Post by Alex on Sept 24, 2017 21:12:21 GMT
Over in the thread about who benefits from the creation of new dollars, Oliver asked:
1. Why can't new bitcoins be created by a bank as a debit to Alice and a credit to Bob? (I'm paraphrasing)
Crediting Bob's address on the bitcoin blockchain requires bitcoin to begin with. Debiting Alice's address on the bitcoin blockchain would require that she owned bitcoin in the first place, and if that was so, then she wouldn't have a need to get a loan.
If Alice wants to borrow a paper note that says "Bank X will pay the bearer of this piece of paper Y bitcoin," the bank doesn't necessarily need to have bitcoin. But if Alice tries to pay Bob for a house with that note, Bob will rightfully wonder why she doesn't just redeem the IOU and send him the bitcoin.
2. "Imagine receiving income in bitcoin. From 2010 to 2017 you say its value has risen from $0.05 to over $1'000 and back down to $250. Your income would have had to change inversely if it were denominated in BTC. So if you had had an income of 20'000 btc p/a originally, it would have fallen to 1 btc p/a at some point to now be somewhere at 4 btc p/a. How is that good?"
This question is about the desirability of both deflating incomes and volatile incomes.
Only irrational people are bothered by an income that decreases nominally. The important thing is that one's real income does not decrease. There is no reason to expect real incomes to decrease with a deflationary currency, as far as I know.
Volatility is undesirable for some people, and extremely exciting for others. As the bitcoin economy grows in size volatility has and will continue to decrease. Volatility does not affect bitcoin's ability to serve as a payment system.
and 3. "Same with saving. If you were lucky enough to save half your income in 2011, that would now be worth 10'000 years worth of income today. As a newcomer to the system you'd have to live pretty long to catch up... How is that good? How does that solve inequality?"
No one claims that bitcoin solves inequality.
The dollar system is unfair because new dollars are created for free by an oligopoly.
By contrast, anyone is free to create new bitcoin, but this process has significant costs.
Bitcoin is an experimental currency that could die! Early adopters only benefitted by incurring great risk. Most adopters also needed to put lots of in mental work to understand why the system works. The older bitcoin gets the less-likely it is to die.
and 4: "This is of course all hypothetical because no monetary system has ever survived such fluctuations."
This is false. Bitcoin has survived such fluctuations for 3186 days.
1. Why can't new bitcoins be created by a bank as a debit to Alice and a credit to Bob? (I'm paraphrasing)
Crediting Bob's address on the bitcoin blockchain requires bitcoin to begin with. Debiting Alice's address on the bitcoin blockchain would require that she owned bitcoin in the first place, and if that was so, then she wouldn't have a need to get a loan.
If Alice wants to borrow a paper note that says "Bank X will pay the bearer of this piece of paper Y bitcoin," the bank doesn't necessarily need to have bitcoin. But if Alice tries to pay Bob for a house with that note, Bob will rightfully wonder why she doesn't just redeem the IOU and send him the bitcoin.
2. "Imagine receiving income in bitcoin. From 2010 to 2017 you say its value has risen from $0.05 to over $1'000 and back down to $250. Your income would have had to change inversely if it were denominated in BTC. So if you had had an income of 20'000 btc p/a originally, it would have fallen to 1 btc p/a at some point to now be somewhere at 4 btc p/a. How is that good?"
This question is about the desirability of both deflating incomes and volatile incomes.
Only irrational people are bothered by an income that decreases nominally. The important thing is that one's real income does not decrease. There is no reason to expect real incomes to decrease with a deflationary currency, as far as I know.
Volatility is undesirable for some people, and extremely exciting for others. As the bitcoin economy grows in size volatility has and will continue to decrease. Volatility does not affect bitcoin's ability to serve as a payment system.
and 3. "Same with saving. If you were lucky enough to save half your income in 2011, that would now be worth 10'000 years worth of income today. As a newcomer to the system you'd have to live pretty long to catch up... How is that good? How does that solve inequality?"
No one claims that bitcoin solves inequality.
The dollar system is unfair because new dollars are created for free by an oligopoly.
By contrast, anyone is free to create new bitcoin, but this process has significant costs.
Bitcoin is an experimental currency that could die! Early adopters only benefitted by incurring great risk. Most adopters also needed to put lots of in mental work to understand why the system works. The older bitcoin gets the less-likely it is to die.
and 4: "This is of course all hypothetical because no monetary system has ever survived such fluctuations."
This is false. Bitcoin has survived such fluctuations for 3186 days.
