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Geek Culture / Who's generated bitcoins?

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Phaelax
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Posted: 29th Mar 2013 15:31
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If you're like me and still somewhat oblivious to what exactly is a bitcoin and why anyone should care (which I'm not sure anyone still should), I found this article to be both very simple and helpful.
http://lifehacker.com/5991523/what-is-bitcoin-and-what-can-i-do-with-it


While researching some new imaging methods (Norton Ghost is being discontinued in a month) I ended up on Lifehacker and found that article. I looked at http://www.bitcoinplus.com/ and gave it a try for a little bit. I didn't let it run for but a few minutes, work computer and all ya know.

So last night before bed, I set my home desktop to run (at about 4.4GHz) and saw the estimated time go from about 2.5 hours(work) to about 22 minutes on mine. Over the next 7 hours last night, I completed 26 generations. Each one earning me a measly 0.00000362 bitcoin. So that's really an average time of about 16min each, but I saw some transactions complete in as little as 2min on some occasions.

According to the websites stats:
Quote: "Your total hash rate is 4.77 Mhashes per second (4772185 hashes per second).
This will result in 4.00000 payouts per hour, or 0.00030432 BTC per day."


So if my math is correct, it could take 3286 days (about 9 years) to generate a single bitcoin! So unless you have a google server farm or a Cray computer, it's basically impossible for the average person to earn any sort of money.

So I have to ask, why does anyone have interest in backing this type of economy?

"You're all wrong. You're all idiots." ~Fluffy Rabbit
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CoffeeGrunt
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Posted: 29th Mar 2013 16:15
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Sounds like a scam.

If the money doesn't exist and isn't recognised by law - that article states that it's used for less-than-legal dealings peer-to-peer - then it's worryingly fragile.
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TheComet
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Posted: 29th Mar 2013 16:25
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Quote: "So if my math is correct, it could take 3286 days (about 9 years) to generate a single bitcoin! So unless you have a google server farm or a Cray computer, it's basically impossible for the average person to earn any sort of money."


If you used the GPU to parallel-process the hashes, you could increase the speed it takes to calculate by factor of roughly 10'000, cutting the time it takes to make one bitcoin down to about 8 hours.

Quote: "So that's really an average time of about 16min each, but I saw some transactions complete in as little as 2min on some occasions."


From the FAQ:

Quote: "I generated a payout in 5 minutes but it says it takes 2.5 hours. How did that happen?
Payouts are essentially random. It's like a lottery that happens millions of times per second, where you get an entry for every calculation you perform. In your case, you got lucky and a got a payout quickly. "


TheComet

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TheComet
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Posted: 29th Mar 2013 16:32
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Quote: "If the money doesn't exist and isn't recognised by law - that article states that it's used for less-than-legal dealings peer-to-peer - then it's worryingly fragile. "


...And you can't use normal money for less-than-legal dealings peer-to-peer? I don't see your point.

Why on earth does it need to be recognized by the law? If I paid you in sandwiches - which isn't recognized by the law as a currency - and you accept my payment of sandwiches, there's nothing illegal about it.

The whole point of bitcoin is that the currency isn't centralized, and no one can control it.

TheComet

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Melancholic
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Posted: 29th Mar 2013 16:41 Edited at: 29th Mar 2013 16:42
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Quote: "Sounds like a scam.

If the money doesn't exist and isn't recognised by law - that article states that it's used for less-than-legal dealings peer-to-peer - then it's worryingly fragile."


What about it sounds like a scam? The fact its electronic? Because the majority (>99%) of money in circulation is electronic already. Or maybe because its not technically backed by anything? Because neither is any fiat currency currently... Why does it being used for illegal purposes make it fragile? If anything that's probably what was accountable for the stable $10-$20 period before this sudden rise in value

Quote: "If you used the GPU to parallel-process the hashes, you could increase the speed it takes to calculate by factor of roughly 10'000, cutting the time it takes to make one bitcoin down to about 8 hours"


With the advent of FGPAs and ASICs mining with a GPU is certaintly unprofitable, if a GPU could mine that quick id be placing orders immediatly

Quote: "So I have to ask, why does anyone have interest in backing this type of economy?"


Its not all about making money mining, as its essentially a P2P currency, monetary policy isn't controlled by some incompetent central bank, rather the rate that new money is bought into circulation is controlled by an algorithm, but there is also a finite amount of the currency, so all form of monetary policy stops when we reach the limit. Its decentralized nature also lends itself to anonymity from governments, hence its adoption for illegal reasons via silkroad and what not.


I can count to banana...
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mr_d
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Posted: 29th Mar 2013 17:39
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If they used this in Cyprus, they wouldn't have worried that the Gov could take up to 25% of their savings...

Seriously - I heard about bitcoin when it first came out, but it seemed like a semi-scam to me back then, so I didn't pay much attention to it and forgot all about it. Heard about it again about a year ago now and found that if I have invested 100 bucks to it at the beginning, then I could have been a millionaire by now

I like the principle/theory behind it as stated above (and how it's marketed), that it's decentralized, and not controlled by any country or bank, and the theory behind it seems legit...

As to the concern that it's used for less than legal situations; as already mentioned, that is happening with "real" currencies now anyway, and if you look past the propaganda that it's used only by criminals for criminal activities, then that fact actually makes it more reliable (as I don't think many crims like loosing their money).

I've heard that many legit businesses are taking up this as an acceptable means of payment. You can even order a pizza (among many other things) and pay with bitcoin now, so I've read.

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Melancholic
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Posted: 29th Mar 2013 18:25
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Quote: "Seriously - I heard about bitcoin when it first came out, but it seemed like a semi-scam to me back then, so I didn't pay much attention to it and forgot all about it. Heard about it again about a year ago now and found that if I have invested 100 bucks to it at the beginning, then I could have been a millionaire by now "


You and me both...


I can count to banana...
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CoffeeGrunt
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Posted: 29th Mar 2013 19:08
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Just wait until a government takes notice of it, and realises they can't tax it. It'll be like SOPA without the mass public resistance.

Everyone talks about how evil banks are here, but I'd like to ask where you're storing your hard earned cash right now?

Exactly. You and I both know that despite fat cat CEOs and investment bull, the protections both legal and contracted are far superior here, especially as far as fraud prevention and compensation don't actually exist as stated in that article.

It might've been cool to jump on when it started, but it won't ever get massive without a large body backing it. Also, the price of these coins is probably going to depreciate, given that everyone's clamouring to get them.

How can they pay you for running your PC anyway? I just don't like that idea, I'm worried they're botnetting it or some weird stuff.
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Diggsey
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Posted: 29th Mar 2013 19:42
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Bitcoins are not centrally controlled so the "they" you are referring to doesn't exist. The rate of inflation is completely predetermined because as hardware gets faster at mining bitcoins, the system automatically adjusts itself to make the process of mining harder.

The reason mining generates money is because in the process of mining you are verifying other people's transactions, which is worth something. Initially this payment is artificial and is the way bitcoins are first created, but over time this has been slowing down. Because mining/verifying transactions is difficult, for large batches of transactions the people who wish to get the transactions verified pay a small amount for the process. Eventually as mining becomes unprofitable the bitcoin economy is designed gradually to switch over to this mode of operation.

[b]
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Phaelax
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Posted: 29th Mar 2013 20:04
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Quote: "If you used the GPU to parallel-process the hashes, you could increase the speed it takes to calculate by factor of roughly 10'000"


And how many GPUs would I need for 10k factor? Because I only do about 75 hashes/sec on a gtx560.


Does anyone know what these complex calculations are for that we're supposedly solving? Maybe someone should implement bitcoin generation into seti!

"You're all wrong. You're all idiots." ~Fluffy Rabbit
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Melancholic
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Posted: 29th Mar 2013 22:57
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Quote: "Just wait until a government takes notice of it, and realises they can't tax it. It'll be like SOPA without the mass public resistance."


Just because there isn't a current system to tax crypto-currencies doesn't mean one cant exist...

Quote: "Everyone talks about how evil banks are here, but I'd like to ask where you're storing your hard earned cash right now?"


This really isn't a fair point, there is no alternatives, oh wait, there is

Quote: "It might've been cool to jump on when it started, but it won't ever get massive without a large body backing it. Also, the price of these coins is probably going to depreciate, given that everyone's clamouring to get them."


It may very well depreciate, it would be nice to have a reason why you think that though, of course there is no supply side change responsible for the exchange rate, as the increase in supply has been kept near constant, so it must be demand side, but why has demand increased is the question.

Quote: "How can they pay you for running your PC anyway? I just don't like that idea, I'm worried they're botnetting it or some weird stuff."


Who exactly is paying you for running your computer? There is no "them", its decentralized, as said before. If your not convinced, you can go grab one of the open source miners and look at the source, hell, you could go download the whole blockchain and inspect all mined coins or transactions that have ever taken place.

Quote: "And how many GPUs would I need for 10k factor? Because I only do about 75 hashes/sec on a gtx560."


Nvidia GPUs seem to get terrible hashing rates compared to their AMD equivilents, I'm in the same boat with a GTX 460 -.- If you want a cryto-currency to mine on that hardware you might look to Litecoin instead


I can count to banana...
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Seppuku Arts
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Posted: 29th Mar 2013 23:29
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This currency confuses me. All I can see is you're mining currency through processor cycles, but isn't currency used in trade for something? What exactly are you being paid for? What do your cycles serve? What exactly are you being paid for? I don't buy that it's just free money.

I've not read up any explanations that make it clear to me.

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easter bunny
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Posted: 29th Mar 2013 23:31 Edited at: 29th Mar 2013 23:36
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Quote: "How can they pay you for running your PC anyway? I just don\'t like that idea, I\'m worried they\'re botnetting it or some weird stuff. "

Hackers have made virus botnets that generate bitcoins on randoms users computers then send them to the hacker, this is a way of making a huge amount of \'money\', imagine if you had 10,000 computers to generate bitcoins, many of them with high speed CPUs/GPUs
according to some online sources, one bitcoin is worth around $90, if one out of 100 computers has the capability to generate one bitcoin in a day,then that\'s $9,000 a day for the hacker. Some botnets have as many as 50,000,000 computers in them, if the makers of these botnets used them for bitcoin mining, they would get $45,000,000 dollars a day!, of course, this would hugely reduce the price of bitcoins and make them practically worthless. Simply, it wouldn\'t work.
Articles:
http://www.redorbit.com/news/technology/1112812519/bitcoin-miners-versus-botnet-miners-032813/
http://www.symantec.com/connect/blogs/bitcoin-botnet-mining
http://threatpost.com/en_us/blogs/zeroaccess-botnet-cashing-click-fraud-and-bitcoin-mining-103012

Dodge those Balls, awesomest app on the Play Store
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the_winch
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Posted: 30th Mar 2013 00:15 Edited at: 30th Mar 2013 00:15
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Quote: "This currency confuses me. All I can see is you're mining currency through processor cycles, but isn't currency used in trade for something? What exactly are you being paid for? What do your cycles serve? What exactly are you being paid for? I don't buy that it's just free money."


It's just a clever way of allocating the money to people that are interested in and have invested in the project.

If you want to increase the amount of currency in existence then essentially someone has to get free money. How else would you choose who that was?

By way of demonstration, he emitted a batlike squeak that was indeed bothersome.
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CoffeeGrunt
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Posted: 30th Mar 2013 00:46 Edited at: 30th Mar 2013 00:47
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The current system is that a mint prints it, and the government uses it to pay people.

Free money for idling my PC on a program...it just sounds too much like those adverts. You know those ones?



Yeah ya do.

Because a system where you get free, effortless and high-value cash for going AFK on your PC is like totally legit guys and cannot have any flaws.
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Melancholic
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Posted: 30th Mar 2013 01:10
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Quote: "Because a system where you get free, effortless and high-value cash for going AFK on your PC is like totally legit guys and cannot have any flaws."


I really cant tell if your trolling here on not, I really hope you are...


I can count to banana...
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TheComet
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Posted: 30th Mar 2013 01:52
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Melancholic and I calculated a little something.

If you bought this: http://www.digikey.com/product-detail/en/XC7V2000T-1FHG1761C/XC7V2000T-1FHG1761C-ND/3925283

And wrote the software correctly for it and everything, you could generate about 511 GHashes/second. This would generate (currently, as I write this post) 1176$ per day, and you'd have payed off the price for that FPGA within 20 days.

TheComet

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Matty H
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Posted: 30th Mar 2013 16:39
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Some people are missing the whole point of bitcoin. It was not created as some sort of scam.

If you really look deep into where money comes from, what those numbers are in your bank account etc, you may discover that the current monetary system(mostly worldwide) is more akin to a scam, or a pyramid scheme where more and more money is needed, along with growth in the various economies, to prevent major defaults and bankruptcies.

The debt/money setup we have now is causing major problems in many economies around the world. An interest free currency like bitcoin could facilitate trade without the constant interest payments to the financial sector, which currently drains wealth from the real economy(people doing useful things)imo.

Paying your taxes in bitcoin would not be a bad thing, at least we don't have the massive overhead of a bloated financial sector taking their cut.

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Jimpo
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Posted: 30th Mar 2013 18:22
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Quote: " This currency confuses me. All I can see is you're mining currency through processor cycles, but isn't currency used in trade for something? What exactly are you being paid for? What do your cycles serve? What exactly are you being paid for? I don't buy that it's just free money. "

It's not just free money - you are paid for verifying other people's transactions. When someone buys something with Bitcoins, their coins have to be verified. Their transaction is broadcast to people mining Bitcoins, and if you are able to compute a proof that this was a valid transaction, you are paid for your work.

http://degorpg.blogspot.com/
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CoffeeGrunt
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Posted: 30th Mar 2013 21:52
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So whenever you pay with Bitcoins, the processor is paid a tithe? Or does the authority in question simply make a new coin and grant it to you?

I'm just saying that I'm holding back on my cash for this. I like how whenever I mention that it's slightly suspect and a bit too easy a way to farm money, people claim I'm trolling.

I don't personally like the way this operates outside a law or governing body beyond having the money exist, and having it be your business to use or safeguard it. A lot of "freedom-y" people might love the idea of "the man" not knowing what they have, but it still doesn't really add up in my opinion.

Still, if you get rich off it, more power to you. If you get scammed or something collapses, likewise.
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TheComet
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Posted: 30th Mar 2013 21:56 Edited at: 30th Mar 2013 21:58
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Quote: "Or does the authority in question simply make a new coin and grant it to you?"


What authority?

You're talking as if the bitcoin is something being controlled by someone, and they could potentially rip you off. You couldn't be more wrong.

TheComet

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Dark Java Dude 64
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Posted: 30th Mar 2013 22:35
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Agreed! And, not being controlled by any sort of government is one of the reasons this is a more stable and reliable type of currency. I think your logic is rather flawed, Coffeegrunt.

Text only signature /troll
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Melancholic
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Posted: 30th Mar 2013 22:52
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Quote: "So whenever you pay with Bitcoins, the processor is paid a tithe? Or does the authority in question simply make a new coin and grant it to you?"


I think its been said enough times already, but let me emphasize it once more, this "authority" you talk about doesn't exist, its entirely decentralized, peer to peer, similar to the way torrents work.

Quote: "I like how whenever I mention that it's slightly suspect and a bit too easy a way to farm money, people claim I'm trolling."


I suspect this was aimed at me, so let me explain, the Bitcoin client and miners are all open source, if there were something suspect it would be pretty damn easy to find it, people over on the Bitcoin forum have scoured through the client, and the blockchain and nothing "suspect" has arisen. Secondly, it is not easy to generate money via Bitcoin, mining with a computer at this stage you'll loose money on the electricity bills, people build massive contraptions (not necessarily computers) to make it profitable, so unless your computer looks like this:



Your not gonna be making any money mining...

Quote: "I don't personally like the way this operates outside a law or governing body beyond having the money exist, and having it be your business to use or safeguard it. A lot of "freedom-y" people might love the idea of "the man" not knowing what they have, but it still doesn't really add up in my opinion."


That's fine, everybody is entitled to an opinion, we seem to disagree as to whether the government has some inalienable right to govern, whilst i agree some government intervention in the free market can be beneficial, i think it should be exactly that, some intervention (don't take this as some super liberal opinion, I'm all for a moderate degree of wealth distribution)


I can count to banana...
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Seppuku Arts
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Posted: 30th Mar 2013 23:24
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How exactly would this method support an economy? All I'm seeing is bitcoin being earned in two ways. You get free money and you get money for processing other people's free money.

As far as I can see, there's no real trade, nothing to fuel an economy. In all honesty, if I was running a bitcoin farm, what incentive would I have to do my job?

Or am I missing the point? Or missed something important. It would make more sense to me if it was just an open currency not touched by the coffers of any one government, but is global, but in theory I could be paid in bitcoins and be taxed bitcoins and then go to the grocery store and spend bitcoins...in an world where bitcoins are an acceptable currency. Because the value of the bitcoin is global defined.

Unless of course, that's what it is. As you can probably see, I am still somewhat confused as to why I should like the idea of a bitcoin economy. Perhaps there isn't supposed to be one, but another money making scheme on the internet?

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CoffeeGrunt
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Posted: 31st Mar 2013 00:15
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I'm with Sepp. The currency and it's handling isn't the problem - I get being able to convert to an unaffiliated form of cash that isn't hampered by economy the way a physical coin is.

What I can't understand is how it appears out of thin air when you run this program. No-one gives it to you, but you get it. It just pops out like Mario stomping a Goomba...

The other question is why can't I pay for stuff on most sites with it?
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Melancholic
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Posted: 31st Mar 2013 00:17
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Its a common misconception that current fiat currencies are "backed" by anything, the value of a currency at the moment is decided by the amount of people willing to buy that currency, and the amount of people willing to sell that currency. Of course this is an oversimplification, the people willing to buy the currency would do so in order to buy exports from the country than uses that currency, so essentially its propped up by trade. Of course governments will intervene in the foreign exchange market by either mass selling or buying currencies to affect the demand or supply of the currency, hence why governments have foreign reserves. If global adoption of Bitcoin were to occur then there would be no need for a foreign exchange market. It would prevent central banks from undervaluing their currency to promote trade (just look at the value of the renminbi and the Chinese central banks actions) or conversely alleviate problems developed countries have when they have a strong currency.

So its not so much that the proponents of Bitcoin are all tin foil hat wearing extreme liberal conspiracy types. A global currency is a nice though, hence monetary unions like the EU. There is also a great deal of trade going on utilizing Bitcoin, that being said it is mostly illegal stuff, weapons, drugs, ect....


I can count to banana...
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Melancholic
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Posted: 31st Mar 2013 00:34
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Quote: "What I can't understand is how it appears out of thin air when you run this program. No-one gives it to you, but you get it. It just pops out like Mario stomping a Goomba..."


The Bitcoin network (decentralized, so unanimously by all clients) issues a block, blocks contain information of transactions that have happened recently and haven't been added to the blockchain yet, the blockchain is like a really large file that every bitcoin client has and is kept constant, this way its near unhackable as you would have to hack 51% of all clients running the network. It contains information about which coins are owned by which computers, and when transactions have taken place. When a block is confirmed, it is added to the blockchain, in order to confirm a block it has to be confirmed by 51% of the network, which is made up these "miners". As a reward for helping confirm the block bitcoins are given to the miner. Because the rate at which new coins are released to the economy is kept constant, these blocks are encrypted so the are varyingly difficult to decrypt and confirm. This way if loads of people start to mine suddenly, the difficulty increases and profits decrease.

Quote: "The other question is why can't I pay for stuff on most sites with it?"


Because its still very much in its infancy, though there has been a lot of media surrounding it recently, such as the man selling his house for Bitcoins, there was even an amazon like store that opened that accepted only Bitcoins, not sure if its still running though.


I can count to banana...
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Dark Java Dude 64
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Posted: 31st Mar 2013 00:49
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Quote: "What I can't understand is how it appears out of thin air when you run this program. No-one gives it to you, but you get it. "
Incorrect! A small amount of money in the bitcoin currency is given to you when you confirm a transaction, unless I read incorrectly.


How would this method support an economy? Well, it's a currency just like any other. Thing is, this currency has many upsides compared to other common currencies, a big one that I know of off the top of my head is that this currency would have no bank of any sort, therefore eliminating things like interest and such.

Text only signature /troll
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CoffeeGrunt
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Posted: 31st Mar 2013 02:14 Edited at: 31st Mar 2013 02:16
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Okay, I understand the system of divvying it out though.

But an interesting point was raised:

Quote: "A global currency is a nice though, hence monetary unions like the EU."


Now, you see the Eurozone is suffering a financial crisis that has hit Greece hard, left Cypriot banks reeling in the last couple of weeks, and is threatening to topple pretty much everyone who isn't Germany or Switzerland unless the region can really get things back together.

Now not saying it's not a good idea, but surely currency diversity is a good thing, much as genetic and species diversity is? If the world lived or died on the Bitcoin economy, then would it really be better off? When a Bitcoin is worth Sixty of my Pounds, and one of my Pounds is worth 92,233,720,368,547,760.00 Zimbabwean dollars, (apparently. That's a damn scary figure if it is.)

If we convert to Bitcoin, each single coin would be worth sixty times the crazy Zimbabwean conversion ratio I pulled off Google, which is admittedly is an extreme case.

Still, should we deny Zimbabwe access, or massively scale down the Bitcoin's value to cope? Not to stereotype, but I don't doubt that there are people working in Zimbabwe earning for less that a Bitoin's worth a day. Can it be divided if it is made corporeal, because digital money is useless in most of the world's regions? There's more countries than Zimbabwe with horribly devalued currency.

Sure, these are problems to overcome, but I bet you that Zimbabweans can buy bread far cheaper than I can, so it scales to a degree. Each currency creates a bubble amongst all the other currency bubbles. The only way we could all use the same currency is if we're all on the same, approximate plane of wealth.
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Dark Java Dude 64
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Posted: 31st Mar 2013 02:21
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Actually, I agree with literally everything you just said! Indeed, the bitcoin becoming a (perhaps even one and only) global economy may not be an ideal situation. From what I have heard though, the bitcoin is experimental and not intended to take over any current world currencies.

Text only signature /troll
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the_winch
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Posted: 31st Mar 2013 02:35
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You do not get paid bitcoins for verifying transactions.

Basically bitcoin transactions are recorded in a database (blockchain). Transactions are added in blocks.

However you can't just add blocks as and when you want as other nodes will reject the block unless it meets certain criteria. One of the criteria is the answer to a very hard to solve problem the answer to which can be verified very quickly.

That's what mining is. Trying to find the answer to the hard problem so you can generate a valid block of transactions and add it to the chain. The person that finds a block gets a reward of some bitcoins plus whatever transaction fees where included in the transactions in the block.

By way of demonstration, he emitted a batlike squeak that was indeed bothersome.
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Melancholic
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Posted: 31st Mar 2013 02:39 Edited at: 31st Mar 2013 04:34
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Quote: "Now, you see the Eurozone is suffering a financial crisis that has hit Greece hard, left Cypriot banks reeling in the last couple of weeks, and is threatening to topple pretty much everyone who isn't Germany or Switzerland unless the region can really get things back together."


The problems the Eurozone is facing are due to the insane monetary policy employed by the ECB, which took into account pretty much solely the needs and wants of the major players, EG Germany. This insane monetary policy, coupled with an economy already in a bad state, created the situation Greece and many others are in. With Bitcoin there is a finite ammount of currency, thus no monetary policy, so the currency much more accurately portrays the value of goods, and Greece wouldn't have ended up in this situation.

Quote: "Now not saying it's not a good idea, but surely currency diversity is a good thing, much as genetic and species diversity is? If the world lived or died on the Bitcoin economy, then would it really be better off? When a Bitcoin is worth Sixty of my Pounds, and one of my Pounds is worth 92,233,720,368,547,760.00 Zimbabwean dollars, (apparently. That's a damn scary figure if it is.)"


We could debate whether or not currency diversity is a good thing or not all day, however i think the discussion should be centered more on global decentralized currencies vs current fiat currencies. In which case there is still space for diversity, i for one am currently mining "Litecoin", a crytocurrency alternative to Bitcoin, and since Bitcoin is completely open source many other currencies can easy arise.

Quote: "Still, should we deny Zimbabwe access, or massively scale down the Bitcoin's value to cope? Not to stereotype, but I don't doubt that there are people working in Zimbabwe earning for less that a Bitoin's worth a day. Can it be divided if it is made corporeal, because digital money is useless in most of the world's regions? There's more countries than Zimbabwe with horribly devalued currency."


I'm not really sure of the point your trying to make... Firstly Zimbabwean dollars are useless not only because they are massively inflationary (not undervalued) but because they're not even used in Zimbabwe for transactions. Secondly, its not like you have to buy a whole Bitcoin, they are divisible... Plus there are companies making physical Bitcoins for places where the infrastructure isn't there to support it.

Quote: "Sure, these are problems to overcome, but I bet you that Zimbabweans can buy bread far cheaper than I can, so it scales to a degree. Each currency creates a bubble amongst all the other currency bubbles. The only way we could all use the same currency is if we're all on the same, approximate plane of wealth."


Check some Purchasing Power Parity indexes and get back to me on this one...


I can count to banana...
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the_winch
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Posted: 31st Mar 2013 02:59 Edited at: 31st Mar 2013 02:59
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Quote: "With Bitcoin there is a finite ammount of currency, thus no monetary policy, so the currency much more accurately portrays the value of goods, and Greece wouldn't have ended up in this situation.
"


Incorrect. There would only be no monetary policy in the area of increasing or decreasing the amount of bitcoins in existence. There would still be plenty of monetary policy in other areas.

People that abuse and manipulate the current currencies for profit, political gain or power are not just going to give up.

By way of demonstration, he emitted a batlike squeak that was indeed bothersome.
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CoffeeGrunt
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Posted: 31st Mar 2013 04:06
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Quote: "Secondly, its not like you have to buy a whole Bitcoin, they are divisible... Plus there are companies making physical Bitcoins for places where the infrastructure isn't there to support it."


So do they saw it into 20ths when they need that small a payment?

Greece went down because, well, it has little to export and no taxes if I remember correctly. Cyprus relied on foreign banking and everyone pulled out when they proposed a tax. It was also exposed to Greece's economics issues.

Sure, not saying using the Pound is going to save Britain. If the Euro fails, we'll follow. But having fragmented currencies slows and compartmentalises the process.
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Melancholic
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Posted: 31st Mar 2013 04:26
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Quote: "Incorrect. There would only be no monetary policy in the area of increasing or decreasing the amount of bitcoins in existence. There would still be plenty of monetary policy in other areas.

People that abuse and manipulate the current currencies for profit, political gain or power are not just going to give up."


Monetary Policy, as in controlling the money supply, whether it be expansionary or contractionary, once Bitcoin has reached its limit of coins, does not exist, there is a finite amount and that cannot be changed. You could argue that someone could horde enough and not use them, which would essentially be controlling the money supply, but that's not monetary policy, that's a guy hording coins... Im not sure what you mean by "In other areas" monetary policy by definition only refers to the supply of money.

Quote: "So do they saw it into 20ths when they need that small a payment?"




Why on earth would it work like that?


I can count to banana...
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CoffeeGrunt
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Posted: 31st Mar 2013 04:31
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Quote: "Monetary Policy, as in controlling the money supply, whether it be expansionary or contractionary, once Bitcoin has reached its limit of coins, does not exist, there is a finite amount and that cannot be changed. You could argue that someone could horde enough and not use them, which would essentially be controlling the money supply, but that's not monetary policy, that's a guy hording coins... Im not sure what you mean by "In other areas" monetary policy by definition only refers to the supply of money."


Isn't that the reason our current money policies are failing, because the vast majority is held by a small minority?
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Melancholic
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Posted: 31st Mar 2013 14:31
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Looking through this thread i shouldn't have been replying at half 3 in the morning

Quote: "Isn't that the reason our current money policies are failing, because the vast majority is held by a small minority?"


That is more of a problem with the redistribution of wealth, so its fiscal. Monetary policy is just policy that controls how much money there is in circulation, there's really only 2 types used today. Firstly the central bank of a country will change the interest rate at which it lends money at (this is money that the bank pulls out of nothing), lowering the interest rate effectively decreases the cost of money, and so is expansionary to the money supply, causing inflation, conversely increasing the interest rate will reduce inflation (though not necessarily cause deflation). Secondly, if adjusting the interest rate fails then central banks will often use quantitative easing (this is what the federal reserve started using a couple months ago, and what the ECB tried with Greece and Spain), quantitative easing is essentially just the central bank agreeing to buy any assets (often toxic) from a bank in order to encourage them to lend easier, thus encouraging economic activity. Quantitative easing most often doesn't work effectively and just leads to inflation without the economic growth.


I can count to banana...
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