Bitcoin - End Game Theory

Dancook

Distinguished Member
Been noticing Bitcoin in the news a fair bit, and I don't even pay attention to the news.

I got reading this
How to get your virtual hands on some bitcoins - Telegraph

Only a finite number of bitcoins can ever be created (21 million, to be exact) and as more and more people compete to mine them, they require more and more computing power to unlock.

In the early days you could generate dozens at will with even a modest computer, but now it’s unlikely you would see any rewards without extremely expensive specialist hardware.

So the creator of bitcoin must have a lot of bitcoins, for the sake of math - I'm going to assume 24 whole bit coins! a fairly modest number..probably more like hundreds..

If as people say, bitcoin is the 'currency of the future' - I have a problem with 21 million going around 7 billion people. So we're going to need to decimalise it.

If everyone had an 'equal share' of bitcoin, they would have 0.03 bitcoins.

That makes the creator 8000 times richer than your average bitcoin owner.

A person earning £160,000,000 a year is 8000 times richer than someone who earns £20,000.
This was assuming a rather modest ratio of 24:0.03

Now today I also learn there are many types of digital currency
Crypto-Currency Market Capitalizations | Bitcoin Ripple Litecoin Peercoin Dogecoin Nxt Auroracoin Mastercoin Namecoin SiliconValleyCoin and more...

I'm super cynical... so I'll suggest that's all that's 208 people trying to get rich quick.

I see it's now even becoming taxable in the U.S. as capital gains, I wonder how many people will be declaring that..
 

blue max

Distinguished Member
I'm issuing bluemax coins. Limited to how ever many you want - 1 bluemax coin equals £1m. They can only go up in value. Form a queue.
 

Dancook

Distinguished Member
I'm issuing bluemax coins. Limited to how ever many you want - 1 bluemax coin equals £1m. They can only go up in value. Form a queue.

Bit rich for my blood, unless you want to pay me a 1 bluemax coin to clean your car, which I hope to cash in immediately..
 

blue max

Distinguished Member
Bit rich for my blood, unless you want to pay me a 1 bluemax coin to clean your car, which I hope to cash in immediately..

You're forgetting the spread - buy for, sell for spread that is. Sell for 1m, buy for 0p.

Bring your own Shammy :)
 

GBDG1

Distinguished Member
The founder of bitcoin about a million bitcoins. Although, none of them have ever moved anywhere, and the speculation is that they never will. Given that nobody knows who Satoshi Nakamoto is, we'll likely not know.

I'm not following your other logic. The genius behind bitcoin is certainly worth a billion dollars, so it's not really a conspiracy in any case.
 

Dancook

Distinguished Member
I'm not following your other logic. The genius behind bitcoin is certainly worth a billion dollars, so it's not really a conspiracy in any case.

In another way other than bitcoin?

If only by bitcoin, he needs to just wait until bitcoin is established then slowly sell his bitcoin into the market.

Since I sincerely doubt any one person will be rich enough to buy him out at this stage...
 

blue max

Distinguished Member
If no-one plays, it is worthless. No demand equals no value.

People want sterling. That's why it has a value.

The premise of bitcoin is it's escalating value. But only at the expense of those buying later. As I have said before, it is the basis of pyramid selling. They have no intrinsic value and are not linked to anything. Some will make money by buying and selling something that has an apparent value due to the fact that others are trying the same trick. At some point, it will falter. Don't get left holding the baby though.
 

GBDG1

Distinguished Member
In another way other than bitcoin?

If only by bitcoin, he needs to just wait until bitcoin is established then slowly sell his bitcoin into the market.

Since I sincerely doubt any one person will be rich enough to buy him out at this stage...

It would be difficult to sell any of the "genesis blocks", because the transactions would destabilize the market.

If no-one plays, it is worthless. No demand equals no value.

People want sterling. That's why it has a value.

The premise of bitcoin is it's escalating value. But only at the expense of those buying later. As I have said before, it is the basis of pyramid selling. They have no intrinsic value and are not linked to anything. Some will make money by buying and selling something that has an apparent value due to the fact that others are trying the same trick. At some point, it will falter. Don't get left holding the baby though.

This is the case with any monetary system, it's only value is equivalent to it's demand. The benefit of bitcoin is that there's a restricted flow and limited volume. This isn't the case with sovereign currencies like GBP, USD etc. Where the country can decide to print more money and devalue the currency via quantitative easing.

No currency trading is risk free, all currencies fluctuate and sometimes they even become totally worthless e.g. Angola, Argentina, Armenia, Austria, Azerbaijan, Belarus, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Chile, China, Estonia, France, Germany , Greece,Hungary, Nicaragua, Peru, Philippines, Soviet Union / Russian Federation, Taiwan, Ukraine and Zimbabwe.
 

Dancook

Distinguished Member
This is the case with any monetary system, it's only value is equivalent to it's demand. The benefit of bitcoin is that there's a restricted flow and limited volume. This isn't the case with sovereign currencies like GBP, USD etc. Where the country can decide to print more money and devalue the currency via quantitative easing.

The currency is divisible to about 0.00000001 or something,

But people probably don't use that many decimals in transactions - at the moment.

If we get to the stage where people start actually transacting to 9 decimal points - I'm wondering if that in some way is just like inflation...

It's a half baked idea though - I'm struggling to get my head round it :D
 

Trollslayer

Distinguished Member
Bitcon = get poor quick scheme.

Mis-spelling deliberate.
 
The c
If no-one plays, it is worthless. No demand equals no value.

People want sterling. That's why it has a value.

The premise of bitcoin is it's escalating value. But only at the expense of those buying later. As I have said before, it is the basis of pyramid selling. They have no intrinsic value and are not linked to anything. Some will make money by buying and selling something that has an apparent value due to the fact that others are trying the same trick. At some point, it will falter. Don't get left holding the baby though.

Stirling has no intrinsic value since it was decoupled from the Gold standard. Bitcoin will have value for as long as it's useful. Only idiots buy it for investment. It's purpose and value is in purchasing often illegal products and services. As long as it can do this and Stirling and other government backed currencies cannot, it will have value.
 

blue max

Distinguished Member
True, but sterling is woven into the fabric of our society.

It must surely be the aim of anyone selling something illegal, to end up with something other than effectively a credit note against something else illegal.
 
True, but sterling is woven into the fabric of our society.

It must surely be the aim of anyone selling something illegal, to end up with something other than effectively a credit note against something else illegal.

More and more legitimate retailers albeit in the tech world are accepting bitcoin payments and it is possible to exchange bitcoin for mainstream currencies.
 

blue max

Distinguished Member
More and more legitimate retailers albeit in the tech world are accepting bitcoin payments and it is possible to exchange bitcoin for mainstream currencies.

What exactly is the advantage of it for paying for illegal goods? Just curious (I don't know a whole lot about it - just from what I heard when they were discussing the MtGox debacle and the $2.7m theft of Bitcoins from the Silk Road 2 website).
 

Dancook

Distinguished Member
What exactly is the advantage of it for paying for illegal goods? Just curious (I don't know a whole lot about it - just from what I heard when they were discussing the MtGox debacle and the $2.7m theft of Bitcoins from the Silk Road 2 website).

Supposedly untraceable.
 
Supposedly untraceable.
Not really. It's very easy to trace bitcoin transactions. Every single transaction is stored in a public ledger that is present in every user's block chain. That's how the integrity of the currency is ensured. You can't just invent coins or fake transactions as everyone has a copy of the full ledger of every transaction. Of course you still need to match a bitcoin address with a real person but anonymity is not a key feature of Bitcoin.

The advantage is that the currency is outside government control. No one owns it. No one can stop people using Bitcoin as long as the buyer and seller both agree to use it. Contrast this to VISA and Mastercard suspending payments to Wikileaks or Russian music websites. It is also immune to inflation. The US dollar is administered by the Federal Exchange which many people do not know is a privately run business. Inflation of the dollar is entirely down to a small group of people who may decide to print more dollars. You can't inflate bitcoin, it has commodity style security of scarcity. The current value spike are purely down to idiot investors getting spooked by government legislation and technically inept exchanges. The currency itself is sound.
 

blue max

Distinguished Member
You say it is immune from inflation, but if someone needs to sell in a hurry, it floods the marked with them and the value goes down doesn't it?

Therefore it's value is set at what someone is prepared to pay. If they become more expensive, less people will be able to afford them, so demand decreases and the value drops.

I don't see it as a one way street.
 
You say it is immune from inflation, but if someone needs to sell in a hurry, it floods the marked with them and the value goes down doesn't it?

Therefore it's value is set at what someone is prepared to pay. If they become more expensive, less people will be able to afford them, so demand decreases and the value drops.

I don't see it as a one way street.

Very true but this is just the currency responding to natural supply and demand. That is very different from a 3rd party flooding the market with extra or fake currency.
 

Wahreo

Distinguished Member
Special offer just for today, I'm giving out 1 x Wario coin for anyone who knows what a Shammy is:laugh:
 

Dancook

Distinguished Member
Special offer just for today, I'm giving out 1 x Wario coin for anyone who knows what a Shammy is:laugh:

A Shaman or something you use to help clean windows? (oops the later is spelt very differently "chamois")
 

blue max

Distinguished Member
If every transaction is there for all to see, I imagine if the government could decide to add VAT to every transaction. That might take the shine off!

It's a shame the shamen doesn't own a shammy!
 

Dancook

Distinguished Member
If every transaction is there for all to see, I imagine if the government could decide to add VAT to every transaction. That might take the shine off!

It's a shame the shamen doesn't own a shammy!

in the U.S.

Bitcoin Could Strengthen The World Economy If Washington Doesn't Destroy It - Forbes

IRS Says Bitcoin Is Property

According to the IRS, bitcoin is considered “property,” therefore capital gains must be recorded and reported. Since the IRS doesn’t recognize bitcoin as a currency, although it operates as such, bitcoin owners are responsible for recording the market price in USD of their bitcoins the day they are obtained, then reporting the difference in the market price the day the bitcoins are used. The gain is considered capital gains and is taxed.
 
You only pay capital gains when you cash out. If Bitcoin is property, market gains affect it like property. You don't pay capital gains if your house increases in price.

As I said, you don't want to use Bitcoin for savings or investment but as a tool to facilitate commerce that traditional currency does not allow.
 

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