Topic: The deflationary problem - page 11. (Read 32501 times)

The problem is that I don't understand why Satoshi designed the protocol to be deflationary.  Gold has been mined for 7000 years.  The amount of gold in the universe is almost infinite.  Most people accept that gold is a store of value.  For BTC to be almost fully mined in almost 20 years means that early adopters have a huge advantage that is unlike any commodity on earth.

Every year more gold is discovered yet hardly anybody would claim that gold was inflationary.  In fact, most people claim that gold protects against inflation.  Why?  Because it takes work to produce gold, just like it does to mine bitcoins.  If all the gold on earth was mined in 20 years, gold would be valueless.

Well we shall see I guess. Let us know when our constant minting coins reach 3% so we can watch the transition to the point at which your modification will be needed to keep them at the top of the heap.

Meanwhile its not clear people are even seeing the value in just the never decreasing minting, maybe you need to push that so people catch on to it first, if you can do that maybe they will then be prepared to believe it should also be modified when it reaches this magical 3%.

By the way, have you graphed how the usefulness / adoption / value / anything changes at 2.9%, 3.1%, 2.99%, 3.01% and so on to prove 3% is truly the peak point?

-MarkM-

I don't believe that will provide the necessary level of inflation necessary to keep increasing hash.  The inflation rate will continuously decrease.

My proposal is a constant block reward until that rate of inflation approaches 3%, then you adjust block reward to annually create 3% inflation.

Whoever implements this and adopts this will be rich because I am certain that at some point BTC will fail.

At least two altcoins already keep issuing the same number of coins per block forever, which is a big step in the "desired" direction, so how about go promote those for now as the best so far and maybe as you become a major investor in those their makers might listen to your arguments that even that is not enough and a coin must be made that increases the nubmer of coins issued per block...

-MarkM-

Wow...   please just go and do this, and don't bother your pretty little head about bitcoin ever again.  It's truly staggering how little you understand, and how utterly unaware you are of your lack of understanding.  But seriously, please go design your alt-chain, I wish you luck with it.

Who cares for 2040? The world ended already last year, thus why worry? 

I most certainly understand the transaction fee scenario, but you don't.

For BTC to to have value, miners must secure the network.  If miners do not constantly increase hash, Moore's law will catch up to the network and it will become prone to attack.  This should be easily accepted as fact.  If you don't accept this premise i can't possibly help you understand the deflationary flaw in bitcoin.

If you don't understand, let me try to explain it again.   If hash remains constant and doesn't increase for a number of years, technological advancements (Moore's Law) will make an 51% attack more likely.

Now what some people seem to argue is that tx fees will support mining growth.

This is true in two scenarios.

1) bitcoins are sent/received more frequently (velocity)
2) tx fees increase

I will addresses the problems with both scenarios.

The problem with #2 is that there is a cap on maximum fee the miners can charge, at 100%.  So velocity remains constant, miners cannot increase profit beyond 100% tx fee.  So this cannot create increasing profit.

The problem with #1 is that bicoins can be permanently lost, and there is a hard cap on the amount of bitcoins.  That means that there will eventually be more bitcoin lost than is generated by block reward.  This should be known as the 'Sweft point' where bitcoin turns into a deflationary currency from an inflationary one.  Thus, to believe that transactions will increase as coins are lost, aka deflation, is not a sound proposition.

Another issue is that rogue miners can mine the network, charging tx fees and sending the coins to the trash.  This would further exaggerate the deflationary tendency of the bitcoin design.  

Thus it should be obvious to anyone that understands the issues to also understand that there exists a simple solution which will make the person who implements it rich.

Make an alt currency with a cap minimum 3% inflation.  This will satisfy the profits of the miners and hash of the network.

+1000 killed off OPs Trolling, also reading this thread i was amazed to actually learn something, the whole deflationry thing and the velocity of money correcting itself as tx / block reward changes very interesting, also as the value of a currency rises people will still spend, if there Btc goes from $300 to $400 overnight and they need there weekly shop then they will just buy there weekly shop and keep $100 to appreciate in value, the only hoarders will be those that can afford to hoard and there appreciation will be the same per bitcoin as everybody elses.

I think when the mining of new coins ends we could see (as some suggested) smaller companies take on Tx processing as they have interests to keep the network alive, this seems to be a good thing as any centralisation of miners over time could be reversed, and that would put Tx processing back in the hands of everybody.

You don't know me!

*Continues to drive straight ahead*

"We're all going to die because our car is heading straight for a cliff ten miles ahead."

Umm, no. We'll probably turn the wheel sometime between then and now.

Wow this thread is full of stupid...   and what's up with the crazy necro-threads lately?

Oh, for the love of all that's holy!!!!

No, no, nope.jpg, consider, that the value of BTC are much higher and there are many many  more people wanting to make transactions, these transaction fees will incentive miners to become transaction processors


I think some new coins may be a good thing as many coins will be lost, some how to a cap or a really slow fixed rate release....but some how neither of these things work as they just out you back to square one

That was in 2011 dude...

when miners were willing to mine for $50 block rewards.

Before SatoshiDICE where transasction fees are paid to miners.

Are you really comparing an ASIC with a supercomputer?  Seriously this is fail. Yes an asic is good for mining, and that's all.

Yep, this is pretty much all I took away from this post.

No, old topics can be still relevant and closing down everything only leads to re-iteration of the same issues over and over again.

The few necroed threads can be closed manually by mods as well...

We also should have an option to filter out posts by order of stupidity... alas, no chance of that