4 ms·

I've been watching Bitcoin for the last few months. It all seems very smart and cool. BitcoinWatch offers an overview of what's happening in the Bitcoin networ

by bobds 16y ago

I've been watching Bitcoin for the last few months. It all seems very smart and cool. BitcoinWatch offers an overview of what's happening in the Bitcoin network: http://bitcoinwatch.com/ http://bitcoinwatch.com/ One bitcoin was worth 0.25 USD first time I checked. Last week or so, it had reached ~0.7 USD. Today it's over 1 USD. I'm amazed.

pilif 16y ago
If the total amount of coins that can be generated is limited and if the amount that is generated per time unit is going down, it's only natural that the value of one coin would constantly increase. Which brings me to two questions the podcast left me with (i'm a developer, not an economy expert, so these might be really dumb questions): 1) is the hard cap really a good idea? Generally, currencies seem to lose value over time. Not to gain it. As the value can only increase, what's the incentive of spending coins now when they could be worth much, much more in two years. 2) being able to anonymously move coins between anonymous peers makes this really interesting for online payment (it's equivalent to paying in cash), but isn't this also the perfect solution for money laundering? Especially when combined with above fact that the value ever increases. Still: something like this would really help in solving the micropayment problem, which exists to this day.
- bobds 16y ago
  > it's only natural that the value of one coin would constantly increase Not really. As I see it, the value is a function of demand. The fact that bitcoins have risen in value so fast, means that demand and confidence is also growing. There isn't really a hard cap. It's just that it will get increasingly difficult to generate bitcoins, so in effect we won't have more than 21 million. The idea is to provide a predictable increase of the money supply. That is good because you know nobody's going to suddenly dump 21 million more bitcoins in circulation, and halve the value of your coinage. That's what's happening with USD. They keep dumping trillions of new dollars in the money supply, something I really wouldn't like if I had dollars in my bank account. Just ask Zimbabwe, where they need a cartwheel of money to buy dinner at a restaurant. So what if demand keeps growing and we need more than 21 million coins? Well the system supports up to 8 decimal points. I guess that will have to do. As far as money laundering goes, I think it's not that much different from regular cash. I also think that tracking everyone's spending/earning habits is not the best way to stop crime.

by bobds 16y ago

pilif 16y ago

If the total amount of coins that can be generated is limited and if the amount that is generated per time unit is going down, it's only natural that the value of one coin would constantly increase. Which brings me to two questions the podcast left me with (i'm a developer, not an economy expert, so these might be really dumb questions): 1) is the hard cap really a good idea? Generally, currencies seem to lose value over time. Not to gain it. As the value can only increase, what's the incentive of spending coins now when they could be worth much, much more in two years. 2) being able to anonymously move coins between anonymous peers makes this really interesting for online payment (it's equivalent to paying in cash), but isn't this also the perfect solution for money laundering? Especially when combined with above fact that the value ever increases. Still: something like this would really help in solving the micropayment problem, which exists to this day.

bobds 16y ago
> it's only natural that the value of one coin would constantly increase Not really. As I see it, the value is a function of demand. The fact that bitcoins have risen in value so fast, means that demand and confidence is also growing. There isn't really a hard cap. It's just that it will get increasingly difficult to generate bitcoins, so in effect we won't have more than 21 million. The idea is to provide a predictable increase of the money supply. That is good because you know nobody's going to suddenly dump 21 million more bitcoins in circulation, and halve the value of your coinage. That's what's happening with USD. They keep dumping trillions of new dollars in the money supply, something I really wouldn't like if I had dollars in my bank account. Just ask Zimbabwe, where they need a cartwheel of money to buy dinner at a restaurant. So what if demand keeps growing and we need more than 21 million coins? Well the system supports up to 8 decimal points. I guess that will have to do. As far as money laundering goes, I think it's not that much different from regular cash. I also think that tracking everyone's spending/earning habits is not the best way to stop crime.