stabilizing bitcoin market | Bitcointalksearch.org

Foxpup

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Quote from: dotcom on September 12, 2012, 02:56:40 PM

If 1 guy held on to like a million btc in hopes that the value would rise as a result of there being less in circulation, that could
potentially be disastrous to the economy right?

Only if he starves to death waiting for the price of bread to go down.

lebing

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Enabling the maximal migration

Quote from: dotcom on September 12, 2012, 02:56:40 PM

I'm no economist, but if bitcoin mining reaches the cap, and there's therefore no new currency entering into the btc market, holding
on to money could present a serious problem.

If 1 guy held on to like a million btc in hopes that the value would rise as a result of there being less in circulation, that could
potentially be disastrous to the economy right?

bitcoin is infinitely divisible, if that is what your question refers to.

One problem with someone holding 1mm bitcoins is the potential for market manipulation.

dotcom

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I'm no economist, but if bitcoin mining reaches the cap, and there's therefore no new currency entering into the btc market, holding
on to money could present a serious problem.

If 1 guy held on to like a million btc in hopes that the value would rise as a result of there being less in circulation, that could
potentially be disastrous to the economy right?

lebing

legendary

Activity: 1288

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Enabling the maximal migration

Quote from: Jermainé on September 12, 2012, 08:17:56 AM

Quote from: aurora on September 09, 2012, 03:19:38 PM

is it ever possible? market is so small (100mil usd) Talked to wellsfargo broker who told me that if market is so little stabilization will never happend.

I agree.

While the market is small, it will not happen, but as it gets larger, it gets progressively more stable. Never is a strong word.

bitcoinbear

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Quote from: Monster-Ant on September 11, 2012, 05:49:55 PM

Thank you for this also. I'm reading as fast as possible, making notes, but there's a LOT of data out there now about BTC. I know I'm trying to catch up late so I'm not worried about the amount of information I have to absorb, I'm just worried about missing little details.

So, to put it easier for me to visualize, BTC's are basically the gold in reserve, while "satoshis" are basically what financial transactions will be made on once the amount of purchases begins to pick up?

And regarding the transaction fee, I've read several times that people doing mining will accept a fee in order to prioritize your transaction. That's still correct and has not changed, right?

This was talked about plenty last year as the price suddenly jumped from 1 UDS/BTC to 30 USD/BTC. People will just use smaller units so that they do not have to deal with so many decimal points, but the underlying code does not change.

1 BTC = 1000 mBTC
1 mBTC = 1000 uBTC (microbitcoin, uses prefix mu or alternately u because it is easier to type)
1 uBTC = 100 satoshi

As it has been pointed out, the actual code stores things in satoshis, which are just really small units so we lump them together into bitcoins. Kind of like dollars are made of 100 cents, bitcoins are made of 100 000 000 satoshis.

You can add as much fee as you want to help the system continue. (All fees in a block go to the miner who finds the block). A higher fee puts your transaction higher on the list of transactions to be processed.

maqifrnswa

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So, if there were 2,100,000,000,000,000 bitcoins instead of 21,000,000 - you'd be happy? Because there are...

Capitalization does not depend on number of bitcoins the same way market cap doesn't depend on the number of shares outstanding. If I offer a 2-for-1 split, my market cap doesn't double.

Formal education teaches economics from the point of view of our current system. The US, and most world governments, follow Keynesian economics where inflation is good and deflation is bad. So, as we are currently living in the US (with the current system as of 2012), we teach our students inflation is good and deflation is bad. There's no point teaching students otherwise, but if you go to graduate school in economics you will learn the bigger picture and that inflation isn't necessarily good - only if you're following a Keynesian system.

Bitcoin is not a Keynesian economy or system, so everything you learned from school (macroeconomics) on global monetary policy does not apply. If you had Austrian training or education beyond our current system, then you might have learned the inflation isn't necessarily good in some monetary systems.

Capital One Corporation

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Investing the bitcoin capital into the real economy, and bitcoin capital get paid back from the real economy. This will help stabilizing bitcoin market.

Jermainé

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Quote from: aurora on September 09, 2012, 03:19:38 PM

is it ever possible? market is so small (100mil usd) Talked to wellsfargo broker who told me that if market is so little stabilization will never happend.

I agree.

DannyHamilton

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Quote from: smickles on September 11, 2012, 11:45:15 PM

. . . so that's 210000000000 for a loaf of bread . . .

I think you've got a problem with your math. The 7.14e-12 is right, but if we assume that the average price of a loaf of bread is $2.30 then I think that works out to the following:

10,000,000 Satoshi / $15,000 * $2.30 = 15,333 BTC (Not 210000000000)

Still 15,333 is quite a bit.

I think it works out to almost 7 Satoshi per $0.01 so bitcoin could still work with amounts that are a fraction of a penny if it needed to. We reach penny parity (1 Satoshi = 1 Penny) when 1 BTC = $100,000.00, so if it makes you feel better, just think of 1 BTC as a One Hundred Thousand Satoshi coin. It would be like the U.S. minting a new coin, giving it a name like HectoKilo Coin (HKC) and declaring that it is worth $100,000. Nobody would be worried that you couldn't buy a loaf of bread with a HKC, or that you'd have to work with tiny fractions of HKC for everyday transactions.

Assuming that pennies and nickels are still in widespread use in the future (which may be unlikely depending on inflation), if the exchange rate gets up around $500,000 = 1 BTC, then the protocol might need to change to increase the number of decimal places a BTC can be split into. On the other hand, if inflation drives the cost of a loaf of bread up to $230.00, then bitcoin should be just fine all the way up to $50,000,000 = 1 BTC.

smickles

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Quote from: Monster-Ant on September 11, 2012, 05:26:17 PM

Even if BTC jumped to $15,000 a coin, how small the fraction would be to purchase something as necessary as a raw chicken became nerve wracking. It's down there where the possibility for floating point errors is no longer a maybe but a definite hazard.

15000 usd per unit calculates out to 7.14285714286e-12 usd each (assuming python didn't fail me in my calculation). That is units being satoshi and the code actually uses satoshi not 100000000 satoshi (1 btc) as units.

so that's 210000000000 for a loaf of bread.

Floating point? It's all stored as an integer as i understand it.

Etlase2

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Quote from: ?? on ??

The functionality and security will remain though and that's where the true value is.

If this is what you believe, then why do you argue so heavily for deflation? I am so tired of bitcoin proponents switching what it is they believe is what makes bitcoin so great on a fricken dime to derail the argument.

Any cryptocurrency can have the same functionality and security as bitcoin. People will likely flee it when they start getting tired of the manipulation and see other currencies that are much more stable.

Quote

I'm sure there are different views on the subject and history teaches many lessons on the danger of a limited amount of currency when a small percentage owns the greater part of it,

Nobody needs to buy up all the bitcoin, 50% was already given away to the first 100k or so people, with the other 7 billion to fight over the second 50%. 10-20% was given to the group that started bitcoin, a group that has since disappeared from the project after retaining complete anonymity. The kings have already been made. It is only a question of how they plan on using that power.

Etlase2

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Quote from: ?? on ??

Ok, so they did very well, much better than any of the fly by night currencies we use these days but it's still a 'did' not a 'do', past tense, while gold is still going strong worldwide.

Gold is no longer a currency anywhere on this earth. I'm not sure how you consider that strong. But if you read the history as to how we got to the point we're at now, it all flows to the Rothschilds in the 1700s creating central banks. The reason they had this ability was because their family was massively wealthy in gold and they, simply put, bought governments by financing wars. Gold was the key reason why we have the shitty currencies we have today. It is not a coincidence that the first draft of the Federal Reserve Act of the US was drafted on a private island owned by JP Morgan.

Monster-Ant

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The ants came marching one by one

Quote from: Etlase2 on September 11, 2012, 05:33:07 PM

Quote from: Monster-Ant on September 11, 2012, 05:26:17 PM

It's down there where the possibility for floating point errors is no longer a maybe but a definite hazard.

As you can probably tell I'm the furthest thing from a bitcoin apologist, but floating point errors are definitely not a hazard. BTC is wholly represented with integers, where 1 BTC is actually 100000000 "satoshis". Many people have suggested moving the decimal place in the user interface so that people don't feel bad about having millibtc. I believe the current UI actually does support it now as an option.

Thank you for this also. I'm reading as fast as possible, making notes, but there's a LOT of data out there now about BTC. I know I'm trying to catch up late so I'm not worried about the amount of information I have to absorb, I'm just worried about missing little details.

So, to put it easier for me to visualize, BTC's are basically the gold in reserve, while "satoshis" are basically what financial transactions will be made on once the amount of purchases begins to pick up?

And regarding the transaction fee, I've read several times that people doing mining will accept a fee in order to prioritize your transaction. That's still correct and has not changed, right?

Etlase2

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Quote from: ?? on ??

Cool. Now care to explain to us unenlightened commoners why deflation is a good thing because I'm kind of mystified how we used gold for thousands of years yet these superior currencies barely last a few decades.

I suppose you mean inflation?

http://en.wikipedia.org/wiki/Roman_Empire

This little empire that lasted for 500+ years used a form of fiat where coins were worth 10-20x the value of the metal.

http://en.wikipedia.org/wiki/British_empire

This little empire used sticks of wood as currency for 700+ years. It only stopped because of the Rothschilds' involvement and the Bank of England in the 1700s.

Native Americans used wampum for who knows how long.

Many cultures used salt.

So fiat or inflationary currencies have been in use for probably as long as gold. The problem with modern fiat is that the ability to manipulate it was taken from the example of gold (central banks).

Etlase2

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Quote from: Monster-Ant on September 11, 2012, 05:26:17 PM

It's down there where the possibility for floating point errors is no longer a maybe but a definite hazard.

As you can probably tell I'm the furthest thing from a bitcoin apologist, but floating point errors are definitely not a hazard. BTC is wholly represented with integers, where 1 BTC is actually 100000000 "satoshis". Many people have suggested moving the decimal place in the user interface so that people don't feel bad about having millibtc. I believe the current UI actually does support it now as an option.

Monster-Ant

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The ants came marching one by one

Thank you all for the interesting information. For some intellectual masturbation I ran the numbers of bitcoins vs transactions made daily in the world via electronic means, adjusted upwards for population growth and internet accessibility, and chunked out 8.5% in wallet loss. The numbers made me cringe.

Even if BTC jumped to $15,000 a coin, how small the fraction would be to purchase something as necessary as a raw chicken became nerve wracking. It's down there where the possibility for floating point errors is no longer a maybe but a definite hazard.

I understand now why 21M was chosen, and why it's so virulently championed, and while I had thought of using all the hardware I just lucked into to mine, I see that the mining difficulty will double soon, meaning latecomers are even more shut out, so I'm not sure if it just might be more profitable to sell all that hardware and put a weight bench and stereo in my shop.

Thank you all for the patient explanation.

DonttreadonmeRP

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Quote from: TheDuke on September 11, 2012, 02:48:29 AM

The 21 million limit is bitcoins bigges problem, and probably why it'll fail, IMHO.

1. The monetary supply can't expand. And no, you can't just move the comma to the left. If you divide 21 million into 210 million units of 0,1 bitcoins, you still won't get more bitcoins.nthe cake doesn't get any bigger, by people cutting it into ever smaller pieces.

2. It discourages trade, and BTCs adoption as an everyday currency. A very big group of BTC users (more than half probably) believe that Bitcoins have a very bright future, will replace/supplement fiat currencies and be worth a lot more in 5-10 years from now. As a consequence they hoard a big part of BTCs instead of spending them.

After all: If bitcoins in 2020 are going to replace just a few billion dollars worth of fiat currency, because of the 21M ceiling, it follows that one BTC is going to be worth hundreds, if not thousands of 2012 dollars in purchase power. What kind of fool would use every one of their bitcoins right now when theyre worth 8-12$ if they can hold on to them as an investment for ten years when they'll be worth thousands of 2012 dollars a piece.

When Satoshi designed the BTC protocol, I also don't think he predicted how fast the development in mining hw would be, nor what kind of people it would attract. (If he'd know for a fact the collective financial IQ level of the community and how gullible the community would be, I think it would be designed with more safeguards in place)

I reject your first premise. Price is best to climb slowly with no downturn. Why would a store owner be upset with his holdings being worth more? Prices can go down. People with coin can buy more. Ever poor people eith not much money. Every little bit of purchasing power help

This is exatly why the supply has to be slow. If it goes too fast it might crash again. As the price rises people will sell there coins slowly to get the most out of it. The "pie" gets bigger the more each coin is worth. Commerce will be stable as long as people don't crash the market. The deeper the market gets the more stable it will get.

Etlase2

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Really, mining? You mean to say that when 50% of all the money to ever be made will be made by December, that this will somehow bridge the gap in poorer countries? Yeah. Right.

Fictional means fake, btw.

Etlase2

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Quote from: ?? on ??

Instant transactions will likely have a huge impact on the world, its hard to know what kind of changes are possible.

And it's also something any cryptocurrency can do. This is the popular argument that "bitcoin will be a payment processor, not a currency." Why would anyone use a payment processor that has such a volatility risk when there are less volatile options? Bitpay is almost as expensive as paypal for low-volume, more expensive for any reasonable business volumes.

SuperHakka

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yo Monster, I hear yer. I too have given this much thought. I think I can frame the problem down to two directly opposing requirements/restrictions.

1. Bitcoins price to USD must stabilise to a small range in order for merchants and the general public to gain confidence. Visibility of value is key.
2. The amount of bitcoins never exceeds 21M.

The problem is that you can't reasonably satisfy both requirements without detrimental impact on bitcoin as a transaction system. For example, say that bitcoins stabilises at $100 per bitcoin. This means that the total value of bitcoins in the world can never exceed 2.1 billion dollars and this pile has to both act as a store of wealth for savers and also as money for everyday use. This is a tiny fraction of the global economy.

So the only way this is going to happen is that the price has to stabilize at a very high dollar price and very quickly in the next few years and this means an exponential bubble NEEDS to happen.

Course, I'm just a noob spouting so I could be wrong.

Topic: stabilizing bitcoin market (Read 3704 times)