90

TL;DR: No. The argument is basically that hoarding will make Bitcoins so valuable that nobody will be willing to offer people enough to part with them. Does that pass the giggle test? Another way of stating the argument is this, "If gold is $2,000/oz today but people think it will be $5,000/oz next year, nobody will trade any gold today." Again, think about ...


16

When developing Bitcoin, Satoshi had already come with the idea that no more than 21 million of them will ever be made. However, there was an unsolved issue: how to accomodate all bitcoins in case it was actually used as a worldwide currency? Comparing to the current (2008?) world's M1 supply, it was determined that 8 decimal places was enough to cover the ...


15

A single Bitcoin is currently divisible up to 8 decimal places (giving you 21*10^14 units of money, or about 2.1 quadrillion units), nothing stops it from being divided further with small protocol change. In order to change the limit of Bitcoins created, one needs to change the protocol and force most of the Bitcoin network to adopt the change, which can be ...


14

Bitcoin is really a little strange because it doesn't know if it is a currency or a commodity. And this is why this question has many answers and is a popular item of discussion. If Bitcoin were just a commodity, the thing to do is to hoard it. There are lots of commodities that are almost totally hoarded. For example: emeralds or works of art. Now if ...


14

Theoretically yes, but that moment is so far in the future it is likely that some other events such as new currency technology will surpass bitcoins. However, mining will not stop. Mining is the security backbone of bitcoin, and it will continue because it will still be profitable to mine. Miners will be paid fees from existing bitcoins with every ...


13

It depends entirely how much those alternate block-chains get utilized. In the recent examples of ixcoin and i0coin, a small portion of btc miners and users switched over, sold their stash and went right back to bitcoin. It's essentially a case of network effect - whichever block-chain has the most users will be the most attractive to new users, and those ...


13

I think you are confusing two things here: Block generation rate New bitcoins introduced per block Blocks will always be found at a rate of approximately one per 10 minute. The difficulty of finding a block adjusts itself according to how many people are trying. Simply said, if N people are mining (all with equal hashing power), they will each (on average)...


10

Mining is not just a way to ensure the initial distribution of bitcoins. It happens that coins have been distributed through mining, because it was easy and useful to do it this way, so this might be a bit misleading, but mining will remain essential even after all the bitcoins (~21MBTC) have been distributed. Mining has not been designed to distribute ...


10

Your question is equivalent to asking, "Does SHA256d have a trapdoor?" SHA256d is a well studied algorithm. It's believed not to have a trapdoor. If the creator of bitcoin has a way to break SHA256d, stealing all our bitcoins would be the least of our worries.


10

the protocol allows a miner when he creates a block to send himself 25 BTC which do not have a proper source (input). that's how those 25 BTC are created, they're bitcoins that come from nowhere.


10

If you are running Bitcoin Core, you can see the total amount in circulation using the RPC call gettxoutsetinfo (in the Bitcoin-Qt debug console, or using bitcoin-cli if you run bitcoind). At the time of writing, the output is: { "height": 517245, ... "total_amount": 16965398.58586455 } which means there are currently ~17 million BTC in circulation. ...


9

Miners (who will no longer be mining, but will be validating transactions in the blockchain) will earn transaction fees. What those fees amount to or are to be interpreted as are hypothetical at this point, but might be imagined to be a transaction cost that ensures the security of the ledger.


8

Why do we mine? We need to all agree on who owns which coins. If your idea of who owns what is different than mine then how can we trade? To achieve this, the Bitcoin protocol keeps its ledger of all transactions in a series of blocks, with each block recording a collection of transactions. Since we don't have a central authority to declare which blocks ...


8

It is likely that blockchain-based currencies like Bitcoin are a natural monopoly. It is most beneficial for users to own and accept in trade the most popular currency, as they will have the greatest number of opportunities to do business with it. This is referred to as a network effect. There are also additional costs and risks associated with owning and ...


8

A short term increase in the gradient on the graph can be caused by a large and fast relative increase in hashing speed of the total network. Within a short time, the difficulty adjusts and prevents it having a substantial long term impact. The steep gradient on this difficulty graph between 13GH/s and around 20GH/s is an increase of around 50% in hashpower ...


8

What you are describing there is a client that is a hybrid of Bitcoin and something else. For instance there is nothing to stop you starting ManishCoin and writing a ManishBitcoinSuperClient. If you can get enough people to believe in ManishCoin then it becomes a useful currency.


8

This is the announcement of Bitcoin: http://www.metzdowd.com/pipermail/cryptography/2009-January/014994.html Total circulation will be 21,000,000 coins. It'll be distributed to network nodes when they make blocks, with the amount cut in half every 4 years. first 4 years: 10,500,000 coins next 4 years: 5,250,000 coins next 4 years: 2,625,000 ...


8

EDA (Emergency Difficulty Adjustment): Median Time Past of the current block and the Median Time Past of 6 blocks before has to be greater than 12 hours. If so, it gets 20% easier to create proof of work. In other words, miners can find blocks 20% easier. Source: Jimmy Song As EDA is one way (difficulty down), miners abuse it. They stop mining, and ...


7

This is very similar to consumer spending here in the US. If people save their money, it's not going towards the growth of the economy. I think a lot of people make this comparison when it doesn't necessarily hold true for Bitcoin at the moment. My opinion is that if miners held onto their coins instead of dumping them on the exchange, it would reduce the ...


7

The answer of D.H. assumes the hashrate of the network never changes between difficulty jumps. But it can in fact evolve quite a bit, so it can be inaccurate sometimes. Your proportion in the network may change but, until the difficulty adjusts, this will not change your rewards. Your average reward will be : So, in your case, with 600 MH/s and a time ...


7

The popular intuition is typically correct in well-saturated markets, but Bitcoin is not yet a well-saturated market. Though the supply of Bitcoin is currently increasing the demand is increasing dramatically faster. This is because we are during the initial adoption curve of a new technology and new demand is created as individuals discover the new tech. ...


6

It`s a geometric series with the base 1/2. After half of the remaining coins are mined, rate is decreased until half of remaining coins since the drop are mined. The rate is convergent, that is, it approaches a finite number and doesn't go on until infinity (like say, 1, 1/2, 1/3... 1/n would). This makes it so that there will never be more than certain ...


6

XRP are internally represented as an integer number of millionths of a ripple. No term has yet been accepted for naming these units, but some people have (I think jokingly) referred to them as "Jeds". Update: It looks like they will be officially referred to as drops as you suggested. A transaction costs 10 drops. There are a million drops in a ripple.


6

The new FinCEN regulations are quite clear that the term "create" includes currencies that people "obtain by their own computing or manufacturing effort". A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may ...


6

As I understand it, this is by consensus, i.e. all the nodes in the network agree on this protocol. No. The network doesn't vote to change itself. Read this: What can an attacker with 51% of hash power do? Arguably, you could try to get a change to the bitcoin client implemented through astroturfing. Here's how you'd increase monetary inflation. Find this ...


6

There are 3 places where GetBlockValue is called. One is on incoming blocks, one is on blocks we're mining, and one is an error message. This is the one for incoming blocks: if (vtx[0].GetValueOut() > GetBlockValue(pindex->nHeight, nFees)) return state.DoS(100, error("ConnectBlock() : coinbase pays too much (actual=%"PRI64d" vs limit=%"PRI64d")", ...


5

A while back I wrote a short post about why hoarding (or more exactly "early adopters") isn't a problem. I'll copy-paste here: Bitcoin was not designed to be a fair currency, just a more efficient currency than its alternatives. Dollars and Yens aren’t “fair” either. It is not random luck that is rewarded – it is one’s ability to research and arrive at ...


5

Currently, only three-letter currencies that exist as IOUs can be created as a custom currency. And if someone else uses that same three-letter identifier for something else, each account can only transact in one of those conflicting currencies. So you could use "XBR" to mean people owe each other beers and you could use the ripple system to track how many ...


5

Some time in around year 2100, blocks will only be worth 0.00000001 BTC or less. But a long time before this, miners will earn their bitcoins by the transaction fee. And when blocks no longer can generate bitcoins, then the miners will earn their bitcoins only from the transaction fee (versus earning 99.99% from the fee). Miners can still generate blocks, ...


5

If the transaction fees from miners are not sufficient to maintain the security of the ledger, than the network will self-destruct. But, with the cap being so-far away (who knows how many years) by then computing power should be sufficient to ensure the sanctity of the network with very very minimal costs (low power costs), it wouldn't surprise me if bitcoin ...


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