another example of how researchers shouldn't make economic assumptions:
"Hoarding: a moral hazard? Bitcoins much more than any other currency in existence
derive their value from the presence of a live, dynamic infrastructure loosely constituted
by the network of verifiers participating in block creation. Because of their appreciation
potential, bitcoins will tend to be saved rather than spent. As hoarded bitcoins vanish
from circulation, transaction volume will dwindle and block creation will become less
profitable (fewer fees to collect). If circulation drops too much, it can precipitate a loss
of interest in the system, resulting in “bit rot” and verifier dearth, until such point that
the system has become too weak to heal and defend itself."
they've made the conclusion that price will rise but neglect the fact that as price rises more participants will enter the market especially if its a good idea thus increasing tx's that will maintain miner profitability. does the LBMA suffer from a dearth of gold future trading from gold hoarding?
"Economic motivation. The strong deflationary characteristic of Bitcoin further compounds the problem. On the one hand, Bitcoins are a currency poised to explode in
value, ceteris paribus, as already discussed; and hence so will the incentive for theft.
On the other hand, the way deflation comes into play, driven by a hard cap on the money
supply, will all but eliminate the money-minting incentive that currently draws in the
many verifiers that by their competition contribute to make block creation a difficult
problem. With this incentive dwindling, laws of economics dictate that the competitive effort devoted to verifying transactions and creating blocks will diminish. In other
words, while block difficulty may continue to increase for some time into the future, it
will eventually start to decrease relatively to the power of the day’s typical PC. History
revision attacks will thence become easier not harder."
as was said before, tx fees should provide plenty of incentive to mine as will the potential for further price appreciation. do gold mining companies have a problem with not getting paid tx fees? no, they mine for appreciation.
"Hoarding: a moral hazard? Bitcoins much more than any other currency in existence
derive their value from the presence of a live, dynamic infrastructure loosely constituted
by the network of verifiers participating in block creation. Because of their appreciation
potential, bitcoins will tend to be saved rather than spent. As hoarded bitcoins vanish
from circulation, transaction volume will dwindle and block creation will become less
profitable (fewer fees to collect). If circulation drops too much, it can precipitate a loss
of interest in the system, resulting in “bit rot” and verifier dearth, until such point that
the system has become too weak to heal and defend itself."
they've made the conclusion that price will rise but neglect the fact that as price rises more participants will enter the market especially if its a good idea thus increasing tx's that will maintain miner profitability. does the LBMA suffer from a dearth of gold future trading from gold hoarding?
"Economic motivation. The strong deflationary characteristic of Bitcoin further compounds the problem. On the one hand, Bitcoins are a currency poised to explode in
value, ceteris paribus, as already discussed; and hence so will the incentive for theft.
On the other hand, the way deflation comes into play, driven by a hard cap on the money
supply, will all but eliminate the money-minting incentive that currently draws in the
many verifiers that by their competition contribute to make block creation a difficult
problem. With this incentive dwindling, laws of economics dictate that the competitive effort devoted to verifying transactions and creating blocks will diminish. In other
words, while block difficulty may continue to increase for some time into the future, it
will eventually start to decrease relatively to the power of the day’s typical PC. History
revision attacks will thence become easier not harder."
as was said before, tx fees should provide plenty of incentive to mine as will the potential for further price appreciation. do gold mining companies have a problem with not getting paid tx fees? no, they mine for appreciation.
*facepalm* This is why I tell people that colleges, especially Ivy League schools, are more about brainwashing people than actually educating them. They shove Keynesian nonsense into the soft heads of kids who just left their parents' house and haven't lived in the real world yet. They make them memorize false premises that become etched in their heads. The better they are at memorizing bullshit, the more likely they are to be the next Paul Krugman.
Apparently, Stanford doesn't even teach logical fallacies to their students.
