Yeah honestly I don't know. But if China can make people disappear for using FB.... who knows.
Bitcoin Surpasses Gold
- Thread starter vanzandt
- Start date
The built in inflation stops. Right now it is inflating, so practically speaking it should have more value then.
But the incentive to mine (keeping the payment system ongoing) also goes away....
Because gold isn't a currency anymore. Neither is bitcoin though...
The next time someone laughs at the Dutch and their Tulips, I'll refer them to this thread.
This isn't entirely true. The incentive to mine will be the transaction fee. Presumably as the coin supply dries up, the incentive will switch from the block reward to the transaction fee. The block reward also decreases over time, so the block reward incentive is decreasing anyway and as such it won't be a massive shock to the market when the block reward effectively goes away.
By design, it is inflationary, because more and more are created. Now you could argue that the rate of loss is bigger than the rate of creation, but you would have to prove that and that wasn't the original plan.
By the way deflationary currencies are not good for payment, because it encourages hoarding and investment type holding, instead of paying with it.
I stand corrected. But the transaction fee also has to increase, otherwise the miners won't be interested running their thousands of computers for pennies. So someone mentioned 2% for CCs, bitcoin's transaction fee can be just as high. Actually right now if we do the math, it is already higher.
Unlike fiat currencies (or even credit cards), the value as well as the transaction fee will be entirely dictated by the market and the transaction fee will rise to whatever minimum necessary to incentivize people to perform that action. You can think of it in terms of arbitrage if you like. The moment it is profitable to perform the action, people will do it until it no longer makes sense and as fewer people do it, the profit will rise to compensate around some equilibrium. This will be partially based on the value of bitcoin as well and it may be that bitcoin's value is capped (by the market) such that the transaction fees are 2% (or whatever the prevailing CC transaction rate is at the time) of the value of the underlying bitcoin.
Similar to other markets where some geographic locations have competitive advantages, this will also be the case in bitcoin. For example, the ongoing cost of mining is electricity costs. People in cold climates will run mining machines in place of electric space heaters will therefore have a competitive advantage. Running a 1500w space heater vs 1500w miner, which would you do? One "wastes" 1500w of power and the other pays you back. Why not use a miner to heat your water?
Expand your mind.
Bitcoin has become a commodity now and i am watching it for the past one and a half year when it was around 230$ per piece, now it has reached around 1200 - 1300$ per bitcoin. I did spent some money buying them but unfortunately invested them with HYIP sites and never got them back.
Looks like trouble in river city