Pages:
Author

Topic: The economic model behind Bitcoin is flawed - page 9. (Read 14062 times)

legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 04:15:05 PM
Are you kidding? For a moment, you were talking about a payment system (like Visa or MasterCard, for the record), hundreds of transactions per second, 24/7/365

Did you finish school, really?

Every tx around 300b. 300*100*3600*24*365 oh god the whole 10Tb. You live in 90s? Btw we already have node partition design internally too.

Just in case, 24/7/365 means service availability. Think again about a data-center (or two)
member
Activity: 108
Merit: 10
December 06, 2015, 04:07:20 PM


The whole twitter worked on one DB instance, what data-center? We'll need some infrastructure but it'll be significantly less than BTC with 10$/tr and fiat payment systems with their jurisdiction issues.

Are you kidding? For a moment, you were talking about a payment system (like Visa or MasterCard, for the record), hundreds of transactions per second, 24/7/365

Did you finish school, really?

Every tx around 300B. 300*1000*3600*24*365 oh god the whole 10TB. You live in 90s? Btw we already have node partition design internally too.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 03:56:24 PM
It clarifies nothing Huh Lets leave our services aside, it's not relevant here. And I still don't see the reason why i should pay the miners electricity price.

Okay, let's assume that you are selling an illicit content on the net. Child pornography would do perfectly for this task, lol. It is a criminal activity in the majority of jurisdictions (if not in all) and severely punished. So as not to get caught, you create a super-duper cryptocoin, with an unlimited supply of new coins. The mining is no longer profitable, the liquidity is abundant, and the price for this coin is low but nearly frozen (which is good for you). The "content" you provide is very expensive for pretty obvious reason, so you set the price for 1 minute of watching it according to the costs incurred and the exchange rate (since you pay your "employees" in fiat). So far so good. Now what happens if within that same time period (i.e. 1 minute) miners can mine much more coins (despite the electricity costs) than you decided to collect from them by viewing your expensive content?

You will be subsidizing them in terms of fiat

Fairy tail. Some crazy man will spend his electricity for... what is the purpose?
In general miner's cost will pay the client who needs money for transfer and there is not enough on free market, than it becomes profitable to mine that small amount. Seller pay nothing. Client will, if it's the only way. But he'll be able to sell it to the next generation of users, so the full price spreading among all clients.

P.S. I don't think CP is the subject for discussion. Our system will have some rules for such things, probably not for the first time but still.

You can substitute CP with anything more decent or legal (lol) but as expensive, though (say, just porno). The result will be the same, unless you decide to cap your coinage one day, indeed. As I said, users will be arbitraging such a system if there would be providers of expensive content/services in it...

But there would be none, obviously
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 03:53:59 PM
2. They'll get additional profit because it's easier faster and cheaper to accept it so more people will buy something

Faster and cheaper than what? There are a lot of coins that are fast and cheap aiming at exactly the same as well as being well-established at that (say, Dogecoin). Do the service providers actually use them? I guess, no, at least, not to a significant degree. Even if we take online gambling as one such "service" (though this is a far cry from what you intend your coin for), I can only name bitcoins, litecoins and doges (in a few places) as being actively used...

Why would the things be different for your coin?

Than any decentralized system, by design. We can process hundreds tps without any limitation of the whole blockchain distributed to another full nodes like almost any altcoin. Plus stable exchange rate due to emission scheme.

What about fault tolerance? You would need a data-center (or two, just in case, lol). All of a sudden, things become much more expensive than previously thought, wow

The whole twitter worked on one DB instance, what data-center? We'll need some infrastructure but it'll be significantly less than BTC with 10$/tr and fiat payment systems with their jurisdiction issues.

Are you kidding? For a moment, you were talking about a payment system (like Visa or MasterCard, for the record), hundreds of transactions per second, 24/7/365

Did you finish school, really?
member
Activity: 108
Merit: 10
December 06, 2015, 03:51:23 PM
2. They'll get additional profit because it's easier faster and cheaper to accept it so more people will buy something

Faster and cheaper than what? There are a lot of coins that are fast and cheap aiming at exactly the same as well as being well-established at that (say, Dogecoin). Do the service providers actually use them? I guess, no, at least, not to a significant degree. Even if we take online gambling as one such "service" (though this is a far cry from what you intend your coin for), I can only name bitcoins, litecoins and doges (in a few places) as being actively used...

Why would the things be different for your coin?

Than any decentralized system, by design. We can process hundreds tps without any limitation of the whole blockchain distributed to another full nodes like almost any altcoin. Plus stable exchange rate due to emission scheme.

What about fault tolerance? You would need a data-center (or two, just in case, lol). All of a sudden, things become much more expensive than previously thought, wow

The whole twitter worked on one DB instance, what data-center? We'll need some infrastructure but it'll be significantly less than BTC with 10$/tr and fiat payment systems with their jurisdiction issues.
member
Activity: 108
Merit: 10
December 06, 2015, 03:48:09 PM
It clarifies nothing Huh Lets leave our services aside, it's not relevant here. And I still don't see the reason why i should pay the miners electricity price.

Okay, let's assume that you are selling an illicit content on the net. Child pornography would do perfectly for this task, lol. It is a criminal activity in the majority of jurisdictions (if not in all) and severely punished. So as not to get caught, you create a super-duper cryptocoin, with an unlimited supply of new coins. The mining is no longer profitable, the liquidity is abundant, and the price for this coin is low but nearly frozen (which is good for you). The "content" you provide is very expensive for pretty obvious reason, so you set the price for 1 minute of watching it according to the costs incurred and the exchange rate (since you pay your "employees" in fiat). So far so good. Now what happens if within that same time period (i.e. 1 minute) miners can mine much more coins (despite the electricity costs) than you decided to collect from them by viewing your expensive content?

You will be subsidizing them in terms of fiat

Fairy tail. Some crazy man will spend his electricity for... what is the purpose?
In general miner's cost will pay the client who needs money for transfer and there is not enough on free market, than it becomes profitable to mine that small amount. Seller pay nothing. Client will, if it's the only way. But he'll be able to sell it to the next generation of users, so the full price spreading among all clients.

P.S. I don't think CP is the subject for discussion. Our system will have some rules for such things, probably not for the first time but still.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 03:46:55 PM
2. They'll get additional profit because it's easier faster and cheaper to accept it so more people will buy something

Faster and cheaper than what? There are a lot of coins that are fast and cheap aiming at exactly the same as well as being well-established at that (say, Dogecoin). Do the service providers actually use them? I guess, no, at least, not to a significant degree. Even if we take online gambling as one such "service" (though this is a far cry from what you intend your coin for), I can only name bitcoins, litecoins and doges (in a few places) as being actively used...

Why would the things be different for your coin?

Than any decentralized system, by design. We can process hundreds tps without any limitation of the whole blockchain distributed to another full nodes like almost any altcoin. Plus stable exchange rate due to emission scheme.

What about fault tolerance? You would need a data-center (or two, just in case, lol). All of a sudden, things get serious and much more expensive than previously thought, wow...

And why should we trust you, in the first place?
sr. member
Activity: 268
Merit: 256
December 06, 2015, 03:37:03 PM
"Why would the things be different for your coin?"

There seems to be an acceptance of this paradox of money : that particular
forms of money cannot be both a store of value and a means of exchange.

Stated differently this becomes Gresham's Law:
https://en.wikipedia.org/wiki/Gresham%27s_law

Summary : "Bad money drives out good"

Regarding Government : "When a government overvalues one type of money
and undervalues another, the undervalued money will leave the country
or disappear from circulation into hoards, while the overvalued money
will flood into circulation."

Thus when government introduced their fiat money, specifically paper fiat
money, silver and gold coinage went into hiding. It is instructive to
observe that when the Mongols conquered China, the conquest was greatly
facilitated by the issuance of new paper money (at an extortionate
exchange rate). Fiat money is merely a transfer of power from savers to
the issuer of the fiat money. All fiat money is credit (and debt).



These things were once universally known. Today, the internet has made
new forms of money possible, and bitcoin may only be the first of many.
The lessons of history are being re-learned. For some, it may be painful.    
This collective amnesia is surely not accidental - the punishment for
currency debasement could be both gruesome and medieval, hence those
promoting fiat currencies have strong incentives to succeed.

History suggests that store-of-value money is sub-optimal, and that a
trimetallic (gold, silver, bronze) currency has advantages (and
disadvantages). This paper asks the question:
https://www.mpls.frb.org/research/wp/wp536.pdf
"The puzzle, of course, is not why sovereigns carried out debasements
(in fact it might even be why they did not do so more often),
but rather why did private agents respond so."

The author does not directly provide a convincing answer. It seems
probable that an informed merchant, on learning of a forthcoming
debasement, will borrow, then covert the bullion into debased coins,
and replay the debt at profit. Thus proximity to the Mint may have  
determined the market price of the debased silver coinage.

Note also "Accountants and merchants would count in livres of this
or that coin, and convert to gold coins to keep track of the
different values of the silver coins ..."

Monetary systems gravitate toward store-of-value (bitcoin) and
"overvalued money" that floods into circulation. Clearly, banks and other
middlemen are incentivised to keep fiat money circulating. Whether
bitcoin can disintermediate the third party in future transactions is
an open question, and there could be an opportunity for the right altcoin.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 03:34:43 PM
It clarifies nothing Huh Lets leave our services aside, it's not relevant here. And I still don't see the reason why i should pay the miners electricity price.

Okay, let's assume that you are selling an illicit content on the net. Child pornography would do just fine for this task, lol. It is a criminal activity in the majority of jurisdictions (if not in all) and severely punished. So as not to get caught, you create a super-duper cryptocoin, with an unlimited supply of new coins. The mining is no longer profitable, the liquidity is abundant, and the price for this coin is low (due to huge money supply) but nearly frozen (which is good for you). The "content" you provide is very expensive for pretty obvious reason, so you set the price for 1 minute of watching it according to the costs incurred, the exchange rate (since you pay your "employees" in fiat), and add a decent profit margin, of course (just in case, lol). So far so good. Now what happens if miners can mine much more coins with the same expenses than you decided to collect from them by viewing your "special" content (since they pay only for electricity)?

You will be subsidizing them in terms of fiat
member
Activity: 108
Merit: 10
December 06, 2015, 03:24:56 PM
3. Again, mine is not the only way to get the currency, you can sell BTC or some service to miners or previous holders. Why unprofitable mine is so important? Bitcoin is not minable for the most but still is useful.

Until then prices (i.e. exchange rate) will be too volatile. Not that I somehow imply that they won't be so (lol) when mining stops being profitable for the majority of miners (see Bitcoin), but the former is a given for a currency that doesn't have limits on the number of coins mined (see Dogecoin). Needless to say that high volatility of a coin is a big no-no for those who are going to trade goods for that coin...

Essentially, the unprofitability of mining sets the cap on the supply of new coins, which should stabilize the price, at least, theoretically, lol

Price will be falling until some equilibrium price will be found, then volatility will decrease. And i think it'll be soon. So what is the question?
member
Activity: 108
Merit: 10
December 06, 2015, 03:14:01 PM
2. They'll get additional profit because it's easier faster and cheaper to accept it so more people will buy something

Faster and cheaper than what? There are a lot of coins that are fast and cheap aiming at exactly the same as well as being well-established at that (say, Dogecoin). Do the service providers actually use them? I guess, no, at least, not to a significant degree. Even if we take online gambling as one such "service" (though this is a far cry from what you intend your coin for), I can only name bitcoins, litecoins and doges (in a few places) as being actively used...

Why would the things be different for your coin?

Than any decentralized system, by design. We can process hundreds tps without any limitation of the whole blockchain distributed to another full nodes like almost any altcoin. Plus stable exchange rate due to emission scheme.
member
Activity: 108
Merit: 10
December 06, 2015, 03:09:53 PM

I understood neither the first nor the second. How exactly the service providers get additional profit from their services by accepting your coin as a means of payment?

Remember, that it is no longer profitable to mine your coin

1. It was about your "Because the profitability of mining is essentially limited by the cost of electricity, while your costs (not even speaking about profits) will obviously be higher than the cost of electricity (since they most likely will include it plus a lot of additional expenses)...". There is some misunderstanding i think

I don't know what kind of service you are actually going to provide, but services that don't require a lot of expenses or just popular enough are usually provided for free altogether (like gmail, facebook, whatever). I was initially assuming that you are going to provide something very original, specific, and expensive (like child pornography, lol) to make use of yet another coin justified. That said, you (and other service providers, for that matter) are still bound by the amount of expenses you (them) may have to bear for their services rendered and the price of electricity (as the decisive factor for mining) that miners would pay for mining your coin in the way I described above...

I hope this clarifies the matter

It clarifies nothing Huh Lets leave our services aside, it's not relevant here. And I still don't see the reason why i should pay the miners electricity price.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 02:49:13 PM
3. Again, mine is not the only way to get the currency, you can sell BTC or some service to miners or previous holders. Why unprofitable mine is so important? Bitcoin is not minable for the most but still is useful.

Until then prices (i.e. exchange rate) will be too volatile. Not that I somehow imply that they won't be so (lol) when mining stops being profitable for the majority of miners (see Bitcoin), but the former is a given for a currency that doesn't have limits on the number of coins mined (see Dogecoin). Needless to say that high volatility of a coin is a big no-no for those who are going to trade goods for that coin...

Essentially, the unprofitability of mining sets the cap on the supply of new coins, which should stabilize the price, at least, theoretically, lol
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 02:24:57 PM
2. They'll get additional profit because it's easier faster and cheaper to accept it so more people will buy something

Faster and cheaper than what? There are a lot of coins that are fast and cheap aiming at exactly the same as well as being well-established at that (say, Dogecoin). Do the service providers actually use them? I guess, no, at least, not to a significant degree. Even if we take online gambling as one such "service" (though this is a far cry from what you intend your coin for), I can only name bitcoins, litecoins and doges (in a few places) as being actively used...

Why would the things be different for your coin?
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 02:17:23 PM

I understood neither the first nor the second. How exactly the service providers get additional profit from their services by accepting your coin as a means of payment?

Remember, that it is no longer profitable to mine your coin

1. It was about your "Because the profitability of mining is essentially limited by the cost of electricity, while your costs (not even speaking about profits) will obviously be higher than the cost of electricity (since they most likely will include it plus a lot of additional expenses)...". There is some misunderstanding i think

I don't know what kind of service you are actually going to provide, but services that don't require a lot of expenses or just popular enough are usually provided for free altogether (like gmail, facebook, whatever). In fact, I was initially assuming that you are going to provide something very original, specific, and expensive (like child pornography, lol) to make use of yet another coin justified. That said, you (and other service providers, for that matter) are still bound by the amount of expenses you (them) may have to bear for their services rendered and the price of electricity (as the decisive factor for mining) that miners would pay for mining your coin in the way I described above...

I hope this clarifies the matter
member
Activity: 108
Merit: 10
December 06, 2015, 01:38:00 PM

I understood neither the first nor the second. How exactly the service providers get additional profit from their services by accepting your coin as a means of payment?

Remember, that it is no longer profitable to mine your coin

1. It was about your "Because the profitability of mining is essentially limited by the cost of electricity, while your costs (not even speaking about profits) will obviously be higher than the cost of electricity (since they most likely will include it plus a lot of additional expenses)...". There is some misunderstanding i think.
2. They'll get additional profit because it's easier faster and cheaper to accept it so more people will buy something.
3. Again, mine is not the only way to get the currency, you can sell BTC or some service to miners or previous holders. Why unprofitable mine is so important? Bitcoin is not minable for the most but still is useful.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 01:32:01 PM
1. You are right if there would be just we, users and our services (like twitter, dropbox, hosting, etc). But as i said that end-user services aren't primary target, it was just part of the explanation why now it's more interesting for service owners

But then we are back where we started at, that is, why should we, the adopters, care (after mining is no longer profitable)? Service owners accepting your coin as a means of payment would be in exactly the same situation that I described earlier...

Apparently, they won't let their users steal from them (read take your coin as a means of payment)

1. Miners consume more electricity than i am (as i just check tasks solution and they actually find it, it's 2000+ difference at least). If it wasn't clear.
2. They care because that's the way to get some additional profit from their services. Let's take your example. I have the payment system, some service (like twitter with payable tweets and subscriptions) and exchange with BTC and stable exchange rate. Then i just sell twitter service with middleman for BTC. Where they steal from me?

I understood neither the first nor the second. How exactly the service providers get additional profit from their services by accepting your coin as a means of payment?

Remember, though, that we are at a stage where it is no longer profitable to mine your coin
member
Activity: 108
Merit: 10
December 06, 2015, 01:23:00 PM
1. You are right if there would be just we, users and our services (like twitter, dropbox, hosting, etc). But as i said that end-user services aren't primary target, it was just part of the explanation why now it's more interesting for service owners

But then we are back where we started at, that is, why should we, the adopters, care (after mining is no longer profitable)? Service owners accepting your coin as a means of payment would be in exactly the same situation that I described earlier...

Apparently, they won't let their users steal from them (read take your coin as a means of payment)

1. Miners consume more electricity than i am (as i just check tasks solution and they actually find it, it's 2000+ difference at least). If it wasn't clear.
2. They care because that's the way to get some additional profit from their services. Let's take your example. I have the payment system, some service (like twitter with payable tweets and subscriptions) and exchange with BTC and stable exchange rate. Then i just sell twitter service with middleman for BTC. Where they steal from me?
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 01:16:18 PM
3. In general there will be still some point where i can get profit anyway (like mining litecoin for example) so the whole assumption is not very solid imho.

I don't quite understand what you mean. I thought we had already agreed that mining your coin was not profitable due to electricity costs as an initial condition:

If I got your point correctly, you are waiting when it becomes unprofitable to mine any more (i.e. after the pump-and-dump stage is over), and accept this coin as a payment for "some end-user oriented services" of yours, right?

Until then people would just mine it and convert to fiat or Bitcoin
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
December 06, 2015, 01:04:34 PM
1. You are right if there would be just we, users and our services (like twitter, dropbox, hosting, etc). But as i said that end-user services aren't primary target, it was just part of the explanation why now it's more interesting for service owners

But then we are back where we started at, that is, why should we, the adopters, care (after mining is no longer profitable)? Service owners accepting your coin as a means of payment would be in exactly the same situation that I described earlier...

Apparently, they won't let their users steal from them (read take your coin as a means of payment)
Pages:
Jump to: