6 ms·

It was set to die by design. Bitcoin has a predetermined graph of coin production with time that converges soon. In 2022, 90% of all bitcoins will be produced,

It was set to die by design. Bitcoin has a predetermined graph of coin production with time that converges soon. In 2022, 90% of all bitcoins will be produced, and the ideal inflation will be lower than most fiat currencies. But inevitably, people die, and the knowledge of their private key with them, removing bitcoins from circulation. The amount of bitcoin will therefore decrease impredictably All in all, it will be as volatile as currently traded gold (which is not as good a long-term store of value as fiat money as a result), and slower to use in transactions (in November, the European Central Bank will launch SCT Inst, a SEPA mechanism that provides transactions in less than 15 seconds, which is better than Bitcoin's recommended 2 hours). Beating the improvements of traditional systems will require new cryptocurrency designs.

ObeyTheGuts 9y ago
u people are just not the target of bitcoin it seems, me i can not use anything else but bitcoin for online money, its only option, there is no other option. For banks u need passport and official paperwork, which is not possible by majority of worlds population. i can do with bitcoin what i can not ever do with anything else.
xTrader 9y ago
> But inevitably, people die, and the knowledge of their private key with them, removing bitcoins from circulation. The amount of bitcoin will therefore decrease impredictably Maybe a bit late, but you finally understood why Bitcoins get more valuable over time: their number grows slowly or maybe decreases, while the number of people wanting them increases. That's why Bitcoin is the best Store Of Value ever devised.
- brianwawok 9y ago
  Ok put your entire life savings in BC, i will put mine in the SP500. Lets see how things look in 40 years?
  - Fjolsvith 9y ago
    How has the SP500 compared to BC since its inception in 2009?
    - alexasmyths 9y ago
      The SP500 has been growing consistently, has for quite a long time, and it's a bet on the future growth of the American economy. There will be ups and downs, but by enlarge, steady growth. BTC has been on a wild ride, and could evaporate at any moment. I don't think it will, but it could, since there's no reason for anyone anywhere to own it. There's no question the safer bet is S&P 500. Now - in the range of outcomes, admittedly, the BTC owns the higher end of the spectrum - no doubt, there are possibilities where BTC completely outraces the S&P, however, it also owns the lower end of the spectrum of outcomes, where a lot of those outcomes are 0.
      - wpietri 9y ago
        It surprises me to see this downvoted. One fundamental of investing is that stocks represent an economically productive asset. In contrast, commodities just sit there. If I buy a chunk of a company, that company is working to become a bigger, more effective, more value-generating company. If I buy an ounce of gold, it stays an ounce of gold. Index funds represent a broader bet still. Because they're composed of many things, volatility is lower and you're betting on whatever the common factors of the index are. So buying an SP500 index fund could easily be said to be a bet on the American economy. And in many ways, Bitcoin is worse than gold. The historical value of gold is known. Bitcoin is new. Gold's floor price is set by the practical use value of it, both industrial and decorative. Bitcoin's floor price is that of bits. That is, zero. The gold market is broad, with producers and consumers all over the world, and open markets in many countries. Bitcoin is effectively controlled by a relatively small number of people and requires careful long-term cooperation of those people. So it seems pretty obvious to me that Bitcoin is much higher risk. Which can mean higher reward. But as anybody who has shares in a failed startup knows, higher risk doesn't guarantee higher reward.
        9y ago
- alexasmyths 9y ago
  "their number grows slowly or maybe decreases, while the number of people wanting them increases." Yes - you are right to point out that as BTC's disappear, it's not such a bad thing. But why do you assume people would continue wanting them? "That's why Bitcoin is the best Store Of Value ever devised." It's currently one of the worst 'stores of value' possible. It's massively volatile, and inherently risky: governments could decide to regulate it tomorrow - or even ban it. It's highly susceptible to popular whims. It has massive chunks owned by individual investors who could 'change their minds' on something. If you have $X USD and want to 'diversify' and have 'strong store of value' - there are many other better options. Real estate being on the top of the list. Over the long-haul, there are innumerable places in the world where real estate will hold it's value for hundreds of years. Baskets of commodities, currencies, decent bonds. Bitcoin is a very speculative asset, which makes it the 'opposite' of a 'store of value'. And if it's not a currency, then why are we using it again? Let me put it differently: In 200 years - do you think there will be demand for real estate in London? There has been for 1000 years. What about Tokyo? Shanghai? Of course there will. Maybe less, but certainly some, and probably more. Will there be demand for BTC in 100 years? It's hard to say. Possibly, but there's a decent chance nobody will know what it is then.
  - wpietri 9y ago
    I'm not sure why this is being downvoted. It seems spot on to me. People argue that Bitcoin is a great investment because it's going to go up, up, up! And people argue that it's a good store of value. But they can't both be true. Reward and risk are strongly related. Nobody should know that better than startup people.
    - alexasmyths 9y ago
      "I'm not sure why this is being downvoted. It seems spot on to me. " Bitcoin is a religious subject among the tech crowd. The most fascinating thing about BTC has nothing to do with 'block-chain' - it's the manner in which it has created hype among tech circles. Techies look at it from a tech perspective, financial types from a financial perspective. From a financial perspective, BTC is downright bizarre. Even the 'threat of disruption' aside, it doesn't make a whole lot of sense. But from a tech perspective, is uber-cool. So it's hard to have a discussion about BTC because almost nobody talks about it as a financial instrument - it's always about tech. The amount of systematic hype is surreal - constant streams of articles etc. etc.. It's going to get bigger before it gets smaller as the hype is just starting to reach mainstream.
- haywirez 9y ago
  People also don't appreciate that Bitcoin is infinitely divisible, so the total numbers are meaningless. At the same time, inflation is super low and decreases over time, giving it more and more edge over nation-state currencies.
  - sidko 9y ago
    Bitcoin is NOT infinitely divisible. Each Bitcoin is divisible into 10^8. There were reasons to choose this number and isn't arbitrary [1]. [1] https://bitcoin.stackexchange.com/questions/31933/why-is-bitcoin-defined-as-having-8-decimal-places https://bitcoin.stackexchange.com/questions/31933/why-is-bit...
    - wwwtyro 9y ago
      It is arbitrarily divisible. Fitting inside 64 bits is convenient, but hardly an insurmountable engineering challenge. There's libraries that handle this sort of thing with ease.
  - wpietri 9y ago
    Isn't inflation strongly negative? In the link I posted above, Fred Wilson exhibits behavior typical of deflationary times: people hoard the currency. That's a strong disadvantage vs nation-state currencies, which have clear inflation targets (generally in the 0-2% range) and the ability to hit them. It may be great for speculation, but it's terrible for a medium of exchange. For that, you want the value to be constant or very slightly decreasing. And I don't think that's fixable. If the Bitcoin supply is limited but those tokens are used in a world of continuous economic growth, then Bitcoin will always be deflationary.
- cirgue 9y ago
  Deflationary assets can be good investments but are terrible mediums of exchange. The Fed has an inflation target and not a deflation target for a reason. Or did I miss the sarcasm here?
pointsphere 9y ago
Yes, the number of coins in circulation decreases over time. But the precision can be increased from the current 8 decimals. Even if all but 1 Satoshi/0.00000001 BTC is lost, it could still be split into smaller units, or used to bootstrap a chain with higher precision. It can be fixed as required. Volatility decreases as the number of users and therefore liquidity increases. It should decline further with rising use of the network for payments instead of a pure store of value. I agree that "viability as a payment system" is where Bitcoin is stuck right now, but scaling the system is the stated goal of all current Bitcoin developer groups. One of them will get it right eventually.

ObeyTheGuts 9y ago

u people are just not the target of bitcoin it seems, me i can not use anything else but bitcoin for online money, its only option, there is no other option. For banks u need passport and official paperwork, which is not possible by majority of worlds population. i can do with bitcoin what i can not ever do with anything else.

xTrader 9y ago

> But inevitably, people die, and the knowledge of their private key with them, removing bitcoins from circulation. The amount of bitcoin will therefore decrease impredictably Maybe a bit late, but you finally understood why Bitcoins get more valuable over time: their number grows slowly or maybe decreases, while the number of people wanting them increases. That's why Bitcoin is the best Store Of Value ever devised.

brianwawok 9y ago
Ok put your entire life savings in BC, i will put mine in the SP500. Lets see how things look in 40 years?
- Fjolsvith 9y ago
  How has the SP500 compared to BC since its inception in 2009?
  - alexasmyths 9y ago
    The SP500 has been growing consistently, has for quite a long time, and it's a bet on the future growth of the American economy. There will be ups and downs, but by enlarge, steady growth. BTC has been on a wild ride, and could evaporate at any moment. I don't think it will, but it could, since there's no reason for anyone anywhere to own it. There's no question the safer bet is S&P 500. Now - in the range of outcomes, admittedly, the BTC owns the higher end of the spectrum - no doubt, there are possibilities where BTC completely outraces the S&P, however, it also owns the lower end of the spectrum of outcomes, where a lot of those outcomes are 0.
    - wpietri 9y ago
      It surprises me to see this downvoted. One fundamental of investing is that stocks represent an economically productive asset. In contrast, commodities just sit there. If I buy a chunk of a company, that company is working to become a bigger, more effective, more value-generating company. If I buy an ounce of gold, it stays an ounce of gold. Index funds represent a broader bet still. Because they're composed of many things, volatility is lower and you're betting on whatever the common factors of the index are. So buying an SP500 index fund could easily be said to be a bet on the American economy. And in many ways, Bitcoin is worse than gold. The historical value of gold is known. Bitcoin is new. Gold's floor price is set by the practical use value of it, both industrial and decorative. Bitcoin's floor price is that of bits. That is, zero. The gold market is broad, with producers and consumers all over the world, and open markets in many countries. Bitcoin is effectively controlled by a relatively small number of people and requires careful long-term cooperation of those people. So it seems pretty obvious to me that Bitcoin is much higher risk. Which can mean higher reward. But as anybody who has shares in a failed startup knows, higher risk doesn't guarantee higher reward.
      - 9y ago
alexasmyths 9y ago
"their number grows slowly or maybe decreases, while the number of people wanting them increases." Yes - you are right to point out that as BTC's disappear, it's not such a bad thing. But why do you assume people would continue wanting them? "That's why Bitcoin is the best Store Of Value ever devised." It's currently one of the worst 'stores of value' possible. It's massively volatile, and inherently risky: governments could decide to regulate it tomorrow - or even ban it. It's highly susceptible to popular whims. It has massive chunks owned by individual investors who could 'change their minds' on something. If you have $X USD and want to 'diversify' and have 'strong store of value' - there are many other better options. Real estate being on the top of the list. Over the long-haul, there are innumerable places in the world where real estate will hold it's value for hundreds of years. Baskets of commodities, currencies, decent bonds. Bitcoin is a very speculative asset, which makes it the 'opposite' of a 'store of value'. And if it's not a currency, then why are we using it again? Let me put it differently: In 200 years - do you think there will be demand for real estate in London? There has been for 1000 years. What about Tokyo? Shanghai? Of course there will. Maybe less, but certainly some, and probably more. Will there be demand for BTC in 100 years? It's hard to say. Possibly, but there's a decent chance nobody will know what it is then.
- wpietri 9y ago
  I'm not sure why this is being downvoted. It seems spot on to me. People argue that Bitcoin is a great investment because it's going to go up, up, up! And people argue that it's a good store of value. But they can't both be true. Reward and risk are strongly related. Nobody should know that better than startup people.
  - alexasmyths 9y ago
    "I'm not sure why this is being downvoted. It seems spot on to me. " Bitcoin is a religious subject among the tech crowd. The most fascinating thing about BTC has nothing to do with 'block-chain' - it's the manner in which it has created hype among tech circles. Techies look at it from a tech perspective, financial types from a financial perspective. From a financial perspective, BTC is downright bizarre. Even the 'threat of disruption' aside, it doesn't make a whole lot of sense. But from a tech perspective, is uber-cool. So it's hard to have a discussion about BTC because almost nobody talks about it as a financial instrument - it's always about tech. The amount of systematic hype is surreal - constant streams of articles etc. etc.. It's going to get bigger before it gets smaller as the hype is just starting to reach mainstream.
haywirez 9y ago
People also don't appreciate that Bitcoin is infinitely divisible, so the total numbers are meaningless. At the same time, inflation is super low and decreases over time, giving it more and more edge over nation-state currencies.
- sidko 9y ago
  Bitcoin is NOT infinitely divisible. Each Bitcoin is divisible into 10^8. There were reasons to choose this number and isn't arbitrary [1]. [1] https://bitcoin.stackexchange.com/questions/31933/why-is-bitcoin-defined-as-having-8-decimal-places https://bitcoin.stackexchange.com/questions/31933/why-is-bit...
  - wwwtyro 9y ago
    It is arbitrarily divisible. Fitting inside 64 bits is convenient, but hardly an insurmountable engineering challenge. There's libraries that handle this sort of thing with ease.
- wpietri 9y ago
  Isn't inflation strongly negative? In the link I posted above, Fred Wilson exhibits behavior typical of deflationary times: people hoard the currency. That's a strong disadvantage vs nation-state currencies, which have clear inflation targets (generally in the 0-2% range) and the ability to hit them. It may be great for speculation, but it's terrible for a medium of exchange. For that, you want the value to be constant or very slightly decreasing. And I don't think that's fixable. If the Bitcoin supply is limited but those tokens are used in a world of continuous economic growth, then Bitcoin will always be deflationary.
cirgue 9y ago
Deflationary assets can be good investments but are terrible mediums of exchange. The Fed has an inflation target and not a deflation target for a reason. Or did I miss the sarcasm here?

pointsphere 9y ago

Yes, the number of coins in circulation decreases over time. But the precision can be increased from the current 8 decimals. Even if all but 1 Satoshi/0.00000001 BTC is lost, it could still be split into smaller units, or used to bootstrap a chain with higher precision. It can be fixed as required. Volatility decreases as the number of users and therefore liquidity increases. It should decline further with rising use of the network for payments instead of a pure store of value. I agree that "viability as a payment system" is where Bitcoin is stuck right now, but scaling the system is the stated goal of all current Bitcoin developer groups. One of them will get it right eventually.