Why are we letting bitcoin fall into the floating fiat currency trap?

OgNasty

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Quote from: vulgata on August 09, 2011, 01:14:31 PM

Quote from: TraderTimm on August 09, 2011, 11:22:35 AM

3) Every block that is mined reduces the available supply, which in turn provides higher value. (For bitcoin itself, not compared to fiat currencies.)

I don't get this one; doesn't each block introduce 50 new BTC every 10 minutes?

I don't think that it's a correct statement at all. Every block that is mined INCREASES the available supply on the marketplace, which in turn provides LESS value. Of course as the above poster noted, this is a temporary phenomenon. Eventually BTC will be a deflationary currency, once the rate of production (from mining) is lower than the rate of destruction (idiots losing their wallet.dat or other losses). At that point, it will begin to realize the benefits of not being like a fiat currency (increases in value). People are getting a little ahead of themselves claiming bitcoins are currently beneficial to fiat currency with regards to dilution, when they're both currently suffering from the same symptoms (printing dollars/mining bitcoins). Of course, the symptoms of bitcoin are hidden because of the growth rate of adoption and the overall awareness that this dilution is temporary.

TraderTimm

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Quote from: vulgata on August 09, 2011, 01:14:31 PM

Quote from: TraderTimm on August 09, 2011, 11:22:35 AM

3) Every block that is mined reduces the available supply, which in turn provides higher value. (For bitcoin itself, not compared to fiat currencies.)

I don't get this one; doesn't each block introduce 50 new BTC every 10 minutes?

Yes, but this generation is finite. The upper bound is 21 million. We've 'minted' 1/3 of that so far, only 14 million bitcoins left. The knock-on effect will become more apparent after the block reward is halved, according to the algorithm that controls it.

vulgata

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Quote from: TraderTimm on August 09, 2011, 11:22:35 AM

3) Every block that is mined reduces the available supply, which in turn provides higher value. (For bitcoin itself, not compared to fiat currencies.)

I don't get this one; doesn't each block introduce 50 new BTC every 10 minutes?

indio007

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Quote from: TraderTimm on August 09, 2011, 11:22:35 AM

While I agree it would be nice to have everything priced in bitcoin, the reality is the system has to slowly permeate the existing infrastructure. I prefer the gradual growth scenario for a number of reasons.

1) It prevents the existing financial system from taking too much interest in things until it is way too late.

2) Allows the network hashing power to multiply to even higher amounts than where it is now.

3) Every block that is mined reduces the available supply, which in turn provides higher value. (For bitcoin itself, not compared to fiat currencies.)

Network effects will eventually show up in the mainstream, with articles and other primers popping up voluntarily. Hopefully by that time the client will have iterated to a more user-friendly and informative interface design.

Ain't that the beauty of bitcoin? That every time new coins are generated the network just became more secure. It's mindboggling.

indio007

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I think we should start ot off with a campaign with major electric companies. That would eliminate the need for a lot of conversion into USD.

It could be a problem or a solution that they are regulated by the State. Maybe because they are a public utility we could get a ballet initiative compelling them to accept bitcoin.

Bitcoin acceptance has already seeped on to Craigslist.

TraderTimm

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While I agree it would be nice to have everything priced in bitcoin, the reality is the system has to slowly permeate the existing infrastructure. I prefer the gradual growth scenario for a number of reasons.

1) It prevents the existing financial system from taking too much interest in things until it is way too late.

2) Allows the network hashing power to multiply to even higher amounts than where it is now.

3) Every block that is mined reduces the available supply, which in turn provides higher value. (For bitcoin itself, not compared to fiat currencies.)

Network effects will eventually show up in the mainstream, with articles and other primers popping up voluntarily. Hopefully by that time the client will have iterated to a more user-friendly and informative interface design.

cicada

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Quote from: indio007 on August 08, 2011, 11:29:22 PM

I know people need to "pay their bills" but why are we competing against all these legacies currencies. Let them destroy themselves in the war they are presently in.
We need to go a step further. Retail is not the answer. We need producers of product to accept bitcoin. Farmers, Manufacturers, skilled workmen etc...
We need to STRIKE THE ROOT!

The moment debtors, mortgage companies, utilities and supermarkets accept bitcoin, we'll be there. Until then the need to 'pay the bills' in $ will dominate.

indio007

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I know people need to "pay their bills" but why are we competing against all these legacies currencies. Let them destroy themselves in the war they are presently in.
We need to go a step further. Retail is not the answer. We need producers of product to accept bitcoin. Farmers, Manufacturers, skilled workmen etc...
We need to STRIKE THE ROOT!

Topic: Why are we letting bitcoin fall into the floating fiat currency trap? (Read 1313 times)