Topic: the maximum number of bitcoins will decrease over time (Read 3550 times)

Interesting point.

   Why that? You can simply keep the reward at any level and after a while there will be an equilibrium between lost and newly minted coins.

Yeah, unfortunately that could very well be the beginning of the end. But this:


Fortunately at 1% loss per year it will take 457 years until we get down to 1% (150 years at 3% loss per year). Still, this is the best argument for sustaining a minimum reward level that I have heard so far. IIRC Geistgeld had a constant reward, no idea about all the new spamcoins.

You have also Litecoin 

One problem with a "low" rate of inflation is picking the rate. The only rate that you can really justify is 0%. Any other rate would be a matter of opinion or the result of a prediction.

I think this has a lot to do with it.  



Trying to keep the number of coins in circulation static would require confiscating "old" coins and that is a very hard sell.  Going for low continual inflation wouldn't be as bad as some make it out to be (the problem with banks isn't inflation it is unfair access to pre-inflated prices) but "stable low persistent inflation" is harder to sell in a 30 second sound bite then "there will never be more than 21M BTC".  A low rate of deflation doesn't have any meaningful effect on the economy and and is easier to "sell".  That is likely why Satoshi went that route, it was the easiest route and honestly if implemented BEFORE the genesis block there is little difference between low (<1% annually) monetary inflation, low monetary deflation, or a system (once all coins are mined) holds the supply nearly static.

IMHO though that ship has already sailed (except for maybe alt-coins).  Trying to change it AFTER THE FACT would kill Bitcoin.  Things like the rate of minting, irreversibility of txs (including old ones), and the maximum money supply are part of the social contract offered to all potential adoptees.  It is immoral to make ex post facto changes to the social contract.  People bought into Bitcoin because those were held out as the "rules of the game".  Changing one wouldn't destroy the economy from a technical standpoint but it would destroy the faith in the currency that the rules won't be gamed/changed for the benefit of some at the expense of others.  

If someone could change the fundamental nature of Bitcoin (even for the "better") what else could they change.  How long until the next change for the "better" and the next one and the next one. How long before that leads to an elite group of economist-miners .... we will call them "The Federal Pool" would analyze the Bitcoin economy and change the minting rate by fiat (decree) to align the rate of monetary inflation with the rate economic growth.  Of course they would do it for the "good" of everyone, there stated goal might be something like "ensure price stability, maximize economic efficiency, and seek maximum employment".

That would be a good, however not a 100% safe way, to find out, if coins are lost or just sitting in a "cold" wallet. Then who whants to loose his wealth, because they sitting in a old, unsafe wallet without the proper, future security features ? So the addition of new features will indeed show, if the coins are lost or just not used. And additions will come for sure !!

I meant altcoins for the supply. If bitcoins don't have enough supply we have altcoins for that.

I disagree.  I like the fact that the deflation neatly counters the risk of permanently losing coins.

We don't really even need altcoins to handle this. Just plug in another private key encryption method into the client, one that's resistant to quantum computing, whenever it looks like QCs start to become a viable threat, and have everyone migrate to the newer addresses (or not, their choice.)

Well we are safe for now from them.
This is why we have altcoins, obviously.

Cracking EC in a matter of minutes?  Seems far stretched, even with QC.

Unfortunately, this only holds for unused addresses, since apparently the sha256(ripemd160()) is still difficult for a quantum computer to crack, whereas the EC isn't. Coins stored in paper wallets would be fine, but as soon as the public key was released, watch out.

The nasty implication of this is that since spending from an address requires revealing the public key, as soon as you broadcast a transaction, others could crack the private key before it made it into a block and re-broadcast a different spend, from that address to one of theirs. It might not work most of the time, but is still an uncomfortable thought.

Source: http://bitcoinmagazine.com/bitcoin-is-not-quantum-safe-and-how-we-can-fix/

Quadrilion :O
That's going so high 

This is no more of a problem than if a country discovers a large gold deposit. The price of gold will adjust accordingly, in a very unspectacular fashion.

The value of 1 bitcoin should not be determined by the number of dollars in circulation, or some country's economy. It should be based on supply and demand. If I have a pizza, how many bitcoins do I want for it? How hungry are you, what are you prepared to spend? Eventually we agree on a price, and that is the value of 1 bitcoin.

-Michael

Everlasting deflation is an aesthetic flaw of Bitcoin. Not that it hurts much but IMHO it would be nicer if we would reach equilibrium between lost and minted coins at some point in time. This would be very easy to achieve by never letting the reward drop below a minimum (say 1BTC or 0.001BTC). Doing so would open Pandora's box, though, and pave way for more modifications.

Also it simply sounds better that there can never be more than 21MBTC

The number of accessible Bitcoins should develop something like this:
(1% p.a. being a random guess, calculation not exact)

I'm not even sure why we are talking about Bitcoin replacing money in circulation. It seems silly to me. Ok, when mining is complete and all Bitcoins are mined then it can be poised to replace all world currencies in existence at once.  Great!  I'll be dead and most of the people on this forum will be so old they will be dead or in diapers. For now, I'm glad that fiat exists because I have spent some dollar bills at the Eros Center Trier, a few "Coffeeshops" in Amsterdam and in Soi Cowboy that I really don't want recorded in the blockchain for all eternity. Know what I mean.  rolf

A bigger problem is that as the number of lost bitcoins increases the true market size of bitcoin will become more and more difficult to estimate because we won't know how many bitcoins are lost and how many are just sitting in wallets and not being spent.

Let's say that someday it appears that 99% of the bitcoins are believed to be lost. That means there are only 210,000 in circulation. But the size of the bitcoin economy is 1 trillion dollars. That means each BTC is worth about 4.7 million dollars. Not a problem, let's say the protocol was modified to support more decimal places.

But maybe there is actually someone out there that is holding anohter 1% of the bitcoins that were believed to be lost. They could start spending these coins at any moment and wreak havoc on the bitcoin economy causing 100% inflation as those "lost" coins are now found.

As you can see, the more time goes on, and the more coins get "lost", the bigger the risk that those coins aren't actually lost which causes greater potential instability to the bitcoin economy.

This is something that both IS and ISN'T a problem.  Here's why.

Many cryptographic functions are based on factoring a large number.  Here, we find that it is true a quantum computer reduces the factoring problem a level of difficulty.

Here is one example http://epubs.siam.org/doi/abs/10.1137/S0097539795293172 and you can even find something on it here http://en.wikipedia.org/wiki/Shor's_algorithm  

(discrete logarithm is needed because instead of factoring, it is exponentiation that is used; however, a logarithm reduces an exponent to multiplication, and it is again a problem of factoring a large number).

However, there are some well known examples of problems with quantum computers actually offer no computation time improvement over classical ones.  It then becomes a problem of exploiting problems for use as a trapdoor function http://en.wikipedia.org/wiki/Trapdoor_function (granted, this itself is difficult, and not many useful and distinct trapdoor functions are known) that also scale equally on classical and quantum computers.

note: I do not know at this time if any known trap doors scale like classically on Q machines. Will find info on this and repost

There are 3 trillion dollars in existence. If you replaced all the dollars with bitcoins, then each bitcoin would be worth $142857.14, and each dollar would be worth 700 satoshis. There is no reason why $21 million BTC can't be worth $3 trillion. It is just a matter of conversion. You don't have to have 1 dollar in existence for every dollar that is spent each year, nor do you have to have 1 dollar in existence for every dollar of wealth.

What about it? Assume you have a working quantum computer. You also know a bitcoin address holding coins. Niw, you need to make your quantum computer reverse the sha256(ripemd160()) to obtain the public key, and then you need to make it reverse the EC calculation to find out the private key. How would you go about this? How much advantage would you have over today's silicon?

Not if 1 Bitcoin is worth $1 Quadrillion.

It has been stated several times that more decimal places can be added easily.