8 votes

Questions for Bitcoin Boosters

It is claimed that the supply of BTC is limited to some specific for now and all time, that the supply won't exceed x coins.

Question: Those 'controlled release' restrictions, aren't they just self imposed? Couldn't they be changed if that's what was desired by whatever body makes the decision?

Suppose competing cryptocurrencies were the dominant form of currency by 2140. Wouldn't the same pressures of for expanding supply exist, i.e., standard macroeconomic arguments about the proper rate and role of inflation and all the political pressures that currently apply to banking, law, academia, and government?

You could reply that competing cryptocurrencies would be like an open market where private individuals could mint gold (the cryptocurrency) into coins freely (competing cryptocurrencies), and that the supply of each would expand and contract according to the wishes of its open source community, with the public acting as the consumer and being the arbiter of the specific X-coin's market value.

You could also argue that market share would accrue to whichever X-coin was best managed as demand would increase it's market value and take market share without adding supply, just by gaining value from demand.

But the problem with these arguments is that gold and silver were never permitted to be freely made into currency in the market, nor were financial institutions allowed to freely issue promissory notes without regulation (free banking).

What happened was that the law imposed limits on the minting of currency and regulation on the activity of financial institutions, all of which would apply no less to cryptocurrencies were they to become widely used, as long as the political environment is what it is.

If cryptocurrencies were the dominant medium if exchange in 2113, why wouldn't the state simply legally make itself the only legal issuer, and replace physical currency counterfeiting prevention with cryptographic counterfeiting prevention, and then allow licensed financial institutions to act as brokers and lenders of the base cryptocurrency in a regulated way?

In such a case, all the pressures that currently exist to increase supply would exist for cryptocurrencies.

You could respond that publicly controlled cryptocurrency is not REALLY the point, but only privately managed open source competing currencies would count for your argument.

Well, leaving aside the obvious question of why that would be permitted politically anymore than free minting of gold or free banking, let's for sake of argument assume that in 2113 the government has relinquished control of currencies to the market, and that a few top cryptocurrencies are dominant, and are managed in the same kind of open source standard as BTC.

Suppose there was 30% unemployment after some particular bubble or some particular natural disaster, or war, or what have you. Or suppose there is simply very high poverty as the economy is transitioning from human to robotic labor.

Wouldn't the same pressures and arguments for inflation exist to compel the collective BTC community to add more supply? Or wouldn't political pressure simply mount so that the law compelled a supply increase, in exactly the same way gold holders were forced to accept paper in 1933?

Other questions

Isn't it true that BTC has very few 'end uses' and 'end users'?

By end use I don't mean eating or wearing your bitcoins; obviously the end use of every currency is to purchase other goods and services or else maintain a store of purchasing power (save in currency; hold liquidity rather than buy an asset). In the case of saving, long term holding of BTC might be an example of an 'end use,' if we apply the term liberally. But that demand is unreliable, as the future path of BTC is strewn with dangers and we can't assume a long term holder isn't going to throw in the towel with uncertainty.

By end use I mean some use of BTC that only BTC provides for, or which the market has decided that BTC provides better and is thus superior to FRNs or traditional state or banker currencies.

Someone looking to use bitcoin for a purchase he either could not or would not make with a financial transaction or cash (illicit end use, silk road, etc.) is an example of an end user.

There are some purchases which the user simply prefers to make with BTC rather than cash or financial transaction, due to some perceived convenience or the trait of irreversibility. That would be a source of end use demand.

In contrast to an end user, the typical BTC user just wants access to the BTC market so he can trade BTC for dollars. This would be someone vending for BTC and asking donations in BTC but who intends to spend the proceeds in dollars.

Of course its a dynamic situation and there can't be a clear demarcating line between the two, because the snowball effect of people adopting BTC will lead to more people spending and using BTC for their own purchases after earning BTC.

For non BTC, an example of end use demand would be paying federal and state taxes and debts; only FRNs are accepted. Or paying liabilities in legal tender. Or accepting payment from the government in its currency, or accepting payment by law in legal tender. Or dealing with banks and brokers who only accept legal tender, or accepting federal entitlements and transfer payments, or accepting a government paycheck (civil service, military).

Or, holding treasury securities with a full faith and credit guarantee (whatever the motivation; liquidity, politics, mercantilism, etc.)

Anyway, aside from these sources of end use demand, the rest of BTC users seem to use it only to change it into dollars, not as an actual store of value or unit of account. It has the property of being a medium of exchange, but not those other properties of a currency, unit of account or store of value.

Bitcoin not a panacea

Bitcoin and all CCs (cryptocurrencies) are subject to the exact same legal environment and political status quo as precious metals or commodities or paper money or bank issued money are and were.

The enforcement of taxes and regulation apply equally to CCs as to gold or paper money. If it ever became widely used enough to really attract the interest of governments or threaten them they could act politically and legally (force is the final word, sadly) to make its status 100% illicit, underground, black market and socially stigmatized.

People are stupid

Since by its nature BTC (and all CCs) will only ever be understood by 1-4% of people, isn't it the ultimate easy sell for the state to raise fears, 'concerns' and hysteria about it? "It is funding terrorism, drug trafficking, weapons trade, human trafficking, etc."

Think about it. The government was able to confiscate gold at a time when a large portion of the public owned gold, traded in gold daily and understood gold, and at a time when there were greater restraints on government and individual liberty was more prized. Wouldn't it be so much easier to ban or take control of something as esoteric, intimidating and poorly understood as BTC? Face it, stupid people are biased. They don't trust what they don't understand, and will be happy to blame awful BTC snobs for any market hiccup that happens during the ascendance of the cryptocurrency.

You might object that since CCs are not physical they would be harder to confiscate or prohibit, but I would reply that it wasn't the confiscation per se that made trading in gold a problem post 1933, but simply the legal status and stigma. Most people just aren't going to do something illegal, hide their business income, hide their taxes, etc., and fight the state. Banks and corporations and individuals on the dole aren't going to stop doing business in Fed bucks.

How would CCs be viable if the government chose to ban, tax or confiscate them?

Conclusion

Finally, for bitcoin to serve as a full blown currency, it would need to be subject to lending, market making, trading, and banking. That would bring it under the sway of regulation.

In a free market of any sort, BTC promissory notes and fractional reserves could be maintained. Competing CC open source standards could certainly ban or try to ban holders from lending at FRB, but that would introduce the same market situation as in banking during its infancy, in which FRB came out ahead.

Unless you subscribe to one of the very fringe theories that FRB is fraud or that the market would stamp it out if the government wasn't involved (rejected by most free market economists, libertarians and a sizable cohort of the modern Austrian school, and the free banking school, and Hayek, and Mises), you are stuck with FRB.

And if you are a political realist, you will accept that the political forces that effected gold and ultimately shoved it aside for state issued fiat currency;

-which effected banking, regulated it and got rid of free banking;

-which effected minting gold into coins, closed it to private free entry and made it the domain of the state;

-which made economic policy the subject of politics, unemployment and business cycle management at the hands of government connected bankers and academic economists;

-which made the USD the grease that turns the wheels of corporate-government relationships;

-which pays the military, civil service, and provides the backbone medium of exchane for those territories and regions where we are the dominant power and which aren't as financially sophisticated or politically stable (yes, this is changing);

-which makes USG the only object that can extinguish tax liabilities and private debts (legal tender law);

-which feed the millions of government dependents;

-which stabilize the entire banking system in its wild speculations, booms and busts by providing an elastic supply of reserves to the Fed's top cartel members and their sub members...

Then why would you expect bitcoin to make any real difference?

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Whatever happened w BTC

I haven't followed it much. Did everything work out? Don't hear much anymore. Did everyone make a lot of money?

It's not about making money you fool!

It's about protecting your ass tests. I mean your assets. You know what I mean.

9-11 was a panda job.

You didn't get a reply because

you're not into that whole brevity thing. And succinctness certainly isn't your strong suit.

The nominal limit isn't self imposed, it's part of the protocol.

Yes there can be competing currencies, which to someone who considers himself to be 'extremely economically literate' should not pose anymore problem than all the new currencies that come into existence whenever there is a secession or ones that cease to exist because they get absorbed when there is an invasion.

CLUE: Acute inflation and deflation pose only acute problems. They go away. The markets clear. Chronic inflation however does not go away and twists society, morality, and is perpetual theft.

HINT: You type way too much for such simplistic ideas. That's why no one responds. The reason you have to type so much is because you have to put a lot of decorations around the bad ideas to make them look coherent. Nothing more. Clean up your mind, stop letting your beliefs lead your reason. Even though you are antithetical to liberty, you will be ineffectual in making a case against it until you understand it.

He who knows only his own side of the case knows little of that. JS Mill

I'm pleased you sent the completely incoherent, no punctuation, one of you away. I assume he's on firedog or huffpo or someplace where they will think he's smart. But you, you can make sentences. You my friend are worth your pay. I do hope you will call Stef.

EDIT: I should add, I am agnostic on btc. But then agnostic is exactly the right way to be on any currency. But you're missing something completely: btc and cc's, as they become perfected, are liable to bring about A backed money. My own speculation is that the owners of government intend this very thing.

That was a fantastic response

I'm working at becoming as articulate and concise as you.

English is my second language but I can appreciate when it's used correctly.

Thank you for the kind comment

I do try to write well, but I suspect it is more that you have a logical mind and are drawn to clear concepts, than it is that my writing is that strong yet.

What I wish is that I could figure out a way to reach people who have muddled, emotional thinking, like the OP. It may be that is a fools errand. As time goes on I increasingly begin to fear that few people can unlearn the magical thinking they are indoctrinated with.

Once people internalize asymmetrical ethics, the idea that what is moral for one person can be immoral for another, it is difficult to overcome.

There seems to be something biological in the brain that early arbitrary hierarchy and violence changes. People see everything in terms of predator and prey. It is the basis of slave mentality. In extreme cases of child abuse, people want to find those weaker to abuse themselves.

But why? I suspect it is because their brains have reverted to an atavistic, collectivist, chimpanzee mode of operation. Establish dominance, or be dominated.

It probably has an evolutionary advantage. If you must live in that society, then you should either accept your lot, and thus survive, or strive to be the predator yourself.

When we say people like cops and gangs behave like animals, I think this is evolutionarily true. They are establishing dominance order as do animals. This is the collectivist evolutionary strategy. Only the strong may mate.

This makes it difficult to change society for the better once people are oriented that way.

Because it is not our collectivist animal nature that made humans dominate as a species. It is our individualistic nature, our orientation to family and no more. Our prodigious and indiscriminate breeding. When relatively free from hierarchy, humans had far more evolutionary cycles, and evolved at a faster rate.

The collectivist strategy, of only the strong breeding, is a short term advantage but a long term disaster. More individualistic species will always out-compete more collectivist, it is simple math. The chaos of everyone being able to mate with whomever they choose creates far too many chances for adaptation compared to only the alpha mating in each generation.

Similarly capitalism (laissez faire) will always out-compete fascism and socialism. Markets are the next stage of evolution.

Adaptation and mutation are analogous to entrepreneurial innovation.

The fascist and socialist fetish with the big and with hierarchy will always be out-competed by people exchanging goods and products freely. Each exchange is an opportunity for innovation.

We are fighting a war of evolution. A primal war that is as old as life itself. Individualism won the war of biological evolution. Will it win the next phase?

Your snide tone is a poor

Your snide tone is a poor representation of yourself. If you were such a great writer and clear thinker you'd have lots of great original posts to point to. You're bitter because we've had disagreements and I've gotten the better of them, and that's about it.

I have presented several novel concepts

But not snidely. Assuming you are not a sockpuppet, I do think you cannot escape what has been done to you. I'm not at all angry about it. Just sad.

You think we need the big man, the leader, that you must be saved from people who do not want to lead or be lead.

To you, we who want to be left alone are the danger. The people who want to socialize the costs of protecting their corporations onto you, the people who want to socialize the costs of their wars onto you children, these people you identify with.

We who reject that imposition you regard as enemies.

3$Bill you are the warrior slave, who kills for your masters, who steals for your masters.

So long as you believe that something your masters do is moral but if you would do the same thing it would be immoral, you will remain a slave and of the worst sort.

I don't see any basis for

I don't see any basis for such harsh accusations. If that was true, I don't think I'd be welcome around here. that's just your warped assessment after having some negative personal interactions with me. Sad, indeed.

you're not so brief yourself

you're not so brief yourself there mr italics.

to say its part of the protocol is to say its self imposed as long as the protocol is self imposed and can be changed. that should be clear from simple logic, so i don't know how you did that acrobatic maneuver in your head to think the statement made sense.

anyways, your other responses sort of responded or objected to points that i never made or argued, so i don't know what their purpose was.

Not so clever as you think

You can type all lowercase and you still have some vague intellectual competence that is entirely distinguishable from the manic ellipsis fetishist that used to post. May still, I don't go looking.

The limit is fixed. It's not self imposed. It was imposed by 'Satoshi' and thence immutable.

Do you think the Constitution is self imposed? Probably you do, but unlike the Constitution the number of bitcoins cannot be changed.

There are many problems with btc, many, I don't own a singe one. I would like it to take off, but it's certainly a bubble at the moment, the only question is at whose behest is the bubble?

Regardless, you attacked btc at it's strongest point, the inability to inflate it. Why?

You're a geenbacker and a statist. You don't want to do away with injustice.

You just want power for you.

And it won't happen.

Ever.

So long as political power exists it will be employed by capital.

i'm actually more clever than

i'm actually more clever than i think, so you're technically right.

my post was a series of questions and challenges to people knowledgeable on bitcoin, and sometimes 'bitcoin' was used loosely and interchangeably with cryptocurrency.

if the number of BTC (in the precise proper noun sense) can never under any circumstances exceed x amount, then the answer would simply be to explain why that is the case and why it could never be changed no matter what. to state something that is controlled by people can never be changed, while may be true, requires an explanation.

if the explanation is sufficient, then the discussion would move onto the 50 or 100 other points and questions i raised. your smug attitude is no help to anyone, and merely masks intellectual insecurity.

of course, whether or not the limit in fact can't be changed even by a unanimous BTC community, no matter what, for some hard wired technological reason, that has almost no bearing on my argument.

if CC's became dominant form of currency they'd become subject to same legislation and political influence as gold and paper. subject to financial technology and supply expansion in the form of ledger entries, credit substitutes. the credit market leads the inflation cycle in our economy; central bank adds reserves with a lag to accommodate the endogenous expansion of credit by banks.

e.g., 2060, the btc banking industry bubbles up the economy with huge credit expansion denominated in btc. market crashes, govt demands there be more bitcoin or bails out the banks with some legally established BTC substitute. or gives special privileges and license to a competing CC. or bans BTC use...

BTC tech solves none of the problems that face the currency and banking environment now and forever.

you keep referring to a period of my posting where i didn't use punctuation or where i overused ellipsis, but there is no evidence of such. please link to any examples of this. the only thing i have ever forgone is capitalizing, when the convo gets to a boring point, which is usually quick with your droning on.

areevaDERPy!

a little research may be in order for you

I'll answer a couple questions, but some deep reading is really in order.

Here's the reading part:

http://www.michaelnielsen.org/ddi/how-the-bitcoin-protocol-a...

If you wished to get more supply of Bitcoins than currently exist, you would have to:
a) get every Bitcoin user worldwide (or certainly an extreme majority) to opt-in to your new protocol and abandon the old code base.
b) possibly be required to forge the entire blockchain (impossible if we're being realistic).

In response to your other comments: You're looking at it the wrong way. Bitcoin is a currency, mainly an international transactional currency that cuts out the banking system as the middle man.

As to your comment: "BTC tech solves none of the problems that face the currency and banking environment now and forever." - Well, if you don't see the banking system as a problem including the Bullion Banks, International clearing and transaction system (SWIFT) which is controlled by the US state dept, then Bitcoin may not be for you.

As far as your comments that Bitcoin is a bubble:
That seems to be the absolute consensus across all financial circles. The consensus is always wrong by the way. Big bubbles are never seen as such during the bubble phase. Since we're basically in a global hyperinflation of base money, it's really difficult to determine if something is a bubble or a result of bad money chasing out the good. Is the art market a bubble, diamonds? Is farmland a bubble? Or is money rushing for perceived safer assets. Appreciation in price of Bitcoin could be many things, and it's probably more likely it's responding to the drivers pushing the art and diamond market, rather than bubble behavior. The chart pattern certainly seems to paint it that way. It's already nearly recovered from it's 50% recent correction.

Bitcoin is a protocol not just a currency, and just as TCP/IP was not the most efficient protocol in the 90s, it became the standard. Bitcoin appears to have reached critical mass and will remain a player for at least the near future.

Crypto currencies coupled with gold and silver stand to tear down the fascist banking complex. So yea, it solves some pretty serious problems.

I never said bitcoin was a

I never said bitcoin was a bubble. Did you even read my post? Your response suggests you didn't read it.

stop feeding the trolls!!!!!

;)

but it's so much fun

Seeing them look at you with those begging eyes, waiting for a scrap. You can even teach them tricks, which they will perform in return for a morsel.

“With laws shall our land be built up, but with lawlessness laid waste.”
-Njal Thorgeirsson

ed u follow me around like a

ed u follow me around like a dog and are pwned on a regular basis by my superior intellect. and you're one of the smarter, more interesting dpers, so that says a lot for me.

as jesus said, don't get it twisted.

This too

green light.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

Awfully quiet from bitcoin

Awfully quiet from bitcoin boosters who usually love to talk. As someone who is extremely economically literate, but not that literate on the technology, I thought it would be worthwhile to compose serious questions for the always talkative Bitcoiners. only one person steps up to the plate to give a response? Are the questions not answerable?

I am not really biased, I support people's right to profit or get burned on it. At this point I just think it doesn't really solve the problems people claim it does, which are political in nature and not technological. I personally have the capability to get the information myself, but for others who might not seek the answers or even know wat questions to ask, it would have been nice to see some responses. It doesn't speak well for Bitcoin to have such bashful advocates.

i found the tone of the questions to be

depressing, unimaginative, technologically challenged antiquated thinking with a glass half empty slave mentality that contends that oppressive government rule is inevitable through the year 2113 etc etc etc.
there were just too many false premises and assumptions to bother with. plus i'm getting burned out rehashing and debunking old bitcoin myths. if you don't like bitcoin don't buy it. the market has/will financially reward good decisions and punish bad ones.

https://www.youtube.com/watch?v=TZwmgeeFB-E&feature=player_d...

Official Daily Paul BTC address: 16oZXSGAcDrSbZeBnSu84w5UWwbLtZsBms
My ฿itcoin: 17khsA7MvBJAGAPkhrFJdQZPYKgxAeXkBY
http://www.dailypaul.com/303151/bitcoin-has-gone-on-an-insan...

if the questions were

if the questions were depressing, that's your issue. were they depressing because you couldn't come up with good answers? so be it. were they depressing because i was poorly informed? remedy the situation.

if the questions were technologically challenged, point out how and why and remedy the situation. this is a discussion forum after all.

if there were false premises, point to them and correct them.

otherwise those are pretty broad, vague objections and themselves don't merit attention or credence.

the point isn't me or you, it's to inform the readers. i did my part, if you can't do yours, don't lay it at my feet.

sorry

i left out defeatist, statist and overall boot-licking tone.

Official Daily Paul BTC address: 16oZXSGAcDrSbZeBnSu84w5UWwbLtZsBms
My ฿itcoin: 17khsA7MvBJAGAPkhrFJdQZPYKgxAeXkBY
http://www.dailypaul.com/303151/bitcoin-has-gone-on-an-insan...

'Mud slingin' aint arguin,

'Mud slingin' aint arguin, Tom Sawyer' - Huckleberry Finn

BILL3

I responded to you below.

Either the hard limit is Virtuous or not

In order for the hard limit to be removed and set to another one ( like the debt ceiling) it would require the majority of the network to agree. Since people are motivated by their own self intrest I doubt that removing the hard limit of 21 million would ever reach a consensus. Those that wanted an inflationary currency could start one of their own but the laws of economics wouldnt let it last long.

Ultimately Bitcoin 21 million limit will never be changed unless the people agree to it and they wont because it would be against their intrest.

Remember no Fed, no banking cartel, no chairman that makes the decisions.

Bitcoin is truely a currency that reflects the peoples will.

That assumption might make

That assumption might make sense if Bitcoin is the property mainly of long term investors, speculators, hard money advocates, early adopters, libertarians.

But if BTC was the dominant market currency, it would be subject to the interests of the vendor too, the borrower, the mass consumer brainwashed by the media, also by the political system. Just like FRNs are. We are all FRN users, and collectively we decide monetary policy through elections. The positive inflation rate monetary policy is the product of that whole dialog and that collection of interests.

You can't have it both ways. If BTC is supposed to be the future of currency, you can't treat it as if it will always be controlled by a small group of committed advocates of hard money or of long term investors with specific monetary attitudes or private interests.

Its easy to imagine wealthy influential BTC owners wanting more coins to be available to mine if they have special access to computing power. Why are the incentives so different?

Interesting point

But now that cryptocurrencies are here if large banks wanted to buy enough servers and create enough bitcoin verifiers to make more than 50% of the network and succeed in increasing the bitcoin limit and inflating it for their own gain....I think people would move next to Litecoin or another bitcoin clone or cryptocurrency.

----------------------------------------------------------------
A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history.
~Mahatma Gandhi

Banks and governments, if

Banks and governments, if they had any interest in mining coins, have the top computing power. Just look at high frequency trading and who gets those scalps. Of course I agree that if there is clear manipulation and an open choice to move to other providers, I guess you could have the unconnected computing geeks constantly fleeing from one x-coin to another as bank and govt computing power overtake each one successively. But that would assume banks/govts had any interest whatsoever or felt threatened in any way, which they don't.

you need 80% of the nodes to agree

before you can making a change.
i don't know exactly how it works as far as coding and stuff but it's different than a 51% attack.

Official Daily Paul BTC address: 16oZXSGAcDrSbZeBnSu84w5UWwbLtZsBms
My ฿itcoin: 17khsA7MvBJAGAPkhrFJdQZPYKgxAeXkBY
http://www.dailypaul.com/303151/bitcoin-has-gone-on-an-insan...

If I understand correctly,

If I understand correctly, its one coin one vote. So 80% could easily be large vendors or btc financial institutions (lenders, trading desks, market makers) in a hypothetical world where crytpo-standard is dominant(whatever the government recognized status of it happens to have).

In such a world, I don't see why people find it so implausible that a positive inflation rate (of the Milton Friedman sort or some 2 percent rule of the Bernanke sort), besides their own personal biases. And of course that kind of inflation only refers to the growth in base money. It has nothing to say about the boom/bust dynamics and credit expansion/contraction that would follow the entry of large financial institutions into BTC as a basis for lending and trading, as would be inevitable if BTC were ever a 'real currency.'

Once banking is involved, there will be btc creation and destruction via credit, as bank money, denominated in btc and fungible with it, is created and destroyed in the centuries old double entry bookkeeping process. An overextended financial sector will have ample motivation and ability to expand base btc if it's loans are about to collapse due to a bursting bubble and imminent btc hoarding.

Once financial institutions are involved as the largest holders/owners of these nodes, there you have your inflation motivation. They will want a growing supply to catch up with their expanding credit, just like w/ money supply now.

I'm not aware of anything in bitcoin that is one coin/one vote

I don't even think there's a mechanism that would make that possible. As far as I know, nothing hinges on 80% of anything. Obviously I could be wrong!

There are two things that I know of that determine adoption of a bitcoin change. The main thing is that the longest (in a certain sense) branch of the blockchain wins, and if you control 51% of the hashrate (cpu power of miners, not users) you can make your branch of the blockchain the longest. That's the reason a 51% attack works, if bad people gain control of 51%. It's also how the miners can collectively agree on a change, they just need to get more than half (by cpu power) to implement it.

Depending on the change, it might also require that the clients (wallet software, merchant software, exchanges, etc) would have to change also. But if the miners change then clients don't really have much choice but to change too.

A special case is a "hard fork" where you essentially have two branches that could both continue as separate alt currencies, and in order for the hard fork to be successful (so that only one of the branches is used and the other dies off) is to get near unanimous consensus.

That's my understanding of how it works for most kinds of changes. I'd very much appreciate being corrected if I'm misunderstanding any of this!

Personally I think the plan is to crash gold, get libertarians to rush into bitcoin, and then crash bitcoin so that the liberty movement is discouraged and impoverished. How bout that for a conpsiracy theory?