k.a. stable). A non-elastic currency has a difficult time doing that because the supply cannot be easily adjusted in response to changing demand. Bitcoin is fairly non-elastic because the total supply is fixed.

Note that the OP assumes that a central bank has the ability to correctly adjust supply to match demand. History has shown that to be false -- all those failed currencies, and inflation has been a major problem in the U.S. ever since the Fed was formed.

LOL that's what you think is wrong with the statement?  Some guy thinks you could live on 1 Bitcoin.  Try living off $200 so stupid

You can divide anything infinitely in digital.  Doesn't mean that you should

$200 aren't divisible down to nano pennies. That's the problem with fiat.

You could live off $200 cause it's divisible down to nano pennies?   

Yeah they buy back the bonds when they want lower long term interest rates.  Still doesnt mean the war was funded by Fed lending money to Treasury.  Myth about govt lending money to itself debunked

http://www.treasurydirect.gov/kids/what/what_borrow.htm

Who cares how much leverage they have?  They have printing press.  

Personally, I think QE is a failure because it's based on the myth of the multiplier.  I'm not here to defend the Fed or govt if that's what you think.  I just think you got it wrong about how banking works and what Keysianism is. I think the brainwashed people here are the libertarians and anarcho capitalist.  You might wanna de brainwash them

What was your MS thesis?