I don't agree with your statement, "Bitcoin is only deflationary because the number of people who use it is growing faster than the number of coins in circulation.". To the contrary, my understanding is that a number of factors have combined with the net result that Bitcoin is hyper-deflationary. One major factor has been the shift of bitcoin 'mining' from computer CPUs, to video graphics processors (GPU's), to FPGA (Field Programmable Gate Arrays), and ultimately ASICs (literally, "application-specific integrated circuits"; what used to be called 'custom' IC's decades ago.) While I don't have a specific number, I would not be surprised to hear that an ASIC miner is 1000x faster than even the fastest x86 CPU. If that were the only factor, it would appear that new bitcoins should be 1000x more available than in, say, 2009. However, I also understand that the 'difficulty' of mining bitcoin has been algorithmically increased regularly, in order to make it more difficult to compute to find individual bitcoins. This is programmed into the entire bitcoin system. In fact, it is to the point where the limiting factor to the cost of 'mining' bitcoin is the electricity cost of running the machines, not the cost of the machines themselves. The bitcoin system 'programs' the appreciation of bitcoin by gradually increasing the difficulty of that mining operation. This translates into an increase in the market value of bitcoin. In fact, this is essential to the (theoretical) outcome of bitcoin. I think of it this way: The system is programmed to only allow the generation of 21 million bitcoins. If bitcoin is ultimately to be used to run the entire world economy (why not?) there should be at least one million times more. (Say, 21 TRILLION; 21,000,000,000,000 bitcoins, if we think of the ultimate value of a bitcoin as being roughly equal to the current value of the US dollar, the Euro, the British Pound, etc.) But since they are limited to 21 million, by algorithm, the value of a 2013 bitcoin will have to be increased by a factor of 1000 to stretch to the task of funding a world's market. And that means that the 2 million BTC currently in the wallet most likely owned by Satoshi will presumably increase in value to $2 trillion (USD). "Nice work if you can get it". Is this a problem? Who, instead, would claim that it ISN'T a problem! Bitcoin has many great features, its possibility (through Zerocoin) of being anonymous one of the most intriguing, but there is nothing about a digital currency that requires that it deflates at the rate historically associated with bitcoin. I view this deflation as being arbitrary and capricious, and wildly too large. Like I've said, I don't begrudge Satoshi $1 billion (USD), but I DO begrudge him $2 trillion. If Satoshi's bitcoin rescues us from all governments (enabling 'AM'), perhaps he should be entitled to $10 billion (USD), but not $2 trillion (USC). Jim Bell
________________________________ From: David Vorick <[email protected]> To: Jim Bell <[email protected]> Cc: Kelly John Rose <[email protected]>; "[email protected]" <[email protected]> Sent: Monday, November 25, 2013 2:20 PM Subject: Re: Interesting take on Sanjuro's Assassination Market How do you think something like that could be managed? Bitcoin is only deflationary because the number of people who use it is growing faster than the number of coins in circulation. But how can you measure the number of people who are using it, and how can you measure how much they are using it? (IE are they speculating, are they actually using it to hide money from their government, are they buying needs like food+water?). Any cryptocurrency hoping to 'appreciate by at most 5%' has to have some reliable metric for measuring it's value in the real world. Otherwise coin generation algorithms are just a shot in the dark, hoping to mimic the expected growth of the coin or having some authority that can provide input about it's real dollar value. And anything that tries to get insider metrics will need some defence against liars and sybil attacks. On Mon, Nov 25, 2013 at 5:07 PM, Jim Bell <[email protected]> wrote: > > > > >________________________________ > From: Kelly John Rose <[email protected]> >To: [email protected] >Sent: Monday, November 25, 2013 8:00 AM >Subject: Re: Interesting take on Sanjuro's Assassination Market > > >On 11/25/2013 4:26 AM, Lodewijk andré de la porte wrote: > >>> Why suddenly all this attention for yet another assassination market? >>> Because it's more "hit them and earn the bounty", like at a fair, style? > > >>I wonder what would happen if multiple people claimed the same date for >>the death of a celebrity. > >I haven't read enough of the 'AM' system to know what that system would do, >but it seems to me that a logical outcome would be to split the reward based >on the size of the contribution included with each prediction. For instance, >if Person A correctly predicted with 1 BTC, and Person B correctly predicted >with 9 BTC, Person 1 should get 10% of the reward, while Person B should get >90%. > >Incidentally, one problem I see with Sanjuro's 'AM' (Assassination Market) >system (at least, so far) is the setting of a minimum bet at 1.0 BTC, which is >about $800 when I checked a few seconds ago. In writing my AP essay, I anticipated that very small bets (say, 10 cents US) would be allowed. Except in unusual situations, few people would want to donate $800 (USD) to see somebody dead; Far more would be willing to donate $1 (USD) for that. > >I don't know if the current minimum bid in 'AM' has something to do with the >granularity of 1.0 BTC, but the existence of digits to the right of the >decimal point in the prediction totalizations suggests that this is not the >case. If the problem is that the prediction totalization is currently being >done manually, rather than automatically, that is a limitation that I think >must be fixed in order for 'AM' to operate well. And with a minimum bet of >1.0 BTC, it might be portrayed as if 'AM' is a tool of the wealthy, rather >than that of the average person. > >To the extent that this is a problem now, it will be worse as Bitcoin continues to deflate (increase in value) as it was no doubt intended to do. What happens when 1 BTC = $10,000? I consider that one of the few disadvantages or problems with Bitcoin is its hyper-deflationary nature: How can a currency function as a currency, if it is 'scheduled' (by algorithm) to appreciate in value far faster than any commodity? Another related problem is that Bitcoin is effectively programmed to excessively reward early-adopters. While I feel that the inventor of Bitcoin should be richly rewarded for doing the work necessary to give us such a beneficial addition to society, the limit of my generosity is about $1 billion (USD). Ultimately, I think that a replacement for Bitcoin ("Bitcoin 2.0"?) is necessary, one that won't appreciate in value more than, say, 5% per year. > Jim Bell > > >Disclaimer: I am not associated with Sanjuro's 'Assassination Market' in any way. > > >
