There only being 21 million bitcoin doesn't matter because that can be subdivided into 100M Satoshis. The whole world would have to adopt it for us to run low on it, and maybe not even then.
But the fact dogecoin is inflationary is interesting. A currency needs to be inflationary or people hoard it instead of spending it, see bitcoin for an excellent example.
After rereading the article, I now understand that you were referring to this quote in the article : "The circulation number is not enough".
You are right, the fact that it's divisible render this point moot. I thought you were saying that dividing coins somehow decreased scarcity (Yes, I've seen many people argue that, believe it or not).
Original comment below :
I find it really mind boggling that some people don't understand that dividing a pizza into 100M pieces does not give you more pizza.
> There only being 21 million bitcoin doesn't matter because that can be subdivided into 100M Satoshis
It matters a little in some hypothetical world where we're actually using crypto instead of fiat currency. If you replaced all USD cash reserves with bitcoin, a Satoshi would have the same spending power of around 1.3 present day dollars. That's a kind of course unit, especially if we want to subdivide it into transaction fees and whatnot.
"Though Dogecoin has an unlimited supply, the actual inflation rate goes down, making this coin deflationary. So, those who criticize Dogecoin for having an endless supply are wrong. They are missing the bigger picture."
I wish all the major trading networks would switch to satoshis right now. The psychology of it, not to mention the ease of just talking about how much you have, would be much easier and would encourage people to try to spend it instead of just invest with it.
> A currency needs to be inflationary or people hoard it instead of spending it [...]
No, not at all. All you need is a sufficiently high rate of interest. The higher the rate of interest, the more you miss out on if you hoard instead of lend.
This is a huge advantage of dogecoin. The inflation is basically a wealth tax on holders that goes towards miners, achieving both encouraging spending and ensuring a well funded mining infrastructure and low transaction fees.
>There only being 21 million bitcoin doesn't matter because that can be subdivided into 100M Satoshis.
Correct, although also incorrect because both of these limits are arbitrary and human made and can be changed any time. Its an absurd belief that this is somehow "set in stone" its not, its written in code, code that humans can update whenever they want.
Absolutely nothing stops people form making something smaller than a satoshi. We just dont know if the majority of the miners will accept the change to the code. If not it can only be applied to a fork which the majority then will declare as "not the real bitcoin". But every time bitcoin forks, the number of "bitcoins" grow whether an individual declares the forks as not real doesn't really matter.
> A currency needs to be inflationary or people hoard it instead of spending it, see bitcoin for an excellent example.
I don't think people are going to starve to death because they know their coins will buy more food next week. But if it stops people spending on unnecessary things, is that such a bad thing?
One thing I never understood about bitcoin: doesn't it require mining a block to transact bitcoin? It seems as though even if it's infinitely divisible, once you mine the 21-millionth block all the bitcoin is rendered worthless, since you can't trade it anymore
I've seen this mentioned before, but what I don't know(and am genuinely asking) is, aren't the transfer fees for bitcoin really high? like, 23 bitcoin? What happens when the transfer fees are orders of magnitude more than the value being transferred?
Yes, Dogecoin's inflation rate decreases with time and eventually hits zero. The crypto community thinks Dogecoin embarrasses them and it's become cringey watching them react so severely to it. It's a fun thing no more risky or silly than NFTs.
It started out as a fun joke, but we found out that when you cross a joke with a actual working cryptocurrency, you get a cryptocurrency, and it doesn't matter how ironically we used it way back when since the similar bad stuff is going to happen as with other cryptocurrencies.
This is not sound analysis, as it revolves around the mistaken notion that a currency is inflationary or deflationary depending on its supply. This is not the case, there are other variables involved. For a cryptocurrency to be inflationary or deflationary, or have a predictable price at all, it would require a governing body that is capable of adjusting its supply as needed. Since they don't have that, because the whole point of cryptocurrencies is to do away with central banks due to a strange paranoia, cryptocurrencies are neither inflationary or deflationary, but simply price unstable.
You are stating this like it's a fact and a known quantity but the reality is that it isn't.
Many countries who manage their money supply have wildly unstable currencies. Turkey for example.
On the other hand many economists belive Nobel Prize winner Milton Friedman's assertion that "Inflation is always and everywhere a monetary phenomenon" (more economists disagree with this probably, my point being that these are not settled matters)
And we have absolutely zero long term evidence of how currencies with pre determined supplies behave.
So, sure, state your case, you might be right, but don't make it out to be like this is some law of physics.
“.. the whole point of crypto currencies is to do away with central banks due to a strange paranoia..”
I agree there are a lot of people involved with Bitcoin that have trust issues (justified or unjustified... you be the judge) but this statement is a generalisation.
Currently cryptocurrencies are the only way for me to be the custodian of my money in a digital form.
If I leave money in the bank while I save up for a deposit for a home loan at the moment I get basically no interest and the bank gets to loan around 17x that money to others to buy residential property.
Meanwhile the cost of housing is increasing because those who have sufficient funds in their account are better off parking that money in the property market (with or without an accompanying loan)
Can you see why people want out of this perverse system?
Well, not exactly. For instance, if you see gold as money, it is inflationary because of its increasing supply, which is not decided by a governing body, but by the supply created by gold mining.
Bitcoin adjusts its supply automatically and without interference from a governing body. It is deflationary since it's supply is capped and because it's purchasing power increases continually.
Inflation definition:
"3.(economics) A decline in the value of money.
4. (economics) An increase in the quantity of money, leading to a devaluation of existing money."
Source: https://en.wiktionary.org/wiki/inflation#English
This comment implies price instability taking USD as a reference. Who cares what is the USD value of BTC? Once all coins have been mined 1 BTC will always represent the same fraction of the total supply of BTC, i.e.: 1 / 21,000,000. This is not true for any of the fiat currencies.
If we take gold as a reference then USD lost 95%+ of its purchasing power over the last century.
Source (one of so many): https://www.officialdata.org/us/inflation/1900?amount=100
As for central bank paranoia, opening a history book should help (keyword: uncontrolled inflation periods + Germany || Hungary || Yugoslavia || Greece || France || Venezuela || Iran || Turkey and I am sure I miss plenty I am not aware of). There's a good reason why the EU has removed this power from its member states to give it to a central bank uncontrolled by the political power.
If one does not want to look at history then simply looking at FY2020 and how much USD currency have been debased should help:
https://fred.stlouisfed.org/series/BOGMBASE/
Make no mistake, large corporations with billions of cash on hands start to understand that if not invested, that money is worth less and less year after year and at an unprecedented pace.
I've given this a (small) bit of thought. With regard to the whales, it occurred to me that if one (or two, or more) of them all decided to sell at the same time and crash the price, the effect would be to disperse all those coins amongst the "non-whales".
And then the question is, well, is the coin more or less valuable when it is held by more people? It seems to me that it would be more valuable, since there would be more people using it.
So even if the immediate effect of the whales cashing out was to lower the price (to something above absolute zero, assuming there will still be buyers), the long-term effect would be more adoption, and increased value.
I'm sure there are holes somewhere in that logic, feel free to point them out.
If they dump their coins the price will certainly be going down to 0. Is there any historical data on these wallets you're aware of? I'm curious how many people have sold off their holdings. it seems odd to me that so many holders haven't sold yet.
This article states downright untrue information about bitcoin:
False: "Everyone in the crypto world believed that this virtual coin would one day change how we use money. It will free us from governments and banks’ control over our financial system. But that goal no longer exists in the crypto world."
False: "The circulation number [of bitcoin] is not enough."
False: "As of this moment, Bitcoin mining is not profitable anymore, including the Bitcoin rewards."
I think people should not think that much in terms of supply-demand for speculative phenomena. At least not in a macroeconomic sense.
The value of a coin is determined by the expectation of selling it in the future at a higher price, nothing else.
These expectations are affected by the supply level only via auction dynamics: lots of newly mined coins in a short timeframe tend to result in big sell orders and downward pressure on the price.
That's an effective but also very limited way to impact the price.
For instance the increase in supply of a non-speculative asset reduces its marginal utility: the more oil available the less useful it becomes.
But there's no theoretical limit to the price of a coin and therefore no limit to the return one can expect!
As it's all about auction dynamics, a highly inflationary speculative asset with well-timed and strategic increase in supply could very well defy any macro supply-demand logic.
> When Bitcoin started, however, profiting off Bitcoin was not the primary goal. Everyone in the crypto world believed that this virtual coin would one day change how we use money. It will free us from governments and banks’ control over our financial system. But that goal no longer exists in the crypto world.
stopped reading here. People have hoped to profit from bitcoin since the beginning.
And while there probably aren't a lot of crypto people thinking that BTC will become the medium of (common) exchange, ending government fiat control of currencies is certainly a primary concern among people in the space, and many are building "layer 2" solutions (such as Lightning) with the goal of facilitating smaller and faster transactions and using bitcoin (or other) as the settlement layer.
So long as individuals want to transact on the Bitcoin network, miners will be there. There IS something to be said about all this “off chain” settlement — let’s hope Coinbase and others remain honest. For that matter, what stops individuals exchanging private keys instead? And, oh yeah, USDT...
I think Cardano (ADA) which is releasing https://roadmap.cardano.org/en/goguen/ very soon will be where the miners go, to stake vs. mine that is. ETH 2.0 has issues https://news.ycombinator.com/item?id=26936244 but ADA from get go has been a stake culture. And stake means no more wasted electricity. It's like Satoshi Nakamoto back in 2008 had this great idea, then Vitalik Buterin had a +1 idea but Charles Hoskinson is fixing this whole proof of work mistake from years ago.
> For that matter, what stops individuals exchanging private keys instead?
This could work if you were only making transactions with people you trust, at least in the short term. The main risk here is anyone with the private key could transfer the contents of the wallet. The seller could even sell the same wallet to multiple people. So you need to get the blockchain involved and transfer it to a wallet that the previous seller no longer has access to.
How can dogecoin have 10x faster transactions than Etherum and BitCoin ? I know the method used by BitCoin with the miners. What is the method used by dogecoin to be so fast ?
[+] [-] eloff|4 years ago|reply
But the fact dogecoin is inflationary is interesting. A currency needs to be inflationary or people hoard it instead of spending it, see bitcoin for an excellent example.
[+] [-] Alain-lf|4 years ago|reply
After rereading the article, I now understand that you were referring to this quote in the article : "The circulation number is not enough".
You are right, the fact that it's divisible render this point moot. I thought you were saying that dividing coins somehow decreased scarcity (Yes, I've seen many people argue that, believe it or not).
Original comment below :
I find it really mind boggling that some people don't understand that dividing a pizza into 100M pieces does not give you more pizza.
[+] [-] hansvm|4 years ago|reply
It matters a little in some hypothetical world where we're actually using crypto instead of fiat currency. If you replaced all USD cash reserves with bitcoin, a Satoshi would have the same spending power of around 1.3 present day dollars. That's a kind of course unit, especially if we want to subdivide it into transaction fees and whatnot.
[+] [-] wmf|4 years ago|reply
[+] [-] netcraft|4 years ago|reply
[+] [-] runeks|4 years ago|reply
No, not at all. All you need is a sufficiently high rate of interest. The higher the rate of interest, the more you miss out on if you hoard instead of lend.
[+] [-] Salgat|4 years ago|reply
[+] [-] young_unixer|4 years ago|reply
At some point people will spend it, it just won't be the artificially early spending that fiat forces us into.
[+] [-] noxer|4 years ago|reply
Correct, although also incorrect because both of these limits are arbitrary and human made and can be changed any time. Its an absurd belief that this is somehow "set in stone" its not, its written in code, code that humans can update whenever they want. Absolutely nothing stops people form making something smaller than a satoshi. We just dont know if the majority of the miners will accept the change to the code. If not it can only be applied to a fork which the majority then will declare as "not the real bitcoin". But every time bitcoin forks, the number of "bitcoins" grow whether an individual declares the forks as not real doesn't really matter.
[+] [-] globular-toast|4 years ago|reply
I don't think people are going to starve to death because they know their coins will buy more food next week. But if it stops people spending on unnecessary things, is that such a bad thing?
[+] [-] skohan|4 years ago|reply
[+] [-] Andaith|4 years ago|reply
[+] [-] ekianjo|4 years ago|reply
[+] [-] practicalpants|4 years ago|reply
[+] [-] arcticbull|4 years ago|reply
- Doge is the best performing asset class of the last decade.
- Doge is the best performing asset class of all time.
- Doge has lower transaction fees ($1.24 vs $20).
- Doge has 10x as many blocks, so much more capacity.
- Doge transactions are much faster.
- Doge has a dog on it.
Frankly it's better in every way than Bitcoin and this makes the maxis very sweaty. It's making them scared for their paper windfalls.
[+] [-] skybrian|4 years ago|reply
No worse than NFT's, sure, but NFT's are crazy.
[+] [-] fshbbdssbbgdd|4 years ago|reply
[+] [-] lottin|4 years ago|reply
[+] [-] anm89|4 years ago|reply
Many countries who manage their money supply have wildly unstable currencies. Turkey for example.
On the other hand many economists belive Nobel Prize winner Milton Friedman's assertion that "Inflation is always and everywhere a monetary phenomenon" (more economists disagree with this probably, my point being that these are not settled matters)
And we have absolutely zero long term evidence of how currencies with pre determined supplies behave.
So, sure, state your case, you might be right, but don't make it out to be like this is some law of physics.
[+] [-] CTDOCodebases|4 years ago|reply
I agree there are a lot of people involved with Bitcoin that have trust issues (justified or unjustified... you be the judge) but this statement is a generalisation.
Currently cryptocurrencies are the only way for me to be the custodian of my money in a digital form.
If I leave money in the bank while I save up for a deposit for a home loan at the moment I get basically no interest and the bank gets to loan around 17x that money to others to buy residential property.
Meanwhile the cost of housing is increasing because those who have sufficient funds in their account are better off parking that money in the property market (with or without an accompanying loan)
Can you see why people want out of this perverse system?
[+] [-] patricius|4 years ago|reply
Bitcoin adjusts its supply automatically and without interference from a governing body. It is deflationary since it's supply is capped and because it's purchasing power increases continually.
[+] [-] Alphabet861|4 years ago|reply
Inflation definition: "3.(economics) A decline in the value of money. 4. (economics) An increase in the quantity of money, leading to a devaluation of existing money." Source: https://en.wiktionary.org/wiki/inflation#English
This comment implies price instability taking USD as a reference. Who cares what is the USD value of BTC? Once all coins have been mined 1 BTC will always represent the same fraction of the total supply of BTC, i.e.: 1 / 21,000,000. This is not true for any of the fiat currencies. If we take gold as a reference then USD lost 95%+ of its purchasing power over the last century. Source (one of so many): https://www.officialdata.org/us/inflation/1900?amount=100
As for central bank paranoia, opening a history book should help (keyword: uncontrolled inflation periods + Germany || Hungary || Yugoslavia || Greece || France || Venezuela || Iran || Turkey and I am sure I miss plenty I am not aware of). There's a good reason why the EU has removed this power from its member states to give it to a central bank uncontrolled by the political power. If one does not want to look at history then simply looking at FY2020 and how much USD currency have been debased should help: https://fred.stlouisfed.org/series/BOGMBASE/
Make no mistake, large corporations with billions of cash on hands start to understand that if not invested, that money is worth less and less year after year and at an unprecedented pace.
[+] [-] eloff|4 years ago|reply
It's not a strange paranoia. Do you know how many currencies go through hyperinflation and die?
The list is much longer than currencies that have lasted 200 years.
[+] [-] mypalmike|4 years ago|reply
More stuff + same money supply = lower price per stuff. The math is unavoidable. Governing bodies don't play a role in that.
[+] [-] omnibrain|4 years ago|reply
[+] [-] ebcode|4 years ago|reply
And then the question is, well, is the coin more or less valuable when it is held by more people? It seems to me that it would be more valuable, since there would be more people using it.
So even if the immediate effect of the whales cashing out was to lower the price (to something above absolute zero, assuming there will still be buyers), the long-term effect would be more adoption, and increased value.
I'm sure there are holes somewhere in that logic, feel free to point them out.
[+] [-] Cicero22|4 years ago|reply
[+] [-] Finnucane|4 years ago|reply
[+] [-] krupan|4 years ago|reply
False: "Everyone in the crypto world believed that this virtual coin would one day change how we use money. It will free us from governments and banks’ control over our financial system. But that goal no longer exists in the crypto world."
False: "The circulation number [of bitcoin] is not enough."
False: "As of this moment, Bitcoin mining is not profitable anymore, including the Bitcoin rewards."
[+] [-] Dopameaner|4 years ago|reply
[+] [-] simo7|4 years ago|reply
The value of a coin is determined by the expectation of selling it in the future at a higher price, nothing else.
These expectations are affected by the supply level only via auction dynamics: lots of newly mined coins in a short timeframe tend to result in big sell orders and downward pressure on the price.
That's an effective but also very limited way to impact the price. For instance the increase in supply of a non-speculative asset reduces its marginal utility: the more oil available the less useful it becomes.
But there's no theoretical limit to the price of a coin and therefore no limit to the return one can expect!
As it's all about auction dynamics, a highly inflationary speculative asset with well-timed and strategic increase in supply could very well defy any macro supply-demand logic.
[+] [-] trts|4 years ago|reply
stopped reading here. People have hoped to profit from bitcoin since the beginning.
And while there probably aren't a lot of crypto people thinking that BTC will become the medium of (common) exchange, ending government fiat control of currencies is certainly a primary concern among people in the space, and many are building "layer 2" solutions (such as Lightning) with the goal of facilitating smaller and faster transactions and using bitcoin (or other) as the settlement layer.
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] vxxzy|4 years ago|reply
[+] [-] andrewfromx|4 years ago|reply
[+] [-] gnopgnip|4 years ago|reply
This could work if you were only making transactions with people you trust, at least in the short term. The main risk here is anyone with the private key could transfer the contents of the wallet. The seller could even sell the same wallet to multiple people. So you need to get the blockchain involved and transfer it to a wallet that the previous seller no longer has access to.
[+] [-] gruez|4 years ago|reply
add a few more steps (to prevent your counterparty from cheating you) and you got the lightning network.
[+] [-] jl2718|4 years ago|reply
This is: https://fred.stlouisfed.org/series/BOGMBASE/
[+] [-] chmike|4 years ago|reply
[+] [-] victorbstan|4 years ago|reply
[+] [-] scld|4 years ago|reply
[+] [-] hellbannedguy|4 years ago|reply
I remember having them on my computer, but can't find them.
[+] [-] paulpauper|4 years ago|reply
[+] [-] darig|4 years ago|reply
[deleted]