Topic: Why bitcoin supply will NOT cap at 21M BTC [NOT PLAUSIBLE] (Read 4390 times)

It would depend on what the new cap would be set to. If the TX fees are not enough to cover miners electric costs then the cap could certainly be increased to continue to give miners incentive to mine while giving bitcoin more time to grow

brenzi:

First, also thanks for the discussion.

Second, I totally agree with you.  In fact if they do all the initial creating of the coins (no miners) they get to control the initial distribution of the coins as they see fit - which is what they are familiar with and used to.

I'm giving up. Here's why:

I was thinking a bit more about the choices of the government. My assumption:
is not very plausible.

Even if money supply could be adjusted by a central bank, it would not be attractive for any government to support a cryptocurrency with decentralized mining. Where would the benefit of such decentralization be if the formula for money supply was centralized?
They'd be better off by mining on their own, probably pegging it to fiat and distribute the cryptocoins just like they do with bills and coins. This - of course - is very far away from bitcoin protocol.
This solution would even save a hell of a lot of energy consumption by the miners that will by then have risen to globally significant levels together with market cap. (See: Energy consumption could become an issue if bitcoin really breaks through) This consumption would be futile because it can no longer be justified by the benefits of decentralization. (And I doubt this justification anyway, because there are alternatives to proof-of-work....but that's another topic)

So I agree that bitcoin will stay bitcoin, even if it will become illegal. Even if it's value drops to zero.

Thanks for the discussion.

Nope won't happen cause if the miners accept the abolition of the cap then it's a free for all with unlimited coins and they become inflationary exactly like the fiat system which is the polar opposite of the ideals behind bitcoin.

This lie is the one I am currently addressing.  In this scenario you have somehow convinced 51% of the miners to jump to the new alt coin in addition to creating the necessary alt nodes, wallets, exchanges etc.

To do this you must have convinced these miners they are going to make more income on the alt chain than on the Bitcoin chain.

Now you are going to turn around and ask all these same miners to take a loss in revenue and go back to hashing on the Bitcoin network with the hope of performing some sort of attack?  Not only does this leave no hashing power to run the new alt coin, if your attack works and the value of BTC drops because of it you are asking these miners to take a total bath on all the Bitcoins they mine during the attack.

Getting 51% to join some sort of centrally UN controlled inflato coin is a total pipe dream.  Getting 90% to join is not even worth talking about.

BTW: the idea of a centrally contolled coinbase subsity rule requires a central point of control which in turn is a weak point in the system and an obvious point of attack for those that don't like the idea.  In other words a distributed Bitcoin network with half the hashing power is still more secure than the centrally contolled UnCoin due it its central control.

That doesn't oppose my point. You are using bitcoin as a medium of exchange, but almost certainly not as a unit of account. How do you judge the price of a good you intend to buy? You might see a price written there in BTC but that doesn't help much these days. You need to check how many dollars,euros or whatever fiat that equals to decide if the price is right. So your unit of account is de facto still a fiat currency. And I guess you still earn your living in fiat. That will stay your reference.

All this might change. If my assumptions in the OP are fulfilled, BTC might become a unit of account. But then we're back at the OP and the reasoning there.

You blow into the same horn again, and I agree to most of your reasoning. But not to your conclusion, because it lacks one critical point.

Please answer this and prove me being wrong:

I am getting a bit tired of fixing this lie, which is a still a lie no matter how often you repeat it.

Let's get more specific shall we?  The proposal is an incompatible change to the coinbase rules.  Specifically, instead of cutting the subsidy in half on predefined block numbers the subsidy would be set on a periodic basis by a central authority “hopefully the UN”.

Now you claim that by just getting 51% of the miners to change their coinbase rules you can change Bitcoin.  This is not true.
  
First, the effect on the remaining 49% of the miners and the entire Bitcoin network of somehow convincing 51% of all the miners to produce incompatible blocks would be identical to simply turning off 51% of the miners.  Block confirmation times would slightly more than double from about 10 minutes per block to about 20 minutes per block until the next difficulty adjustment time which would be pushed out from about 14 days to about 28 days.  So after having to suffer with 20 minute confirmation times for about 28 days the remaining Bitcoin network would be back to normal operation with half the hashing power it had before.

Now let’s look at the miners you somehow convinced to change their coinbase rules.  First, they have to find each other and form their own peer to peer network.  Oops, without changes to their code all the nodes on the network are going to reject the incompatible blocks produced by all these miners!  OK, you can solve this by somehow convincing some/most/half of the nodes to change their coinbase rules to accept the incompatible blocks.  Perhaps you promise to pay them for doing it, or, it may be easier to just fire up your own collection of new full nodes all around the world that support the new rules.  (One node inside each bank that wants to participate in the new system would do it.)  So we end up with one network of nodes and miners that support Bitcoin and a second network of nodes and miners that support the new alt coin.

Now let’s look at it from the user’s perspective.  They get to keep their Bitcoins as if nothing happened (well they have the 28 days of slow response time) and they also instantly get an equal number of the new alt coins.  Not a bad deal for them.

So, in summary, no, you cannot change the Bitcoin protocol by simply changing the rules for 51% of the miners and even if you do convince some percentage (any percentage) of miners and nodes to change the rules it only creates a new alt coin that shares the coin history with the Bitcoin blockchain at the time of the hard fork.

I see what your saying, however I think that a centrally controlled bitcoin would have zero following. I certainly have no interest whatsoever in someones coupons. That is all they would be. Basically frequent flier miles. The supply, the price, even distribution would be controlled. The fact that BTC is beyond the control of any entity is the single most important aspect of bitcoin. And I'm quite moderate. Many around here would DDOS the hell out of any site that used them.

As far as the second point I have to disagree that it only applies to hoarders. I have used BTC as a payment network for years. I do not "invest" in bitcoin, I use bitcoin. In fact I have not made a purchase online with a credit card this year. I exclusively use bitcoin online. I don't care about the price of a bitcoin today or tomorrow, I'm still going to use it no matter what. I also don't care if it is made illegal. There is nothing that will dissuade me from using it except any kind of control being exerted over bitcoin. In that case I will divest 100% and move on to crowdfunding investments.

Let's use some realistic scenarios. The price does not swing 50% one way or the other in a single day. Figure a 2% yearly deflation, what would happen? Everything would continue as it does now, with the exception that saving money makes more sense than spending money. Deflation would be bad for people with multi-year loans and good for savers, thus making people more likely to only spend money they have. It would be good for the common man and bad for bankers. Which is why we have inflation.

No, the salaries go down as well. Zero-sum game. If you never get the chance to save, you'll never profit from price deflation (or at least less than the wealthy).

I agree that price inflation hurts the poor more than the wealthy. But so does price deflation.

But I think we're getting off-topic here. There are a lot of threads around discussing the good and the ugly of inflation and deflation. I suggest we stop at this point and keep discussing the OP

But with deflation, the cost of eating goes down so the poor can save more.

The reality is that inflation hurts the poor the most and helps the rich. Most of the wealth held by wealthy people is in the form of assets such as real estate and companies. Poor people hold most of their wealth in cash. Inflation helps wealthy people at the expense of poor people because the values of assets go up and the value of cash goes down.

Wealthy people such as bankers and politicians love inflation.

Of course, but its software. Change the code, convince 51% of the hashpower to use the new code and its done.

edit: You need to also convince the majority of nodes, not only the miners.

Isnt it hardcoded with 21mio cap?

I give up for now. Let's see what happens when we have implemented the non-inflating currency.

Ok, I give up for now. We now set out to prove that it is wrong, with a non-inflating currency.

With pleasure: Because the 3 he can get tomorrow will be worth the same as the 2 he gets today if he gets 50% interest on his savings.
In the case of deflation, nobody will accept negative interest, because they're better off by just hoarding the cash. So unfortunately this problem is not symmetrical.

Deflation is a transfer of wealth from the bottom to the top as well. Whoever has the possibility to save money today will be richer tomorrow. The poor need to eat today, they can't wait until tomorrow.
Inequality can't be addressed by monetary policy alone.

Ok, let's play the same game with inflation (in prices). Why would the seller sell anything for 2, when he can get 3 tomorrow?

No proof at all. If a seller is ready to offer a discount of 17% today he will be ready to offer the same discount tomorrow (or your example is not sustainable). So if the price is 2.5 today, it will be 2.08 tomorrow.