Topic: Why bitcoin is doomed: I can't couterfeit them - page 2. (Read 5791 times)

I agree that this negative-feedback is good and works well during an expanding economy. Essentially, a bubble is prevented.

Instead, suppose the economy is contracting for whatever reason, perhaps a natural disaster or a lack of good ideas. Due to the economy contracting, the demand for goods is lowered and, hence, prices go down. When prices go down, the rate of deflation increases, thus exacerbating the situation. Is this not the case?

You're absolutely right, if the economy is already growing so fast that no investment is better than just leaving things the way they are, then investment will, and should be, discouraged. Not all investment is good. Bad investments steer resources from more productive uses to less productive uses.

Okay, so you're saying that the thing that bothers them is that people who want to invest money in new businesses can't "appropriate" value from other currency holders who just sit on their money

because any increase the size of the economy resulting from their investments is shared by all currency holders equally?

Because that's what the blog post seems to be complaining about, and it does seem like it'd not work out terribly well.

U r wrong. Read http://en.wikipedia.org/wiki/Stock_split. Replace "share" with "bitcoin".

Take, for example, a company with 100 shares of stock priced at $50 per share. The market capitalization is 100 × $50, or $5000. The company splits its stock 2-for-1. There are now 200 shares of stock and each shareholder holds twice as many shares. The price of each share is adjusted to $25.

Here's a problem I see with deflation that I haven't seen a good answer for, perhaps someone could enlighten me.

When the risk-adjusted real interest rate of an economy falls below the rate of deflation, what incentive is there to loan? If you say none, then this leads to higher rates of deflation, which mean more deflation and hence the proverbial deflationary spiral. With inflationary prices, even if the real interest rate is negative, there is still an incentive to give loans (or using a bank via CDs/time-deposits/savings-accounts, etc). Thanks

Wait what? WTF, you aren't making any sense. If we split a 1BTC coin 10x times, don't we then get 0.1BTC printed on 21'000'000 * 10 coins giving us 10 * 21'000'000 more coins to work with now?  

It is not an increase in the total value, but of course printing more money or lending out money doesn't increase the total value either. What bothers them is that this isn't any value that they can appropriate, because it's shared by all currency holders equally.

I don't know what that means. What's he actually going to do with his bitcoins?

What do you think would happen if, for example, Satoshi actually does control 1-2 million BTC and starts a banking empire?

It is not an increase in the total value, but of course printing more money or lending out money doesn't increase the total value either. What bothers them is that this isn't any value that they can appropriate, because it's shared by all currency holders equally. In their view, printing more money and giving it to everyone is bad, but printing more money and giving it to banks to lend out is good, because lending is good. And giving it to governments to spend is good because government spending is good.

What they really want to do is punish saving, which they slander by calling it "hoarding". This is really the broken window fallacy writ large. Saving is actually producing. To "save money", you must earn it and do nothing else.

It's similar to using "micro" and "nano". If every bitcoin was a coin with "1 BTC" printed on it, then we would have 21'000'000 such coins. If we decided to split Bitcoin 10x times then we would have "10 BTC" printed on the same (21'000'000) quantity of coins. Increase in supply would be if we added more coins to those 21 million ones.

If we decided to split Bitcoin 10x times then we would have "10 BTC" printed on the same (21'000'000) quantity of coins.

Deflation is associated with depression because depressions always happen after an bubble created by the mass emission of unbacked credit, with all the resource misallocation this entails.

I don't understand. In your analogy you say I start with 100 shares, and then I have 1000 shares and yet you say this is not an increase in supply? What is this then?

It's true that in a perfect monetary system the money supply is linked 1:1 to the GDP.

But this concept is incompatible with an incorruptible Cryptocurrency.

It's true that in a perfect monetary system the money supply is linked 1:1 to the GDP.

But this concept is incompatible with an incorruptible Cryptocurrency.

I still believe though that Bitcoin won't be the only currency in the future, there'll be many different systems for different purposes in parallel (precious metals, local currencies, LETS, Ripple, privately issued ones, business-to-business clearance etc), and this will make such discussions obsolete.

I don't understand. In your analogy you say I start with 100 shares, and then I have 1000 shares and yet you say this is not an increase in supply? What is this then?

It's true that in a perfect monetary system the money supply is linked 1:1 to the GDP.

I disagree. The same happens with stock split. If u had 100 shares after 10x split u would have 1000 of them. Moving decimal point in Bitcoin helps only to use amounts less than 1 satoshi, it doesn't increase Bitcoin's supply.

Here is my rebuttal:
He tries to present a thought experiment with his quant coins, but completely fails to grasp some of the fundamental problems of the system he's defending.

1) He is the "authoritarian dictator" in that scenario. He has a special monopoly on the right to acquire wealth without earning it, while everyone else has to face the 'reality' of working hard and the risk of going bust. This is just Feudalism in disguise.

2) It's very easy for the system to be unstable, whereby he gradually acquires more and more wealth. It seems that no matter what he does, he, as the central bank, cannot lose. Combine that with greed and other human weaknesses, it's extremely tempting for central banks and bankers to corrupt the system. The so-called "boom bust cycle" is a colossal fraud designed to enrich banks.

3) He doesn't actually present any arguments as to why deflation is bad. Population growth is not good enough. There is more than one way to double the number of coins in circulation: you can mint them, or you can cut them in half.

And FOUR, the point that obliterates and renders his entire article null and void...
Bitcoin's decentralised, open-source nature actually does allow money supply expansion! The caveat is that the expansion will only occur organically. I.e.: if there's a sufficient profit motive for people to FORK the damn project! This solution is staring him and all the other sceptics in the face and they still don't get it. Likewise, if Bitcoin-compatible parallel currencies fall out of favour due to some depression, the market exchange rate will take care of that automatically.