Topic: What is the main reason for the recent price raises? (Read 3119 times)

Yes, I read your Killswitch earlier and was about to suggest that [moving on] next

My SE bitcoin.stackexchange.com account is locked for 7 days, but I won't be returning there any way. I am finished talking to the developers of bitcoin, they obviously won't listen. So I have moved on to replacing Bitcoin:

Bitcoin: The Digital Kill Switch

https://bitcointalksearch.org/topic/bitcoin-the-digital-kill-switch-160612

Bitcoin is diabolical, but only an expert can see it.

I will grant you that it is possible that Satoshi did not intend his design flaw, but I find it highly unlikely. But it isn't worth arguing. Let's move on to fixing the problem, then let users decide which P2P coin they want.

Do you mean locking your thread or banned how?

Maybe he just didn't notice or account for the possibility to mine gold on other planets than earth, like many other experts. Upon scrutiny I saw such omittances in his writings many times. A genius may not see every possible point of view on every area.

I believe it to be impossible to force in any protocol that can be imagined.

If a corporation wants to provide free tx fees, even if the protocol attempts to enforce it, they can just refund the money back in another transaction.

So users will route their transactions to those corporations.

I believe the only possible way is forced debasement and NO tx fees.  

You must remove the user's incentive for a Tragedy of the Commons.


P.S. this is why I suspect Satoshi had evil intentions. He made a big deal about lying and saying Bitcoin's money supply was modeled on gold.

the current rules aren't set in stone, there may very well be a minimum transaction fee or other such things you are concerned with in the future.

Bitcoin: The Digital Kill Switch

https://bitcointalksearch.org/topic/bitcoin-the-digital-kill-switch-160612

I am not saying that Bitcoin is a scam for that reason. Read the next post please.

lol but I'm agreeing with you. I'm saying that in the future there will be a new currency that will either replace Bitcoin (and its derivatives), or supplement it significantly. But the fact is that right now in the present, such a currency doesn't exist. So you telling people that Bitcoin is a scam because in the future something else will replace it is pure nonsense. When that future comes, then you will have a point. Until then Bitcoin remains useful.

It is possible that there are people who would otherwise buy Bitcoin, who would prefer some features in another system more.

You are actually missing the KEY POINT, which is barrier to entry. Replacement goods have low barriers to entry.

If there is an exchange rate from currency A to currency B, then the barrier to entry is nearly zero. Merchants will accept as many currencies as they can.

That is why I say real-time market exchange at POS is a crucial factor. Surely some aspiring entreprenuer will provide it, if not already.

People should be dumping Bitcoins and buying Litecoins like mad right now. Those who do are going to make a big arbitrage when the rest of the herd catches up to this reality.

But the competitors can't all be the same. You are correct someone won't go buy Litecoin if it is just an exact copy of Bitcoin.

So each competitor has to have a few compelling features. I don't know how many such features are possible. The market will tell us.

So I am saying that not everybody buying Bitcoin now or in future, is getting exactly what they want from Bitcoin. Competition will come (I hope).



Study "replacement good" in economics.

Why? Who says the competitors will be better? You're defeating your own point.

You're saying it's possible to extend Bitcoin by making nearly-identical alternatives, thereby bypassing Bitcoin's 21million limit, and in the same breath you're saying that the new currency will be different and better and gain marketshare on its own, which means it's not Bitcoin.



See, that's an oxymoron. Either the new currency is identical to Bitcoin, which means it's extending the money-base and creating inflation, or it's unique enough to be "a better Bitcoin", which means it's not Bitcoin and cannot extend the Bitcoin money-base.

You're countering yourself.

Which by the way I actually agree with you. I think some new and completely not-Satoshi based digital currency will come up that will be better than Bitcoin. But that has nothing to do with any of this, or the viability of Bitcoin itself in the short term until that moment comes.

You are missing a point. There is only a finite demand for P2P currency. That demand has to be spread between P2P currency units that are issued. The spreadout won't be uniform (e.g. Bitcoins are $90 and Litecoins are $0.65 at the moment), but there is a conjecture that the competitors will become better and gain more market share.

So if I create a better Bitcoin and I debase mine more than Bitcoin does, Bitcoin will suffer a debasement of the market. But remember what I wrote below too...


I sort of superseded those comments with the following. Did you miss my post above?

Hey listen, I respect any kind of critical thinking on any subject, especially one such as this. But you can't just say "I think it is wrong..." without explaining why it's wrong and expect to be taken seriously.

The fact is that there are very few things you can pay for directly with gold and silver. One of the reasons is divisibility, but mostly because the state makes it very difficult to actually use gold and silver in that way. Someone could charge you 1oz of gold and 10oz of silver for something, like say 1g10s would be the price. But with Bitcoin that's simply not needed. You could just charge someone 1.281249BTC for something. So why on earth would any merchant charge 1BTC200LTC for something? To accept both Bitcoin and Litecoin for something you could easily denominate with just 1 currency is crazy. Also to exchange between one and the other will incur a price. So if say 1BTC is worth 1,000LTC in the future, if you wanted to actually trade 1BTC you'd get 900LTC. The rest is the merchant fee. Why lose that money when you could just sell something for 0.05BTC to begin with?

Your entire premise doesn't make sense.

Another thing is that the Bitcoin 21million cap could simply be removed if enough people wanted that. So why even bother with a new currency? Just move the cap on Bitcoin if it ever comes to that (and I hope it won't)

I missed the main point. Gresham's Law.

Bad money drives good money out of circulation.

So Bitcoin will end up being more hoarded than a P2P competing currency that has more debasement. Which will be better for that competitor, because lack of velocity is the problem in Bitcoin. Too much hoarding as store-of-value, not enough using as a unit-of-exchange.

1. This was not my point. The writer mentioned it and as sleepless as I am at the moment, I agreed in a rush that it might be a possibility.

2. Actually gold and silver do extend the money supply of each other, but they are not exactly fungible because they have different qualities. In terms of valuation, silver is more volatile. In terms of physical properties, they are different and have different applications. Thus they have different  pricing. But do not think that their prices are not related. If either gets too overvalued w.r.t. to the other, this is an arbitrage opportunity over the long-term. C.f. the gold/silver ratio and the Bimetallic standard. These were important concepts in the 1800s. Many elections were found over them.

3. The key reason why they won't be fungible is because competing currencies will have different properties and their valuations will have different dynamics. However, I think it is wrong to assert that more competitors does not increase the supply of digital coins. Sorry I think the writer is correct, but he must be careful to point out they are not perfectly fungible.

Is this crazy?

What if satoshi created this knowing the difficulty would go up and just make a killing of the software to mine it.
Remember the real money in the gold rush was sell equipment. If there were no pick axes there was no gold.

No, that's BS.

The argument is that Bitcoin is inflation-proof once the 21 million were mined. You're claiming that this is not true. You're wrong, and here's why.

Your point is that while it's true that there will only ever be 21 million Bitcoins, that number can be extended with additional currencies like Litecoin. The problem with that is for that logic to make sense, each Litecoin would have be worth exactly 1 Bitcoin. If a Litecoin is worth say 0.5 of a Bitcoin, then what's the point? You could just use 0.5 of a Bitcoin. The existence of Litecoin doesn't extend the amount of Bitcoins out there any more so than the existence of Silver extends the amount of Gold out there. One of the uses for Silver is to use it as a smaller denomination because 1 unit of Gold is worth so much. That's not a problem with Bitcoin, as it can be divided to eight decimal places. Good luck trying to get 0.00000001 ounces of physical Gold. If Silver was worth exactly the same as Gold, then it could be said that for the purpose of currency-backing, Silver is as good as Gold, therefore we have more to work with. But it's not. And Bitcoin isn't either.

The rhetorical question here is, if people wanted to extend Bitcoin, then why start a whole new currency instead of just using a smaller value of Bitcoin? It's trivial to send 0.00000001BTC just as much as it is to send 1BTC.

I will try to get all the facts and possibilities mentioned, but I can't completely eliminate the communication barrier between a programmer (myself) and non-technical person. Some understanding will be lost in the process.

I am composing something better now. I have to rush because that writer wants to publish immediately. I'm sleepless, my prose is suffering.

fungibility point is a bit weak

I may be sending you a better document after a few hours. I'm worried that if you get some technical details wrong, they will accuse you of lying.

I will try to condense and not use technical language.

On the issue of fungibility between competing P2P currencies, I think you need to be careful about this point. It is not clear that they will be fungible.

The stronger point is that they are not fungible, and that the first mover advantage will go to BitCON! And thus it will monopolize processing for the corporate-fascism and then they have the digital kill switch on each person.

Now the fanboys will say that you can just create a new address at any time. This is myopic, because as soon as the corporates have 51% of the processing power (by giving it away for free), then they can change the protocol and work with the government regulators to require everyone to be registered with global id per person.

This is verbose. I did not take time to refine it.

Some more thoughts in this video:

http://www.youtube.com/watch?v=0UKC7iaBKvs

I like the point that "Ponzi" Sotashi (the anonymous creator) disappeared when the developers started to pressure him on his identity.

Our talking points:

1. SATOSHI:

I don't know if you like the conspiracy angle, but it doesn't make any sense that someone can work on something alone for 3 years, then pop up and be such an expert on cryptography, no one in the industry knows him, no family or friends know of him and his work, then disappear without a trace. Normal people talk to other people over a period of years. This indicates it must be CIA or military industrial complex like agent. In one of the cryptography examples that Sotashi gave on the mailing list where he first discussed his invention with James A. Donald (a person I know), he used a military example.

The design Satoshi chose (as described below) is not a random choice. It was clearly design to fail in a very specific way that gives power to the government, even there are other designs that won't fail.


2. BITCON's DEBASEMENT IS NOT AT ALL THE SAME AS GOLD:

Bitcoin fanboys claim that Bitcoin is like gold because the debasement is halving every 4 years, to stop at 21 million coins with a couple of decades (75% in first 8 years, 87.5% in first 12 years). This provided 50% of the total money supply to the insiders who mined in the first 4 years.

But this is nothing like gold, which was debased over millenia, and still has an increasing supply forever (we can mine gold in future in outer space), and the nominal increase every year it itself increasing. Gold is much more fair to mankind because the very rich can't enslave us with a money supply that never depletes. Slowly depleting money supply is important, so that lazy capitalists can't concentrate their percentage of money supply with interest bearing bonds. Innovation comes from new production, and in the small. Large capital can't see all those small innovations and can't finance innovation with guaranteed interest. Investmet at risk is required to finance innovation, not usury. A money supply which did not debase at all, is slavery to the usurists.

What is bad about debasement, is uncontrolled debasement or especially debasbement that is decided by one group. Gold is meritocracy because the debasement can't be altered easily by any one group, and new gold is added to keep capital from becoming lazy and sit in usury bonds.


3. BITCON's INFLATION IS IN THEORY UNLIMITED (but are they fungible?):

P2P currency units can be created by anyone who creates a competitor. If an exchange is created between different P2P currencies, then if a merchant accepts Bitcoin, then it also accepts the currencies that can be exchanged to it. Exchanges could operate in real-time in theory because these are digital, so "Clickout Shopping Chart" in Bitcoin could in theory be paid with any P2P units.

I liked this point a lot. Currently Litecoin is only worth pennies per coin even though there are much less Litecoins mined than Bitcoin.

Perhaps they are not yet fungible, because people a) don't see this real time exchange capability, b) they don't yet trust that Litecoin is a stable system.

Fungibility between Bitcoin and competitors can maybe be provided by a real-time exchange at the time of spend.

It is still required to have confidence in the quality of the competitor's P2P database.

I don't agree this is the strongest point. I am urging to hit the other points also.

1:1 ratio is irrelevant. Fungibility is all that is required with an exchange. Real-time makes it more fungible. Fungibility lifts the value of the less expensive currency via arbitrage, until fair-value is reached.


4. ANONYMITY IS OVERRATED:

Yes each sending and receiving address doesn't have a name. But FinCIN ruled March 13, 2013 that to cash in/out to any other currency makes the person a money transmitter and falls under their regulation and reporting requirements.

The P2P (peer-to-peer) database has one copy and is viewable by everyone. The govt tracks what we do with various methods such as cookies,
man-in-the-middle routers, our facebook and google accounts (they have to provide the info if govt asks for it), etc.. Thus they can figure out the identity of the transactions if they really want to.

Gold is a private hedge against government. You can trade it without any public record viewable by everyone on the internet.


5. MONOPOLY ON PROCESSING (666):

Digital kill switch.

I want you to get the technical description correct. So I will write the following paragraph carefully.

Bitcoin transactions are processed by the peer computers who contribute their processing power to computing a hash puzzle, in exchange for a reward which is the debasement that occurs with each transaction block. Without this processing by the peers, then no transactions can occur and the Bitcoins would be worthless. These peers compete to solve the puzzle (on each 10 minute block of transactions), and this mathematically insures that there can't be a double-spend in the one distributed copy of the database (sounds like magic but it isn't). If an attacker had 51% of the processing power, he could corrupt this database, refuse to do certain transactions, or even change the protocol to do hyperinflation or what desired. Normally it is not likely for an attacker to get 51% because the whole world is motivated to contribute processing power in exchange for that debasement reward. But this reward is halving every 4 years and will eventually be 0. So who will process the transactions then? The developers of Bitcoin claim that a) some retailers such as Walmart will have an incentive to offer processing for free in exchange for prioritizing their own transactions, and b) that a market-based transaction fee can
compensate other peers.

That is a logic fail. If the corporations can give away processing for free, then there is no market for a transaction fee. Users will not route their transactions to the peers that charge, if the corporations are offering to process the transactions for free.  (Also the market-based transaction fee wouldn't scale any way for numerous reasons... ask me if you need to know... but you don't really need to know because the other point trumps this one any way).

So therefor Bitcoin is designed to hand over processing of digital payments to corporate-fascism.

Although some might think we can't create a competitor later (in which the no debasement is a lie), I actually think that once the bitcoin is #1 and widely adopted, it will be impossible to compete to create a new P2P currency. The reason is because the primary need will be fulfilled and it would be impossible to get the momentum to build from small again. Remember money is a social institution, so you need economy-of-scale. Right now, everyone is very excited because there is no such P2P currency in widespread adoption. Once there is, most people won't want to try an upstart small currency. And I think probably they are not fungible, but you can present both arguments.


6. WASTEFUL and THUS NOT PROFITABLE FOR PROCESSORS

Bitcoin's Proof-of-Work algorithm for preventing double-spend requires all the peers to be continually processing thus burning electricity (the main cost) and expensive specialized hardware such as GPUs, FPAs, and ASICs.

Thus the mining is less profitable and the Bitcoin difficulty scales to the total mining power in the system. This keep the reward for mining nearly equal to the cost of mining on a system-wide basis. The only way to profit is the have a more efficient hardware (or lower electric cost) than the other peers. Thus there is really not net profit being generated system wide-- zero-sum game.  Many miners don't realize this yet and have doubled-down on huge hardware investments and long payoff terms (but Moore's Law means the new miners double in speed every 18 months).

Thus the miners really are not profitable. Thus this is going to fall right into the lap of the corporate-fascism to keep the processing going.

Whereas, I designed a Proof-of-Work which uses hard-disk space and the peers are only doing something when they are selected round-robin. Thus mining can be much more profitable and the more important thing is everybody already has a hard-disk to contribute and don't need to buy esoteric specialized hardware.

So my point is that Bitcoin is designed to making the processing by peers fail and fall into the lap of corporate-fascism. There is a way to fix this technically, but Bitcoin refuses to make these changes. I talked with the developers for a period of days, then they banned me when they realized I had figured out their scam system.

Fungibility between Bitcoin and competitors can maybe be provided by a real-time exchange at the time of spend.

It is still required to have confidence in the quality of the competitor's P2P database.

I don't agree this is the strongest point. But that writer likes it. I am urging him to hit the other points also.

1:1 ratio is irrelevant. Fungibility is all that is required with an exchange. Real-time makes it more fungible. Fungibility lifts the value of the less expensive currency via arbitrage, until fair-value is reached.