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Comment by nostrademons | Hacker News Reader

It's analogous to investing money in USD or GBP before those countries were given a license to print as many USD and GBP as they wanted.

Before then (1931 for the pound and 1933 for the dollar, though they maintained de-facto parity with gold until 1971), dollars and pounds were considered good investments. That's why we had bank runs: people thought their money would be safer under their mattress, and preferred to own physical currency rather than numbers in a bank's ledger. The only reason holding USD is a bad investment is because inflation is basically guaranteed: you know that a dollar will be worth less tomorrow than it will be today, because the authorities that control the dollar say so. Not so with Bitcoin: the total supply is fixed at 21M, forever, and there's no central authority with the power to change that.

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It is fixed at 21M but technically, this can be changed through an Economic Majority [0][1].

[0] https://en.bitcoin.it/wiki/Economic_majority

[1] https://bitcoin.stackexchange.com/questions/3945/how-could-t...

What does this concept of Economic Majority look like of we consider it for the US Dollar, rather than btc?

economic majority for the USD is the Federal Reserve Board

Doesn't apply. The feds control the USD and if there's one thing the fed isn't it's a democratic mechanism.

This should actually scare "investor" speculators: if the number of mining pools gets much smaller, miners collude, or someone performs a DDOS attack some miners, fundamental assumptions of the currency go out the window.

"Could" being the operative word here.

But then, this is where Bitcoin is genius: the code isn't everything.

There's a whole bunch of built-in economic incentive feedback loops.

And getting to an "Economic Majority" is very unlikely to happen because none of the participants have to gain from that change.

Also: since a bitcoin is divisible to 10e-8, it's going to be a very long while before there's an actual shortage of the darn thing.

>There's a whole bunch of built-in economic incentive feedback loops.

Is the implication that monetary and fiscal policy also not driven by economic feedback loops? Of course they are; just different ones.

21M is the basis of bitcoin for most hodlers.

Any fork or decision by anyone to change this 21M number means that for me (and most hardcore bitcoiners I know) the chain which sticks to Satoshi's 21M becomes the REAL bitcoin chain.

21M is non negotiable. If it doesn't have 21M, it simply isn't BTC.

It can also be changed if Mathematicians all decide to redefine what numbers mean, which has just about as much chance of happening.

You can't print gold, and BTC is appreciating much faster than gold (or any commodity or store of value or even other cryptocurrencies).

It is not appreciating because fiat money is being devalued. That can account for -- at max -- 20% of the price increase.

It's appreciating because of speculation.

People also lose bitcoins, I assume easier than losing physical currency or a bank account.

One of the ways I don't feel bad about not making millions in BTC even though I was aware of it long ago is the absolute certainty that I would have simply lost the paper wallet, had a hard-drive failure, etc, etc. There is just no way I would have held onto my keys for the 7 years that I was aware of it. I imagine that the breakage here for early investors is probably pretty high. I never did cash out on my dogecoin...

It’s not impossible to make copies of and secure private keys if you have a plan. (But even if you had bought some and preserved it, would you have had the tenacity/foresight to hold onto the BTC for 7+ years?)

> It’s not impossible to make copies of and secure private keys if you have a plan

I was 100% discussing my scenario. I would absolutely not have enacted a careful plan with multiple fall-backs. Which is it's own kind of self-indictment tbh, but one that I am at peace with. :D

Also, this holds for 99.99% of the populous. Even hardware wallets aren't a great solution and there you're paying a hundred dollars or so just to get one.

Shovels in a gold rush.

> You can't print gold

You can 10x the world gold supply by capturing a single medium-sized metallic asteroid.

You also can't send gold over the internet or store it in a private key. Given that Bitcoin is otherwise quite similar, mutatis mutandis, it's not unreasonable to imagine that Bitcoin might displace gold to some degree as a reserve asset.

The supply of capital-B Bitcoin is 21M, but at any time, anyone can create Bitcoin2, which is an exact clone of Bitcoin but with a fresh chain. Any Bitcoin2 token has exactly the same utility as a Bitcoin token in principle - the only difference is that, for now at least, lots of people are mining Bitcoin and no one is mining Bitcoin2. If there comes a day when a lot of people think there should be 42M bitcoins, instead of 21, what would stop them from just starting a second chain? Granted, these "a lot of people" are not a "central authority", but is there really a difference when it comes to the question of bitcoin's total supply? As long as those people have enough compute they're willing to put to work mining Bitcoin2, there's nothing stopping them from creating more tokens that are just as useful as original Bitcoins.

And, of course, they could freely choose to make Bitcoin2 have a trillion tokens instead of 21M, or whatever number they want.

yes but the beauty is that, due to the lack of a central authority, the game theory of the situation virtually ensures that no one would ever do that — that is, take bitcoin2 seriously

I don't know if I agree with that. Like take the example of a country whose currency collapses due to government mismanagement and its people decide that they would be better off with a cryptocurrency. I'm not sure how realistic this is, but it's at least a scenario that I see proposed from time to time. Those citizens face a trade-off when deciding between Bitcoin and Bitcoin2. Bitcoin has a lot of active miners, which is valuable, as it means their future transactions will be more secure. But Bitcoin is also very expensive, and difficult to acquire. Joining the bitcoin economy is entering into a game where other players (bitcoin early adopters) have a huge head start, and these newcomers have nothing. If they instead start a new chain, they will need to bring their own compute power, but will have an opportunity to have a meaningful share of the tokens, and therefore some amount of influence on steering the currency.

It's probably unlikely that an enfranchised bitcoin user would be incentivized to jump to a newborn chain, but I don't think it's the case that a new user is always incentivized to adopt the existing chain. As the price of bitcoin increases, and the remaining coins to be issued decreases, a new chain becomes more attractive for new users.

Is that true though? Bitcoin cash, bitcoin gold, etc.

Well Bitcoin does have almost central authority - if Top 3 mining pools decide to change their software in literally any way, then everyone else will comply of will be left in the dust. It's not that hard for 3 people to agree on a common action plan.

It's easy to create a fork of software.

It's hard to create a fork of firmware running in people's minds.

I think the main thing Bitcoin has going for it is name recognition. Would be better if we could leave proof-of-work in a flaming trash pile and migrate Bitcoin to Ethereum (and rename it Bitcoin)

Similar things have already happened (Bitcoin Cash, Bitcoin Gold). The original is still standing tall. But if you think you can convince someone your Bitcoin is better, feel free to do a fork!

The 21M can absolutely be changed. It's not a law of physics, it's just a line of code that can be changed. If enough people agree to it, it can be changed, they can even change the number of coins you get for successfully mining a block.

A deflationary asset class encourages hording, not spending or using in other ways. There's also no real limit to the number of crytocurrencies that might appear later (see: MySpace replaced by Facebook), unlike gold. As for inflation: safe government bonds have historically kept up with that over the long haul, so no big loss there.

Imagine a society not based on consumerism and quarterly report increases. Gasp!

Back in the day people used to get interest (covering more than inflation) from holding money in their bank accounts. What's changed?

My understanding has always been interest rates. Interest rates on savings accounts are supposed to be slightly lower than interest rates on loans with the bank taking a profit in the middle.

Home loans used to be much higher, in the 10-15% range and you could get 6-7% on your savings account.

With home loans in the 2-3% range, those margins aren't feasible anymore.

But that's probably an old understanding. I'm sure there's a lot more financial wizardry to it now.

I'm not an economist either but what you said makes sense. We instead nowadays have tons of various fees on our bank accounts so the return ends up being negative. And we're supposed to accept that this is fine and normal? Economy is booming? Give me a break.

This is why creative solutions like bitcoin, if not (necessarily) directly solving anything, do give pause for thought, and maybe shine some hope for a non-corrupt (immutable) system of money.

I need to read up on whether a deflationary currency/economy would really be an issue, or if it just wouldn't work with how things are currently set up.

Edit: And yes, it's a complex issue with no outright easy answers. Doesn't hurt to think about it though.

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Rates have been declining for years (decades, really), but so has inflation. The spread hasn't actually changed that much.

> Imagine a society not based on consumerism and quarterly report increases. Gasp!

I have literally no idea what that would look like or how Bitcoin would play a role. I guess hodlers who bought early would be rich and normal people poor?

Hmm. Ignore the existing coins for a moment, let's just imagine that starting today everyone gets their salaries paid in bitcoin and that's the only currency you can use.

Assuming the value will slowly (and for the sake of argument steadily) increase, would consumption and innovation stifle to a halt and everyone turn into hodlers?

Saving money would become attractive yes, and loans would become expensive or unrealistic (depending on the rate of deflation).

And companies/businesses would value a steady and solid stream of revenue/profit over hysterically chasing constant growth.

Would this really be so disastrous and why?

Bitcoin specs change all the time and they could decide to increase the supply

That would result in a certain fork. We had already had that and it seems the majority has decided to stick with the initial rules even though the fork wasn't about supply but something that will give bitcoin more practicality.

Being a decentralized application, certainly the core devs could attempt to make such a change but I guarantee that would cause a fork and the community would decide which fork they want to put their mining effort into.

The 'community' at large doesn't mine Bitcoin. A few gigantic mining farms mine bitcoin, and their self-interest could well change the bitcoin issuance. It's not as decentralised as you think.

enters Litecoin

>> Not so with Bitcoin: the total supply is fixed at 21M, forever, and there's no central authority with the power to change that.

But as TFA indicates, there are over 500 other crypto coins. When anyone can create a new one they become irrelevant.

They are relevant because, for any given coin/chain, it seems to be pretty damn hard to hack the numbers. The only way to get some is to mine for a long time with expensive hardware, or to convince someone to give you some by giving them cash. Turns out enough people have enough interest in the things that they don't give them up very easily.

Bitcoin, and to a slightly lesser extent Ethereum, are schelling points for crypto. There are good reasons for this. Both bitcoin and ethereum created something new and interesting. In a world where you are trying to pick the coin that everyone else is going to pick, which one will you pick? The Nth of its kind, or the one that created the kind to begin with? That’s why they account for a huge majority of total value of all crypto currencies.

Edit: obviously this is an oversimplification and there are other factors like quality of governance, quality of the underlying tech, and so on. But I believe the above is the crucial factor.

The dollar was just created but is not irrelevant.

Anybody can easily create a coin, but if the coin has no market share or broad usage, it has no practical value.

We can make infinite coin types, with each coin type having an infinite number of tradable units; all that matters is adoption. Bitcoin is far more likely to be accepted than a coin you invent tomorrow.

You had it with 'we can make infinite coin types' - who cares about what is adopted today? People change platforms every few years. What happened to MySpace? What's happening to Facebook even now? Where did TikTok come from? There is turnover.

Anyone can create a Craigslist clone, but somehow they still make 100s of millions of dollars per year.

And not just a craigslist clone, but a much much better one too!

Yep, this is what people are not understanding. Too many engineers and not enough business owners on HN. The hardest part of starting a business is getting the network effects on your side, it isn't the tech.

Sure, but then why have a market for hundreds of coins? We dont have a public market for all the craigslist wannabes because they are not relevant at that level.

Not all exchanges list all coins. Also, we DO have a public market for craigslist wannabes...it's called the internet and you can launch one tomorrow.

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