Why Bitcoin is a significant breakthrough, but perhaps not as a currency • Hacker News Board

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#41

Post by fthssht » Thu, Dec 19, 2013, 10:39 PM UTC

maratd wrote: post #33

rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

> You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year. You want inflation, not deflation. The value of the currency should decrease at a 2% clip per annum. This would make it into a realistic currency, where people get annual…

2% per annum clip is nonsense dogma. As close to 0 as possible is probably ideal.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#42

Post by swalsh » Thu, Dec 19, 2013, 10:41 PM UTC

rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

I proposed a way of tying the difficulty level to the quantity theory of money a while ago on economics and alt currency forums of bitcoin talk.

I think if you're going to be successful, you'll have to find a different set of early adopters. Bitcoin is as much ideological as anything, and while some people don't want to see another alt currency because of their level of investment, others just generally don't believe there's anything wrong with the system today.

Anyways, i'd love to actually develop the idea... but I didn't want to spend time on "just another altcoin" unless I had faith it might get some adoption.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#43

Post by chipsy » Thu, Dec 19, 2013, 10:41 PM UTC

api wrote: post #39

A bit reason I think Bitcoin is a fundamental innovation is that nobody quite seems to know what it is. It's clear to me that it is not a currency in the classical sense in that it does things that no classical currency does, but it's also not just a payment mechanism or a wire service or anything else simple and easy to define.

I agree; the narratives surrounding Bitcoin examine small facets and magnify their importance. It is like the "blind men and the elephant" parable.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#44

Post by swalsh » Thu, Dec 19, 2013, 10:44 PM UTC

bachback wrote: post #24

rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

This is impossible. The network can never put a limit to its own value. The valuation must come from outside. How should a network possible describe what its worth? The money network should not predict demand. One could in theory have predictors of demand, but that would be an algorithm for pricing a set of cryptocoins.

pretty easily actually. The block chain gives us a pretty reasonable way to estimate the supply of currency, the velocity of it, and we can kind of estimate price. That's enough. I think if we modified the protocol a bit we could make it even more accurate too.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#45

Post by rthomas6 » Thu, Dec 19, 2013, 10:48 PM UTC

richcollins wrote: post #28

rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

When demand wanes, the currency is harder to mine and becomes more scarce If its harder to mine then its harder to transfer. At some point you're stuck with something worthless.

That's true, and a good point. Perhaps instead of varying the mining difficulty, the reward for confirming a new block could be varied. That ensures that as long as there are enough people interested in mining, you won't have this problem. The miners would still get the transaction fees even if the reward level was at zero. If that kills mining interest enough to have insufficient miners, Bitcoin will someday face a similar problem.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#46

Post by swalsh » Thu, Dec 19, 2013, 10:56 PM UTC

fragsworth wrote: post #2

I think we almost all agree that cryptocurrency is a revolutionary thing. It's difficult to see how revolutionary, because we are only beginning to understand what can be made possible by it. I often see it compared to the advent of the early Internet in the 1980s, when nobody really knew how big it would get, just that it was "revolutionary" and would become huge. This may be an overestimation caused in part by bitc…

I don't like bitcoin, I hate that it has a fixed supply. I think in a good economy prices should fluctuate based on the supply and demand for the product (not the currency). Bitcoin as it is today doesn't really account for that.

That said, I owned some, and I recently sold some. Going through bitstamp (in slovania) was a pain. Getting the coins in was a breeze. However the international wire transfer took days, and cost about $60. Global transactions using bitcoin seem very lucrative here. Credit cards are another way, but they're expensive to the merchant. Bitcoin makes commerce on the web pretty nice in a lot of ways.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#47

Post by maratd » Thu, Dec 19, 2013, 10:59 PM UTC

johndevor wrote: post #40

maratd wrote: post #33

Earlier quoted context omitted.

> You could plan the rough change in value over time, and build it into the algorithm, perhaps making gains unlimited at first, then making it very deflationary for several years, and gradually easing gains to something like 0-2% deflation per year. You want inflation, not deflation. The value of the currency should decrease at a 2% clip per annum. This would make it into a realistic currency, where people get annual…

> You need to conform to basic human psychology for wide adoption. I don't think inflation is a part of basic human psychology.

> I don't think inflation is a part of basic human psychology.

Regardless of your thoughts, it is.

Most jobs do not experience constant annual productivity gains, but everyone wants a raise at the end of the year and feels like shit when they don't get it. Nominal inflation allows you to give them a raise without impacting your bottom line. Win/win.

Most merchants what to see their prices go up, it signals to them that there is demand for their goods. A steady, slow, increasing demand for their goods makes them feel good. Even if the costs of operating their business are going up at a similar clip, it makes them feel good that they can increase their prices. Having to keep your prices the same or drop them is frustrating, as if you're not making progress. Win/win.

A steady, slow pace of inflation is ideal.

It allows for short term saving, like for a downpayment on a house, but discourages unhealthy hoarding over long periods of time. Again, win/win.

Look, I get it, Economics is an art, etc. but this stuff has been established over a long period of time and it works.

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#48

Post by hershel » Thu, Dec 19, 2013, 11:02 PM UTC

swalsh wrote: post #42

rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

I proposed a way of tying the difficulty level to the quantity theory of money a while ago on economics and alt currency forums of bitcoin talk. I think if you're going to be successful, you'll have to find a different set of early adopters. Bitcoin is as much ideological as anything, and while some people don't want to see another alt currency because of their level of investment, others just generally don't believe…

Can you please link to your solution ?

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#49

Post by rthomas6 » Thu, Dec 19, 2013, 11:06 PM UTC

swalsh wrote: post #42

rthomas6 wrote: post #19

I am convinced that many problems with Bitcoin would be solved if we could come up with a way to tie mining difficulty to the currency's demand instead of only to the mining computing power. Instead of ensuring a predictable generation rate, this could ensure a predictable value . When demand wanes, the currency is harder to mine and becomes more scarce, and when demand surges, the currency becomes easier to mine and…

I proposed a way of tying the difficulty level to the quantity theory of money a while ago on economics and alt currency forums of bitcoin talk. I think if you're going to be successful, you'll have to find a different set of early adopters. Bitcoin is as much ideological as anything, and while some people don't want to see another alt currency because of their level of investment, others just generally don't believe…

I did toss out a less thought-out version of the idea on bitcointalk and /r/bitcoin a while back, and you're right, they were not interested. Those communities seemed to think that a non-predetermined amount of coins meant the same thing as a fiat currency. But maybe if something like this is actually built, people that believe in more mainstream economic ideas would get attracted to it and start to use it?

Re: Why Bitcoin is a significant breakthrough, but perhaps not as a currency

#50

Post by whyenot » Thu, Dec 19, 2013, 11:08 PM UTC

praxeologist wrote: post #10

wildbunny wrote: post #4

This article misses the true breakthrough which bitcoin represents which is a trustless , decentralised store and exchange of value.

On that note, I want to point people to Protoshares and the concept of DACs (Decentralized Autonomous Corporations): http://protoshares.com/ http://letstalkbitcoin.com/bitcoin-and-the-three-laws-of-rob... http://letstalkbitcoin.com/dacs-that-spawn-dacs/ The use of the word "corporation" is kind of wonky to me and the whole concept took me a little time to wrap my head around it, but these are the types of things we c…

I read the whitepaper. It is extremely poorly written and filled with largely meaningless jargon. Maybe the idea is brilliant but it is not being communicated very well.