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MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

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Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#151

Post by strgcmc »

gizmo686 wrote: post #137
martinko wrote: post #89

Earlier quoted context omitted.

Bitcoin's security does not need to keep going up indefinitely. It will reach an equilibrium where tx fees will be paying for the entire security of the network. As the block size is capped, there will be a market for fees. Hard-forking to remove the block size limit would have profound consequences for the decentralized nature of bitcoin - arguably its most important characteristic.

Assume a block size limit of 4MB. The minimum transaction size is 166 bytes. This gives us maximum 25266 transactions/block. The current block reward is 6.25 https://blockchair.com/tools/halving-countdown This is worth about $72,000 USD https://duckduckgo.com/?q=6.250+BTC+to+usd&t=canonical&ia=cu... This means that, to match current security without block rewards, transaction fees would need to rise by at least $2.84…

Plucking a number randomly from a real-world point-in-time snapshot of https://bitcoinfees.earn.com/, I see a suggestion of ~150 satoshis/byte, so for your example, transaction fees for an ideal/max size block would be 600 million satoshis = 6 BTC, which roughly is about the same as the block reward.

Needing to roughly double the status quo transaction fees to make up for lack of the block reward in order to provide equivalent security, doesn't seem ridiculous to me at all. And this is the worst case scenario (i.e. the reward will go from 6.25 to 0 slowly, but it can't go negative).

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#152

Post by sudosysgen »

betterunix2 wrote: post #150
mac01021 wrote: post #143

Earlier quoted context omitted.

Is there a reason that congress couldn't bestow upon the Fed some powers of taxation, while still leaving it free of the political constraints that the legislature faces?

I do not know what the law allows, but in principle a government could give such power to its central bank, and there is some precedent (the ancient Romans had a system of private tax collectors, who would basically pay the government for a kind of license to collect taxes). I am not sure there would be much of a point, since the Fed can always raise interest rates, which has the same effect on the supply of money an…

The difference between taxation and rate hikes is that taxes are generally progressive, while rate hikes being progressive or not depends on a lot of factors (but they can be). Taxation is a much more precise tool than rate hikes.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#153

Post by gizmo686 »

CryptoPunk wrote: post #149
gizmo686 wrote: post #137

Earlier quoted context omitted.

Assume a block size limit of 4MB. The minimum transaction size is 166 bytes. This gives us maximum 25266 transactions/block. The current block reward is 6.25 https://blockchair.com/tools/halving-countdown This is worth about $72,000 USD https://duckduckgo.com/?q=6.250+BTC+to+usd&t=canonical&ia=cu... This means that, to match current security without block rewards, transaction fees would need to rise by at least $2.84…

Where does 4 MB come from? The average block size right now is 1.2 MB (the 0.2 MB because of SegWit). Assuming SegWit adoption increases to 100%, we get 1.6 MB. The average fee on a transaction would need to rise $7.47 to match the post-halving's new, lower, security budget. The average value of a transaction would need to double to make an average transaction fee of $14 (the current average fee of $6.50 + an increas…

4MB is the theoretical limit with SegWit, if you are constructing a block specifically as big as possible. In practice, you will probably never see a 4mb block (and if you did, it would not be composed of minimal transactions).

My calculation was looking at a lower bound for needed transaction cost.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#154

Post by betterunix2 »

sudosysgen wrote: post #152
betterunix2 wrote: post #150

Earlier quoted context omitted.

I do not know what the law allows, but in principle a government could give such power to its central bank, and there is some precedent (the ancient Romans had a system of private tax collectors, who would basically pay the government for a kind of license to collect taxes). I am not sure there would be much of a point, since the Fed can always raise interest rates, which has the same effect on the supply of money an…

The difference between taxation and rate hikes is that taxes are generally progressive, while rate hikes being progressive or not depends on a lot of factors (but they can be). Taxation is a much more precise tool than rate hikes.

Again, the Fed's mission is to stabilize the value of money, and progressive tax is no better at accomplishing that objective than a flat tax. Progressive taxes may be something that people like you (and me) think are a good idea, but that is a political consideration, exactly the sort of thing the Fed is supposed to be immune to.

As for taxes being "precise," that is an interesting claim. The US tax code is not even remotely precise, in fact it is hard to know what you are supposed to pay in taxes for the first paycheck of the year (your bracket could change unexpectedly). Our income taxes are progressive, but the wealthiest Americans pay little in income tax because their "true" income comes from their investments. We have the AMT which is meant to take care of that, but the AMT has not been properly adjusted for inflation and so a bunch of middle class families are stuck paying it, even though those families also pay income tax at a higher bracket than the wealthiest households that AMT was supposed to target. Then there are the countless things a person can get credits for -- children, particular kinds of business income, charitable giving, state and local taxes, etc. -- that result in people with the same income level paying wildly different taxes from their peers. Investment income is taxed, but losses can be carried forward, and some investments are taxed in a totally different way, some can also be carried backward (see Section 1256), etc.

On some level it is "precise," but in practice it is a mess that gets more difficult to work the more "established" you are in life (bought/sold a house? got married? have a new child in your life? finally made enough to contribute to a retirement account? get ready to do a bunch of paperwork to figure out what you are supposed to pay).

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#155

Post by mac01021 »

dnautics wrote: post #71
mac01021 wrote: post #34

Earlier quoted context omitted.

I never understood how anyone can find it remotely fair for the Fed to introduce new money into the economy by any means other than equal division between all citizens.

What about government contracting? Is it a fair process to decide who builds a highway? The Fed's activity is what drives the government's ability to pay it's contractors.

Why conflate regulation of the money supply with the ability to hire contractors?

If you want to increase the money supply, print some money and give it out.

If you want to fund highway construction, figure out how much it will cost and then raise that amount of tax revenue to pay the builders.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#156

Post by microtherion »

xiphias2 wrote: post #20
ausbah wrote: post #7

Earlier quoted context omitted.

wasn't quanatative easing done for like a decade after tbe recession with no inflation? why is there any reason to think this time around will be different? scale?

No, if you look at shadowstats, the house/rental prices, or the Big Mac index, you can see that there was significant inflation in the past 50 years. Governments are changing the measurement of the inflation to try to hide it.

My favorite ShadowStats statistic is that their own annual subscription price has remained unchanged at $175 since at least 2006, during 14 years of supposedly rampant inflation: https://www.pragcap.com/update-theres-still-deflation-in-hyp...

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#157

Post by lifty »

betterunix2 wrote: post #115
lifty wrote: post #40

Earlier quoted context omitted.

Hilariously weak? I think they lay out a reasonable argument considering the amount of debt around the world and the fragility of the economy. The big question is: will we have deflation or inflation? I am not sure, but I doubt the USG will let itself go bankrupt.

"I doubt the USG will let itself go bankrupt." The federal government cannot go bankrupt. In theory the government can default on debts, but in reality there is never a situation where the government would be forced to do so (it is always due to political dysfunction) -- as others have stated the US government is able to issue more money whenever it needs to do so, and thus can always satisfy any monetary obligations…

Defaulting is a much better word, I shouldn't have used 'bankrupt'. And I agree with you, I think it's a nearly impossible for the USG to default on its debt, even temporarily. The only situation in which that can happen is through insane administrative fuckup, but that's not likely.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#158

Post by frank2 »

parasubvert wrote: post #132
nostrademons wrote: post #117

Earlier quoted context omitted.

I think that was the grandparent's point. The USG can always issue more currency and inflate away the value of its debt. Doing so is preferable to default (and the fiscal & political crisis that would bring), and so they will. Thus, we're going to get more inflation.

We watched one of the US political parties threaten default at least three times in the past 12 years. I think creating political/fiscal crises is part of the point.

I had no idea. Where can I learn more about this?

Are you sure they threatened to default of _Treasury_ instruments?

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#159

Post by mrfredward »

mac01021 wrote: post #148
SpicyLemonZest wrote: post #62

Earlier quoted context omitted.

It seems unfortunate to give up a useful tool for managing the economy just because it can't be structured to provide everyone an equal amount of benefit. Should we end small business programs because not everyone's wealthy enough to own a small business? I'd see the problem if it worked how I've sometimes seen it described, where rich people and banks are just getting free gifts of cash, but that's not accurate.

I don't see why it's unfortunate if there's an equally good tool that is more egalitarian. Congress could give the Fed the power to, rather than just buy bonds (or whatever it is they do) introduce money to the economy simply by giving everyone money. I understand that it is not exactly true that the rich are getting free money for nothing. But the whole reason we're talking about this here is that someone pointed ou…

>I'm totally open to the idea that someone will come along and explain to my why my idea for how the Fed should give everyone money is just not workable.

Congress has this power, and can always use it. The fed doesn't have this power, and that's because a bunch of unelected bankers aren't supposed to be making political decisions about wealth distribution.

Read up on the difference between fiscal stimulus and monetary stimulus...it's impossible to have an intelligent discussion on this subject without knowing how those things differ.

Re: MicroStrategy Adopts Bitcoin as Primary Treasury Reserve Asset

#160

Post by betterunix2 »

frank2 wrote: post #158
parasubvert wrote: post #132

Earlier quoted context omitted.

We watched one of the US political parties threaten default at least three times in the past 12 years. I think creating political/fiscal crises is part of the point.

I had no idea. Where can I learn more about this? Are you sure they threatened to default of _Treasury_ instruments?

Basically it came down to a refusal to raise the debt ceiling, which forces the Treasury to take "extraordinary" measures to meet debt obligations. In several cases the Treasury was warning that they were running out of such measures and that if the debt ceiling was not raised there would be a default.
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