Topic: The economic model behind Bitcoin is flawed - page 8. (Read 14061 times)

True, but dollar purchasing power has decreased a lot:


Of course, anything that can be traded will have value. Bitcoins, dollars, paintings or even collection cards

People overall are living much better today than they lived some 100 years ago (just when fiat began to take over the so-called "sound" money). I'm not even mentioning the miserable conditions the total majority of population lived 500 years ago. That would simply be beyond comparison. You may indeed question the validity of this assertion (that people live better today), but you can't possibly deny the explosive growth of population as well as human lifespan...

I don't think that any of the latter would be possible if the former was not true

I tire of your theory.
WHO does this system work for?
The current system does not work fine for anyone but the elites; they are the ones who hoard the credit and assets and leave them idle; money velocity has slowed down dramatically. It is pure "idle worship"; energy must flow through a system because stagnation is death.
How all of this could possibly be "economically better" than sound money is something that I fail to comprehend. I don't think that you can determine that an economic system is "better" unless it is in reference to some group of people; economics is a social science and is properly called "political economy". It has been shown that the people manage money better than the State but the peoples' productivity and creativity is cheated by the monetary system. Cui bono??

"Of all contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money." - Daniel Webster

It ain't until and unless people are no longer willing to trade goods for it. A yardstick for measuring the value of one good against the other is not required to have value in and of itself, wow. Balance scales to measure weight would work just fine even if they were weightless themselves (in fact, they would work even better)...

They just need to be balanced properly, the scales of justice

The Dollar just isn't what it used to be; it is no longer a measure of value, it is pure "dimensionless" ponzi.


"Federal Reserve Notes are not Dollars." - Russell Munk Assistant General Counsel, Dept. of the Treasury 1977

"Of all contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money." - Daniel Webster

More quotes

You are welcome, bro

No, definitely not.  And hence why I liked your phraseology so much.  Dimension solely comes from a well defined definition of unit.   

Dimensional analysis is the use of well defined units as a sanity check.

Fiat is a dimensionless yardstick.       

That's a nitpicking at its best... Does a sequence of natural numbers have a dimension, wtf?

I like that "dimensionless yardstick"; quite apt   Of course "yard" is a unit aka a dimension, so it appears to be an oxymoron, but "dollar" is similar in that it refers to a real unit or dimension (a quantity of silver) but yet doesn't really.  Dimsensional analysis as any other physical or scientific analysis with such units is doomed to failure.  Perfect!

As in:  I'm 1.5 yards tall.  4 2015-funk yards, which represent some unspecified amount of distance which you can't ever know.  Pretty tall for a dwarf wouldn't you say?

Anyway fiat is also great because you can issue yourself as much as you want at any time with no work.  It only takes 1 bit flip on a 32 bit integer to create over a billion dollars.  Can you do that with bitcoin?  I didn't think so.  You need quadrillions of bitflips just to get 25 coins. 

Basically, you are admitting that you can inject as much money into the system as you see appropriate (with all ensuing consequences), essentially bypassing the proof-of-work protocol, provided it is in fact implemented (which I doubt). This doesn't bode well...

But everyone is free in drawing their own conclusions, of course

Are you serious? In the case of Bitcoin (as well as other cryptocurrencies) the market cap (in terms of fiat, say, USD) is calculated by the number of coins in circulation multiplied by its current exchange rate (or something to that tune). We don't even know how many bitcoins are lost for good. Indeed, you can always say that the amount of goods traded is some % (or rather ‰, lol) of that number...

But do you have any real figures in absolute terms, however pathetic they might be?

Well, you shouldn't trust, just calculate your profit\risks ratio. You definitely shouldn't hold that 1m$ here, but sell some service with almost immediate BTC withdraw could worth it.

Another one attempt to answer your main question. Lets imagine money workflow.

Client wants to get some currency to buy some good\service, he'll buy it on free market or mine it by himself. In result clients pay to Intel and electricity provider to get medium of exchange. History over, first money holder took the risks here. So actual question for him is - will he be able to sell it month later with the same exchange rate (or what discount will be)? The risks are:
1. Fbi arrests the server, some attack happens, all hardware along with backups fails. Most severe case, there are some ways to mitigate consequences but discount will be big.
2. Mining alg cracked, asic appears, admins print huge amount of money. There will be some reasonable daily limit of mining withdraw so we'll be able to catch emergency cases, algs will be adjusted to existent hardware. We'll not print much because it's a long term story for us, nobody will just throw out the reputation.
3. Economy behind will shrink, trust will fall (if somebody will use as medium of saving too), competitors will rise, velocity of circulation rise. Required money supply shrink too, price will go down. Possible but it's long time processes, it can't happen fast.

As i said, calc it on your own, if the risks are too high for you then sry for bothering.

The number of goods traded for bitcoin is basically a function of the market cap.
I don't think that the market cap is as important as the fact that it is a viable alternative that works; I can and DO trade ALL of my bitcoin for goods because there are many advantages to using bitcoin for trading in goods, the first one being that one gets to "starve the banks"! As mentioned in another thread:

The good ole day..... i would have loved to have known about bitcoin back then.  it must have been really interesting doing that, who actually got you into it was it a friend or sumthin?

What fraction the merchants accepting Bitcoin convert to fiat is not as important as the total amount of goods traded for it (in terms of both fiat and Bitcoin). What is it equal to, does it grow and how fast? If two people sold something to each other for bitcoins and kept them, we would have 100% of "merchants" loyal to Bitcoin, wow...

But does this "statistic" tell us anything?

It's the weakest point of the system, you are absolutely right. Trust shall be accumulated due the time of stable work, but it will never be enough.
The main point: we are developing it and we have profits from BitMoney stable work and popularity. Absolutely no reasons for us to harm the project or our clients interests.
I hope that build-in exchange will not be the main BTM market, so users will not have to rely upon us in this point either.

A recent survey showed:
50% of merchants who accept bitcoin convert it all to fiat. 10% keep the bitcoin. 40% take a mix of fiat and bitcoin.
I conclude that the use and acceptance of bitcoin as money is growing.
Another recent survey showed:
Bitcoin acceptance and use is growing faster than the internet but slower than mobile phones because the latter network was able to utilize existing networks while the former had to create a new network from scratch. This indicates that trade conducted in bitcoin is growing, and not diminishing.
I have thought about how VAT and sales taxes are often comparable to the loss incurred by a barter transaction (up to 10%); it seems to me that avoiding VAT and sales tax is a great use case for bitcoin, and obviously certain groups of people will try to use it for most of their transactions. Also, Since there is apparently not enough money to pay back all the loans with interest, the fiat system creates economic distortions on a massive scale, so bubbles in fiat assets are somewhat comparable to those of crypto-assets.

The one million dollar question... Why should we trust you?

Hi deisik and hi all
Just have noticed this discussion. I am also a member of BitMoney dev-team. Hope to make all clear about our project, if it is so actively discussed.

- What is it about exchange rate? Will it always fall?
As soon as we integrate many services, people will start to buy BTM for their needs. Most people can't mine as much as they need for usual transactions. So the rate will stabilize, with small inflation like any currency has.

-Well then, what is the reason to integrate it with my service or just use?
And it's the main point. Here we come to the topic subject.
We are developing payment system which should have many obvious advantages if compared with Bitcoin. I just paste here some description from the manual:

* Anonymous (for clients) transfers optionally.
* Small storage requirements
* Ready to work immediately after start.
* Client-server protocols based on the i2p network, most experienced system for anonymous and encrypted communication.
* Client authentication and encryption key exchange based on RSA with 2048 bit keys. Everything including local settings is encrypted with AES-256.

In short, BitMoney transactions are fast, and can not be tracked like Bitcoin payments. This fact and out i2p relation provide many opportunities and we are trying to catch and use all of them (ani-spam system is just the first and one of the most simple examples). I can't say if we shall succeed or not, but the next generation cryptocurrencies have to provide this properties for their users. Bitcoin can't reach it by design, and we are already doing it.
Just for example. Fast transactions provide opportunity for shops to sell goods with a price based on almost current exchange rate, not making 3-10% markup for safe currency exchange. Moreover, low commissions let shops to make even lower prices in BTM, that is good for their consumers.
Offline payments are the other interesting feature. It will be implemented in the future release.
And I can go on long enough.

-What is the reason to mine BitMoney anyway, if my electricity doesn't cost ~0?
First, for small amounts it's easier to mine BTM than to buy it. It's most about different ani-spam services (look our forum or build-in chat for example).
Second, we have plans to provide a kind of investments with BTM, but it's not about HYIP pyramids or something alike. It should be a kind of investment in external services implementation, clean and profitable for all sides with a goal of further project development. But now it is all I can tell about that.
Third, BTM mining is still profitable just to buy BTC with current rates.

Finally, if we are speaking about Bitcoin. It is also not profitable to mine for most of users. But they use it, and not because of profitable mining, but for its comparative security and anonymity.

-Where is admin's profit?
We have commissions for most of transactions like any other payment system has.  But our commissions are much lower.

-What happens, if you have problems with fbi?
https://bitcointalksearch.org/topic/m.12975575

Please, just check our news sometimes. We are in constant development and have ideas how to implement our plans in reality, with benefits for everyone.

We obviously can't provide 99.999% availability time (as and many other VISA advantages), but it's not necessary, we are discounter Fast and cheap. But of course we'll have failover systems (replication based with rollback time notification smthg like that). But not the whole data-center.