Topic: The deflationary problem - page 15. (Read 32479 times)

I don't know about these ones, but real lunatics come from the moon.

What?

Ociam?

If Satoshi is really a single person (as opposed to a front for an organization) the s/he is a true polymath.  There is simply to many areas of expertise s/he would have required to produce something of this degree of elegance on the first try.

No, not joking.  It's already been shown extensively by others in other threads that difficulty follows price, and that  price is not responsive to changes in difficulty.  Note the search function, it does really work.

Block generation doesnt stop on 2040.  The bitcoin per block reward decreases in half every few years, but doesn't stop.  Economics will dictate a value for bitcoin.  A miner will produce a block in exchange for the value of the bitcoin reward.  If there are not many people interested in mining due to low reward, then the difficulty rate will be decreased in accordance.  As it is easier to produce bitcoin, then a miner will be more likely to solve the hash problem to generate a block, so the reduced reward rate is compensated by the lowered difficulty rate.

No. It's not a lie. It simply hasn't been addressed in a way that is satisfactory to you. I'm beginning to wonder what it is you're looking for in terms of a response. If you understand the system so well and find it wanting, what more could we possibly say to you? You've already decided on an answer, it seems.


We've given you a lot of reasons why the removal of a base block reward will be a non-issue. I haven't seen you address a single one. How can we give you a satisfactory explanation if you won't tell us what your problems with the ones we've already given are? All you've done so far is call us all idiots and reiterate the points you made in your original post, points which, I might add, a number of people aside from you feel they've satisfactorily addressed. Give us something more to go on and maybe we'll get somewhere.


Q.E.D.


Wrong. The Keynesian economic model you refer to is based on indivisible units. Bitcoins are, in theory, infinitely divisible. In practice we only allow transfers of at least 0.00000001 bitcoin. This can be changed, though, as smaller transactions become necessary. Thus deflation in the Bitcoin economy will look quite different from deflation in any other economy. At worst it will eventually reverse and result in inflation when someone breaks ranks and spends more than usual. But liquidity traps are not possible with bitcoin, at least not in theory. (And there is no reason at present to suspect that theory is wrong, from where I stand.)

@thread poster - at first it is going like 1/2 of the amount generated every 4 years, so it will simply go really low amount in 2100's. About transaction fees and mining - simple math man..

if now we have fees around 0.1 - 1 BTC / block - let's call it 0.3 BTC.
Let's say we have 50 transactions per block (just took a look for couple last blocks on blockexplorer) - so it's 0.006 btc / transaction. - lets even call it 0.005 BTC (~10c)

If visa really have 4000 transactions / s (and that's only VISA) then it will be at CURRENT! fee rate 12000 BTC / block   - which is about $210000 / 10 minutes for mining for all miners - which is about $30.000.000 per day for all hashing guys. So where's the problem man? Let's even say that power consuption is like $0.1 /kwh and miners mine only when they have $0.9(probably current ratio) in return for every 1kwh lost. That's about 2,500.00 Thash/s  which is like 500 times our current hash rate! If there will be need then fees will increase to get enough miners running. Remember also about block rewards till 2100 yr. To attack network someone will need to put in the machines like $1.000.000.000 dollars minimum, and it will be traceable as big power consumption on specific area, someone buying like ~5 000 000 computers of same type etc etc. - it's not that easy as you think.

Maybe i did some mistakes in calculations, or information specified is not completly proper - but for sure FEEs can be readjusted to meet network requirements.

One thing is sure -> more people in the system - safer system.

Please, point out your problems with the issues as I have presented them.  [hypocritical ad hominem]Or did you not read my posts because they were too long and hard to understand? [/hypocritical ad hominem]

Yeah, the more you dig the more you find ... satoshi must have had some exposure to control system theory (not to mention the myriad other topics). The stability during boot-strapping (what we are experiencing now) is actually harder to achieve than in the stable case ... and then it combines a system that caters for both.

Wonder if there were any design notes on that aspect of it?

Aside: in the middle of the financial crises in 2008 Henry Paulson placed Neel Kashkari, a recruit also from Goldman Sachs with prior training and experience in multi-variate aerospace control systems, in charge of monetary systems at the Treasury. (i.e. the exchange stabilisation slush fund, the PPT).

http://abcnews.go.com/Business/neel-kashkari-tarp-bailout-czar-leaves-washington-california/story?id=9269413

"According to the Washington Post, Kashkari, who left his post at the interim assistant secretary of the treasury for financial stability in May 2009, is enjoying his new life, a move he told the paper he's dubbed the "Washington detox."

Today, Kashkari's daily routine includes chopping wood found on his property near the Truckee River and building a shed, ..."

Let's preserve this for posterity. Now read this again. Now we bring up deflation in combination with decreasing by a fraction of % hashing power 30 years from now. That's a new level of ...

Original Poster, your problem is trivially easy to solve.

Please just tell us first exactly how many fixed coins you wish to buy and at what price, since most people who mouth off like that fail to put their money where their mouth is.

If you are serious about buying coins that feature your "fix", they will be made available for you to buy. Its simple, just put your money where your mouth is.

Until you do, or someone does, why should someone even point you at the coins that have the feature you are mouthing off about, let alone build them from scratch just for you? Possibly a hidden cadre of people are already making fortunes with precisely such coins, but if you aren't serious about buying any there is no point wasting their time on you.

-MarkM-

This issue hadn't been addressed, please stop saying that.  It's a lie.

If it had been addressed someone would have Provided a sufficient explanation in this thread.  I have yet to see one.

Thus to me this issue is problematic for bit coin.

People assume wrongfully that inflation is bad.   To respect to security, inflation is not only beneficial but necessary.  Otherwise a declining hash will compromise the security of the network.

Pure genus isn't it?

However misguided, it raises some interesting thoughts about if/when bitcoin network is matured. If difficulty is stabilising at some rate this is likely because the exchange value has stabilised. If the exchange value has stabilised there is much more likely to be merchants and vendors willing to exchange, trade, do free commerce, rather than save. The result of this is more transactions on the network and thus more fees.

So here is yet another self-regulating mechanism tucked into the inner workings of bitcoin, this time as a mature network. More stability of exchange value leads to more commerce leads to more fees => more mining => more security. Also, a drop in exchange value leads to more commerce (people cashing out) and more fees. Net effect, it drives difficulty towards some temporarily stable value (stationary fixed point) on fees only mining basis.

Correction noted and made. Thanks. :-)

Only if you're working in base 6.

ByteCoin

Just thought of something else:

The kind of people who have the resources for massive bitcoin mining servers are likely to be large financial investment firms.  It is very much in their interest to keep mining, as, essentially, their entire company can perform transactions on the bitcoin network without any fees, as long as it's solved by their own server.  This would be HUGE savings for the firm, likely doing high volume microtrades on thousands of stocks, on top of the income from the fees themselves.  So we've got an example of secondary or tertiary motivational factors.

You have. The way I understand it, the Bitcoin algorithm always seeks to have 10 6 blocks an hour solved.¹ If everyone were to stop mining tomorrow, the difficulty would eventually plummet.


Right. But if the network becomes open to attack due to a drop in the network's hashing power, people will become less willing to pay for bitcoin.


Kinda. I don't actually think we're looking at a system where one drives the other. I think we're looking at a feedback loop. But this is irrelevant. Sweft, your concerns have been voiced by many a newbie before you and addressed many times before. It's a failing of this community that we don't have a sticky to address your concerns, choosing instead to react with hostility toward you. (Though your calling everyone an idiot probably didn't help your case much.)

I think you are overlooking the fact that the base block reward will be diminishing gradually, not simply going from 50 to 0 in 2040. Hashing will still take place afterward as by then (as it has been said before) transaction fees will have become the norm for "must-take-place-ASAP" transactions. Because the base block reward is set to diminish gradually, there will be plenty of time for the mining ecosystem to begin adapting to the upcoming change. The coping mechanism may be built into the system in the form of transaction fees, or a new as-of-yet-unknown one may be built on top of it. After all, the bitcoin payment processors that are bound to crop up will have a vested interested in keeping transactions going and may institute fees of their own, much like banks have now, to compensate mining cost (if indeed it becomes unprofitable.)

The bitcoin system is extremely robust, I think you'll find. Hopefully the cold reception you've received from this community of bitcoin veterans won't put you off them too much.  

Edit:
1. My original claim of 10 blocks an hour was incorrect. According to the wiki:
From https://en.bitcoin.it/wiki/Category:Mining