BitCoin

ExremelyCautiousSocialist

danm wrote: »

I do not think Bitcoin is a Ponzi scheme

A certain % of people claiming scam seems to be alright if you want to make a return from a speculation point of view. Not so great from a slow growth PR point of view.

HappyHarry

Bitcoin will never become a major currency.

It has many inherent flaws, but a key one is that it has a fixed ceiling of 21 million bitcoins.

This is unworkable for a currency.

Everyday, someone would save some bitcoins, or lose their wallet, or die and not provide beneficiaries with access, effectively taking bitcoins out of circulation, sometimes permanantly.

As the number of bitcoins in circulation falls, and are not replenished, then the only way to pay future salaries and purchase goods would be to devalue bitcoin according to the amount in circulation.

This leads to deflation, where the price of goods falls year on year, as do salaries. Expenditure on anything bar esentials then grinds to a halt, as people become aware that the bitcoin held today will be worth much more in a few years' time

The whole system then comes to a shuddering stop, and a new currency is rapidly formed, and the old bitcoin becomkes absoluetly worthless.

If bitcoin never becomes a major currency, then it's inherent value will fall to zero.

If bitcoin becomes a major currency, then very shortly it's inherent value will fall to zero.

Talking about blockchain, transaction fees, miners, fiat currencies and trading patterns does not get away from the basics that bitcoin is unworkable as a major currency.

markj113

HappyHarry wrote: »

Bitcoin will never become a major currency.

It has many inherent flaws, but a key one is that it has a fixed ceiling of 21 million bitcoins.

This is unworkable for a currency.

Everyday, someone would save some bitcoins, or lose their wallet, or die and not provide beneficiaries with access, effectively taking bitcoins out of circulation, sometimes permanantly.

As the number of bitcoins in circulation falls, and are not replenished, then the only way to pay future salaries and purchase goods would be to devalue bitcoin according to the amount in circulation.

This leads to deflation, where the price of goods falls year on year, as do salaries. Expenditure on anything bar esentials then grinds to a halt, as people become aware that the bitcoin held today will be worth much more in a few years' time

The whole system then comes to a shuddering stop, and a new currency is rapidly formed, and the old bitcoin becomkes absoluetly worthless.

If bitcoin never becomes a major currency, then it's inherent value will fall to zero.

If bitcoin becomes a major currency, then very shortly it's inherent value will fall to zero.

Talking about blockchain, transaction fees, miners, fiat currencies and trading patterns does not get away from the basics that bitcoin is unworkable as a major currency.

The 21 million bitcoins is a red herring, there is an infinite amount of numbers after the decimal point that just requires a small code change (currently 8)

HappyHarry

markj113 wrote: »

The 21 million bitcoins is a red herring, there is an infinite amount of numbers after the decimal point that just requires a small code change (currently 8)

No, it's not a red herring.

My comment is not about whether bitcoin can physically be managed with smaller amounts in circulation.



My comment is about the ecomomic impact of deflation and a falling amount of currency in circulation.

eskbanker

markj113 wrote: »

The 21 million bitcoins is a red herring, there is an infinite amount of numbers after the decimal point that just requires a small code change (currently 8)

How would changing the number of decimal places increase the number before the decimal point?

That sounds like similar numeracy logic to the (possibly apocryphal) tale of the less-than-intelligent footballer wanting a pizza cut into six slices rather than eight as he wasn't hungry enough to manage eight....

Linton

eskbanker wrote: »

How would changing the number of decimal places increase the number before the decimal point?

That sounds like similar numeracy logic to the (possibly apocryphal) tale of the less-than-intelligent footballer wanting a pizza cut into six slices rather than eight as he wasn't hungry enough to manage eight....

Because...
The demand for bitcoin increases but the supply is limited. Therefore there is steady deflation with existing bitcoins coming more valuable and smaller bits of bitcoins enter circulation. As bitcoin is infinitely divisible (not quite but near enough) there is plenty of room at the bottom for all forseeable needs.


Since the bitcoin-rich will see their wealth in real terms steadily increasing with no effort on their part they neednt bother investing for the future. Eventually everybody with any bitcoins will be rich and no-one will need to work.

HappyHarry

Linton wrote: »

Because...
The demand for bitcoin increases but the supply is limited. Therefore there is steady deflation with existing bitcoins coming more valuable and smaller bits of bitcoins enter circulation. As bitcoin is infinitely divisible (not quite but near enough) there is plenty of room at the bottom for all forseeable needs.


Since the bitcoin-rich will see their wealth in real terms steadily increasing with no effort on their part they neednt go to the effort of investing for the future. Eventually everybody with any bitcoins will be rich and no-one will need to work.

You do realise that someone is going to take you seriously :eek:

Joe_Bloggs

Is there any evidence, in history, of Central Banks printing/creating money in the belief that it should mean something to somebody and then have their currency totally rejected as worthless ?
J_B.

ExremelyCautiousSocialist

Linton wrote: »

Since the bitcoin-rich will see their wealth in real terms steadily increasing with no effort on their part they neednt bother investing for the future. Eventually everybody with any bitcoins will be rich and no-one will need to work.

You mean we can retire with 0.0000000000000000000000000000000000000000000000000000000000000000000000000000001 BTC ?

fwor

It almost looks as though the person who designed Bitcoin (who incidentally is believed to already hold around 4% of all of the Bitcoins that can ever be mined) built in a feature that ensured that all Bitcoins would naturally increase in value.

It also appears that once all 21 million Bitcoins have been mined, mining activity will cease. When that happens, who will provide the computing power to process transactions? Perhaps the algorithm that defines "difficulty" is such that the difficulty of mining the last few Bitcoins increases to be very large or even infinite?

Can some or all of these limitations be overcome by "forking" the currency in a similar way to that already done in the creation of Bitcoin Cash?

It seems that, if the trend in the price of Bitcoin Cash is in anything to go by, nobody is convinced that it's the solution...