So, have we resolved it yet?
Been practicing necromancy much ? Are you a professional Lich, or just an adept ?
Seriously guys, this forum should have an option to close very old topics. Perhaps automatically, by vote or by owner.
Topic: The deflationary problem - page 12. (Read 32514 times)
Been practicing necromancy much ? Are you a professional Lich, or just an adept ?
Seriously guys, this forum should have an option to close very old topics. Perhaps automatically, by vote or by owner.
So, have we resolved it yet?
some thing else WILL TAKE ITS PLACE.
Yeah. Bitcoin in its current implementation may die out, but the idea will live on.
Perhaps soon we will have exchanges for the competing cryptocurrencies.
The future is here https://exchange.bitparking.com/main
hah, this all implies that bitcoins will last as a currency for more than a few months before collapsing spectacularly
Well... it's already lasted for 2 years... so I don't think it's going to just collapse out of the blue. Price might drop, but every market does that from time to time.
some thing else WILL TAKE ITS PLACE.
Yeah. Bitcoin in its current implementation may die out, but the idea will live on.
Perhaps soon we will have exchanges for the competing cryptocurrencies.
One way to look at this to is there was 1 man smarting enough to create bitcoins to begin with well with in the next 30+ years there will be some one smarter making changes or adding to btc some how or even a newer forum of digital currency so when we do hit the 21milllion btc and cant generate any more then some thing else WILL TAKE ITS PLACE.
man can think it we can build it.
Just my take on it.
man can think it we can build it.
Just my take on it.
You don't understand bitcoins, sorry. Read the thread, hopefully you will understand. If not, again, sorry.
The sentence that I quoted does not make sense.
I am sorry that you don't understand how to form sentences. Go back to school and hopefully you will learn. If not,
Velocity of money means a decrease in the exchange of money. That's what it means.
No. Velocity of money is the average frequency of the exchange of a unit of money per time unit.
Considering that bitcoins are easily divisible, a decrease in the velocity does not necessarily mean a decrease in the number of transactions.
A currency that will be worth more in the future will decline in transactions because there is little reason to spend it, when you earn money by holding it.
People don't just spend money because they worry it will go down in value. They spend it because they need to buy things.
A decrease in transaction fees leads to a decrease in mining profitability, which leads to a decrease in hash.
...Which leads to a decrease in difficulty, which leads to an increase in the profitability of mining.
Of course, miners can just refuse to include transactions with low fees, encouraging people to pay higher fees, making mining more profitable.
The entire system self balances.
A decrease in hash will compromise the network.
Current indications are that it is more profitable to be honest than to try to compromise the network.
The reward, in Bitcoins, for solving a block, will decrease over time.
But considering Bitcoin is designed to have an increasing value, the value of the reward (in terms of purchasing power) shouldn't decrease.
But considering Bitcoin is designed to have an increasing value, the value of the reward (in terms of purchasing power) shouldn't decrease.
Velocity of money means a decrease in the exchange of money. That's what it means. A currency that will be worth more in the future will decline in transactions because there is little reason to spend it, when you earn money by holding it. A decrease in transaction fees leads to a decrease in mining profitability, which leads to a decrease in hash.
A decrease in hash will compromise the network.
A decrease in hash will compromise the network.
Without rereading the whole thread, I think you are the only one to bring up the velocity of money. To be honest, I never thought of transaction fees as a "tax" on the velocity of money. I personally think that in the long term, mining capacity will follow the stored value of all bitcoins, not the price of power as many expect. If the bitcoin economy becomes a multi-trillion USD economy, all world governments will be mining in a big way. Early adopters and large corporations will be using their capital to set up solar mega-projects and data-centers: decoupling the price of electricity from mining capacity.
In my first or second post, I explain why I think bitcoin will fail in the medium term. The slow dwindling of mining capacity brought on by deflation did not make the list. You may be right. However, keep in mind that bitcoin is still an experiment in its early stages. The first drop in block reward has not happened yet, and will happen within two years (haven't calculated the expected date).
If you are correct, I would expect to see a substantial drop in mining capacity (over 30%), that does not rebound for several months. If everybody else in the thread is correct, I would expect to see a slight drop in mining capacity (for consistency I will say less than 30%) that will rebound within 6 weeks (apparent lead-time for mining to match price according to some on the forum).
If deflation is really shown to be a problem, I think many people would support starting a new block chain where the block reward does not diminish over time (possibly called bitcoin 2.0). Would that be inflationary enough for you, or do you think the block reward should increase over time as a (small) percentage of existing bitcoins?
If I am right about mining capacity following the stored value of all bitcoins, inflation (not deflation) may actually cause mining capacity to drop. Currently, bitcoin is experiencing hyper-deflation, and mining capacity is scaling well.
Quote from: Sweft
Without increasing hash, the network is not secure.
I am pretty sure i won't be mining on the same old 5970 in 5, 10, or even 15+ years..
Quote from: Sweft
Without increasing hash, the network is not secure.
I am pretty sure i won't be mining on the same old 5970 in 5, 10, or even 15+ years..
Yeah, unfortunately with transaction fees you have to deal with the velocity of money. In a deflating currency, the velocity of money declines, less transactions
No, you get smaller transactions, not less transactions.
less fees.
I don't think you know how the fees work.
A decrease in hash will compromise the network.
You don't understand bitcoins, sorry. Read the thread, hopefully you will understand. If not, again, sorry.
Quote
Yeah, unfortunately with transaction fees you have to deal with the velocity of money. In a deflating currency, the velocity of money declines, less transactions, less fees. The numbers you have created are pure speculation.
You stopped at the final hurdle. (remember this is in far, far future when btc is actually deflationary)
Velocity of money declines, less transactions, less fees ....
less fees, less mining, difficulty eases ...
difficulty eases, valuations decline slightly (inflationary expectations creep in), people start spending ...
velocity of money increases, more fees, more mining .... until velocity of money declines ... begin loop again, it will track the demand for money.
It appears there is a self-regulating mechanism built in even in the far, far future when your grandkids might be debating these same things. (Be careful, they maybe reading what you write today).
Sure, there is self regulation. That's fine.
You don't understand one point. Without increasing hash, the network is not secure. If hash begins to decrease or remain at equilibrium the network will be vulnerable to compromise. This is inescapable.
Without an increase in hash, the network is vulnerable. If miners don't profit, the network is vulnerable.
Inflation expectations cannot creep in to a currency that is mathematically devoid of inflation.
Quote
Yeah, unfortunately with transaction fees you have to deal with the velocity of money. In a deflating currency, the velocity of money declines, less transactions, less fees. The numbers you have created are pure speculation.
You stopped at the final hurdle. (remember this is in far, far future when btc is actually deflationary)
Velocity of money declines, less transactions, less fees ....
less fees, less mining, difficulty eases ...
difficulty eases, valuations decline slightly (inflationary expectations creep in), people start spending ...
velocity of money increases, more fees, more mining .... until velocity of money declines ... begin loop again, it will track the demand for money.
It appears there is a self-regulating mechanism built in even in the far, far future when your grandkids might be debating these same things. (Be careful, they maybe reading what you write today).
Yeah, unfortunately with transaction fees you have to deal with the velocity of money. In a deflating currency, the velocity of money declines, less transactions
No, you get smaller transactions, not less transactions.
less fees.
I don't think you know how the fees work.
On the off chance that OP isn't trolling, I'll give a go at removing the main concern of the post.
Although as others have pointed out, 2040 is not a special date, we can at least agree that the coin creation reward for block solving will have diminished by then to a much smaller reward than exists today.
In fact, in 2041, the coin creation reward for solving a block will drop from 0.39BTC to 0.19 BTC. Sounds drastic, right? Who would mine for 0.19 BTC??? But that reward is only a small part of the picture. We need to consider transaction fees and exchange rates too.
Let's consider a pretty conservative (but of course not guaranteed) prediction of a future in which BTC is commonly used and has been adopted by a good portion of the populace, and is used for a portion of Internet commerce. There might, in this world, be 10,000 transactions in each 10 minute block, and let's say they pay on average 0.002 BTC per (a small fraction of the suggested transaction fee for today). That works out to 20 BTC in transaction fees, or 20.39 including the creation reward.
Now, 2040 rolls into 2041 and (gasp) the creation reward drops to 0.19. Suddenly and without warning, the total block creation reward drops to 20.19 (from 20.39)! Oh noes!
Who can say what the exchange rate in USD will be at that time? $100? $1000?
As time goes on, and adoption increases, the transaction fees increase. In even a very conservative prediction, transaction fees outweigh the creation reward well before 2040.
Although as others have pointed out, 2040 is not a special date, we can at least agree that the coin creation reward for block solving will have diminished by then to a much smaller reward than exists today.
In fact, in 2041, the coin creation reward for solving a block will drop from 0.39BTC to 0.19 BTC. Sounds drastic, right? Who would mine for 0.19 BTC??? But that reward is only a small part of the picture. We need to consider transaction fees and exchange rates too.
Let's consider a pretty conservative (but of course not guaranteed) prediction of a future in which BTC is commonly used and has been adopted by a good portion of the populace, and is used for a portion of Internet commerce. There might, in this world, be 10,000 transactions in each 10 minute block, and let's say they pay on average 0.002 BTC per (a small fraction of the suggested transaction fee for today). That works out to 20 BTC in transaction fees, or 20.39 including the creation reward.
Now, 2040 rolls into 2041 and (gasp) the creation reward drops to 0.19. Suddenly and without warning, the total block creation reward drops to 20.19 (from 20.39)! Oh noes!
Who can say what the exchange rate in USD will be at that time? $100? $1000?
As time goes on, and adoption increases, the transaction fees increase. In even a very conservative prediction, transaction fees outweigh the creation reward well before 2040.
Yeah, unfortunately with transaction fees you have to deal with the velocity of money. In a deflating currency, the velocity of money declines, less transactions, less fees. The numbers you have created are pure speculation.
The other problem is that for hash to increase, there must be either an increase in velocity or block inflation. We reach a point where block creation is negligible. Thus, since we agree that the deflationary aspect causes hording (which i'm not arguing is bad in commodities like gold, etc) but the proof of gold does not depend on mining. It's the proof itself. A bitcoin requires future proof of work. Gold requires past proof of work.
Deflation poses numerous problems to the future of bitcoin. They should be easily solved by a competing cryptocurrency.
On the off chance that OP isn't trolling, I'll give a go at removing the main concern of the post.
Although as others have pointed out, 2040 is not a special date, we can at least agree that the coin creation reward for block solving will have diminished by then to a much smaller reward than exists today.
In fact, in 2041, the coin creation reward for solving a block will drop from 0.39BTC to 0.19 BTC. Sounds drastic, right? Who would mine for 0.19 BTC??? But that reward is only a small part of the picture. We need to consider transaction fees and exchange rates too.
Let's consider a pretty conservative (but of course not guaranteed) prediction of a future in which BTC is commonly used and has been adopted by a good portion of the populace, and is used for a portion of Internet commerce. There might, in this world, be 10,000 transactions in each 10 minute block, and let's say they pay on average 0.002 BTC per (a small fraction of the suggested transaction fee for today). That works out to 20 BTC in transaction fees, or 20.39 including the creation reward.
Now, 2040 rolls into 2041 and (gasp) the creation reward drops to 0.19. Suddenly and without warning, the total block creation reward drops to 20.19 (from 20.39)! Oh noes!
Who can say what the exchange rate in USD will be at that time? $100? $1000?
As time goes on, and adoption increases, the transaction fees increase. In even a very conservative prediction, transaction fees outweigh the creation reward well before 2040.
Although as others have pointed out, 2040 is not a special date, we can at least agree that the coin creation reward for block solving will have diminished by then to a much smaller reward than exists today.
In fact, in 2041, the coin creation reward for solving a block will drop from 0.39BTC to 0.19 BTC. Sounds drastic, right? Who would mine for 0.19 BTC??? But that reward is only a small part of the picture. We need to consider transaction fees and exchange rates too.
Let's consider a pretty conservative (but of course not guaranteed) prediction of a future in which BTC is commonly used and has been adopted by a good portion of the populace, and is used for a portion of Internet commerce. There might, in this world, be 10,000 transactions in each 10 minute block, and let's say they pay on average 0.002 BTC per (a small fraction of the suggested transaction fee for today). That works out to 20 BTC in transaction fees, or 20.39 including the creation reward.
Now, 2040 rolls into 2041 and (gasp) the creation reward drops to 0.19. Suddenly and without warning, the total block creation reward drops to 20.19 (from 20.39)! Oh noes!
Who can say what the exchange rate in USD will be at that time? $100? $1000?
As time goes on, and adoption increases, the transaction fees increase. In even a very conservative prediction, transaction fees outweigh the creation reward well before 2040.
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