Why bit coin is doomed Tyler destroys the idea

[trefoil]

Quote from Gringo:

I have an issue with this idea of a deflationary algorithm. It implies is that the prices of goods is going to decrease relative to the new cryptocurrency. In other words, the price of the crytpocurrency is going to increase relative to the goods. Keeping only the algorithm in mind and not involving other variables, this can only occur when the quantity of the crytpocurrency is reduced. This also implies that the pre-exiting cryptocurrency is taken out of digital circulation.

Being in circulation means there are holders of the currency in its entirety. How is it going to be decided which holders lose their currency for the quantity to decrease? If all lose their currency equally then the decrease in the quantity is offset by the increase in value, neutralizing the change in price and making the currency non-deflationary. If only a select lose their value then there has to be a mechanism to decide which ones. Are users going to even adopt a cryptocurrency with such power to take away their stored wealth? Forget about using it to trade and make profit, a large number of holders are there to protect their assets from inflationary pressures in the real world. Deflationary cryptocurrency isn't even providing that. In the real world usually debt is issued to bring in the floating currency as cash is exchanged for the debt with interest. What's being offered here?

Somehow it seems the idea in the article has not been clearly thought out, as far as the deflationary part of the currency is concerned. Unless some explanation is in the offing, this whole line of reasoning seems suspect. Why bother with the other analysis if the first paragraph can't hold some scrutiny.

Gringo

If the amount of ccy is steady while the amount of goods increases, then the ccy's value will increase relative to the amount of goods (and services). Bitcoin's absolute limit on how many are issued assures deflation in the context of an expanding economy. Vice versa if the economy contracts, of course. It's all relative.
Think about it: actually, the amount of ccy only has to increase by less than the goods & services it pays for for it to be deflationary. So you can have a ccy whose absolute supply increases, but who's growth rate lags that of the economy as a whole. Gold fit that bill when it was the standard, in the late 1800's and up to 1914.

 

[xelite777]

Quote from trefoil:

Gold fit that bill when it was the standard

The Gold standard was abolished for one reason and one reason only: Gold cannot be created out of thin air, something that the banksters and the Elite do not want.

Abolish paper money and let people buy stuff (and be paid) with gold (and other precious metals like silver) and inflation will disappear almost overnight.

 

[failed_trad3r]

Quote from Scataphagos:

Didn't they say something like that 400 years ago about tulip bulbs?

Aren't bitcoins equally stupid... backed only by the "greater fool" to pay a higher price?

Bitcoin is a pyramid scheme, just like Herbalife. But its alot more transparent, since the workings of the scheme are now in the hands of a community. So Bitcoin should have a value of $0, but if the community promotes Bitcoin well it can end up at $10k.

The whole pyramid has to convince greater fools to commit a wealth transfer to early adopters. That can only be done with deceptive marketing.

 

[Gringo]

Quote from trefoil:

If the amount of ccy is steady while the amount of goods increases, then the ccy's value will increase relative to the amount of goods (and services). Bitcoin's absolute limit on how many are issued assures deflation in the context of an expanding economy. Vice versa if the economy contracts, of course. It's all relative.
Think about it: actually, the amount of ccy only has to increase by less than the goods & services it pays for for it to be deflationary. So you can have a ccy whose absolute supply increases, but who's growth rate lags that of the economy as a whole. Gold fit that bill when it was the standard, in the late 1800's and up to 1914.

trefoil,

Yes, you are right. I had understood this part that you have written above. The author had implied that bitcoin was an inflationary currency, and rightly so. The number of bitcoins increase every year by whatever percentage and then become constant at a certain level. In real life bitcoing isn't as inflationary because other currencies are printed a lot more. Here we are not worried about increase or decrease in goods. There was a reason I had left that point out previously. The good could stay the same in the economy but still have increased or decreased value based on their demand. Therefore, for the purpose of the discussion the goods and the demand and supply of them were left constant. The only variable is the CCY. Strangely enough, from your exposition I believe you already understand what I have written so far.

The only reason to address the possible flaw in the article was to point out that an algorithm that makes the CCY deflationary has to reduce the amount of that CCY. Which doesn't make sense as someone will have to give up their CCY for there to be less of it. It is this problem of giving up that to me makes this situation unlikely. At least I wouldn't buy a CCY that could disappear from my account. Others might also avoid adapting it in the first place. Making this the sole argument to prove that bitcoint will disappear seems faulty to me. Now bitcoint might still disappear from other reasons, such and government intervention or something else, but isn't likely to do so because of a deflationary algorithm in CCY.

Xelite777 I believe is correct in stating that bitcoin might be the beginning. The market eventually will decide whether CCY in this shape or form is acceptable or a refined version is a better option. I am of the opinion that the genie is out of the bottle and isn't going to go back. It is us who have to monitor and adapt as the situation unfolds.

Gringo

 

[stock_trad3r]

People have been predicting its failure since 2009. Btcoin serves a purpose. It facilitates commerce and is a longer term hedge against hyperinflation. Also there are no god alternatives to bitcoin, unlike stocks where there are 1000's to chose from. I own about 40 coins and won;t b selling anytime soon

 

[altoid]

Quote from failed_trad3r:

Bitcoin is a pyramid scheme, just like Herbalife. But its alot more transparent, since the workings of the scheme are now in the hands of a community. So Bitcoin should have a value of $0, but if the community promotes Bitcoin well it can end up at $10k.

The whole pyramid has to convince greater fools to commit a wealth transfer to early adopters. That can only be done with deceptive marketing.

Well stated !

 

[Hoi]

Quote from failed_trad3r:

Bitcoin is a pyramid scheme, just like Herbalife. But its alot more transparent, since the workings of the scheme are now in the hands of a community. So Bitcoin should have a value of $0, but if the community promotes Bitcoin well it can end up at $10k.

The whole pyramid has to convince greater fools to commit a wealth transfer to early adopters. That can only be done with deceptive marketing.

Stubborn ignorance of a few, will not holdback world's greatest innovations as shown in this chart:

 

[R. Raskolnikov]

Yeah, because that sounds REALLY practical! LOL, you must be joking.

Quote from xelite777:



Abolish paper money and let people buy stuff (and be paid) with gold (and other precious metals like silver) and inflation will disappear almost overnight.

 

[failed_trad3r]

Quote from Hoi:

Stubborn ignorance of a few, will not holdback world's greatest innovations as shown in this chart:

Bitcoin is easier to promote than Herbalife, and much easier to comprehend as a pyramid scheme. Plus its transparent, the algortihm is open-source.

If Herbalife is a grade C pyramid scheme, Bitcoin is a grade A pyramid scheme.

With Herbalife you have to activly go out promote, get a downline, make calls, promote more etc. The upside is you get a stream of earnings, the problem is when your downline stops making money you stop making it too. Theres alot of uncertainty with herbalife.

Now bitcoin, buy bitcoin for lump sum of $1000 Promote on ET, promote on reddit, promote everywhere, bitcoin goes to $10k, cash out at 100.000 make 99.000. Simple to understand. The only hard part is how to buy and sell them you have to create accounts on mt.Gox and stuff. Theres a reason there are 60 copycats of bitcoin.

 

[Hoi]

Quote from failed_trad3r:

Bitcoin is easier to promote than Herbalife, and much easier to comprehend as a pyramid scheme. Plus its transparent, the algortihm is open-source.

If Herbalife is a grade C pyramid scheme, Bitcoin is a grade A pyramid scheme.

With Herbalife you have to activly go out promote, get a downline, make calls, promote more etc. The upside is you get a stream of earnings, the problem is when your downline stops making money you stop making it too. Theres alot of uncertainty with herbalife.

Now bitcoin, buy bitcoin for lump sum of $1000 Promote on ET, promote on reddit, promote everywhere, bitcoin goes to $10k, cash out at 100.000 make 99.000. Simple to understand. The only hard part is how to buy and sell them you have to create accounts on mt.Gox and stuff. Theres a reason there are 60 copycats of bitcoin.

Aahh... now I understand.... YOU are Bill Ackman