Why Bitcoin is a significant breakthrough, but perhaps not as a currency
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I can't think of a decentralized way to measure demand, though, so maybe this is not possible.
https://bitcointalk.org/index.php?topic=171539.msg1862790#ms...
Although at the beginning it should not be stable , but rising to get people involved with the coin., and at some pre defined point become stable.
If its harder to mine then its harder to transfer. At some point you're stuck with something worthless.
You want inflation, not deflation. The value of the currency should decrease at a 2% clip per annum.
This would make it into a realistic currency, where people get annual raises in their salary, prices gradually climb making merchants happy, etc.
You need to conform to basic human psychology for wide adoption. And don't worry about the miners, they will mine regardless, even if it's worth less and less each year ... now the speculators? Those will be gone and good riddance.
If the digital currency doesn't have any significantly attractive qualities outside its use as a store of value, it's a shitty currency.
If you can make a currency that people will use on a day to day basis, voluntarily, despite having 4% inflation (which is a much better target, economically -- the 2% is the weaksauce compromise with the anti-inflationists), then you've created something which has real utility.
I don't think inflation is a part of basic human psychology.
Regardless of your thoughts, it is.
Most jobs do not experience constant annual productivity gains, but everyone wants a raise at the end of the year and feels like shit when they don't get it. Nominal inflation allows you to give them a raise without impacting your bottom line. Win/win.
Most merchants what to see their prices go up, it signals to them that there is demand for their goods. A steady, slow, increasing demand for their goods makes them feel good. Even if the costs of operating their business are going up at a similar clip, it makes them feel good that they can increase their prices. Having to keep your prices the same or drop them is frustrating, as if you're not making progress. Win/win.
A steady, slow pace of inflation is ideal.
It allows for short term saving, like for a downpayment on a house, but discourages unhealthy hoarding over long periods of time. Again, win/win.
Look, I get it, Economics is an art, etc. but this stuff has been established over a long period of time and it works.
this is an old theory and has been refined over time, but its still the basic model taught in economics courses.
Nope. Most economists prefer low but stable inflation around 1-3%.
End-of-the-year raises can happen in a deflationary economy too, that's not really associated with the inflation / deflation debate. The amount of the raise can be less in nominal dollars but the employee gets the same real purchasing power.
> Most merchants what to see their prices go up, it signals to them that there is demand for their goods.
Price doesn't signal that there is demand for their goods, demand signals that there is demand. Price is a reflection of demand / supply, not the other way around.
> it makes them feel good that they can increase their prices.
But don't they, similarly, feel bad when they see everybody elses' prices also increase? They know that their paycheck gets less and less at other stores.
I think it's hard to draw a connection between feelings and economics.
> It allows for short term saving, like for a downpayment on a house, but discourages unhealthy hoarding over long periods of time. Again, win/win.
We live in a time of unprecedented levels of debt, both personal and national. I'd argue that such debt isn't all that healthy for the long-term growth of an economy.
1. 99% of people out there have no idea what purchasing power is.
2. The 1% that do either lack the ability or the will to calculate it.
3. It's entirely irrelevant, because in a deflationary environment you will be receiving a pay cut. Remember, most people do not experience productivity gains which necessitates a pay cut. If you're flipping burgers, you're flipping the same amount of burgers you did last year. If your productivity didn't increase and your boss gave you a raise or even kept your salary the same, he's taking money out of his pocket for you. Very nice boss you have there ... also, a very rare creature.
4. Now that you're cutting people's wages ... you've seriously pissed them off.
> Price doesn't signal that there is demand for their goods, demand signals that there is demand. Price is a reflection of demand / supply, not the other way around.
I'm glad you know what a demand curve is. I actually know how to calculate one since I have a formal education in economics and actually took econometrics.
I also ran a pretty successful retail outfit that had revenue in the millions.
Do you know how many times I calculated a demand curve? Zero.
It would have been a waste of time. Because I'm not the only player in the market. I don't have the data.
What data do I have? More people are buying my shit. I'm running out of stock. Let me increase my prices. My prices increased, now people are buying the same amount of shit they did before. I am making more money. I feel good. Oh crap, my supplier increased his prices. My supplier is an asshole. But people are buying my stuff, I just increased prices, things are good!
99% of merchants operate in this way. Yes, I knew the changes were nominal. They still made me feel good. Inflation wins.
> But don't they, similarly, feel bad when they see everybody elses' prices also increase? They know that their paycheck gets less and less at other stores.
No normal human being makes the connection between prices and their paycheck. Not even economists. Yes, that's the rational conclusion. The world doesn't work that way.
When I get a raise, I'm happy with my boss and about my work. When I see prices rise at the store, I'm pissed at the store. There is zero connection there, even though it's obviously all connected.
People aren't computers.
> I'd argue that such debt isn't all that healthy for the long-term growth of an economy.
While I would probably agree with you, the inverse of saving is not debt. It's the lack of saving. You can skip saving a single dollar and still be debt free.
"More people are buying my shit. I'm running out of stock. Maybe I won't decrease my prices this year. My prices didn't decrease, now people are buying the same amount of shit they did before. I am making more money. I feel good. Oh crap, my supplier didn't decrease his prices this year. My supplier is an asshole. But people are buying my stuff, I didn't have to lower prices, things are good!"
In a deflationary economy, people always buy LESS of your stuff and you have no idea if that's happening because your goods are less popular or because the currency is deflating or possibly both. In an inflationary system, if less people are buying my stuff, I know there's a problem with my goods.
Where did I trip up?
Sure, people will need to adjust their thinking, but I think you overestimate the obsession with rising salaries/costs.
"In a deflationary economy, people always buy LESS of your stuff and you have no idea if that's happening"
[citation needed]
> [citation needed]
> Where did I trip up?
The fact that you need a citation to realize that in a deflationary system if prices stay stagnant people will consume less by definition. You don't seem to realize that. Deflation means prices are falling. If prices don't fall and the dollar is worth more, people buy less of your stuff. This isn't rocket science. Please stop advocating things you don't even understand.
That's not true. The world is entirely aware of prices and how their paycheck relates to it. It's called a Cost of Living Adjustment:
I think if you're going to be successful, you'll have to find a different set of early adopters. Bitcoin is as much ideological as anything, and while some people don't want to see another alt currency because of their level of investment, others just generally don't believe there's anything wrong with the system today.
Anyways, i'd love to actually develop the idea... but I didn't want to spend time on "just another altcoin" unless I had faith it might get some adoption.
Bitcoin appeals to people who have decided it's outrageous they have to invest their money in productive enterprise to get more of it, and it specifically appeals to greed which says "get in early and get rich easily!"
Perhaps the specific non-central bank model used by Bitcoin, but there could be alternatives to a traditional central bank that might be used in an alternative currency that wouldn't have the same problem, so I wouldn't rush to say that that acknowledgement rules out non-central bank models generally.
I wonder if there is another community that would be more interested in such a currency's adoption.
I wouldn't mind a distributed currency with this property, but you really should be aware that this is the basic operation of the banking system.
With a commodity like gold, when its value increases, people mine more of it because people want more. This increased supply reduces its value.
To me, the ideal currency is one in which you can get paid for performing a service, and 20 years later, the payment is still worth exactly the cost of that service. A long-term store of value, a way of remembering the value of everything.
Edit: I'm not trying to criticize your ideas; I almost completely agree with you.
Any coin that tries to adddress the problem of deflation right now will also have to go through a cycle of gaining widespread adoption before we know whethre or not the monetary policy built into the coin works. PeerCoin if it ever gains wide adoption will almost certainly seem just as volatile as BitCoin as it becomes more widespread. And we wont know until it becomes widespread if it successfully combats deflation.
Are you sure of what you're saying ? Because bitcoin doesn't seem to work in a very simple fashion already, it's decentralized and it's already a miracle if it's working as the programmer intended.
The same could be done for other parameters (like the targeted time between blocks) or maybe even for more complicated things, like what kind of digital signature algorithms are acceptable.
I'd call it "votecoin".
I often see it compared to the advent of the early Internet in the 1980s, when nobody really knew how big it would get, just that it was "revolutionary" and would become huge.
This may be an overestimation caused in part by bitcoin stakeholders trying to promote the idea. But a very similar thing happened in the 90s when everyone was buying tech stocks.
I think most people don't generally go to the source when learning about something, though, even today when it's easily possible. Usually what people do is learn what is fed to them from whatever outlets they prefer (TV, news websites, reddit, etc.) and hear about stuff in passing.
That said, I owned some, and I recently sold some. Going through bitstamp (in slovania) was a pain. Getting the coins in was a breeze. However the international wire transfer took days, and cost about $60. Global transactions using bitcoin seem very lucrative here. Credit cards are another way, but they're expensive to the merchant. Bitcoin makes commerce on the web pretty nice in a lot of ways.
He was well aware: he posted a short essay to bitcoin.org explaining how Bitcoin is a general solution to the Byzantine Generals problem, and if you read his early cryptography/p2presearch ML threads, he specifically says that digital money is but the earliest and most obvious application, and that far more could be built on top of it, and he hoped there would be, and included the dangerously-complex scripting language specifically to support more complex functionality than simply a global ledger.
It's not his fault if everyone else was more interested in applying Bitcoin to financial transactions than exploring approaches like Namecoin.
This idea of the Bitcoin protocol as a decentralized, secure, and transparent storage system has all kinds of applications, whether Namecoin, smart property or something else.
I played around with using Namecoin as a more consumer-friendly form of drm.
Ultimately I think this level of efficiency would probably destroy most developers who used it (especially games).
The trick was to line up economic incentives so that securing the network and accepting transaction fees are the same thing.
The fact that bitcoin serves as a centralized document store is one of the biggest defects in bitcoin as it stands now, and when bitcoin does fall, it will fall to a system that treats the transfer of currency units as a first-class citizen rather than a side effect of a script.
Suppose it's 15 years from now. Many cars can drive themselves.
Suppose someone designs a mechanism that allows you to control your vehicle (remotely) only if you own a specific "ownership item" (colored coin, whatever people are calling it) on the bitcoin network. You prove this to the vehicle, and it goes to wherever you tell it to. The item on the bitcoin network means you "own" the vehicle.
Now you can tell your vehicle to go to a public place where someone might inspect it with the intent of purchasing it. That person tells you "OK, I'll buy it for 0.1BTC" and you perform an exchange of your ownership document for 0.1BTC over the bitcoin network.
You don't have to trust anyone with anything. The exchange happens atomically. You don't even have to go anywhere to perform the exchange.
(and once you have that, escrow service anyway becomes cheap)
When I say that a transaction is not a first-class citizen, I mean things like the fact that the question "I have this address, how many bitcoins do I have" is not really answerable; redeeming existing incoming transactions may rely on information outside of your key pair.
You're correct that as it stands, 1:1 transactions are pretty much all we have to deal with, so long as IsStandard doesn't change. The fact that the script language exists is worrisome, as is the fact that IsStandard only applies to relying of transactions by clients, not transactions in blocks.
You still have to trust SHA-256 and that no one can afford to do a 51% attack, for instance.
http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-rob...
http://letstalkbitcoin.com/dacs-that-spawn-dacs/
The use of the word "corporation" is kind of wonky to me and the whole concept took me a little time to wrap my head around it, but these are the types of things we can expect to see with blockchain technology and hopefully IMO eventually the abolition of states worldwide.
These kinds of comments do nothing to help promote bitcoin as a legitimate technology and only increase the risk that cryptocurrencies become generally illegal to use. I'm really disappointed with the anti-government garbage spouted by so many people in the community.
If all the libertarians who are into bitcoin suddenly cut down the rhetoric, you think that this will "make bitcoin legitimate technology"? What does that even mean? You mean that governments are going to suddenly be more friendly to bitcoin users? That seems like an incredibly naive belief, sorry.
In general, it is disappointing that people still hold to backwards and primitive beliefs such as democracy and state worship. Statism is institutionalized violence and injustice writ large. I totally understand how your perspective on this can be different, but please understand that what you are calling garbage I see as a call for justice.
What you are advocating is what you then go on and complain about; it's total akrasia. You are suffering from Stockhom syndrome in believing freedom from your serfdom would be serfdom. Democracy is a very persuasive idea because it seems like you have choice, but then in reality the political elite rule. 2/3rds of Americans oppose the Iraq war; would you say this is an example of having a say in policy?
Governments are, across the board, a failure and a drain on society. Every service, including things like providing a "social safety net" can be better provided through market processes.
You're right that each person's vote, by itself, is only a tiny drop in the bucket. That's not a flaw; that's the whole point of a democracy: it biases the government toward action that will please the most number of citizens. The lone whims of one person should not carry the day in a democracy.
For example: the Iraq war was very popular when it was started. Then, when it became obvious what a mess it was, and become unpopular, the American people voted for a change in government. Now we're not at war in Iraq anymore.
The fact that you mention labor as some sort of success shows that you buy into the common narrative and haven't really looked at the situation. The 2002 study by Vedder and Galloway put the damage to the economy over the previous 50 years at $50 trillion dollars by unionism. Unions increase wages where they can restrict entry or have special privilege to intimidate employers but help to reduce wages overall.
Libertarians aren't actually opposed to unions if all a union is doing is organizing to protect rights of workers, but that isn't in truth how they operate. You can find more details on the study I mention and many more reasons why unionism is destructive here: http://mises.org/daily/1685
The US government is also the worst polluter on Earth, yet somehow you believe it has accomplished some triumph of environmentalism?: http://ivn.us/2012/04/18/the-number-one-worst-polluter-on-ea...
The government fails in its own task of enforcement in notable cases like the BP oil spill. There was legislation before this spill limiting liability for accidents like this. I think this was then sidestepped because of the severity of this spill, but it is an example of legislation actually protecting corporate interests and aiding their ability to pollute. When companies pollute, more often they end up paying a fine to the government rather than compensating victims. The common law mechanism whereby people can sell off their claim to a tort, no matter how minor, has been destroyed in modern, authoritarian systems.
The US government makes illegitimate claims to large areas of land and then takes money for leases on mineral/timber/other rights. This temporary ownership creates an incentive problem. When a company has no long-term stake, the tendency is to strip mine or clear cut a forest. Where instead a system of ownership is upheld, you see a tendency to have more sustainable treatment of land because there is a stake in the long term value of the property.
The same sort of structural incentive problem exists for democracy in general vis a vis systems like feudal monarchies (which, note, I do not advocate still either). When a king permanently "owns" his territory, there will often be some restraint in over-taxation or overly aggressive military adventures because the king is interested in passing on the kingdom to his heirs. In a democracy, temporary rulers have the incentive to make use of their power and "get in while the gettin's good".
The Iraq War may have been popular when Bush started the new salvo but this was based on false information crafted by this administration in order to plunge them into war. It's a problem that the system you advocate even puts a person in the position to manufacture terror like this. Public sentiment was at 2/3rds+ since at least 2006 against the Iraq War and the pullout could have happened swiftly long ago. The idea that these politicians are basing military policy on public opinion is ludicrous. You are clearly totally blinded by your worship of democracy. BTW, there are still at least 20-25K military and contractors in Iraq.
Look at the history of opinion on Afghanistan: http://www.gallup.com/poll/116233/afghanistan.aspx
That's 65-82% opposed every year except the dip to 54% in '05. I guess in your world of doublethink, this would be an example of democracy accomplishing the "pleasing of the most number of citizens".
Elections are mere popularity contests. These politicians do not represent you in the same way I would represent you if you handed me $5 and sent me to the store to get something specific. At times, politicians will react to public opinion or there are very slow movements towards ending their criminal policies like the Drug War. If pot was legalized at the federal level, would you add this to your list of great accomplishments? I'd list it as a failure due to the years of unjust policy previously, the millions of captives kept for victimless crimes now, the families and neighborhoods which would still be destroyed by the prohibition on other drugs.
Your statist ideology is outmoded. Information now flows more freely and the crimes of states will be laid bare. Once the "great western democracies" fully implode, people will question these types of systems and look for new solutions. That is what we are building now with things like blockchain-based tech, libertarian legal scholarship, etc.
The poll numbers you cite on Afghanistan are public opinion of the country itself. If you will look at the next chart down you will see that even in 2013 a majority of Americans do not believe it was a mistake to go to war there after the September 11 attacks.
This article describes the usage scenarios in detail: http://hackingdistributed.com/2013/06/20/virtual-notary-intr...
"Restricting transactions to such a simple form would restrict Bitcoin to exactly the possibilities traditional currencies had (though decentralized). However, Satoshi saw the potential to allow it to do more, and introduced a script system. He wasn't around anymore to bring it to practice, but Mike Hearn wrote down some of the things Satoshi had in mind on the Contracts page of the Bitcoin wiki."
Why oh why must every mention of Nakamoto imbue him/them with certain politics? We're led to believe Nakamoto is a subversive anarcho-capitalist libertarian who wants to overthrow governments.
There are certainly hackers driven by ideals and politics (e.g. rms), but there are plenty more who solve a problem just because they can. The Morris worm wasn't published in order to promote anarchy. Quicksort wasn't invented as a metaphor for classism. http://dl.acm.org/citation.cfm?id=358561
It seems far more likely that Nakamoto saw an existing problem, solved it in a clever fashion, and published the result.
>This was probably intended as proof that the block was created on or after January 3rd, 2009, as well as a comment on the instability caused by fractional-reserve banking.
I've noticed this on a few sites, and I'm wondering if the problem is on my end, or if it's a problem with the website.
(I have the same problem with Opera 12.16.)
http://www.aaronsw.com/weblog/squarezooko
...you can see his thoughts were more focused on censorship-resistance (a major interest of Swartz) than on stateless money.
So, Aaron was a brilliant dude, who did a lot of cool stuff. I just don't think the personality matches up, at all, with whoever created Bitcoin. If Swartz created a cryptocurrency, which I don't think he would have, I doubt it would look like Bitcoin. (There's also several people much higher on the list of "might be Satoshi".)
Nick Szabo. Mike Hearn. Hal Finney. Wei Dai.
Nick Szabo is a "former law school professor at George Washington University" according to Wikipedia.
Wei Dai has attended SIAI/MIRI workshops in person:
http://lesswrong.com/lw/ig9/outside_views_and_miris_fai_endg...
("Wei Dai" could be a pseudonym but if so I haven't seen him mention that on Less Wrong.)