It is not limited to 21M "units", and it never was. It's arbitrarily divisible into whatever units you like. Again, since it is not a national currency, it doesn't matter. It isn't "deflation" when the price of gold goes up.
I guess some people can't let go of the idea that Bitcoin is "supposed" to be like a dollar-denominated debit card.
Also, please take your "digital gold" meme and use it on r/Bitcoin. Not only does Bitcoin's price contain the speculative valuation of a million people who call it a currency (regardless of your particular vision) but that vision also has a million flaws. It's rather funny, when someone points out its flaws as "digital gold" then the Bitcoin troglodites come out and call it a currency. When you point out its flaws as a currency, they correct you that it is, in fact, digital gold. When in fact, it's just a technology medium for transmitting value without the economic mechanisms to be a currency, nor the historical/economic/political/social mechanisms to be a 'digital gold'.
It would require a hard fork, but it is technically possible to increase the divisibility of the base satoshi unit. And it should be an uncontroversial change if needed, since it will not require any redistribution of money.
With that said, it doesn't seem likely that the value of a bitcoin will increase in the near future to the point where we will actually need more than 21 quadrillion units of precision.
From my limited level of understanding, it seems that the only differences are that you know that Bitcoin has no inherent value at all (gold has some since it can be used to make jewelery and gold-plated audio connectors, among other things) and you know exactly how much Bitcoin can ever be mined.
Instead of explaining what Bitcoin actually is you compare it to something very simple that everybody knows and derive "digital gold" ...
[1] https://en.wikipedia.org/wiki/Abundance_of_the_chemical_elem...
[2] https://www.metalary.com/tantalum-price/ [3] https://www.bullionbypost.co.uk/gold-price/today/kilograms/u...
I've moved to altcoins for sending money, the transaction fees of bitcoin finally pushed me to another one.
I wish I'd buy a little extra to speculate myself, but I'm pretty impatient so I'd better not.
Presumably "some people" includes its creators, given that "coin" is in the name. If that isn't meant to evoke currency, that's quite an oversight.
> It is not limited to 21M "units", and it never was. It's arbitrarily divisible into whatever units you like.
This response doesn't seem to address the parent's related point: that bitcoin as implemented seems to have inflation and deflation built in.
> Again, since it is not a national currency, it doesn't matter. It isn't "deflation" when the price of gold goes up.
It's certainly the giant problem it would be if it were a national currency, but that doesn't mean it doesn't matter. Speculation in anything can have consequences that are undesirable, and for that reason, it's often regulated.
By removing himself from the picture Bitcoin stands alone, controlled by the masses - which is exactly how it ought be. If instead Al Gore created Bitcoin, it will be intrinsically tied with his name as some sort of central person which is contrary to the entire idea. The reason I think this is particularly important is because decentralization is generally going to be seen as intuitively impossible to laymen.
And the possibility of a person is always greater than the reality. Fischer is still the greatest chess champion to ever live in the minds of many, even though he only played in one world championship - and against a champion who was on his way out in any case. Him disappearing after a meteoric rise paradoxically cemented his legacy. Satoshi is a much more meaningful creator than John Doe could ever be.
I think you'll excuse us as thinking that the original intent was to make, I dunno, coins, like a currency.
Yes, it may have evolved past that now, but the intent and the use of bitcoins up until maybe 13 months ago was that bitcoin was a currency. Now it's millennial gold or something. What will it be in another 13 months? Who knows.
Sure, I will buy a novilty bitcoin when it's once again worth a penny. But, novelty does not create enduring value.
I'm not sure I agree with Stiglitz that it should be outlawed since I'm uncomfortable with protecting people from their own stupidity, but I understand the analysis he's doing to conclude that.
«cannot support a growing Bitcoin-based economy»
Bitcoin doesn't need to support a growing economy. Our economy is fiat-based therefore Bitcoin can do just fine, serving its purpose as a parallel currency to the economy. Its purpose is to provide censorship-resistance, to allow people to escape inflation, to solve merchant fraud with irreversible payments, etc.
Irreversible payments will help merchants, not solve merchant fraud. If anything they will cut down on consumer fraud but they actually enable merchant fraud.
The only thing that is stopping this is the miners' incentives, which is the exact same thing that stops contract violations.
The difference with legal contract enforced systems is they aren't. No one is going to build a system that restricts it's owner legally, and furthermore legal rules are leaky abstractions that have workarounds and spotty enforcement.
If we could run the economy on blockchain, why not?
Like you say, blockchain as a concept has many desirable traits that make it superior to a fiat currency. But if Bitcoin in particular were designed in a way that allowed it to avoid rapid fluctuation, I could see it slowly rising in use, until after many years it's powering a lot of commerce instead of the US dollar. As it is, it's going to reach a ceiling of usefulness that a differently architected blockchain wouldn't have.
One potential obstruction to this is probably the speed of transaction confirmation. I believe it takes about an hour for a transaction to be confirmed. If we equate that to a current fiat currency based transaction confirmation which takes just a fraction of a second, we are way off. I may be wrong in this comparison. What I do understand is that, you can't have the blockchain and also the speed of a fiat currency based transaction confirmation. What I don't understand is - Is this confirmation so crucial. I see blockchain as more amenable to existing workflows that takes eons to complete, such as an approval in an organization.
Every major blockchain is trying to shard or find other solutions to increase scalability of confirmations. Most coins have it on the 2018 roadmap to deliver lots of these improvements which will bring the transaction times way down. If some coins stay slow, then others will be used instead for situations where you need to compete with the speed of a wire transfer.
SEPA has basically no fee and is usually next day, with SEPA SCT Inst it'll soon be 15 seconds (and no more than 20 seconds) with the same fees, after which bitcoin can't compete on that anymore.
ACH transfers take days; wire transfers take minutes to hours and cost tens of dollars. There's ever possibility of running a digital currency that can clear transactions on the order of minutes with minimal cost. Bitcoin isn't well suited to that, partially because it hasn't been managed well.
A credit card would still pre-authorize against a balance at an institution, but it would settle between the customer and merchant bank on the same schedule (when the merchant cleared their transactions for the week) or faster (eg, on the order of minutes). That makes credit cards considerably closer to cash (fast) than what they are now, like checks (slow).
And for people who wanted it to settle immediately or treat it like cash, they could make a direct transfer, and have it clear on the order of minutes. (Not great for coffee, but something like buying a car.)
Digital currencies can be those things, they're just not.
Can you please elaborate on this a bit more. What is direct transfer and how is it different from bitcoin /ethereum payments. From what I understand, they are the same.
Because we can't. Given that there are trade imbalances between countries (and assuming we want the economy to actually continue to run, as opposed to transfer all the wealth in the world to first one country, then one person, and then stop alltogether)
That means trade imbalances must be forgiven. Our current system does that through credit creation and crashes (bankruptcies). Bitcoin simply ignores the problem. Therefore bitcoin economic model is designed to transfer all the wealth to the rich and stop.
At some point. When this hype and unstability will have allowed for tools and bridges to be built, it will be not be welcome anymore.
That makes sense. Maybe BC is just the sacrificial starter we needed to ultimately result in adoption of a blockchain that works better. And some people will make a lot of money from BC, some people will lose a lot, and in the end we'll get something better.
You have the PoS folks, IOTA's got an interesting strategy and some other paradigms but for now its still conjecture. Decentralized distributed technologies will likely always be slower than centralized monoliths.
There is a great irony in the fact that cryptocurrencies are designed to be finite in size to ensure their value, yet the number of potential cryptocurrencies in the world is pretty much infinite.
About ten years ago I had a friend who had been convinced by blogs that we were on the path to hyperinflation. He started buying gold and silver like crazy. Back then you could read a lot of smart-sounding people who would tell you all about how the inflation apocalypse was imminent (Fed balance sheets, stimulus, etc.) I almost bought into it too, but I didn't really have any money to sink into gold and silver. Really glad in hindsight.
I think Satoshi, who ever he was or is, was a brilliant engineer and cryptographer but his skepticism of fractional reserve banking and his general distrust of the financial system makes me believe that he only really dabbled in macroeconomics and banking.
We should all be really, really glad that previous innovators did believe in fractional reserve banking, credit markets, and fiat currency. If you like modern life, I mean.
Was there no innovation during the free banking period of 1860-1920? I seem to recall at least one ground-breaking invention that happened during then.
What fiat money is good for is so the government can spend whatever it wants to without needing to tax it or balance its books. Fiat money makes financing of wars possible, for example.
The notion that fiat money makes for stable financial markets is obviously false, although it is persistent.
The explosion of the railroad system solved those problems, but that was around 1870.
Massive oil, gas and coal reserves are hardly unique to America. Oil, for example, has made Saudi Arabia very wealthy, but not an economic powerhouse.
These people just don't get that civilization is energy flows and culture, not laissez-faire economic policies.
Anyhow, my point was fiat money was not a necessary condition for such prosperity.
Isn’t that a US-centric issue? Was it shown that satoshi is from the US?
It's not an essential property of central banking that banks will give you the money in an account, or courts will enforce a debt against someone, simply because you know some basic demographic information about the victim.
A "unit" consists of 100,000,000 "satoshis", just as 21 million "dollars" consists of 2,100,000,000 pennies. It's just an arbitrary unit of denomination. I guess the difference is there would only ever be 2.1 quadrillion "satoshis", instead of basically an infinite number of "pennies".
If we're all being honest with ourselves, people are buying BTC now because they expect the price to go up -- not because they expect to use it as a currency in the future. I don't think we know it's a bubble. No one can really know that. I think we do know that it's being used only for speculation at the moment, which makes it a commodity, not a currency.
That's a fallacy that keeps being repeated by those who never thought this logic through. I spend bitcoins. I have been spending them for 7 years. Because the thing is no one knows for sure that Bitcoin will keep rising, or even maintain its value. Therefore spending bitcoins today is actually logically the less risky option.
In fact I can show that your argument doesn't hold in another way: if you think the value will keep rising, you should be putting all your life savings into Bitcoin at this very moment... And I know you are not doing it, because you don't know if Bitcoin will keep rising.
That seems to be latest meme for attacking bitcoin. You know what makes new want to spend my bitcoin? I have a bitcoin debit card, and i like beer. Not a beer in 10 minutes either. So i buy it. The only difference is that the money in my wallet isn't being debased while I'm not buying beer with it. So beer just keeps getting cheaper.
the transaction would likely take much longer than 10 minutes - unless you paid a transaction fee worth many times the cost of the beer :)
For example, if you transact BTC directly over the network, yea it’ll be expensive. Like 5-8%. But if I transact through an exchange, it’s more like .25-.5%. And it’s instantaneous. They’re a clearinghouse that batches transactions periodically.
Seems there’s a lot of misunderstanding about money in general, including crypto. I for one am glad awareness is raising. As I truly believe money/finance/capital is an extreme, if not the greatest, form of control.
Edit: And 5-8% transaction rates are absolutely insane for a payment system.
It's actually not even that, the miners just choose the transactions that pay the highest fees each time they create a block, to maximize their revenue, so you can choose whatever fee you're willing to pay and it might or might not be included depending on what other people are willing to pay.
Also you don't usually buy beer for 20 million, hence the rates will be in the mentioned ballpark.
Yup.
> Must be the same as leaving your coins in an exchange and converting to fiat when you spend?
Yep. I just transfer bitcoin there when I need it. These days though, I just put the cash I want for the next couple of weeks from a paycheck onto it. I actually have to move bitcoin off the exchange, because it has increased so greatly over the past few months. My beer money is increasing in value faster than I spend it.
If that's what you want, then Bitcoin is not for you. You should be satisfied with dollars, yen and euros.
Others have different priorities where an open-source, global, fungible, non-government, fixed-supply commodity is a better fit.
Live and let live, to each his own. We're happy to coexist.
[1] https://en.wikipedia.org/wiki/Whataboutism [2] http://www.newsbtc.com/2017/11/29/bitcoin-mining-causes-incr...
In that sense bitcoin might be a better choice vs. hiring bank clerks.
Um, like what? Why would you want a deflationary currency?
[1] after expenses and other minutia
The only way to fix this would be to require payment before manufacturing the goods so there isn't a time lag.
I guess what I'm getting at is that it is deflationary as a currency which is bad. As an investment vehicle or value store it seems to be unmoored from any fundamental value.
But no major world currency in the last thirty years has fluctuated like Bitcoin has in the last thirty days. Not the yen, the euro, the yuan, the dollar. For lesser currencies that have, it's wreaked havoc on their respective economies, proving that these kinds of fluctuations are undesirable.
Crypto currency is a great idea. Getting rid of central control is fantastic, because a rogue central bank is a real risk to a stable currency. But why cripple it with a design that can't succeed as a stable store of value because of its relatively fixed supply? I get that we don't want someone pulling the levers, but couldn't it algorithmically expand in relation to economic activity, such as transaction volume?
I just hear a lot of people who seem to be speaking their book instead of addressing real weaknesses that, to me, seem unnecessary to the intrinsic value of a cryptocurrency.
Pound sterling: http://www.macrotrends.net/2549/pound-dollar-exchange-rate-h...
Swiss franc: http://www.macrotrends.net/2558/us-dollar-swiss-franc-exchan...
Euro: http://www.macrotrends.net/2548/euro-dollar-exchange-rate-hi...
Yuan is much worse, though it doesn't matter that much due to capital control: http://www.macrotrends.net/2575/us-dollar-yuan-exchange-rate...
https://static4.businessinsider.com/image/5a09d3f635876e0101...
Though fiat currencies fluctuate less frequent so far.
Incidentally, US dollar is the most well managed currency and that is why Americans do not understand the value of bitcoin.
Why? What particular problems does it address that other currencies do not, and what would ultimately ensure its value or price stability?
Commodity currencies have value because they have non-currency uses. Gold is useful in electronics, manufacturing, biotech, and jewelry, and so on.
Fiat currencies are backed by tax authority, and control over territory... or in other words violence. We know fiat currencies are valuable because people have to use them to pay taxes, to use natural resources, etc.
Remind me why we should use a currency that someone merely imagines into existence. At least if I hand you an IOU scrawled on a piece of paper, I'm promising you something, and anyone who would find that valuable would be placing a bet on my trustworthiness, as dubious as it may seem to some. But bitcoin doesn't even offer that.
When the price of the basket goes above the original price (inflation) you reduce the mining reward (or in worse cases remove some of the coin from circulation in various ways). When the price of the basket falls (deflation) you increase the mining reward increasing supply.
You would need a trusted oracle, but that is no different than any other smart contract.
Gold is like that too, you can't dig a lot more gold even if the global economy suddenly explodes. Yet gold is a reasonable way to store my assets. Why do you think of BTC anything different?
What seems to be the case though is that the decimal is placed at the wrong part of the number. Perhaps what we know of as a micro bitcoin should actually be what is called a bitcoin. The problem is that people see whole things which makes bitcoins seem unaffordable.
I hope we eventually have a blockchain that could serve both purposes.
There are specific instances where people do not have remittance services available to them -- getting money across some borders, completing illegal transactions, etc. For BTC to be a mainstream money transfer method, however, it will need to be obviously better than just doing it the old way -- paying a 3rd party to clear the transaction.
It's an elegant technological breakthrough in search of a killer app, I think, and that killer app can't just be illegal or extralegal transactions. If that's all it ends up being, governments are going to crack down even more than they already have.
It's not a technology problem. Transfers could be instantaneous and nearly free without a blockchain. The reason they are not is because of several reasons. Fraud prevention is one. Another is that the cash being held during the transfer is used for investments.
Bitcoin makes this faster because there is no middle man or regulations slowing it down, not for technical reasons.
I see intrinsic issues as an in person medium of exchange due to transaction times.
It's the other way around. It is designed to expose bubbles.
these are skeumorphs to a relatable asset class because cryptographic hash units are not relatable.
the whitepaper says peer to peer electronic cash system that allows payments to occur without an intermediary, it does that, it also attracts other people to use it because of its properties, that was the point and now you are adding way to much into the misnomers to rationalize your lack of participation.
One of the core purposes of currency is to provide a relatively stable store of value as a medium of exchange. Rapid inflation or deflation is very undesirable. Currency is not supposed to be a get-rich-quick scheme. It's the oil of commerce. But, bizarrely, it's fundamentally architected into Bitcoin that it will fail at that, preferring instead to promote a rush to scarcity that grabs headlines but provides little utility as currency.
Having said that, a cryptocurrency that does its job -- that is, has the features of an actual currency, such as being a stable store of value, by expanding the money supply in proportion to the amount of economic activity it supports -- seems like a very valuable concept. Do any of them do that? I looked at Ethereum, and its design doesn't seem better in this respect.