Topic: Would Bitcoin Suffer a Similar Fate as that of Unix on the Desktop? (Read 4430 times)

Well, it's a market price, in a sense. That price has a network effect component. If everybody hoards something, its price goes up, but it won't be used as money. The network effect is that caused by everyone hoarding it. If quantity is unlimited but production of something is not so easy, its price would be more stable, and it will be used as money. The network effect in this case causes people to use it as a medium of exchange.

Just read about ppcoin. It is VERY interesting to me.
https://github.com/ppcoin/ppcoin/wiki/FAQ

In what way is it not?

Agentbluescreen says they aren't a "Medium of Work-Resource Exchange" or a "token of the limitless Prime Resource of all labours", and he is correct currently, but let's just wade through all that and pretend they are for now.

That wikipedia article is in serious need of editing  LOL


The queer notion that our human, public Medium of Work-Resource Exchange needs to ALSO be some other "commodity" that can easily be monopolized by any elite gang of "economic winners" to thus enslave us into debt to their "lending" monopoly, is BAD MONEY, not good.

This arises from the confusion of idiots who stupidly confuse a "money" (token of the limitless Prime Resource of all labours) with a wealth (some scrap-token of some hoard of mere inanimate and unproductive yet rarer junk).

A junkyard full of scrap cars contains thousands of rare parts worth thousands of times it's value, but one would not be right to regard it as a "good money".

The wikipedia article needs to be edited to describe the contrast between the coin and paper as that between a "dangerous, finite, limited-commodity token" and a "safe, properly growth-elastic and unlimited-resource token". In other words, dangerous money versus safe money.

Whenever there is not enough of a Medium of Work-Resource Exchange to put some in everyone's pockets an economy faces catastrophe!

It's not what you make money out of, or even what it's worth that ever really matters, it's WHO "OWNS" IT! (all?) ...that does!

In what way is Gresham's Law applicable to cryptocurrencies?

See http://en.wikipedia.org/wiki/Gresham%27s_law

If this holds up then people will be using alternative non deflationary coins and hoarding (not using) bitcoins.

Thanks JustusRanvier. So I maybe completely wrong about my thesis here. I admit ignorance and am not aware of such crypto currencies until now. Just googled it, and indeed PPCoin sounds very interesting. I will take a look at it and others.

Bitcoin has had a head start, and that maybe the only reason it's very popular. The competition will intensify shortly, and we'll see whether Bitcoin remains at the top of the heap.

The market has already decided. There are alternate cryptocurrencies with no hard limit on quantity.

Nobody uses them.

Amazingly enough, when people are free to choose they tend to choose to hold the currency which gains in value over the one which has a constant or decreasing value. So far no amount of persuasion works to convince people that they should reverse their preferences, so that's why advocates of those other systems can must constantly attempt to remove the features that people actually want in Bitcoin. 

I believe what will happen is that there will be a dominant currency, and that dominant currency would be one that had no hard limit on quantity. In this regard, both Litecoin and Ripple are similarly lacking. The Bitcoin community can and should change this absolute rule, and simply allow the law of supply and demand to determine the course of the currency. It would appear on first examination that this is no different from the current fiat money situation, but in fact there is a big difference: there would be no central authority that will control the quantity of money (as in current fiat money arrangement). The market will decide how many Bitcoins will be produced at any given time. When the price is high, miners will overproduce and thereby tilt the price downwards. Mining profits would then fall, and production consequently be reduced also. Price would go up again, and so on, in a mild cycle of ups and downs. There will be more periods of quiet equilibrium than violent crashes and recessions.

This phenomenon will actually make bitcoin currency more inflationary. MUWAHAHAAAHAAHAAA!!!!

Could transaction fees paid be a measure of velocity as they go to a random miner?

There will be and there´re already enough bitcoins to run world economy - however we can be quite happy if it ever covers 1 - 5%. It needes just split (which is not good for clarity, but maybe there will be some changes in the future). Basicly miners will mine and others will spend. Only "few" understand the real potential value and very few really saves bitcoins - which is good for bitcoin economy and adpotion.  So, within next years bitcoin fiat value can basicly only increase as demand will increase dramatically due to India / africa where bitcoin is going basicly replace banks as there´s hundreds of millions without any bank relationship. Of course there will be other altcoins, but it is quite important to understand that bitcoin is more and more nearby real mass adoption stage and other alt coins are just very small sub economies without any real traction. So, in Bitcoins we trust.

Yes. Anyone desperate for "another currency that has no hard limit on quantity" should just load up with XRP instead of bleating that Bitcoin lacks this "feature".

Coin loss, population growth, and a hard limit all collude to make btc a deflationary currency (when the hard cap comes or gets close)

A lot of people around here think this is a good thing, but that is because they currently don't need to buy groceries with btc (or produce groceries with btc).

All there is to do really is just sit on them, watch the exchange rate, wait for the new mints to taper off, and see what happens.

I agree that the value of btc as a store of wealth is proportional to its value as a medium of exchange, because it has absolutely no other use. You can't even make jewelry with btc.

One thing that I haven't seen talked about around here, is that all the different altcoins springing up takes the pressure of deflation off of bitcoin.

Bitcoin may be the first, and currently the biggest and the baddest, and the most valuable against fiat, but at the end of the day, you have to admit that anymore it's just another crypto altcoin like all the others. The supply of all of them combined is growing, and probably always will, and they all equalize and trade for each other in places like vircurex and btc-e. So when a new one springs up that gains some popularity, people move some of their positions in bitcoin into these.

I think the deflation/inflation issues of any altcoin will ultimately be averaged out across all the altcoins, of which bitcoin is only one. Hopefully that average will work itself out to be optimal in terms of exchanging goods and storing wealth.

Niko, I read this again, and I think I have just fully understood it. So what you are saying is that keeping the quantity a constant while allowing the value to change is just the other side of the same idea, which is allowing the quantity to change, thereby steadying the value. Sort of like an adiabatic pressure, volume, and temperature (velocity) relationship. Keeping the pressure (price) constant and allowing the volume (quantity) to change has a similar effect on temperature as keeping the volume constant and allowing the pressure to change.

You make a very good point, but there is just one thing we need to take into account. If the current Bitcoin rules are followed rigorously in time, there would be a tendency for the absolute quantity to decrease. This is because, like real coins, Bitcoins can be lost. I have a Bitcoin address for which I lost the private key. Fortunately for me, that Bitcoin address has zero coins in it. We can imagine this happening to millions of people on a daily basis losing the private key for one reason or another, and the sum of Bitcoins lost in this manner can be substantial. As another, more dramatic example, some wealthy person with millions of Bitcoins in several accounts or addresses dies, and nobody, not even his heirs, are able to get to the private keys.

One other thing: it's not just economic activity that's going to affect the value of Bitcoins. Things like the size of the Bitcoin economy in terms of total number of users is also a big factor in its valuation. We want to see the Bitcoin market increase in size in terms of number of participants; but even if Bitcoin conguers the whole world this increase in market size will continue due to population increase. At some point (maybe after we have gone to other habitable planets light-years away, and Bitcoin remains the dominant currency), even the fact that each Bitcoin is divisible won't be enough for it to continue to be useful to a population much larger than its quantity.

Are you saying the Colorado river cut it's path via conscious decisions?

1. I've used Linux on the desktop since I was 12.  Linux and other Unix like OSes run the vast majority of hardware.  Windows is for consumers and (decreasingly) business users.  Real code runs on a real OS.  Smartphones are almost all POSIX compatible.  Microsoft will continue to see difficulty with new markets since users now understand the walls that come with Windows.
2. As for chance, it does play a small roll, but 98% of the time, if you started with the same initial distribution of land and poured water on it you would get the same path.  The path did change as the river carved out the rock.  Softer areas of rock wore quicker and pulled the river in that direction.  If you go back far enough, and cast your net across the entire universe, it can be deterministically predicted.  However, there are practical problems when you try to model the entire universe over all time, so we have to resort to probabilistics to make good local guesses and still acknowledge that the likely event may not happen because of an external factor we can't predict.
3. If bitcoin runs serious international settlement and some other systems provides a simple user interface for consumers (possibly with chargebacks, insurance, etc.), bitcoin will still be a success in my mind.  This is just like the comparison of Unix running the show and Windows just being a walled garden so idiots don't hurt themselves with the power of the real system.  As long as the real system remains accessible to everyone.

I think you are mistaking some corporation or one proprietary operating system, compared to the open source programmers or OS. Perhaps, during that time, 4 digit years took up twice the space of 2 digit years, and space was at a premium then. This Y2K bug was not a problem for Linux machines, and for most of their software (unless it had a Windows counterpart) because this really is a Y2038 bug. Which is not a bug, it's just a limitation of the bits allocated for time.

The Miners' "Greed" will Save Bitcoin

It occurred to me that the Bitcoin system of production does not need to be controlled at all, not pogrammatically, not even by any rule. What will limit production is the profitability of miners. At this stage of development, Bitcoin is increasing in value, and mining is very profitable. It cannot remain so forever, if production is not limited by absolute quantity. Assume for the sake of discussion that there is no limit. Every miner, to increase profitability, would produce as many Bitcoins per second as he could. There will be over-production, and subsequent inflation (inflation in quantity, and then eventually reduction in value [the alternate "definition" of inflation]). As the value of Bitcoins come down, naturally the profits of miners will come down also, if measured in terms of how much a Bitcoin can buy. The system will tend towards a state of equilibrium, one in which the profitability of miners is throttled by inflation (in the second sense), and the value of every Bitcoin stabilizes.

This absolute limit on quantity is fictitious anyway, and I daresay it is GOOD that it is fictitious.

Let's say that the miners "collude" among themselves in order to remove the absolute limit on quantity. As the moderator of this forum pointed out here: https://bitcointalksearch.org/topic/m.1543280, there is really nothing that can stop the miners from changing the quantity rule, except the wallets in everybody else's possession. What if the miners themselves also start distributing their vesion of the wallet, with compelling advantages to the user? (For example, a version with a much pruned Merkle tree, so that everybody with a smartphone or any handheld device can use it.)

So now the question to ask is, if the limit on quantity is fictitious, what sets Bitcoin apart from any fiat currency in use today? Every fiat currency is controlled by some monopoly, a monopoly necessarily sanctioned and enforced by the state. In Bitcoin's case, such monopoly does not exist. In Bitcoin's case, its own market will control its quantity, while fiat currencies are prone to hyper-inflation because its monopolistic structure does not present a feedback mechanism to limit production or "printing".

The two worries I expressed in the OP are in reality no cause for concern. I now believe in Bitcoins much more than I ever did. If a version of the wallet that can run on a handheld becomes available (as I am sure it will, soon enough), then its proliferation will further enhance its own integrity, as I explain here: http://ctapang.wordpress.com/2013/01/30/more-on-bitcoins/.

I understand your point that it maybe possible to game the measure of velocity, what I don't see is the motivation for it. If I were a miner for this new currency (which would simply be a slightly different version of Bitcoin), sure I would want to relax the production spigot for that currency. But by doing so I would be affecting not just the production of my mining rig, but the production rate of all my competitors as well. We can all conspire to render that spigot ineffective altogether, but then doing so would NOT be in our interest. Why? Because, like the oil-producing cartels, we don't want to flood the world with cheap currency. It wouldn't be in the interest of miners to lower the relative price of the new currency, just as it's not in the interest of oil-producing countries to cause the price of oil to come down. What every oil-producing country wants to do and is continually doing is to announce that it would reduce production, but then secretly do the opposite (increase its production). However, all the other members of the cartel are doing the same thing, and so in general they find it very difficult to directly cause an increase in the world price of oil. The current high price is certainly not of their doing.


Some programmer thought at one point in the history of desktop PCs that it's OK to allocate only so many digits for the year. And so during the year 2000 an enormous amount of effort had to be spent just to fix this date limit bug. My point is that the eight decimal places for every Bitcoin may still not be enough. If the U.S. dollar were to continue as the dominant world currency, the M1 count would definitely grow, maybe indefinitely.

Lets hope people have learned a thing or two before such nonsense occurs.  Collective stupidity is getting a little old.