8 ms·

There is a finite amount of bitcoins because it is designed to mimic a natural resource - easy to "mine" at first, much more difficult to mine as time goes on,

by tcoppi 16y ago

There is a finite amount of bitcoins because it is designed to mimic a natural resource - easy to "mine" at first, much more difficult to mine as time goes on, and eventually there are none left. If there were an infinite amount of bitcoins that could be generated, there would always be inflation in place roughly proportional to the amount of computational power being used to mine, and soon your bitcoins would be worthless. As well, bitcoins are divisible to 8 decimal places, so I don't think there's any problem of "running out" in practice, bitcoins will just become more and more valuable. And why shouldn't they? Miners and investors now are expending time and money investing in them, which is a risk because bitcoin may never become popular. The greater the risk, the greater the reward, same in any type of business.

seanalltogether 16y ago
You know I've thought about this for awhile and I'm starting to come to the conclusion that inflation is a good thing. Having a currency that doesn't inflate is bad for 2 reasons. 1. The population keeps growing, 2. Humans are hoarders. Having currency inflate encourages society to use their money instead of squirreling it all away. Everything in life devalues over time and I don't think currency should be any different. However I don't believe currency should be unpredicatble and inflate at the whims of the government.
- deleted 16y ago
  [deleted]
- cturner 16y ago
  Everything in life devalues over time That's not true. Violins, clinker bricks, gold, wine, classic aston martins, original prints of the Book of Mormon tend to appreciate. Some wisdom for you: cheese. When sovereign debt collapses, those of us who have been quietly stashing wheels of cheese will laugh all the way to market.
- joe_the_user 16y ago
  Congratulations, you've arrived at the conclusions of JM Keynes' General Theory. http://en.wikipedia.org/wiki/John_Maynard_Keynes http://en.wikipedia.org/wiki/John_Maynard_Keynes Of course, that viewpoint has been the subject of some debate in the last eighty years.
- OstiaAntica 16y ago
  No one squirrels away money-- savings in a bank is still reinvested into the economy, by the bank through lending. Unless you are literally sticking money under a mattress, it gets circulated.
  - kronusaturn 16y ago
    But we're talking about bitcoins, which are extremely easy to just leave sitting on your hard drive rather than invest.
    - danenania 16y ago
      Sounds like a market opportunity for making them easier to invest.
- Groxx 16y ago
  Humans are hoarders, but humans like stuff too. If they hoard everything, they're either conceptually sticking it under their mattress, or they're loaning it out to make more, which is putting it back in the market. If they like stuff, they'll eventually buy something with what they've been hoarding. I know that's the core argument against deflationary currency, but I don't see how it's valid. I find it much more likely that it's a belief pushed on our society by money lenders, as they thrive on people buying things now that they can't afford at the moment. Not implying a conspiracy - that implies organization, which isn't necessary for such an emphasis. It's in the lenders' best interest, so they'll do so.
ZitchDog 16y ago
Rather than debating the validity of the Gold Standard (which is essentially what this discussion boils down to) I would direct you to a great set of podcasts from Planet Money[1] in particular [2][3] which discuss the general current thought on the Gold Standard, and show why most economists agree it is untenable in the long run. [1]http://www.npr.org/templates/archives/archive.php?thingId=133252308 http://www.npr.org/templates/archives/archive.php?thingId=13... [2]http://www.npr.org/blogs/money/2011/02/15/133781593/the-tuesday-podcast-the-gold-standard http://www.npr.org/blogs/money/2011/02/15/133781593/the-tues... [3]http://www.npr.org/blogs/money/2011/02/18/133874462/the-friday-podcast-gold-standard-r-i-p http://www.npr.org/blogs/money/2011/02/18/133874462/the-frid...
- tcoppi 16y ago
  Most of these arguments apply if you are going to be using a finite supply of money as your "main" currency. I agree that not having an inflatable supply is bad in such situations. However it is incredibly unlikely that bitcoin will ever occupy this niche(I highly doubt anyone is going to ever pay taxes in BTC). For what it is, an easy and quick way to transact payments anonymously* and securely online, it is incredibly valuable and I hope it caches on. *How anonymous it is obviously depends on how sophisticated you are at using it.
  - ZitchDog 16y ago
    It will still be bad for the adoption of Bitcoin as a trading currency. If I have a Bitcoin that is worth $1 today but will almost certainly be worth more than that in a month, what is my incentive to give you the Bitcoin? Wouldn't it be smarter for me to just give you $1 directly via PayPal? As it stands the only reason to use Bitcoin currently is for shady deals, novelty, and speculation. I find it laughable that Bitcoin advocates laud the increase in the currency's value as a good thing. It is most certainly not a good sign for a currency when it's value increases dramatically over time such as the Bitcoin has.
    - mike_esspe 16y ago
      You should get $1 somehow (exchange BTC to dollars for example), so it's equivalent to sending the exchanged amount of BTC.
CJefferson 16y ago
That also sounds suspiciously like the description of a Ponzi scheme, where the first people in make all the profit, and the people at the end get shafted.

by tcoppi 16y ago

seanalltogether 16y ago

You know I've thought about this for awhile and I'm starting to come to the conclusion that inflation is a good thing. Having a currency that doesn't inflate is bad for 2 reasons. 1. The population keeps growing, 2. Humans are hoarders. Having currency inflate encourages society to use their money instead of squirreling it all away. Everything in life devalues over time and I don't think currency should be any different. However I don't believe currency should be unpredicatble and inflate at the whims of the government.

deleted 16y ago
[deleted]
cturner 16y ago
Everything in life devalues over time That's not true. Violins, clinker bricks, gold, wine, classic aston martins, original prints of the Book of Mormon tend to appreciate. Some wisdom for you: cheese. When sovereign debt collapses, those of us who have been quietly stashing wheels of cheese will laugh all the way to market.
joe_the_user 16y ago
Congratulations, you've arrived at the conclusions of JM Keynes' General Theory. http://en.wikipedia.org/wiki/John_Maynard_Keynes http://en.wikipedia.org/wiki/John_Maynard_Keynes Of course, that viewpoint has been the subject of some debate in the last eighty years.
OstiaAntica 16y ago
No one squirrels away money-- savings in a bank is still reinvested into the economy, by the bank through lending. Unless you are literally sticking money under a mattress, it gets circulated.
- kronusaturn 16y ago
  But we're talking about bitcoins, which are extremely easy to just leave sitting on your hard drive rather than invest.
  - danenania 16y ago
    Sounds like a market opportunity for making them easier to invest.
Groxx 16y ago
Humans are hoarders, but humans like stuff too. If they hoard everything, they're either conceptually sticking it under their mattress, or they're loaning it out to make more, which is putting it back in the market. If they like stuff, they'll eventually buy something with what they've been hoarding. I know that's the core argument against deflationary currency, but I don't see how it's valid. I find it much more likely that it's a belief pushed on our society by money lenders, as they thrive on people buying things now that they can't afford at the moment. Not implying a conspiracy - that implies organization, which isn't necessary for such an emphasis. It's in the lenders' best interest, so they'll do so.

ZitchDog 16y ago

Rather than debating the validity of the Gold Standard (which is essentially what this discussion boils down to) I would direct you to a great set of podcasts from Planet Money[1] in particular [2][3] which discuss the general current thought on the Gold Standard, and show why most economists agree it is untenable in the long run. [1]http://www.npr.org/templates/archives/archive.php?thingId=133252308 http://www.npr.org/templates/archives/archive.php?thingId=13... [2]http://www.npr.org/blogs/money/2011/02/15/133781593/the-tuesday-podcast-the-gold-standard http://www.npr.org/blogs/money/2011/02/15/133781593/the-tues... [3]http://www.npr.org/blogs/money/2011/02/18/133874462/the-friday-podcast-gold-standard-r-i-p http://www.npr.org/blogs/money/2011/02/18/133874462/the-frid...

tcoppi 16y ago
Most of these arguments apply if you are going to be using a finite supply of money as your "main" currency. I agree that not having an inflatable supply is bad in such situations. However it is incredibly unlikely that bitcoin will ever occupy this niche(I highly doubt anyone is going to ever pay taxes in BTC). For what it is, an easy and quick way to transact payments anonymously* and securely online, it is incredibly valuable and I hope it caches on. *How anonymous it is obviously depends on how sophisticated you are at using it.
- ZitchDog 16y ago
  It will still be bad for the adoption of Bitcoin as a trading currency. If I have a Bitcoin that is worth $1 today but will almost certainly be worth more than that in a month, what is my incentive to give you the Bitcoin? Wouldn't it be smarter for me to just give you $1 directly via PayPal? As it stands the only reason to use Bitcoin currently is for shady deals, novelty, and speculation. I find it laughable that Bitcoin advocates laud the increase in the currency's value as a good thing. It is most certainly not a good sign for a currency when it's value increases dramatically over time such as the Bitcoin has.
  - mike_esspe 16y ago
    You should get $1 somehow (exchange BTC to dollars for example), so it's equivalent to sending the exchanged amount of BTC.

CJefferson 16y ago

That also sounds suspiciously like the description of a Ponzi scheme, where the first people in make all the profit, and the people at the end get shafted.