Do you see a future in cryptocurrency?

[halik]

Bitcoin isn't inherently deflationary (those who claim it is assume continued hoarding, and dismiss the divisibility of a single Bitcoin); it's decentralized and I don't see that it actually needs a single government or entity to back it; the volatility problem is going away (but is an problem with many "real" currencies, anyway); and insurance is starting to be offered for online wallets like through Coinbase, Xapo and for merchants using payment gateways like BitPay. The reason large companies are starting to accept Bitcoin is precisely because it's trending in the right direction in all these areas, but of course there's a lot of work and growth to be done. No one is claiming any cryptocurrencies are a mature financial platform yet.

You do have a point about it not being time-efficient (unlike cash) but that's where Bitcoin debit cards - and eventually credit cards - offered by financial service companies will come in. Even with regular cards you are waiting for a transaction to "post", but with Bitcoin that verification happens in a matter of minutes or a few hours at most.

Judging by what you said, you are one of those people with limited grasp of economics. There is a fixed amount of bitcoin and continuos economic growth (population, technology).

Deflation has nothing to do with hoarding or how many decimal points you have, it's an issue of having positive carry which creates a heavy opportunity cost of actually transacting. See Japan in the last 20 years - you won't use money as money if it's generating positive return and money velocity drops. Why buy anything now, when 6 months from now it will be 5% cheaper to you?

 

[KlokWyze]

Everyone's an expert.

 

[Crono]

Judging by what you said, you are one of those people with limited grasp of economics.

Deflation has nothing to do with hoarding or how many decimal points you have, it's an issue of having positive carry which creates a heavy opportunity cost of actually transacting. See Japan in the last 20 years - you won't use money as money if it's generating positive return and money velocity drops. Why buy anything now, when 6 months from now it will be 5% cheaper to you?

Instead of assessing my knowledge of economics, please just explain it to me as if I'm an idiot.

What gives Bitcoin positive carry, exactly?

 

[BoberFett]

Bitcoin isn't inherently deflationary (those who claim it is assume continued hoarding, and dismiss the divisibility of a single Bitcoin)

You missed my post, did you?

 

[halik]

Instead of assessing my knowledge of economics, please just explain it to me as if I'm an idiot.

What gives Bitcoin positive carry, exactly?

At some point all 21M bitcoins will be mined and held by someone, so as there's economic growth the relative purchasing power of bitcoins will go up. So just having bit coins generates positive return, which makes you less willing to spend em.

From wiki:

However, deflation is the natural condition of hard currency economies when the supply of money does not grow as quickly as population and the economy. When this happens, the available amount of hard currency per person falls, in effect making money more scarce; and consequently, the purchasing power of each unit of currency increases.

http://en.wikipedia.org/wiki/Deflation

 

[Crono]

At some point all 21M bitcoins will be mined and held by someone, so as there's economic growth the relative purchasing power of bitcoins going up.

From wiki:

http://en.wikipedia.org/wiki/Deflation

And how did I not address that in what you bolded and quoted? Bitcoin is theoretically infinitely divisible (it has a practical limit of a Satoshi last I checked, or 0.00000001 BTC, but keep in mind that Bitcoin is a software platform after all and this can be changed) and the stability of Bitcoin over the past few months combined with the number of merchants who are accepting Bitcoin (often with very favorable discounts, as with NewEgg's recent promo) means there's far less incentive to simply hold or horde Bitcoin than there was. You are making the assumption that the Bitcoin "gold rush" mentality will continue, which I don't think is a fair assumption to make.

There are also other developing cryptocurrencies with different models than Bitcoin but based on the same underlying technology. I wish Primecoin would gain traction because it actually is infinite to begin with, which makes it easier to deal with because you can just use whole XPM rather than divvying it up into subunits (plus the difficulty is inverse to the network hash rate).

 

[BoberFett]

Right, because I want to go to a store and count the zeroes in the price of something measured in billionths of a unit.

 

[halik]

And how did I not address that in what you bolded and quoted? Bitcoin is theoretically infinitely divisible (it has a practical limit of a Satoshi last I checked, or 0.00000001 BTC, but keep in mind that Bitcoin is a software platform after all and this can be changed) and the stability of Bitcoin over the past few months combined with the number of merchants who are accepting Bitcoin (often with very favorable discounts, as with NewEgg's recent promo) means there's far less incentive to simply hold or horde Bitcoin than there was. You are making the assumption that the Bitcoin "gold rush" mentality will continue, which I don't think is a fair assumption to make.

There are also other developing cryptocurrencies with different models than Bitcoin but based on the same underlying technology. I wish Primecoin would gain traction because it actually is infinite to begin with, which makes it easier to deal with because you can just use whole XPM rather than divvying it up into subunits (plus the difficulty is inverse to the network hash rate).

If you cannot comprehend that granularity has nothing to do positive carry/deflation, I honestly can't help you.

 

[Crono]

Right, because I want to go to a store and count the zeroes in the price of something measured in billionths of a unit.

You don't need to transact in whole bitcoins any more than I need to transact in millions of dollars. Meaning that simply dealing in Satoshis if/when Satoshis are worth the equivalent of, let's say dollars, you simply need to know that 100 Satoshi's equals 1 μBTC, and that 20,000 1 μBTC can buy you a car.

The beauty here is it's all metric. The above is just an example, and when we do get around to transacting more frequently in cryptocurrency there won't be a need to understand it in dollar values.

 

[Crono]

If you cannot comprehend that granularity has nothing to do positive carry during deflation, I honestly can't help you.

If you can't understand that infinite divisibility and not just granularity means no scarcity and no absolute reason positive carry and deflation needs to occur, I honestly can't help you either.

You're thinking in rigid economic terms of fiat currency instead of digital currency. I think that's the failure of most economists who give Bitcoin a cursory look without try to understand the beauty of the flexibility (and I'll admit, potential danger) of a truly digital-first currency that is also a technology.

 

[dighn]

the need for finer granularity is precisely due to an increase in the value of BTC. it's not a counter to the deflation argument.

personally I see it being a great vehicle for discretionary transfer of funds. for daily uses it's not really worth the risk.

 

[Crono]

the need for finer granularity is precisely due to an increase in the value of BTC. it's not a counter to the deflation argument.

True, but finely dividing bitcoin is in essence no different than printing money to increase supply, a la the Federal government. It's only a matter of changing the wallet software* to make the default transactional amount smaller. This can even be done preemptively in anticipation of an increase of the value of a single BTC, which may not be actually realized.


* I'm oversimplifying, probably, but you know what I mean

 

[dighn]

it's actually different when you divide BTC, because the amount you own also grows by the same factor. it's kind of like a stock split; the shares increase but the value of what you own is the same. however it is deflation in the first place that drives the need to do that.

when money is printed, what you own is still the same, and that devalues. it's the opposite process but kind of a problem in itself if not dealt with (through investment).

 

[LegendKiller]

If you can't understand that infinite divisibility and not just granularity means no scarcity and no absolute reason positive carry and deflation needs to occur, I honestly can't help you either.

You're thinking in rigid economic terms of fiat currency instead of digital currency. I think that's the failure of most economists who give Bitcoin a cursory look without try to understand the beauty of the flexibility (and I'll admit, potential danger) of a truly digital-first currency that is also a technology.

Holy shit dude. It doesn't matter how little you can divide BTC, the scarcity itself will cause problems.

If I have 100 BTC worth $1 each and $100 total goods in an economy (call it GDP) then I have $1 BTC/GDP. If I have $105 GDP and $100 BTC, then the BTC has lost parity with the economy since you aren't making any more of it. The only way it can maintain the parity is by appreciating to $105. Thus, anything I buy is now cheaper by the nature of it appreciating (deflation) relative to the good. It doesn't matter if you can re-split the good into whatever BTC, the fact it is appreciating (deflation) is what matters. Why should I spend it today if it will appreciate tomorrow?

It is the aggregate amounts of currency vs the aggregate amount of the economy/assets that matters. Everything else, including "divisibility" is immaterial.

All you're saying is that because I can now $1 of today's goods with .952 BTC I am fine. However, it still doesn't solve the fact that tomorrow, if the economy grew at the same rate (110.25 tomorrow), then I only need to spend .907 BTC. Why would I spend .952 today when I only have to spend .907 tomorrow? Money velocity, as Halik said, would plummet.

Everybody knows this, only an utter fucking moron doesn't.

 

[Crono]

Holy shit dude. It doesn't matter how little you can divide BTC, the scarcity itself will cause problems.

If I have $100 BTC and $100 GDP then I have 1 BTC/GDP. If I have $105 GDP and $100 BTC, then the BTC has appreciated by 5%, by losing parity with the economy. The only way it can maintain the parity is by appreciating to $105. Thus, anything I buy is now cheaper by the nature of it appreciating (deflation) relative to the good. It doesn't matter if you can re-split the good into whatever BTC, the fact it is appreciating (deflation) is what matters. Why should I spend it today if it will appreciate tomorrow?

It is the aggregate amounts of currency vs the aggregate amount of the economy/assets that matters. Everything else, including "divisibility" is immaterial.

Everybody knows this, only an utter fucking moron doesn't.

What you are describing is predicated on current holders of Bitcoin assuming that Bitcoin will rise in price versus the price at time of purchase, and holding on to that Bitcoin indefinitely. You are building scarcity into this scenario by supposing that Bitcoin doesn't drop in value (except it does, and has from it's high of over $1,000 to where it is now at $500). So like in any market, yes, those who buy low and sell high have the advantage and greater purchasing power, but anyone who does the reverse will lose out.

If I now have $85 GDP and $100 BTC, what has that done to the Bitcoin economy and psychology of Bitcoin investors? Or the next day when its $80/$100?

 

[LegendKiller]

What you are describing is predicated on current holders of Bitcoin assuming that Bitcoin will rise in price versus the price at time of purchase, and holding on to that Bitcoin indefinitely. You are building scarcity into this scenario by supposing that Bitcoin doesn't drop in value (except it does, and has from it's high of over $1,000 to where it is now at $500). So like in any market, yes, those who buy low and sell high have the advantage and greater purchasing power, but anyone who does the reverse will lose out.

If I now have $85 GDP and $100 BTC, what has that done to the Bitcoin economy and psychology of Bitcoin investors? Or the next day when its $80/$100?

Do you not see the problem? If I only have 100 BTC, it *HAS* to appreciate since there is more assets out there than BTC to denominate them in. It can't drop in value if everybody needs it to transact and there's only a certain amount available.

Do you understand basic supply/demand of a scarce resource at all?

If aggregate demand of oil keeps going up but supply is fixed, then what happens to the price of oil? If the price of oil goes up then the price of everything else, relative to oil, goes down.

This is why Bitcoiners and goldbugs are dangerous, they have *NO* concept of reality outside of some magical vacuum devoid of any reality of human emotion, economics, or truth. It's just "Well, it works this way BECAUSE I SAY SO"

 

[The Boston Dangler]

no. only government-backed monopoly money is considered real money, especially by those with lots of it. also, by people i want to buy shit from.

 

[LegendKiller]

no. only government-backed monopoly money is considered real money, especially by those with lots of it. also, by people i want to buy shit from.

I'll take my 11 supercarriers, most technologically advanced military, largest pool of IP (drugs, technology) and one of the better governments on the planet. You can have your...servers.

 

[Crono]

Do you not see the problem? If I only have 100 BTC, it *HAS* to appreciate since there is more assets out there than BTC to denominate them in. It can't drop in value if everybody needs it to transact and there's only a certain amount available.

Do you understand basic supply/demand of a scarce resource at all?

If aggregate demand of oil keeps going up but supply is fixed, then what happens to the price of oil? If the price of oil goes up then the price of everything else, relative to oil, goes down.

Except supply isn't fixed, and Bitcoin isn't scarce. BTC may be capped, but bitcoin isn't because it's infinitely divisible and not consumable (unlike oil).

I'm tired of explaining this, so here's an article on it. Hopefully we agree to disagree because I don't want to keep debunking people's wrong assumptions about Bitcoin. And like I mentioned earlier, not all cryptocurrencies operate the same way (why I prefer Primecoin).

http://www.cryptocoinsnews.com/debunking-deflationary-bitcoin-argument/

 

[LegendKiller]

Except supply isn't fixed, and Bitcoin isn't scarce. BTC may be capped, but bitcoin isn't because it's infinitely divisible and not consumable (unlike oil).

I'm tired of explaining this, so here's an article on it. Hopefully we agree to disagree because I don't want to keep debunking people's wrong assumptions about Bitcoin. And like I mentioned earlier, not all cryptocurrencies operate the same way (why I prefer Primecoin).

http://www.cryptocoinsnews.com/debunking-deflationary-bitcoin-argument/

Supply is fixed, you have a certain amount of BTC, then that's it. If you don't produce BTC in supply aggregating to the growth of goods, then you naturally have a situation when goods outstrip funds to transact it, naturally creating an imbalance.

As I pointed out, mathematically, you can divide it all you want, in fact, you *HAVE* to, otherwise you could never transact with it, period.

Gold is effectively infinitely divisible also, at least electronically so, but it falls into the same problem.

The article does nothing to address the aggregation of an economy. Nothing at all. It just says "We are right because we are right".

 

[halik]

Just gonna leave this here; changing the currency granularity isn't some magical property that only bitcoin has, nor does it in any way address the positive carry issues vis a vis deflation...


http://en.wikipedia.org/wiki/Redenomination#List_of_currency_redenominations

 

[zinfamous]

no!


i mean...yes!


wait, no?

I don't know...yes!


how about....yes?

:hmm:

 

[Skel]

Other than being non-goverment what benefits does it give me over the dollar? I don't follow this stuff enough to really understand it, other than according to this thread there's only so many coins that can be made/found/dreamed up

 

[T_Yamamoto]

Well I changed my topic a little bit.

 

[halik]

So this happened http://www.businessinsider.com/bitcoin-has-been-getting-obliterated-2014-10