Quote:
Originally Posted by PairTheBoard
My guess is the fundamental thing bitcoin's creator wanted was a maximum coin supply. So, while both are necessary, neither an inflation amount that goes to zero, e.g. C/1, C/2, C/3, ... for periods 1,2,3, ..., nor even less so an inflation rate that goes to zero is sufficient to satisfy that fundamental criteria. It requires inflation amounts that sum to something finite, like 1+ 1/2 + 1/4 + 1/8 + ...
I think I followed well enough thus far but this part I'm not sure. The specific words are so important. I'm interested in the idea that a 21 million coin finite supply is similar in finiteness to a coin with an infinite supply with a declining inflation rate. The latter has an infinite supply but its not really meaningful in the sense of diluting the coin supply. (did I say that all right?)
Quote:
Originally Posted by BrianTheMick2
That last sentence is approximately (rounded off at 183 decimal points) 100% untrue in the case of guessing a loss rate and including an actual rate of coin supply increase to make up for those lost coins.
Interestingly, either way you get an unstable value of Bitcoin, as has been seen over it's lifetime. Even more interesting is that stability is an absolute requirement of a decent currency. You get 38.78% less house/gold/bread/cheese/peanut butter in trade than you did last year per Bitcoin. This makes peanut butter* a far better currency (it is holding up very well in number of jars per house).
*Creamy, obviously
That's something that is actually interesting, and I agree with you, but its not discussed because the two camps are fighting rather than thinking. Mainstream economics believes bitcoin is a bad candidate for money/currency (obviously these terms require definition so its a loose statement). PTB suggests that the creator was intending on a finitely supplied issuance. But there isn't really a prevailing school of thought for that:
Quote:
Originally Posted by bitconi's creator
To Sepp's question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don't know a way for software to know the real world value of things. If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that.
In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.
It's sort of commonly understood now that being in the position of the creator of bitcoin you couldn't programmatically control the other kind of inflation: ie purchasing power.
The constant-ness of bitcoin becomes a necessary trade-off for that reason I think. Now I don't know what word is correct (perhaps not constant) but there is an admission that if a value controlled currency is ideal (whatever it be controlled at or targeted to), bitcoin could not be ideal. And the creator seemed to admit for this reason bitcoin is not an attempt at ideal money (but rather as a gold like medium)
But I mean to point out, with that limitation, it doesn't matter if bitcoins supply/issuance runs out or not