Topic: What happens if someone starts another blockchain or cryptocurrency? (Read 16613 times)

Wow it sure does! Now I can ignore all your bullshit about turning Bitcoin into Shitcoin, and the forum is now a marginally quieter place.

Ignore button. As I apply this more and more, the forum improves!

If the exchange rate was fixed by law, I'd have hundreds of those gold coins.

This is very true for the "store of value" function. For the "medium of exchange" function, the network effect is a strong driver and will add to the "first mover advantage" of bitcoin.

Sorry, you fail your test. If you whine and suck up to me, I may consider partial credit.

Same circumstance. Fixed Exchange Rate. Exchange rate between $5 coin and $5 bill is fixed by law.

The law works in other circumstances too.

For example, I have next to me a $5 coin and a $5 bill.  Both are real, official, legal "money" of recent issue, blessed by the U.S. Government and either one could be traded for stamps at the post office or used to pay my taxes.  One is paper, and the other is gold.  In this country, the bad money drove out the good money, a process that started about 100 years ago, and was more or less completed by 1965.

Good job. This quote from wikipedia is helpful at stating Gresham's Law accurately and in simple terms.

The Nobel prize-winner Robert Mundell believes that Gresham's Law could be more accurately rendered, taking care of the reverse, if it were expressed as, "Bad money drives out good if they exchange for the same price."[13]

Neither the US dollar nor bitcoin operates under a fixed exchange rate, so of course Gresham's law is not applicable.

It would have to be way better and it would have to be so different that Bitcoin could not be re-architected into it.

But I fail to see how BTC could not be easily modified to adapt to any new cryptocurrency technology.

Regardless, if it did happen, it would have to be VASTLY superior to overcome the network effect that BTC has. Think mp3 vs ogg for example - ogg is better, but mp3 is already everywhere, so the cost of transition is not worth the marginal benefit.

You said:
You are in error, you made up the contradiction because you project your own frameworks onto others. You can't abandon your implicit assumptions.

Central planning does not mean any delegation of planning or the existence of hierarchical elements in planning, but that force is used to suppress markets.

I prefer a point by point refutation myself and let my opponent discredit themselves by demonstrating rejection of logic.

It is funny that you accuse your opponents of rejecting logical argument, while your only "argument" is an ad hominem (i.e. a logical fallacy). You conveniently neglect making any logical arguments yourself. If you do not want to confront my arguments, that's all right, but justifying it as "scientific" is highly misleading.

Edit: I would also like to point out that none of the references I provided were by Ludwig von Mises, and one of them was provided by the Federal Reserve Bank of Minneapolis.

I like to debate people who are so full of themselves as you, cunicula. They typically end up contradicting themselves within a couple of minutes. You have a unique opportunity to surprise me. Are you up for the challenge or is it beneath you?

Don't forget, they call chiroprators Doctors now. Let's not get into epistemology debates.

And there's your answer: if it's slightly inflationary it will overtake Bitcoin, otherwise it will fail

@kjj: Bitcoin is strongly deflationary in real terms, unrelated to any one fiat currency.

But this thread is about "What happens if someone starts another blockchain or cryptocurrency?"

Please check the OP to remind yourself what the intent of this thread is.  Thanks.

You don't see it.  Bitcoin is deflationary in relation to the dollar in your example.  That means that the dollar is inflating.  They are a matched pair, just as you can't have a purchase without a sale, you can't have an inflation without a deflation.

Inflation always ends badly.

Gresham's law refers to government enforced exchange rates and does not apply. This is about deflationary expectations on a free floating market.
The rational agent will not run out of cash if he has a webstore where people buy iPads with cash, and he gets a commission in cash. He will never get a a bitcoin revenue because people will not buy his inventory with bitcoins. Cash circulates, bitcoins do not.

Yes, given an unlimited supply of two currencies of unequal merit, it totally makes sense to unload the loser.  Congratulations, you've found a really convoluted way to restate Gresham's Law.

In reality, the rational agent will run out of dollars eventually, or run out of people willing to accept them.

Thank you Cunicula!!!

+1000 (not that I have that many votes here anyways...)

@etotheipi

The subject has been beaten to death for a century by various economic schools, and the general consensus of most economists, supported by empirical data, is that deflationary expectations destroy trade, reduce economic activity and makes everybody a bit poorer, save for those who hold the most money.

A rational agent holding Bitcoins will understand their risky nature so it's likely he will diversify to control risk - not dump all his savings into Bitcoin. He might hold one third of his money in a mutual fund, one third in cash and one third in Bitcoins. Of these assets, Bitcoins is the most risky, but it also has the largest potential upside.

Ok, if this rational agent is faced with a buying decision regarding a new iPad, what currency is he likely to use, Bitcoin or cash ? Two basic scenarios:
 - as long as bitcoins are rising, it's irrational to spend them; it's like killing your best cow - it's much more profitable to ride the bull market
 - if bitcoins have stagnated since the user has added them to his portofolio, it's irrational to spend them since he took all the risk but has none of the expected upside

Faced with this decision the rational agent will chose to pay with cash. He will treat Bitcoin as a long term investment, and only spend them if:
 - he wants to balance his portfolio after a bitcoin rally and mark his profits
 - he wants to liquidate his bitcoin portfolio for whatever reason

Both these events are rare, so the velocity of bitcoins will be extremely low, and will mostly be related to cash <-> bitcoin exchanges. Thus Bitcoin's potential as a trade facilitator will not be fulfilled. On the other hand, an slightly inflationary cryptocurrency which has similar risks but no potential upside will be spend by it's owners like there's no tomorrow. Nobody will treat it as an investment since it's guaranteed to loose some value in a year or two - the hot potato game. The much higher velocity means higher GDP and strong merchant revenue in this alternate cryptocurrency.

LOL.  The pot calling the other pot black.  Your tea leaves and sheep's entrails may be fancier than his, but don't pretend that there is some science going on here.

Admittedly, it's a weird analogy, because it's not the electronics themselves that are deflationary, it's the money that is used to buy them that is deflationary with respect to what is being purchased.  But the analogy holds for the same reason that people purchase electronics with fiat -- the money has no particular utility to the owner except that it helps them acquire things to do have value/utility.  A world where Bitcoin is a dominant currency will see people using them, because they need stuff.  Just because they can buy more stuff later with the same number of Bitcoins doesn't mean they'll wait -- a lot of stuff you buy because you want it or need it now.  It just means people be more inclined to save their Bitcoins instead of spending it on stuff they don't need.  It's has different economic principles, but it's not a show-stopper for the currency.

EDIT: Sorry, I shouldn't have started derailing this thread, especially with concepts that are probably beaten-to-death on other parts of the forums.  If someone has a link to the discussion on this stuff, let me know, I'll take my rambling there.