Bitcoin - the "gold will save us" ponzi scheme

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:31 pm

Sehlby wrote:
One thing you must realize is that money is complicated. It doesn't have one dimension or even 10.

Thus the key insight that Satoshi made was that he needed a simple story about money.

So all those who need to feel they understand, will boast that they do.

The key is to make dumb people think they are smarter than they are. Then they get overconfident.


Let me quote from my answer to my question:

http://bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose/8709#8709

"The stability of a currency’s value is based on how many businesses can keep their unit-of-account in that currency, because business have to do valuations with longer-term planning for their inputs and outputs. If I ask you to go to the store to get some milk, then I ask you take 10 steps forward and 9.9 steps backward along the way, will you do it? Volatility is a cost. Even appreciation is a cost to a business, because they aren't not always going to be on the appreciation side of the equation with their inputs and outputs."

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:33 pm

jing_troop wrote:
Shelby wrote:
The long-term and short-term expectations polls, both show extreme ponzi valuations. And interestingly bitcoiners aren't as interested in the short-term 2017 time-frame. Their expectations skew is Bitcoin will overtake the world long-term. Speculative investments shouldn't be valued extremely long-term— too many variables change. Any seasoned investor knows this.

What you have here, is Satoshi cleverly hoodwinked goldbugs (knowing their psychological weakness) think that Bitcoin  has the properties of gold (but it does not!), and so these naive investors pile in long-term thinking it changes the world. This has NSA finger prints all over it.

Besides gold has never been a superior currency nor investment over long-term. Go dig into my links, I have all the historical data to proof of that claim.

REALITY CHECK!

Just for fun, a market value list of gold for several decades passed: https://raw.github.com/datasets/gold-prices/master/data/data.csv

This myopia is central to Satoshi's ability to create a market value with his "gold" (scarcity) design.

Gold has an intrinsic value because it is used as a physical commodity, and the most important use is central banks hold it. This is why although gold skyrockets, then crashes, it never crashes to 0. Silver is heavily used in industry, this is why it can never crash to 0.

The key is that the most astute and wealthy capitalists will hold gold and silver long-term, but they will not hold Bitcoin long-term, because they understand that the free market rewards those who correctly assess value. Ask Warren Buffet about value creation.

Bitcoin has very, very low instrinsic value, because of it can't be used as a stable unit-of-account[1].

[1] https://bitcointalk.org/index.php?topic=158111.msg1679002#msg1679002

IMO, like all ponzi schemes the believers will make denial rationalizations (and even get angry at people who present them facts) as to why it must have intrinsic value, and thus it will continue to skyrocket in price for as long as greater fools can bring more money into it.

But when the next general economic liquidity crunch comes, many of these fools who put too much of their networth into Bitcoin, will have to sell in a panic. This will pop the bubble (circa 2015 - 2017) and then the stampede will be on, because there will be stories in the news about how there is very insignificant transactional and unit-of-account usage of Bitcoin by businesses and the profitable and productive sectors of the economy who are the only sector that matters for generating value. Don't forget my point that spending money on goods and services drives value of the currency higher, because the businesses can reinvest in greater productivity gains from profits.

To understand money, you need to understand the economy, see How an Economy Grows and Why It Doesn't[2].

[2] http://home.earthlink.net/~schiffeconomics/

Bitcoiners will rationalize that gold is a superior money because they claim that no one can debase it. This so stupid. First of all, both inflation and deflation concentrate wealth to the rich[3]. Secondly, because of this concentration of wealth under gold to the rich, the public will never allow it! You get a world war if necessary, but the public will always demand debasement, and there is no technical way to stop it (not even Bitcoin is immune, the government can easily subvert it when they are ready[4]).

[3] http://bitcoin.stackexchange.com/questions/408/does-hoarding-really-hurt-bitcoin/8533#8533
[4] http://bitcoin.stackexchange.com/questions/8572/powerful-elite-thwarting-cryptocurrencies/8653#8653

And this is the way it should be! A free-market does not mean that it is a merit to encourage non-productivity by erroneously assuming that BLIND capital can invest most efficiently in productivity[5]. The larger the capital one has, the less knowledgably one can allocate it. This is a fact. This is because innovation is born in the small, and no person is omniscient. This is why the Bible says that money will fly away.

[5] http://www.coolpage.com/commentary/economic/shelby/Demise%20of%20Finance,%20Rise%20of%20Knowledge.html#FinanceabilityofKnowledge

Storing past productivity and holding the future in chains with your past accomplishments, is the antithesis of prosperity.

Yes we need some savings, because this represents sacrifice and hard work, which is a merit based system.

But we also need to debase the capital over time, so that the rich don't have an unfair advantage to make the innovators slaves to the lack omniscience.

The philosophical paradigm of Bitcoin, is that the early adopters from first 4 years will have 50% of the money supply. That is insane and will never be allowed in a meritocracy. The free market will never allow this. Yes people should profit on their innovations, but they should not have 50% of all future production. Society will go to world war if necessary to remove those chains.

The technological innovation of Bitcoin that I love is that no person can control the debasement. However, with Bitcoin this is not true. Satoshi controls the debasement and he got some (large chunk) of that 50% of the money supply.

So I would like to take his technical innovation and put it in a new bitcoin-like system where the debasement is automatically adjusted by a mathematical algorithm designed to get a balance between transactional and unit-of-account usage versus store-of-value usage. To prevent it from sliding into the ponzi scheme outcome.

CAPICHE?

P.S. Dunning-Krueger dolts who think I don't realize that Satoshi can't change the preset debasement schedule, that is irrelevant. He alone decided it. And it is insane and not a merit-based duration as I explained the reasons why above.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:46 pm

Dunning-Krueger dolts can't see their ignorance. They will continue to spout illogic, and there is no logic they will ever accept. Nor will they ever admit defeat, because they don't have the logic to see when they are making a total fool of themselves.

I hope you prove me wrong. I would love to see that you can adjust to reason and logic.

DataPlumber wrote:
What you describe as "rationalizations" is just us being, y'know, rational.  You discard all simpler explanations that do fit facts as "baseless opinion" but then wave Occam's Razor around like it's a prison fight.

Either you do not understand that the 3 items you presented were one of many possibilities that can (within statistical likelihood) fit the facts, thus by definition assumptions.

Or you do not agree that Occam's Razor is an accepted principle of the scientific method.

In either case I can only shrug. What can I do with an utter dolt?

DataPlumber wrote:
NO MATTER WHAT debasement scheme is used, all new market entrants will start at zero, and ALL EARLIER ADOPTERS will have ALL OF THE COINS.  Shocking, I know.

Did you pass your Algebra 2 course?

If the latter debasement is mathematically adjusted to market conditions (in a decentralized manner with no SPOT of failure modes), the early adopters are continously diluted. If they hold forever, their value will asymptotically trend towards 0.

However, this will take a long-time, and in the meantime they will be rewarded by appreciation in value (both FX price and real productivity gains in the economy from transactional velocity as I explained in my prior post).

An honest and merit-based system, instead of ponzi scheme.

DataPlumber wrote:
Except the one you want to design, which, of course, solves that problem for you.

I want the honest and merit-based system, and I never said I would pre-mine coins and keep it secret. Everyone would be on an equal footing and can bring their Proof-of-Work to bear on it as it is released.

DataPlumber wrote:
BTW where's this description of your alternative system that can work based on how much hard drive space you have?  It's simple to show proof-of-work using cryptography, but I'd like to see how you can prove to the satisfaction of a neighbor how much drive space have.

Yeah I am clever. Satoshi did not think of this perhaps:

http://anonycoin.org

Btw, I have better name coming soon...

but I don't know if I will implement this. I need to see some support and desire for it first.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 2:52 pm

Korbman wrote:
Shelby wrote:
Yeah I am clever. Satoshi did not think of this perhaps:

http://anonycoin.org

Btw, I have better name coming soon...

but I don't know if I will implement this. I need to see some support and desire for it first.

Ahhh there it is. I was wondering how long it would take before you started advertising your own Alt-coin

Communist.

(I expected you to do exactly that. I knew you were waiting for DataPlum to ask me to share my algorithm)

What is your retort now you fool?

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 5:11 pm

Apologies I was away for some minutes writing about Big O algorithm-cost math:

http://esr.ibiblio.org/?p=4861&cpage=1#comment-397234

ChipCoin wrote:
There are several ways in which Bitcoin is a better currency for the internet age:
- It's not subject to inflation / quantitative easing

STOP. All of you readers need to stop a delusion that is in your mind.

1. Inflation and deflation both transfer wealth to the rich at a faster rate than they transfer it to you. Neither is good. So don't think Bitcoin's inflation is better. Please re-read the following linked post slowly over and over until you understand. It took me 6 years to figure that out. You are not going to get it in 5 minutes. You need to sit down with a cup of coffee and read it slowly.

https://bitcointalk.org/index.php?topic=158111.msg1679165#msg1679165

2. I agree that letting some humans decide the debasement rate is bad, because it means they can game the system and profit more than others. The debasement rate should be algorithmic in the open source, so we all are on a level playing field. The debasement should be optimized to minimize both inflation and deflation. Our value should increase with a balance of FX price increase and that goods getting more plentiful at the same price due to increases in productivity. We will never get this perfect, but at least if we can agree on something more sane than what Satoshi chose, then we won't have a ponzi scheme.

Also all you goldbugs needs to read this:

Does Money Have to be Backed?

http://armstrongeconomics.com/2013/03/26/does-money-have-to-be-backed/

Expect to your preconceptions destroyed, if you have an open and rational mind.

ChipCoin wrote:
- Can be used for internet payments, with low fees (try 1 satoshi fees!)

Agreed, I would never want to lose this.

But the transaction fees in Bitcoin are not set. As the profitability of mining declines, they could increase, especially since the Proof-of-Work in Bitcoin encourages a monopoly as Satoshi himself admitted! Go back and read the OP linked question and following the links!

ChipCoin wrote:
- Wallet encryption makes it safer from theft than your credit card / cash
- It's extremely divisible

First we used seashells and leaves, the we used gold & silver coins, then we used paper banknotes and plastic cards - finally now we use Bitcoins!

Agreed! I love the technology advance of Bitcoins. But I am telling you it has to be improved. There are some fatal flaws in the debasement and the Proof-of-Work.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 5:36 pm

DataPlumber wrote:
ChipCoin,

Welcome to the thread, and the forum.  I'd suggest going through the previous posts to get a sense of the depth of the discussion, or at least check out the excellent summary on page 5.

Korbman wrote:

I've updated page 5 with a more accurate summary, taking into account the past 2 pages. It's a light read compared to everything else, but the same valid (and important) points are covered.

Nice you choose the page that has all the "finger in ears, nananana" politics, and nearly none of the factual content.

ChipCoin at al, I suggest reading the entire thread, not just one page of it.

They don't want you to read the truth. They are trying to hide the facts in their so called "summaries" which are nothing more than politics and hiding all the details.

Note if they continue this, then I will continue adding this post to the bottom of the thread too. I will also make a request to moderator to stop this pollution of the discussion, with such attempts to funnel readers to only one part of the thread.

It is so pitiful, they have lost the logical debate, they have to resort to such slimy methods.

They can also see they are losing as new votes continue to appear for "No", as more readers learn the truth.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 5:59 pm

[quoter="DataPlumber"]
Shelby wrote:
DataPlumber wrote:
BTW where's this description of your alternative system that can work based on how much hard drive space you have?  It's simple to show proof-of-work using cryptography, but I'd like to see how you can prove to the satisfaction of a neighbor how much drive space have.

Yeah I am clever. Satoshi did not think of this perhaps:

http://anonycoin.org

Btw, I have better name coming soon...

but I don't know if I will implement this. I need to see some support and desire for it first.
Do you have a thread to discuss this?  If so, please respond there and link me to it from here.
[/quote]

Not yet. I was hoping that moderators will let me out of Newbie area, because I don't want to put such a serious thread in it. I want to interface with smart developers.

I don't understand why you want to have a technical discussion with me, when you are still playing politics and asking ChipCoin to go read a summary which is just BS and has none of the details and truth?

You expect me to be nice and respect you when you continue batshit dumb juvenile behavior?

DataPlumber wrote:
1.  What's to prevent me from connecting to the network a thousand (or ten thousand) times so that I might improve my odds of being selected as the next block creator?  (An "attacker network" of one or more machines (sock puppet connections or a botnet) masquerading as many more than physically exist.)  I don't need to have 1tb available until i'm selected, and then only one instance of 1tb needs to exist behind all of the sock puppet connections.

Re-read the algorithm at http://anonycoin.org, that is explained.

In short, you need to have all those 1TB (or what ever size we chose, probably scale it by Moore's law over time automatically) of secret keys stored, or you are not ready to respond when your turn comes.

DataPlumber wrote:
2. Which peer throws the dice to 'randomly select' which other peer is selected to be the next block creator?  What if that peer is compromised to produce a non-random number that throws the next block to another member of an attacker network, thereby locking in the attacker network's indefinite control of the blockchain?

The dice is determined by the hash of the chain of blocks with the entropy of the transactions. No one can predict it, nor change it. When selecting which transactions to put in the current block, the current peer has only a limited time to respond and the difficulty will be set high enough that it is not practical for them to search for a set of transactions that would select a desired peer. Also remember there is a transaction fee, so it is costly to add bogus transactions.

DataPlumber wrote:
3. What happens if that selected block creator
a. fails / disconnects
b. generates an invalid proof-of-work
c. is continuously DDOS'ed as soon as it's selected?

That why several nearest closet will also do duplicate work.

DataPlumber wrote:
4.  Is there a mathematical proof that your proof-of-work scheme cannot be simplified by a hitherto-unknown heuristic that allows for a proof-of-work with a much smaller storage requirement?

I haven't written it down yet. Intuitively I've got it. I need to formalize.

DataPlumber wrote:
PS It's "DataPlumber" not "DataPlum".  <shrug>

Good technical questions. Shows that you are developer. So why the political BS from you? Come on now. You are smarter than that. I will respect you, if you respect me.

Do you think I would ever trust you to be in charge of something, if you chase away new ideas as you have done to me? I had to fight so hard, others won't be able to do. Show me that you embrace new information rationally.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 6:27 pm

WishIStartedSooner wrote:
I voted yes, but purely for semantic reasons, as bitcoin is clearly not a ponzi.

I think you have valid points, but what you're missing is when the early adopters cash out, that bitcoin will return to the bitcoin economy, and start to maybe be used again.

Thanks for being amicable and also for not lurking. Hope I don't piss off but I must be frank, you have two logic fails here. Hopefully you have a thick skin.

You are correct that as the wealth is distributed with a better Gini coefficient, then it will be less skewed to ponzi. One of the key traits of ponzi is the white lie that lets the insiders walk away with a big chunk of the networth of society.

And my design is that everyone with a harddisk can mine, so a much better Gini coefficient from the start and forever.

However your vote of Yes fails on two points.

1. It is a ponzi until they cash out at least. Short-term ponzi, long-term stability would not change what it is for now.

2. Lack of debasement is not a stable form of money and not even better for anyone except those who control politics, never has been and never will be. I refer readers again to read more carefully the following two linked posts.

https://bitcointalk.org/index.php?topic=158111.msg1679165#msg1679165

Does Money Have to be Backed?

http://armstrongeconomics.com/2013/03/26/does-money-have-to-be-backed/

WishIStartedSooner wrote:
So it will seem like a ponzi scheme when the price drops from early adopters going and getting theirs causing late-comers to lose out on money, but the price will stabilize again as demand for that bitcoin continues to increase, which will occur naturally as bitcoin gains legitimacy.

The problem is that the white lie about "bitcoin is better like gold" and "no debasement is a better world" is causing the ponzi frenzy. Every person who is pissed off about the end of the 78 year sovereign debt cycle, is religiously passionate about a better system.

The problem is that their religion is being aided by a debasement that is not increasing to dampen some of the rush into it. The debasement should only slow as the transactional goods & services economy becomes a larger share.

And because of this flaw, it can't never stabilize, just as gold and fiat can never stabilize. But at least fiat stabilizes for much longer periods than gold (in some cases), because the better central banks do allow some flexibility. (not saying I like central banks. I don't, I want a free market with open source algorithms)

With an algorithmic fluctuating debasement, we can get something like a mix between gold and fiat, without the bastards front running us with their secret control of the levers.

Then finally, we can get a bitcoin-economy that grows in value.

Until that technical change is made, it is a ponzi scheme. Sorry.

WishIStartedSooner wrote:
If the demand for bitcoin drops over time from lack of adoption (and not just early adopters cashing out), then the early adopters are fucked. Ponzi schemes do not fuck the early adopters.

No chance of that. Price is going way up. Don't worry. It is an awesome ponzi scheme, for the religious delusion reasons I explained.

Once the sheep are jealous of the earlier ones, the gold fever starts. They are all 49ers rushing to California now.

WishIStartedSooner wrote:
That risk is what I think makes the difference between a viable currency, and a con (which is the word I think you should be using in place of "Ponzi scheme,")

A ponzi scheme can fail only if the participants realize that the value isn't there.

In this case, no one is going to believe what I am saying above about the valuation of a currency.

They will stampede into Bitcoin, guaranteed. I should buy Bitcoin. I would make a lot of profit, if I sell out at the right time.

But I am not interested in profiting on a ponzi scheme. And who knows when it pops and crashes.

I will admit that as Bitcoin crashes, it still has some transactional value, assuming that the merchants don't get so burned that they curse it.

However, if a competitor is able to get traction that has more stable value, that could alter the outcomes. I don't think this is likely.

WishIStartedSooner wrote:
However, your language is intentionally trying to piss people off (by implying that every poster has a low IQ, for example), so I view you as a troll.

A very successful one too, because you've stirred up quite a name-calling contest here...

I only implied that to those who were writing batshit stupid nonsense to me. Such as fornicating over whether the white lie in Bitcoin is an economic bubble. I don't care. We have a scheme here that is caused by misinformation and greater fools funding the earlier fools. Call it what ever you like. That is waste of precious time to argue over the name, when the effects are the same either way.

If you waste my time with stupid games over irrelevant naming, then you are not smart IMO.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 6:42 pm

DataPlumber wrote:
Shelby wrote:
You expect me to be nice and respect you when you continue batshit dumb juvenile behavior?

I'd suggest you go back up and see who started that.  Your very first reply on this thread was condescending and rude, and had I noticed that at the time I might have declined to engage you.


Liar. Here is my first reply to you:

https://bitcointalk.org/index.php?topic=158111.msg1674023#msg1674023

Nothing there but being respectful and answering your question.


DataPlumber wrote:
Your constant belittling of the intelligence of everyone on this thread ...


Yadayadayada.

You continue to waste my time on politics. Stop, or I will ignore you.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 7:06 pm

yefi wrote:
Shelby wrote:The participants there often disagree and argue with each other, so there is no One Direction.

I wasn't using a metaphor  ::)

I thought you were using caps for emphasis not in the proper usage, since there is so much of that sort of thing in forums.

Then I guess you were implying that who are my external peers is irrelevant in this forum, and/or that I'm juvenile or possess some trait of that boy band. I admit I do look young with blonde hair and blue eyes even though I am 48.

When did the affliction of losing control over your eyes start?

(egos are bigger than brains, and balls are smaller than hoops)

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 7:08 pm

I hope you can appreciate how impossible it will be for me to teach every member here basic economics? I don't have enough time. Eventually I must quit and go back to real work.

The number of possible misunderstandings and conflations is unlimited.

Peter Lambert wrote:
Shelby wrote:

The philosophical paradigm of Bitcoin, is that the early adopters from first 4 years will have 50% of the money supply. That is insane and will never be allowed in a meritocracy. The free market will never allow this. Yes people should profit on their innovations, but they should not have 50% of all future production. Society will go to world war if necessary to remove those chains.

The early adopters have 50% of the money supply ... until they spend it. You seem to completely miss how bitcoin is actually a currency, it is transferred around to help generate wealth. Say there is Joe, who has some bitcoins he mined a long time ago. Joe pays some bitcoins to Bob to do some work and create some value, Bob would otherwise just be sitting on his couch watching TV. Joe the early adopter has now cashed out his bitcoins, but because of bitcoins the total value of the system was able to increase.


I did not miss that, my entire thesis is that spending is what is lacking in Bitcoin. There is too much store-of-value and not enough velocity.

But then you try to erroneously attach that truth to giving 50% of a money supply to a few people.

I would have no problem with them having 100% of the current money supply, if I know that the debasement is sufficiently fast, that they are not incentivized to sit on that capital and bury it in a hole.

Please people, stop conflating truths with non-truths.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 10:45 pm

WishIStartedSooner wrote:
You are correct that as the wealth is distributed with a better Gini coefficient, then it will be less skewed to ponzi. One of the key traits of ponzi is the white lie that lets the insiders walk away with a big chunk of the networth of society.

Okay, so that supports the argument that bitcoin is not a ponzi scheme, and if anything negative, would best be classed as some kind of con? Not that I really care, I want to address the points you're actually making, not the naming scheme.

If Charles Ponzi gains more owners of his receipts from his "Securities Exchange Company", did this better Gini coefficient make it not a ponzi scheme?

The key is that if the people invested are not spending, then the value isn't there.

You think that later they will become spenders, thus you think the Gini coefficient is dropping in a valuable way. I see they are all buying to sell later at a profit.

Thus I disagree with you.

More replies to follow...

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 10:48 pm

WishIStartedSooner wrote:
And my design is that everyone with a harddisk can mine, so a much better Gini coefficient from the start and forever.

This might actually be more fair in the beginning. I will concede that point.

But over time, after the early adopters have sold out, after the mainstream has picked up on it, the wealth is going to redistribute itself to those who "do more" to earn it (that's a different argument all together though, and I'm not trying to derail the thread).

Not any time soon, when dormancy is not improving it means more and more people are just piling in because they want to profit on others piling in.

They do think they are going to hold until the spenders finally come.

But so far the spenders are not coming in at the same rate as the speculators, i.e. it is diverging not converging (means can only end up as a blowoff peak and crash)

And the more the price goes up, the more people are going to get jealous and come piling in.

The merchants and spenders economy can't possibly develop as fast.

After the ponzi scheme crashes, then if only the spenders and merchants hang around, then maybe it can stabilize. The lack of debasement will be a negative, but not as much so as now, if there is a larger installed base of spending by then.

So what ever it will be later, for now it is not that. For now, it is a divergent system, with ponzi scheme qualities.


WishIStartedSooner wrote:
So at worst, we'd end up with a system similar to what we see now. The result of capitalism where the wealth is more topheavy, the only difference being that we would not allow banks to have control over what we've accumulated (if we didn't want to). This sounds just peachy to me.

By the time we get to that future, the governments will probably have co-opted it already any way. It really only makes sense to talk about what it is now.

WishIStartedSooner wrote:
In a system, like you propose, where the initial coin is distributed more fairly, those who take more action to earn it are still going to end up with more money, and thus more resources to set up projects that make more money. So in a laissez-faire system, the end result is still going to be same after the shitstorm, so why care if early adopters profit from the risk/work they put into it?

Differences are:

1. My Proof-of-Work is more level playing field, everybody already has a hard disk. They can jump in.

2. The award won't get less fair over time.

Yes capitalism will still be in play. I want meritocracy, not socialism. The difference is I remove the ponzi flaw (#2) and the monopoly miners flaw (#1).

The way we are headed now with ASICs, the users of the currency (the spenders) won't mine. In my system, they earn the debasement.

WishIStartedSooner wrote:

It is a ponzi until they cash out at least. Short-term ponzi, long-term stability would not change what it is for now.

So it's only a con until the early adopters cash out, then everything equalizes? I don't understand how this is even a con to begin with. Just seems like another bubble bursting, which is something we all expect to happen many times during bitcoins ascent to ubiquity, a natural consequence of it's growth, and the uncertainty that people have inside them.

We can't look into the future and say anything. Futures contracts are inherently socialism (but that is too deep to discuss).

We can look only at what is now.

We have no idea what it will do after it crashes.

We know it will crash, for as long as speculation is diverging from value. We just don't know when. Depends how many fools are coming in.

It is ponzi con because the perpetraitor knows that the fools believe there is value. He knew how to structure it "like gold" so they would believe. But it is nothing like gold (see the OP linked question), and in fact structuring it that way enabled him to get a huge chunk of the greater fool funds that are coming in.


WishIStartedSooner wrote:
A frozen debasement is not a stable form of money, never has been and never will be. I refer readers again to read more carefully the following two linked posts.

Is bitcoin a frozen debasement though? I will admit, I had to look the word up on wikipedia. Here's what it says:

Debasement is the practice of lowering the value of currency. It is particularly used in connection with commodity money such as gold or silver coins. A coin is said to be debased if the quantity of gold, silver, copper or nickel is reduced. Fiat or paper money is debased when volume of money printed is greater than demand

Yeah if you don't know these things, you should not be voting.

You just proved my point that Satoshi used asymmetric knowledge to fool you.

Debasement means we increase the quantity of bitcoins. This is currently decreasing at a geometric rate of halving the debasement rate every 4 years. Nothing every used as money has that fast of a declining debasement.

Gold is the most extreme, and it isn't close to Bitcoin. Orders-of-magnitude difference. This is what is causing the frenzy of speculation. The speculators will say it is because they expect future growth of spending, but the fact is they are coming in because of the EXTREME scarcity of the newly generated coins. And this religious delusion I have described in this and prior reply to you.

WishIStartedSooner wrote:
It seems to me that if the mainstream DOESN'T pick up on it (and those dumb-asses may well not), then debasement is not frozen but thoroughly possible. Not because extra bitcoin is being made, but through lack of demand for what exists.

So... bitcoin debasement is not frozen, just driven by something other than the federal reserve's whim?

Maybe I'm misunderstanding what you mean by this...

Please learn about the system.

WishIStartedSooner wrote:
And because of this flaw, it can't never stabilize, just as gold and fiat can never stabilize. But at least fiat stabilizes for much longer periods than gold (in some cases), because the better central banks do allow some flexibility. (not saying I like central banks. I don't I want a free market)

Oooohh I think I see what you're saying. Yes it is unstable now. But with mainstream adaptation the price fluctuation would be much less volatile than it is now. Also, we have the technology to compensate instantly for what differences in price would still occur. And only the fringe is arguing that bitcoin will make fiat disappear. So if it didn't completely overtake fiat, we'd still have a way to store wealth that is stable. If it does overtake fiat, then the larger market saturation would ensure that more stability exists.

Roughly agreed.

WishIStartedSooner wrote:
Once the sheep are jealous of the earlier ones, the gold fever starts. They are all 49ers rushing to California now.

Seems those fortyniners made out pretty good, and the economy survived, did it not?

As long as demand exists, any price drops from early adopters unloading would be corrected for in time. And your argument is that religious delusions will push demand higher over time, until it's mainstream. Right?

Ponzi schemes look great until the implode. The key point is the divergence.

WishIStartedSooner wrote:
I will admit that as Bitcoin crashes, it still has some transactional value, assuming that the merchants don't get so burned that they curse it.

But those merchants won't get burned, unless they intentionally leave their money in BTC for speculative purposes. Instead they will have immediately converted it to fiat, which isn't going away THAT fast...

Overly simplistic analysis.

There are many ways they can get burned. Once is they lose a revenue source they were projecting as increasing. Another is any value they had in the system could be wiped out. Another is they may not trust the system. Another is the government might come in and shut down the system claiming too many people were harmed. Etc....

Nobody likes to be part of things that fail. Bad outcomes happen when many people are harmed. Wars... New regulation... etc...

WishIStartedSooner wrote:
Regarding the name calling, whether somebody is smart or not, if you're trying to warn them that bitcoin is a con for altruistic reasons, then you might have better luck not pointing their (our) lack of intelligence out to them (us).

I tried but they were trying to drag me into games, so they could get me to hide my points in a 1000 posts of diarrhea. I know how trolls operate. I know how to minimize their effectiveness.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 10:49 pm

aa wrote:
I'm sure it's been mentioned already, but I'll mention it again, the OP question (and that idiotic post on that other site) is quite stupid for the simple fact that it seems OP does not know what a Ponzi scheme is.

It's no different than the idiots who see sites like the bitcoindiamond or litecointreasure and call them scams (of various types). No, those sites aren't pyramid or Ponzi or any other type of scam because they don't tell you that you're guaranteed to make money from nothing. They are gambling sites. They have very specific gambling rules clearly stated. If those sites are scams, every type of gambling ever created is a scam as well.

I guess it never occurred to you that a gambling site takes a pool, awards it to the winner, and gives the house a percent.

This is nothing like a system where greater fools are funding the sales of earlier fools.

What separates a stock from a ponzi is:

1. There is some intrinsic value that is growing as fast or faster than the increase in valuation. Or at least not diverging exponentially.

2. AND, there is not some white lie using asymmetric knowledge to fool or manipulate the psychology of investors.

Who is the idiot here?  ;)

aa wrote:
It's the same thing with anyone trying to claim that Bitcoin is a Ponzi scheme. Who is profiting? Who is actively seeking dollar investments -claiming a magical high return on the invested money- in order to pay off previous investments?

I already explained this up thread. Since you did not bother to read, I will tell you again, that Satoshi is profiting and his centralized promotion about magical quality of "gold" has been there from day 1 until now:

http://bitcoin.org/bitcoin.pdf#page=3

When in fact, he made the debasement decline so fast that it is nothing like gold at all. And this hoodwinked the philosophy of investors. They do indeed think it will go up forever.

Satoshi did not create an honest platform. He used a trick to fool everyone. And you are still fooled by it. That just shows how clever he was. Even I tell you, and you can't see it right in front of you face.

aa wrote:
Bitcoin's value is completely based on the same value system used by any other currency that exists: the "it's worth what I'll trade for it" system.

BS! You are so fucking ignorant, I shouldn't even bother replying to you.

Currency gets its FLOOR value from the government, or in the case of gold because it is held by central banks and the kings.

Currency gets its real value from the M and V in the equation:

M * V = P * Q

Quantity Theory of Money.

STFU ignoramus.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 10:50 pm

LorenzoMoney wrote:
Occam's Razor.

A guy who studied previous e-currency, learns enough about cryptography to write a theoretical article.
That doesn't sound like a Ponzi scheme. It sounds like a math / CS nerd who proposed an experiment and then created the software to implement the experiment. Since latecomers can benefit from trading Bitcoin, it is certainly no Ponzi scheme.  It merely is a cool, math / computer science experiment that involves many people.

And then disappears and no one knows him. He has no parents, no siblings, no friends, who had any clue that he might be working on something for 3 years.

Also math nerds do not have the networking programming skills to code what was already a completely working version when he released it.

Also programmers don't just leave and never say anything again. I have never seen that happen.

Any one who has a case of a programmer who was on a big project and never mentioned it or put it on their resume, etc?????

Then why does he choose to halve the # of new coins every 4 years, then say this is like gold, when gold's production is NEVER halved. It always increases!




The shape of the gold production curve is inverted in concavity:



Last edited by Shelby on Tue Mar 26, 2013 10:52 pm; edited 1 time in total

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Tue Mar 26, 2013 10:52 pm

I QUIT.

I will not continue with making a currency that is backed by nothing.

The more I think about it, I wasted my time. This is so stupid.

Currency must be backed by production, else by force.

That is a basic reality of economics and politics.

The developers of Bitcoin have no idea the risks they are taking of being blamed when the ponzi bubble crashes.

You early adopters who are pumping, all the information is being saved by the NSA.

When they are ready to prosecute, when the general population is destitute as this economic crisis goes into the abyss after 2017, there is not going to be any rationality.

Homeland Security has purchased over a billion hollow point bullets.

Think about it.

Find your rock.

Shelby wrote:
Luno wrote:
I cannot think of any currency, current or past, that doesn't have every property of a ponzi scheme:

That it has no value other than what has been paid by previous investors and is only gaining value by specuation.

BINGO! What took you guys so long to reach that important realization.


Luno wrote:
For Bitcoin to be fraudulent,  It has to have a back door in the code or another weakness only known by Satoshi or a few. This would be difficult to implement, as it's open source...

The fraudulent point is very important. You can rationalize all you want about what is and is not fraudulent, but the fact is that when the public interest is harmed, and many people get angry, history shows you can be prosecuted without fairness:

http://bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose/8709?noredirect=1#comment11400_8693

Good point about being fraudulent-- what I mean by the requirement for the "white lie". What income? Currency systems don't generate any income. They are all fraudulent according to who receives the debasement. Usually that is the banksters, so we can't prosecute them for it. It is very dangerous to be a developer on a currency system that has rewarded you and is going destroy the wealth of many greater fools. I would never be aligned with Bitcoin, many prosecutions are coming after it fails. You've been warned

What is fairness anyway? It is just another word for "I got mine and got away with it".

Now you know why I won't touch a bitcoin even if you offered it to me for free. I am not stupid.

Read this:

http://bitcoin.stackexchange.com/a/8728/3441

Here is what I wrote:

http://bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose/8709?noredirect=1#comment11404_8728

I was working on money systems from 2007. I stopped bcz I concluded that no money system can exist w/o a central repository. Bitcoin moves it into the cloud, but still a single centralized copy. As you say, much  net traffic goes thru govt routers along some hop. The rest they harvest via google, facebook cookies, etc.. I feel sad now bcz Bitcom idealism that is going to end up giving the government exactly what they want from a digital currency. I am working a different idea where the software code is the money-- a money for programmers. Their code is their money. We use each other's code.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 1:37 am

http://bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose/8723?noredirect=1#comment11426_8723

You are very naive about consumer protection law. And we are headed into increasing socialism, not less. There is a clear intent to deceive on page 3 of Satoshi paper. He said Bitcoin's supply curve is motivated by gold, but it is not. Gold's supply & periodic nominal increase both increase forever, Bitcoin's decreases to 0 fast. Lies in the prospectus are FRAUD. Bad invesment ≠ fraud. Ponzi, mania, pump&dump = fraud. See a difference?

http://bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose/8723?noredirect=1#comment11435_8723

If you own already, pump&dump is applicable. It doesn't matter what you call it, the government will invent a new description, if the prospectus is fraud or even deception, there is big trouble ahead if many people are harmed. A golden rule in business is never let your customers get harmed, else you WILL suffer too. Only Wallstreet can break that rule, bcz the judges are bought and paid for.

http://bitcoin.stackexchange.com/questions/8671/any-counter-proof-that-satoshi-nakamoto-did-not-design-a-ponzi-scheme-on-purpose/8723?noredirect=1#comment11421_8723

Doesn't matter if u name it pump&dump, mania, or ponzi — they're all fraud. Fraud is an intent to deceive. Page 3 of the Satoshi's paper, as well the Bitcoin foundation logo, are fraudulent deceptions, implying that Bitcoin has a similar debasement/inflation model as gold. I refuse to be part of fraud, neither as a developer nor as an early adopter defrauding the naive later adopters. So you go ahead & fool yourself that the name makes a difference, I don't plan on joining y'all to jail. The banksters throw their underlings to the guillotine after finished using to do their bidding.

@Shelby: "X is motivated by Y" is entirely consistent with "X is different from Y".

Tell that to an angry Obama mob. Courts are not computer programs David. It doesn't matter what you call it, the government will invent a new description, if the prospectus is fraud or even deception, there is big trouble ahead if many people are harmed. A golden rule in business is never let your customers get harmed, else you WILL suffer too. Only Wallstreet can break that rule, bcz the judges are bought and paid for.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 1:50 am

Korbman, let's talk about fraud. Where are the prospectus on your site? I see  you are selling notes to fund mining pool in ASICs. No wonder you hate me, because I was going to use hard-disks.

So where in your prospectus do you disclose that bitcoin is lying about being modeled after gold?

Let's get legal now. Put here on the written record.

Come on, don't get shy now  :-*

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 6:37 am

Okay David I'm humbled by your humbleness and motivated by your rationality, so let me step out my war mode and speak to you civil. Apologies, I had gotten war weary in this forum dealing with so many combatants.

I just provided a new answer at the bitcoin SE about transaction fees won't scale. So thus, it adds another reason to support that Bitcoin is designed to not scale for transactions, rather for investment.

But without transactions, there is nothing to invest in-- no value. Precisely what makes a ponzi scheme.

It is specifically designed to fall off in revenue for miners, as transactions were supposedly going to increase.

Satoshi separated transactions from blocks. The only protocol point of Bitcoin is to mine blocks, not to process transactions. And the mining was designed to fall off at halving every 4 years.

If that ain't a scam, then tell me why?

http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be/8749#8749
http://bitcoin.stackexchange.com/questions/3111/will-bitcoin-suffer-from-a-mining-tragedy-of-the-commons-when-mining-fees-drop-t/8686#8686
http://anonymint.org/#Bitcoins_Transaction_Flaws




I want to share something about the way money should work from a genius (who was held in prison by the USA for 7 years without a trial):

http://armstrongeconomics.com/2013/03/25/sovereign-debt-crisis-conference-2/

We must address a basis question. Those who cannot comprehend what is really at stake will just be fixated on “where do I put my money” and could care less that the barn is burning down around them. The core issue is if money is INTANGIBLE and is simply electronic, then we must ask two critical questions:

(1) why do we borrow with no intent of paying anything back, and

(2) why do we need taxes if money is INTANGIBLE?

If government simply created the money it needs to fund itself within a fixed limit of say 5% of GDP annually, then two issues emerge. First, there would be no borrowing so the debts would be about 33% of what they are today meaning that the purchasing power of money right now would be significantly higher. Second, we do not need taxation for it is silly to tax everyone when money is INTANGIBLE. Taxes were necessary ONLY when money was TANGIBLE. We have moved beyond that. If money is INTANGIBLE, then government can also be much smaller for it is pointless to hunt down people to get money in taxes when we create most of that money through borrowing and interest payments anyway. About 70% of all money created is going to bondholders. The higher that rises, the slower the economic growth and the worse the future appears.

The banksters were so afraid of this guy, they tried to murder him in prison. They put him maximum security prison, etc..

The only reason they did not succeed, is he has too many friends. He helped too many people make a lot of money, because his Pi model of economic confidence is always correct. He was earning $33 a minute on consulting in the 1980s.

I've been studying many different sources about monetary theory. Armstrong is correct.

We should fund what we need from debasement.

Bitcoin is the wrong model. It won't scale.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 6:38 am

A message to everyone:

The reason I am so warlike in this discussion, is because I understand that the future of our human race is at stake.

When you try to argue definitions, you are falling right into the hands of the people who are manipulating this. They are masters of Double-Speak.

One of the facts of life, is that things are not always what they seem to be from your own perspective.

I am trying to get bitcoin fixed, so that it can be what you think it is.

It is not what you think it is. I wish it was.

You will say, "why should we believe you, you don't even know what a ponzi scheme is".

All I can say to you, is you don't know the technical, monetary, and other issues involved here.

If you knew what I knew, you would understand.

Please stop thinking I am trying to destroy P2P currency.

Indeed, I do think hard-disks for Proof-of-Work would protect us more from the real threat, which is government.

But that is not the main problem with Bitcoin. The main problem is that debasement is dying. You've been hoodwinked into thinking that debasement is bad.

All of you should try to slow down with your reactionary minds, and do some careful reflection and study.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 6:40 am

MoonShadow wrote:
Shelby wrote:
DataPlumber wrote:
I'm a little disappointed that the link for "as Satoshi Nakamoto anticipated..." was not to any primary source, but rather your inference of his intentions.  I feel that your link to something other than a primary source is a bit misleading, since the thought that went through my head as I clicked was, "wow, he really said that?  I wonder what the context was."

Perhaps "as I clearly show Satoshi Nakamoto anticipated" would be a better title for the link.  It fits what you're trying to say without being misleading.

I don't have time to be a word-smith. People can think a little more slowly and figure it out.

The page I linked to has links somewhere (I can't remember where!) to some of the design decisions or statements by Satoshi.

Satoshi said that he expected mining to become concentrated among a few miners and that it would possibly be free.

Sure sounds to me like he was planning for a govt or fascist-corporation takeover.

You readers go vote and you don't even research all my links. So no wonder you don't see what I see!

You didn't understand why he said that.

Here, you're the latest inspiration for this...

https://bitcointalk.org/index.php?topic=159349.msg1684347#msg1684347

Are you sure I don't know? (hope you didn't overstep with your hubris)

I think I do understand why he said it would become concentrated.

It is a natural function of fixed-capital capitalism and economies-of-scale and I explained that here:

http://bitcoin.stackexchange.com/questions/3111/will-bitcoin-suffer-from-a-mining-tragedy-of-the-commons-when-mining-fees-drop-t/8686#8686

Did you even bother to read that linked document before accusing me of not knowing?

Satoshi even anticipated ASICs. Did you know that Mr. Bravado?

As for Satoshi's assertion that transactions might become free, I don't know why he would say that. Do you know why?

The only reason I can think of is government subsidy.

Why are you referring me to Satoshi's paper, when I've read it already and linked to it numerous times? Are you accusing me of not knowing how Bitcoin works? Please back up your accusation with proof.

The link where Satoshi said mining might be free in future, is from the mailing list where he first announced (the post where he discusses 10GB bandwidth for internet). I have read all of his posts. Have you?

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 6:41 am

MoonShadow wrote:
AnonyMint wrote:
MoonShadow wrote:
You didn't understand why he said that.

Here, you're the latest inspiration for this...

https://bitcointalk.org/index.php?topic=159349.msg1684347#msg1684347

Are you sure?

I think I do understand why he said it would become concentrated.

It is a natural function of fixed-capital capitalism and economies-of-scale and I explained that here:

http://bitcoin.stackexchange.com/questions/3111/will-bitcoin-suffer-from-a-mining-tragedy-of-the-commons-when-mining-fees-drop-t/8686#8686

Did you even bother to read that linked document before accusing me of not knowing?


Of course not.  How could I?  You had not provided such a link in the post I quoted!  Do you really think that you're opinion is so highly valued that we actually read everything you write?  I still won't read it, and I still know you didn't get it, because of this statement...

I linked it twice before within the past several posts.

So if you are not going to read the thread, then don't falsely accuse.

If you are going be an asshole, then don't be surprised if I am an asshole to you.

MoonShadow wrote:

As for Satoshi's assertion that transactions might become free, I don't know why he would say that. Do you know why?


Yes, I do.  Hell, I was here.



The only reason I can think of is government subsidy.

Not even close, buck.  I've had this conversation so many times, I feel like a third grade teacher ready for retirement.  You really have no idea.  Please, for the love of God, use the search function!

Give me the terse summary please. Because I suspect you are full of shit, based on the fact that you didn't even read the thread you were replying to as proven above.

Being "here" doesn't impress me. I've seen many logic fails on this site.

You've already demonstrated that you don't always have a high comprehension level.

P.S. Don't try that shit on me. I know how to deal with assholes like you.




Also why are you shifting the discussion from the debasement, which is the major fucking problem for funding mining for transactions going forward?

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 6:42 am

Satoshi said mining would become centralized:

http://www.mail-archive.com/cryptography@metzdowd.com/msg09964.html

Here he said there would probably always be nodes willing to process for free after debasement ends. He did not elaborate on why:

http://www.mail-archive.com/cryptography@metzdowd.com/msg10142.html

Another reason to centralize mining is the communication overhead, which I implied in my prior post where I said Satoshi was discussing the 100GB bandwidth.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 6:42 am

Shelby wrote:
Another reason to centralize mining is the communication overhead, which I implied in my prior post where I said Satoshi was discussing the 100GB bandwidth.

He is not using the bandwidth as the reason the mining will become centralized. He says it will become centralized any way. That is why I say the reason is the economics of fixed-capital investment.

If you have 1 million transactions per day with 1KB each, that is only 1GB per day bandwidth for each peer. With a 10Mbps connection, that is only 15 - 20 minutes per day. And bandwidth is increasing.

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Re: Bitcoin - the "gold will save us" ponzi scheme

Post  Shelby on Wed Mar 27, 2013 6:44 am

It amazes me that you couldn't see that what I was expecting from Satoshi is exactly what you have written below.

MoonShadow wrote:
Shelby wrote:
MoonShadow wrote:

Not even close, buck.  I've had this conversation so many times, I feel like a third grade teacher ready for retirement.  You really have no idea.  Please, for the love of God, use the search function!

Give me the terse summary please. Because I suspect you are full of shit, based on the fact that you didn't even read the thread you were replying to as proven above.


Satoshi believed that there would be few professional mining outfits, and that most users would not often have to pay a transaction fee, because in a future that bitcoin had adoptence and success near the level of a minor national currency, most businesses would be accepting them.  For major retailers such as Wal-Mart or Target, accepting bitcoins via free transactions would be a comparative advantage they could wield over smaller competitors because these major retailers could afford to either build their own mining farm or sponsor a professional mining outfit by contract, so that their free transactions could be favored by those same contract miners in the same way that fee paying transactions can be expected to be favored over free transactions now.  The same kind of arrangement could occur between bitcoin "banks", who agree to transact off-network between their members whenever feasible and to mutually favor each other's userbase regarding free transactions within their own transaction/mining pools.  Thus, the market for transaction fees was expected, from very early on, to compete with partial trust parallel payment networks built up specificly to avoid direct blockchain transaction fees.

Therefore, few professional miners as mining without sponsors or some other off-network method of income would eventually become difficult; and mostly free transactions (to consumers) because the primary burden of paying for the network would shift to the corporations that desire to get you to spend in their stores.

And, yes, that is the short version.

Thank you very much! So you just proved my point that he was expecting the fascist-corporatism model for our future!

Where did he actually write that? I just deduced in my own mind that he was expecting a govt+corporate takeover of society. Or is that some interpretation you all sorted out independent of him saying it?

MoonShadow wrote:


Also why are you shifting the discussion from the debasement, which is the major fucking problem for funding mining for transactions going forward?

Because it's not a problem, and you don't see why.  Start with the above summary, but there is much more to it.

That is exactly the problem.

You are not building freedom. You are building slavery.

-------------------

So now thanks to our gracious global moderator MoonShadow, we see the true model for Bitcoin.

This is a model where debasement ends, and the large corporations control our lives.

You've just proven which answer is correct to my question. And it wasn't my answer.

Thanks for the slamdunk! Wow you couldn't have made it any easier for me.  :-*  :-*  :-*

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