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I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

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Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#111

Post by sgornick »

richcollins wrote: post #105
ars wrote: post #42

Earlier quoted context omitted.

Right, that's what I'm saying: As more people join the network it becomes uneconomic to mine bitcoins, because since it's harder now, it costs too much electricity. So those with the least efficient setups stop mining. So the price settles at the cost of electricity. Then they reduce the number of coins per block. So suddenly it comes even less worth it to mine. Until the value of each bitcoin rises to match, causing…

miners will just charge a fee to verify transactions

The miners can only ignore transactions that don't carry a fee or a fee that isn't large enough. But other miners will likely accept those transactions, so the miner isn't forcing the fees up but instead letting them pass him by.

More likely the inefficient miners will be forced to quit mining as they will not be able to compete with those who either don't pay for power, or are not a commercial endeavor that is doing so at a larger scale.

Whether that is two months or four years away, who knows.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#112

Post by wmf »

epscylonb wrote: post #83
michaelochurch wrote: post #64

Bitcoin isn't a scam because it's "imaginary" (i.e. fiat) but because of how the currency is distributed: a proof-of-work system that is skewed heavily in favor of early adopters. There are a lot of good ideas in Bitcoin, but the truth is that its raison d'etre is to enrich early adopters-- the definition of a pyramid scheme. (It's not a Ponzi scheme; that has a technical definition and Bitcoin doesn't qualify.)

I would be much more impressed if people who raised this point also suggested a fairer way of distributing the coins. It is difficult to tell if they think the fundamental concept of bitcoin is bad or if they just have sour grapes because they aren't an early adopter. But while we are at it, why shouldn't early adopters profit?, they took a risk early on. And actually if you ask me I think the minting system is prett…

It has been suggested that each block should create BTC proportional to the current difficulty, so BTC would be produced faster as the network grows.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#113

Post by ars »

baddox wrote: post #70
shazow wrote: post #63

Earlier quoted context omitted.

How do you distinguish between currency and a medium of exchange? From the sound of it, you defined currency as "a stable medium of exchange" which by definition prevents any unstable currency from being a currency. Is there a definitive reason why a less stable medium of exchange cannot be a substitute for a stable one? Especially with today's technology when increasingly many things are being done in "real time". I…

ars obviously wasn't thinking critically in that comment. You're absolutely right: his proposed definition of "currency" isn't useful at all, because it would preclude talking about "the stability of a currency." A currency is simply a medium of exchange that is widely recognized, where "widely" is subjective. Most modern currency also is notable because it has no intrinsic value (gold coins, for example, have intrin…

Change 'recognized' to 'stored' in your second paragraph. If people don't store it, it's not a currency, even if they use it.

No one willingly stores unstable currencies. The only time people use unstable currencies is if they are forced to by law, or if they are speculating.

When you hear people talk about "the stability of a currency" they are talking about fluctuations of a few percent, not 10s of percents.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#114

Post by noglorp »

urbanjunkie wrote: post #56
niklas_a wrote: post #30

Earlier quoted context omitted.

Plenty of people save in BitCoin, some would even argue that's where much of it's value comes today. Look at the article from Richard Falkvinge that he linked to for an extreme example. Nowhere did he suggest that the restaurant owner exchanged his BitCoins for USD. Maybe he saves them and uses them to buy something else. Who knows, maybe he buys the ingredients for his Meze using Bitcoins?

No, plenty of people do not save in BitCoin, for values of plenty and save that most people would understand. You might more accurately have put 'a few people hold bitcoins for reasons of speculation'. This is not the same as saving. [Disclosure - I hold no bitcoins] PS - it's probably about time that people disclose whether or not they hold bitcoins when commenting.

Holding == saving. Sounds like you are trying to emphasize the difference between investment and speculation, instead.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#115

Post by ars »

shazow wrote: post #63
ars wrote: post #10

The most important by far rule for currency is stability. With stability comes acceptance of the currency. You don't have that - the owner first looked up the exchange rate to US dollars. What you have is a medium of exchange, but you don't have a currency. A medium of exchange is useful, and can eventually become a currency. But bitcoins are not yet a currency. Perhaps someone can make a bank, where you store US dol…

How do you distinguish between currency and a medium of exchange? From the sound of it, you defined currency as "a stable medium of exchange" which by definition prevents any unstable currency from being a currency. Is there a definitive reason why a less stable medium of exchange cannot be a substitute for a stable one? Especially with today's technology when increasingly many things are being done in "real time". I…

> How do you distinguish between currency and a medium of exchange?

A currency is stored, a medium of exchange is used right away (or traded for a currency).

> Is there a definitive reason why a less stable medium of exchange cannot be a substitute for a stable one?

Yes. Since it is unstable no one can rely on it. Since no one can rely on it people are unwilling to collect (and store) large quantities of it.

> To me, it seems that knowing (and potentially being able to predict) the variable forces that are affecting the volatility of a medium of exchange

If you can predict it, so can others. If I predict it will go up, everyone else will too. So everyone will hoard it - easy way to make money right? That means everyone wants to buy it, no one wants to sell - the price will skyrocket. Till it collapses, since it eventually will.

Then it collapses, people see the collapse, and everyone sells, the price goes to zero, and the process reverses.

To be a currency it must be stable.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#116

Post by stuhood »

wmf wrote: post #112
epscylonb wrote: post #83

Earlier quoted context omitted.

I would be much more impressed if people who raised this point also suggested a fairer way of distributing the coins. It is difficult to tell if they think the fundamental concept of bitcoin is bad or if they just have sour grapes because they aren't an early adopter. But while we are at it, why shouldn't early adopters profit?, they took a risk early on. And actually if you ask me I think the minting system is prett…

It has been suggested that each block should create BTC proportional to the current difficulty, so BTC would be produced faster as the network grows.

This would cause inflation, because miners would be able to print money by throwing hardware at the problem.

The ideal system/algorithm would exactly match the amount of Bitcoin in circulation to the growth of the economy, which would keep prices stable. Bitcoin pioneered most of what you'd need to create such an algorithm in a new system, but what does "growth of an economy" look like in terms of transactions between anonymous addresses? You'd need some concept of identity to determine the number of unique players, and the value flowing between them.

A system that solves this problem at scale is the economic holy grail.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#117

Post by gridspy »

ohashi wrote: post #87
netcan wrote: post #65

Earlier quoted context omitted.

Interestingly, that may be an advantage of the system. It encourages early adoption and encourages early adopters to nurture the system. Maybe it's unfair, I don't know. But, I don't see any perverse incentives.

If you want to know how this may be perverse, it mirrors a pump and dump. Get in really cheap, hype it and dump for lots of profit on something without any basis for its value.

Only the people who are doing the pumping are going to dump at that point. By the point it is valuable, there will be many more people who (probably) stay around - bitcoin will hopefully be well established by then.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#118

Post by lwat »

sgornick wrote: post #108
FeelsGoodMan wrote: post #58

It should be noted that the only reason Meze Grill is accepting bitcoins is because Bruce Wagner, host of the 24/7 Bitcoin show ( http://onlyonetv.com/?page_id=178 ), loves the restaurant and convinced the owner to accept bitcoins. The owner himself (on Bruce's show) has admitted it's basically a cute little gimmick and doesn't actually any real volume using bitcoins at his shop. Yes, the above is as ridiculous as it…

Quick question for you. Who was the second astronaut to set foot on the moon?

Buzz Aldrin? Buzz is ridiculously famous so maybe your analogy is not the best.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#119

Post by gridspy »

ars wrote: post #42
wedesoft wrote: post #36

Earlier quoted context omitted.

The cost of electricity per Bitcoin in turn depends on the computing power invested in the network. The strength of the next block is adjusted so that it takes approximately 10 minutes for the network to solve it. Also there are optional transaction fees.

Right, that's what I'm saying: As more people join the network it becomes uneconomic to mine bitcoins, because since it's harder now, it costs too much electricity. So those with the least efficient setups stop mining. So the price settles at the cost of electricity. Then they reduce the number of coins per block. So suddenly it comes even less worth it to mine. Until the value of each bitcoin rises to match, causing…

As soon as mining becomes "uneconomical" you will revert to the point that the only miners are 100-1000 geeks around the globe doing it for fun.

That is still enough computing power to make the network moderately secure.

Entities with a vested interest in Bitcoin being unhackable by those with too much CPU power might then run non-profitable mining setups.

Re: I Spent A Coin (And I Liked It) — How I Bought Lunch in Manhattan with Bitcoins

#120

Post by FeelsGoodMan »

sgornick wrote: post #108
FeelsGoodMan wrote: post #58

It should be noted that the only reason Meze Grill is accepting bitcoins is because Bruce Wagner, host of the 24/7 Bitcoin show ( http://onlyonetv.com/?page_id=178 ), loves the restaurant and convinced the owner to accept bitcoins. The owner himself (on Bruce's show) has admitted it's basically a cute little gimmick and doesn't actually any real volume using bitcoins at his shop. Yes, the above is as ridiculous as it…

Quick question for you. Who was the second astronaut to set foot on the moon?

What's the analogy you're trying to make?
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