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This. Bitcoin is digital gold. Once it proves itself, we will probably transition into something like peercoin, or more appropriately an unimplemented proof-of-

by zanny 13y ago

This. Bitcoin is digital gold. Once it proves itself, we will probably transition into something like peercoin, or more appropriately an unimplemented proof-of-work payment scheme that calculates the payments not only on difficulty but also on the transaction rate across the last several blocks. You would want a median 1% inflation, but if exchange slows significantly (indicating money hoarding) you want the inflation rate to increase. If too many transactions are happening, you would turn down the inflation rate to compensate. The only real "hard" part is preventing spoofing the system by moving money back and forth between accounts to fake economic activity, so you would have to put weights on idle money so that money that has been stationary longer has more impact than money changing hands, to avoid tampering.

fragsworth 13y ago
I strongly suspect that the Bitcoin developers and mining community will eventually choose to inflate the currency. Not for any economic reasons, but rather to provide the funding for a large and secure mining network, because future transaction fees might prove to be insufficient. That 21 million number is not set in stone, and will change if there is a need for it.
- zanny 13y ago
  That still doesn't account for the fact that having a mathematical model for inflation is hugely advantageous for a currency. Current btc should be inflating at upwards of 10% considering how little money movement there is in the network due to the investment hoarding.
  - maratd 13y ago
    > That still doesn't account for the fact that having a mathematical model for inflation is hugely advantageous for a currency. This is hugely important and obvious to anybody who has taken Econ 101. Everybody knows this. So why would you invent a currency that was deflationary in nature due to an artificial cap? Well, once you realize that the guy(s) who invented it are holding 10% of it, you'll have your answer. Bitcoin is in a huge bubble at the moment. My only hope is that this bubble bursts before the inventors can cash out. Oh, sweet justice. After the collapse, there is every reason to believe that Bitcoin will become something genuinely useful or at the very least, inspire something that will be useful.
    - fragsworth 13y ago
      Deflation is only a threat because of fractional-reserve lending. The world ends up owing itself more than it actually has in currency, and it collapses in on itself in a massive disaster if and when the currency deflates. Fractional reserve lending of bitcoins seems highly unlikely to happen any time soon, if ever. And if it does start happening, it is likely to be made quickly illegal, because the system simply won't work.

by zanny 13y ago

fragsworth 13y ago

I strongly suspect that the Bitcoin developers and mining community will eventually choose to inflate the currency. Not for any economic reasons, but rather to provide the funding for a large and secure mining network, because future transaction fees might prove to be insufficient. That 21 million number is not set in stone, and will change if there is a need for it.

zanny 13y ago
That still doesn't account for the fact that having a mathematical model for inflation is hugely advantageous for a currency. Current btc should be inflating at upwards of 10% considering how little money movement there is in the network due to the investment hoarding.
- maratd 13y ago
  > That still doesn't account for the fact that having a mathematical model for inflation is hugely advantageous for a currency. This is hugely important and obvious to anybody who has taken Econ 101. Everybody knows this. So why would you invent a currency that was deflationary in nature due to an artificial cap? Well, once you realize that the guy(s) who invented it are holding 10% of it, you'll have your answer. Bitcoin is in a huge bubble at the moment. My only hope is that this bubble bursts before the inventors can cash out. Oh, sweet justice. After the collapse, there is every reason to believe that Bitcoin will become something genuinely useful or at the very least, inspire something that will be useful.
  - fragsworth 13y ago
    Deflation is only a threat because of fractional-reserve lending. The world ends up owing itself more than it actually has in currency, and it collapses in on itself in a massive disaster if and when the currency deflates. Fractional reserve lending of bitcoins seems highly unlikely to happen any time soon, if ever. And if it does start happening, it is likely to be made quickly illegal, because the system simply won't work.