Topic: The current Bitcoin economic model doesn't work - page 4. (Read 96390 times)

You really have no clue. If you're in Bitcoin for the long run (storing value long term), price bubbles and bursts don't matter, and you keep your own wallet. At least, that's what I do. If you want to play the game, then play the game, but don't pretend like everyone has to.


Because not many people agree with you. Start your own fucking currency rather than trying to change ours.


Invalid assumption.

`I detailed in the first post exactly how's this possible. Both systems are fully compatible.

Who said anything about inflation? If you have 100 people and $100 on an island, and then the population increases to 110 people producing 10% more, shouldn't we print 10 more dollars to keep prices constant? If we don't prices will simply decrease to compensate for the increased supply of goods and services relative to money. It's the same situation with bitcoins. Say we originally have 100 users and 100 coins, but then next year we have 102 users, then next year 115 users, then next year 120 users, then the next year 150 users, but the increase in supply is always constant at 10 coins/year. How do you expect speculation and price bubbles not to be rampant? Well under the current system it's even worse because the new supply shrinks each year till it reaches zero!

You're essentially saying that stealing some money from a random person and giving it to another random person isn't a bad thing for society. But it is. Sure, there's a 50% you might be the lucky guy who gets the free lunch, but overall you want to know what to expect to plan ahead properly. That's why most people don't like gambling even if it was at a 50-50 chance. The current bitcoin market condition is only attractive for addictive gamblers.

Historical evidence doesn't indicate this at all. I mean look:


The whole point of the alternative model is kicking speculators out of the game. The result would be having a natural, ever-growing bitcoin economy with a slightly-increasing supply matching it. The price will hardly rise or drop because supply will react to demand changes. It is the current system with its fixed supply and crazy demand (due to speculation) which renders the price stability impossible. And as long as people don't see price stability they won't store their wealth confidently in bitcoins. In other words, they will stay away from it.

And retain compatibility with the existing system? It seems like a contradiction. Isn't the whole point of the proposal to use other rules?


So under stable circumstances with demand determined only by, say, 3% economic growth wealth equal to 3% of the value of the money supply will be transfered from current coin holders into waste heat. Whoever the ones are that burn the resources will get the new coins. (IMO this is wasteful and distorts the incentives for investment but this is the old inflation good or bad argument; let's not go there.)

By putting a cap on the price this way you'd get rid of speculation in higher prices but but only by wasting the same amount of wealth that successful speculators would have received. Why is that better?

Speculation in lower prices would not be affected.

Isn't this just trading swings both up and down for even larger swings down? Without a price cap temporary demand spikes will be absorbed by short sellers. With a price cap they will be absorbed by new money but then there will be a price drop. A drop both from the lower demand and from the greater supply of coins. And not dampened by speculators anticipating it.

Yes it can.

The current design is a failure so why not simply transform it instead?

Read the first post in this thread.

Under normal circumstances (read: flexible supply) the total demand will almost never shrink. That's as unlikely as having a negative GDP growth in a given year. What will occasionally shrink however is the increase rate of total demand.

It'd be random just like the current design. The proposed changes are really very limited.

Suggester, Bitcoin can't be changed that way but a similar competing currency could be created. How would the flexible supply work? When demand shrinks whose money will be destroyed? When demand grows who will get the new money?

Thanks to the (stupid) limited supply model which results in perpetual price bubbles and bursts, Bitcoin users have come under the mercy of exchangers. The reason is simple: One cannot trust their very own bitcoin wallet. If you have $100 worth of coins today on your computer, they could be worth $90 tomorrow, and then $80 the day after, which means you need to keep them in the form of fiat currency at the bitcoin exchanger's website or at a service linked to it such as Dwolla or LR to ensure your ability to utilize their full worth as bitcoins later.

Sounds familiar? It should. Because we're back to the good ol' banking system again. These exchangers and services can hold your money hostage till you send them scans of your personal documents where you could then be vulnerable to identity theft or at least a breach of privacy, or the exchangers' databases themselves can get hacked as was the case with MtGox in June and most recently Bitcoin7 yesterday, potentially undermining all your wealth.

Had Bitcoin used a flexible supply model which anchors a single coin's price to the amount of electricity needed to generate it, the community's reliance on such services would've been very limited. We'd only use them to get money in and out of the system, but not for storage over long periods of time where they're vulnerable to all sorts of misfortunes we're seeing now. It's not an exaggeration to say that every (non-speculating) user who lost money to a price burst, a database breach, or draconian security and AML regulations is probably a victim of the limited supply model.

If matters continue this way then the general population, which we were hoping to attract to adopt bitcoin usage, will lose all confidence in the P2P currency. Normal people aren't willing to keep their money in the form of a medium wildly fluctuating up and down by the day, while keeping it in the form of fiat with traditional institutions nullifies the whole purpose of bitcoin. This is an open letter for the project's developers to reconsider the current design in order to save this marvelous idea from an eminent failure.

It's all just a game. You have to look at it like that if you don't want be worried about losing money.

There will always be new things that come along.

Bitcoin is still relatively a new thing.

Let's hope it is harder to shut down than e-gold was.

If the system is shown to be unfair on society in general, a newer currency will develop, and maybe laws to go with it that will compete with Bitcoin, presumaby this will lessen the value of Bitcoin.
So there might be an incentive to 'cheat' a little in some way, but once it starts hurting a lo of people, they wil come up with an alternative.

If we switch to an exponential difficulty requirement for chain forking, we can amplify the requirements for this type of attack and move it from "incredibly difficult" to "nearly impossible".

http://forum.bitcoin.org/index.php?topic=11464.0

I just made an account on this forum, and I must admit the ignorance shown here by these fake "opponents" to the currency is nauseating at best. All they can do is reference to past event's and out-dated theory's that simply do not apply to bitcoin. I have been reading up on these coins for 2 weeks now, and to be honest with you, they seem so attractive to me, that my original plan of exchanging them for money immediately as I mine them has gone completely out the window! You trolls are only motivating people who are learning about bitcoins, and who see the pure brilliance behind them, to back them up EVEN MORE. Who the hell says that bitcoins were made to be used as a highly speculative investment ponzi scheme? Maybe the ill-intentioned trolls like Suggestor draw people to these conclusions, and maybe there are people out there trying to drive the "ponzi scheme", but we have to realize that these people simply do not understand the system. They think they can play ponzi with it because they don't believe in the systems resiliency, they think it will either be hacked, or taken down by the government at some point, but they are wrong.

We know this because the system that's been designed is beautiful, and was built with resiliency in mind. Don't you think all of these things were already foreseeable by the developers? Bitcoins are just like any other currency, except more predictable, and secure. I see collapse next to impossible, and the envy that I see in this forum by some stupid people who only wish they would of thought of it(or even had the remote brain capacity to even understand what the system really is) is a truly desperate attempt to shun the brilliance that is bitcoin. Some people thrive on the status quo because they can't see themselves evolving with times, either because their scared, or simply to stupid, and these people are what I call dinosaurs. I am here now, and though I heard about bitcoins a long time ago I have to admit I didn't grasp what they really were until they were reintroduced to me by a friend, and after 2 weeks of steady research (videos,articles,wiki,forums,MSM) I can honestly say you guys have my support 100%. I am here, remember that, and there a millions of us out there who support you and don't even know it yet. These people (like me) will invest in this economy JUST TO PROVE THE TROLLS WRONG. I believe in my heart that the developers, and the community as a hole has nothing but good intentions in mind for this project.

We truly don't even need the government backing us, or anyone for the matter including MT.GOX or any of these exchange markets. The key lies in strengthening our economy and I am already seeing it happen right before my eyes. I mean look at bitmunchies.com for god sake. The idea is genius, I can't wait to start saving hundreds of dollars on groceries just by buying from bit munchies.  They even got Chefboyardee 

You have to be a fool not to know the true value of what has been built here. I do agree with some people that bitcoins are actually worth even more than they are trading for now, and while that may seem hard for anyone to imagine it's totally feasable. First you have to admit that FIRST MATTERS , if it didn't there would be no Bill Gates, Steve Jobs, or even dare I say Barack Obama.

YOU CAN BUILD A WEBSITE LIKE AMAZON.COM , BUT IT WILL NEVER BE AMAZON.COM . GET IT?

FIRST MATTERS NO MATTER HOW MUCH YOU TROLLS BRING UP COUNTER CURRENCY'S THAT DON'T EVEN EXIST YET, AND THAT ARE ALL FLAWED IN THEORY ANYWAY.

This system relies on three very basic things that I think are notable:

1. It's decentralized, to the point where no single entity can take over all of the nodes. If I read correctly in a previous post,the top 500 worlds super computers can't amount to our nodes, making it virtually impossible for anyone to shut us down. They would be better off investing their time and resources mining, and using it to back up their own reserves...
2.It's predictable, sure there will be bumps down the road, and I expect the market to fluctuate viciously. But they will never be able to stop people from using them for goods and services. And once again that is the key to this projects survival.
3.It's intelligent, I know its hard for people to humble themselves in this new "modern age", but for FFS you gotta admit when something is smart, and has the potential to change this entire planet as we know it.

That is my 2cents, see you guys around the forum, I will def be showing pictures of the rig I am going to be building this week for mining. I am also going to be putting in the little savings I have into all bitcoins. YEAH I'm putting my money where my mouth is, and even if the market fluctuates, I truly and deeply believe in the end result, that none of you will be able to stop. God I'm loving it  !

And BTW I'm a Democrat, you don't have to be a conservative, libertarian, or anarchist to believe in this system. If you ask me it's a PERFECT check/balance to the current monetary system that we have now. It will finally put accountability back into the equation that bank's and world governments can't control, something that is purely ran by the people, and that will only make the existing monetary systems stronger, because then they will finally have true competition, and start taking their debt/taxes/budget management ALOT MORE SERIOUS.

That's true, too; but they could still dick with the last couple hundred blocks.

Actually, as chain "checkpoints" are hardcoded into the default Bitcoin client, even with the processing power it is practically impossible to pull something like this off.

Says the smartass who thought billionaires held all their assets in cash.

Suggester;


uh-huh.

If they have half of the network's computing power (equal to the honest network) and fail to include transactions into blocks they create, confirmation can take twice as long.


I really doubt that they have a significant amount of hardware that performs hashes as quickly as a distributed network full of ATI graphics cards. I imagine if they did, it would be rather centralized, and perhaps easy(ish) to take offline through some sort of attack.

The bitcoin network has,  in collective, surpassed the total (estimated) hashing power of the top 500 (not secret) supercomputers on Earth.  Even taken as a given that the US government actually does have this much computational power in total, it would be a non-trivial issue for any branch to assert control of the computational power of the others for such a project.  And by the time this could be arranged, the power of the network will have quintupled once again.  IMHO, this was once a real concern, but no longer is.  This is no longer the most likely attack vector by any government agency, their attacks will come in the public view, not in the dark reaches of the Internet.

Why would they need to spend the transactions of others when they can simply freeze all the payments by always holding the upper hand (read: possessing the longer "magical" blockchain)? Their presumed goal is to ruin the project, not to steal people's coins.

I realize that creighto but it's implicitly understood. We're talking about the US government which owns computers powerful enough to create a greater proof of work than the rest of Bitcoiners combined, not some Russian script kiddy in a basement.

May I ask everyone to reserve their comments regarding crypto attacks on Bitcoin's infrastructure to its thread while reserving this one to the deflation and pricing problem? I know I started it all but I was innocently responding to Bitter's CIA joke.

I would hope that you would know that Wikipedia is only as accurate as those who contribute articles, which in this case is not very accurate at all.  The main chain is the one with the greatest total proof-of-work, not necessarily the longest.  I could make a longer chain in the dark with one GPU and a hacked client (to set the block interval to one-hundreth of a second) running at a difficulty of one; but as soon as I attach my client to the rest of the network, my chain is going to cease to exist.

Let me quote your original post which brought me back into this:


Of course someone with hashing power equal to or greater than the rest of the network can probably build a longer block chain. Can they do so forever? Probably not.

The part that concerns me and you have yet to explain, is how creating a longer block chain allows you to spend the transactions of others. Would you please explain how they would go about doing so, given that all transactions must be signed by the holder of the private key?

From Wikipedia: The main chain consists of the longest series of blocks from the genesis block to the current block.
And thank you Bitter for making it quite clear who exactly doesn't know what he's talking about.

Or he's a retired bored old man who's got nothing better to do than insult others whom he disagrees with instead of leaving them in peace and wasting his time on more entertaining activities.

I just LOVE how you keep coming only to say this thread is a waste of time only to come again a couple of hours later to just repeat the same thing. Listen buddy, if you wanna increase your post count why don't you just start a thread all for yourself and keep repeating whatever you want in it while leaving this thread to time-wasting people who want to actually accomplish something? If you really think it's a waste of time then you're better off getting a life without coming for a third time only to repeat the same thing, please.

Thanks for promising not to post here again. Have a great day.