Gold collapsing. Bitcoin UP.

[albin]

@AdrianX

It's the opposite, velocity is inversely proportional to the money's real value.

The reason is because P works the opposite way, decreasing P indicates a rise in Bitcoin real value.

 

[AdrianX]

@albin I understand the higher the velocity the greater the value of the money is that not correct?

eg. $1 traveling around the economy at 100x the speed of light has the same value as $1.2 trillion traveling as fast as it takes to walk to the corner store. (High velocity = high btc value - low velocity = lower value. ie. you can increase M if the velocity is low and decrease M is the velocity is high to keep P stable)

___


On a separate note I just learned something new - either BU has millions in funding or BS/Core have employed a sociopath trying to obfuscate the fact that he and his cabal have taken tens of millions in funding.

 

[lunar]

With all the mud slinging going on, it's easy to miss the real news.
Looks like http://btc.top/index.php have added over 100PH in the last 3 weeks.

 

[Christoph Bergmann]

@albin I understand the higher the velocity the greater the value of the money is that not correct?
.

The opposite. Everything is more valuable when it is exchanged rarelier.

 

[AdrianX]

@Christoph Bergmann can you explain "exchanged rarelier" and how a low velocity increases or decreases the value of money because I don't understand the mechanism then.

- if meant to say "earlier" then are we in agreement?


edit**

my understanding of velocity seems to be correct here is a clear explanation.
http://thismatter.com/money/banking/money-growth-money-velocity-inflation.htm

GDP = Money × Velocity so given M is fixed at 21M if the bitcoin GDP is to increase then the only way it increases is with an increase in Velocity the rate at which money used for the exchange of goods and services. obviously saving BTC is decreasing velocity but it is also decreasing the quantity in circulation.

in Keynesian economics when money velocity drops it's understood that money is going into savings and therefor increasing in value, central planers then work to increase the velocity by adjusting the money supply upwards by lowering interest rates to maintain pricing and keep the velocity stable forcing it out of savings.

here is an explanation why Y is used in place of T in the link above.

T is difficult to measure so it is often substituted for Y = National Income

 

[adamstgbit]

LN will incress BTC's velocity.

 

[AdrianX]

LN does not increase bitcoin use it increases the number of transactions bitcoin users can do - so no net increase in GDP considering bitcoin is not currently limiting the number of transactions a user can do.

So when it comes to the quantity of money theory LN does not increase Velocity it increases Transactions with a reverse relationship to Price levels. The way to increase velocity is by adjusting Price.

The net result of the LN is fewer fee paying transactions in the bitcoin network.

 

[Richy_T]

As an example, let's imagine a future where the UTXO set is 90% spam outputs that will likely never be spent and are thus stored on a solid-state drive. Let's say it takes about 60 milliseconds to look up one of these spam outputs. If a miner includes one of these spam outputs in his block, the chance that another block is found somewhere on the network during those extra 0.06 s is 0.06s / 600s = 0.01%. It thus costs about 0.01% * 12.5 BTC = $1.25 of marginal orphaning risk for a miner to include it and so he might demand a $2.00 fee in order to do so.

Quite potentially as well, a miner might look at such a transaction and say "That's going to take a while to look up, I'll put that on hold for now" and not include the transaction in the potential block it is hashing. Once the transaction has been verified, it can be added into the block if appropriate or remain in fast memory for the next block.

It's almost as if disk caching is an entirely new concept to these people.
[doublepost=1485234388][/doublepost]

you may find the very detailed posts by /u/ydtm useful, he's been at it for months.

https://www.reddit.com/user/ydtm

It was interesting to run across an old thread last night and see him batting for Core Segwit. Mind you, I used to be for it too. But based upon closer inspection...
[doublepost=1485235048,1485234041][/doublepost]

And I now think the 'malleability as a bug' notion simply requires more support before we go there.

If malleability is a bug that needs fixing, it is a bug that needs fixing for *all* transactions, not just Core anointed ones.
[doublepost=1485235273][/doublepost]

That's basically my argument: If you think of UTXOs as identities, you can only reduce the UTXO set by combining identities.

While this is true, I think the fear of combining identities is often overstated. I mean, it's good if it's avoidable if needed but often, one might not care. It's usually pretty much abandoned when sending to cold storage, for example.

 

[79b79aa8]

what do mssrs. maxwell and back have in common? they both had concluded, prior to bitcoin getting launched, that decentralized cryptocurrency was not feasible. it took them at least a couple of years of bitcoin staring at them in the face to accept that conclusion was wrong (and now they shamelessly pose as quasi creators of the system). then they started a company backed by venture capitalists who thought that bitcoin was interesting, but needed some fixing (faster transaction times, etc.). then they have spent a couple more years hectoring people who disagree with their fixes.

 

[Richy_T]

OK. So several times in the last 24 hours, I have seen Maxwell claim that @Peter R's paper makes the "hard" (whatever that means) assumption that Bitcoin inflation continues indefinitely.

Now, my first instinct is that Maxwell is a lying sack of shit. My second instinct is that Maxwell is a lying sack of shit. My third instinct is that Maxwell misunderstands something in his Gregological way and in a typical display of passive-aggressiveness assigns that to an assumption on Peter's part when it is more likely just a disagreement about fundamentals.

Now, I guess we should be impressed that he's moved beyond just calling everyone a paid shill but I'd be interested in seeing this claim of a "hard" (whatever that means) assumption addressed. Give that I suspect there's an 85% chance that Peter has addressed this before, a link would be perfectly acceptable.

 

[solex]

The whole concern about what happens when the block reward vanishes is not a problem per se, the problem is really people trying to "do something" about it in this early phase.

At the time of writing bc.info and tradeblock are reporting massive backlogs of transactions. Mined blocks have $1,000 in fees for 1000 to 2000 transactions. This is unsustainable and Bitcoin won't be no.1 crypto in 5 years, let alone worry about what happens to it in 20, 40 or 100 years from now.

Even if SegWit activated the blocks full situation would continue unabated with little alleviation of upward fee pressure, until a critical mass of users were forced to use alt-coins. Any LN that finally appears will be a ghost network begging for business which has permanently moved elsewhere.

 

[albin]

@AdrianX

It's the opposite, basically one way to think about it is with higher velocity, less monetary units are capable of performing the same amount of exchange work. Velocity in Fisher's theory acts as kind of a pseudo-supply. We see this empirically in central bank monetary policy, where often there are measurable effects where increases in money supply end up producing less inflation than expected, because of the concurrent reduction in velocity (i.e. if there are more units in circulation, a single unit has to move less times to account for the same aggregate economic activity).

This aspect doesn't justify just constraining blocksize -> moon though, because reducing transaction throughput has contrary effects too on the opposite side of the equation, which I would argue are probably more significant. I can't necessarily back this up empirically per se, but just furiously handwaving, I would find it way more plausible that constrained transactional capability hits the bottleneck of killing aggregate real economic exchange much earlier than it starts suppressing money velocity.

Funny thing about the application of the formula is that I doubt Fisher ever even imagined that his theory would be applied to understand a money with arbitrary hard transactional volume caps!

 

[Christoph Bergmann]

@Christoph Bergmann can you explain "exchanged rarelier" and how a low velocity increases or decreases the value of money because I don't understand the mechanism then.

- if meant to say "earlier" then are we in agreement?


edit**

my understanding of velocity seems to be correct here is a clear explanation.
http://thismatter.com/money/banking/money-growth-money-velocity-inflation.htm

GDP = Money × Velocity so given M is fixed at 21M if the bitcoin GDP is to increase then the only way it increases is with an increase in Velocity the rate at which money used for the exchange of goods and services. obviously saving BTC is decreasing velocity but it is also decreasing the quantity in circulation.

in Keynesian economics when money velocity drops it's understood that money is going into savings and therefor increasing in value, central planers then work to increase the velocity by adjusting the money supply upwards by lowering interest rates to maintain pricing and keep the velocity stable forcing it out of savings.

here is an explanation why Y is used in place of T in the link above.

T is difficult to measure so it is often substituted for Y = National Income

"exchange" was somehow nebular, I mean spent, exchange it for goods, the same like selling a good ...

Your formular misses an important part: Money = amount of units x value of unit

If

GDP = amount of units x value of unit x velocity

and GDP stays the same, than velocity and value of units are inverse (more velocity = less value, and the other way round)

So, paradoxically money is worth more if it is less usable. All these coins currently struck in the limbo of the mempool can not be spent for goods or sold on exchanges, so the price for the coins left on exchanges should raise (given that the decreasing usability doesn't decrease demand)

 

[freetrader]

Bitcoin used (again) to circumvent censorship as a political tool:

Russian Central Bank banned payments from popular payment processor Yandex. Money to Navalny, one of the most famous candidate, who now being pressured by Kremlin which afraids competition to Putin. Navalny now published huge Bitcoin QR code on his main page.

https://np.reddit.com/r/Bitcoin/comments/5pt6mk/russian_central_bank_banned_payments_from_popular/

How long before Russia bans Bitcoin (again)? /s

Note: While I have no particular knowledge of this guy's political views, except that he's been called ultra-nationalist by others on Reddit, I think whether his politics are agreeable or disagreeable to oneself doesn't matter when it comes to the effect this use of Bitcoin will have. If it works as a tool against censorship for one side of the political spectrum, it will also be adopted in time by the other side of the spectrum, and soon even politicians in the middle who don't use it will find themselves at a relative disadvantage.
[doublepost=1485259153,1485258476][/doublepost]Ah, MimbleWimble, the altcoin that *can* be freely discussed! (*) and researched at BS (†)

http://www.coindesk.com/bitcoin-devs-feeling-optimistic-mimblewimble/

(*) In general, anything posted by BashCo is subject to exemption from the no-altcoins rule. (np link to /r/Bitcoin, take appropriate caution)

(†) http://diyhpl.us/wiki/transcripts/scalingbitcoin/milan/mimblewimble/ , https://np.reddit.com/r/Bitcoin/comments/56898o/mimblewimble_andrew_poelstra/

 

[awemany]

@Richy_T :

That's basically my argument: If you think of UTXOs as identities, you can only reduce the UTXO set by combining identities.

While this is true, I think the fear of combining identities is often overstated. I mean, it's good if it's avoidable if needed but often, one might not care. It's usually pretty much abandoned when sending to cold storage, for example.

Maybe so. Maybe payment routing will add some privacy. But we don't even know how to properly route yet! I have yet to see any proper analysis on the privacy trade-offs of LN vs. mainchain.

And I am certain that the average number of UTXOs per person will be MUCH larger than one in any success scenario, LN or not.

But it is the onus of the SegWit/LN guy to make a solid and sound case for LN and SegWit, with an outlook, data, a sane roadmap and all that - and further allow open discussion on that and take reasonable input. We never had that, and too many holes have been shot into these concepts by now that calling them just 'leaky abstractions' wouldn't do the potential clusterfuck justice that we might get if we activate that stuff haphazardly because 'it is the preferred scaling system by all of the Bitcoin ecosystem'. (to use rBitcoin language)

But we all know that. Luckily, the dynamics are more and more in our favor. It is weird: We are patiently waiting for more people to become impatient with Core ...

 

[xhiggy]

@AdrianX

It's the opposite, basically one way to think about it is with higher velocity, less monetary units are capable of performing the same amount of exchange work. Velocity in Fisher's theory acts as kind of a pseudo-supply. We see this empirically in central bank monetary policy, where often there are measurable effects where increases in money supply end up producing less inflation than expected, because of the concurrent reduction in velocity (i.e. if there are more units in circulation, a single unit has to move less times to account for the same aggregate economic activity).

This aspect doesn't justify just constraining blocksize -> moon though, because reducing transaction throughput has contrary effects too on the opposite side of the equation, which I would argue are probably more significant. I can't necessarily back this up empirically per se, but just furiously handwaving, I would find it way more plausible that constrained transactional capability hits the bottleneck of killing aggregate real economic exchange much earlier than it starts suppressing money velocity.

Funny thing about the application of the formula is that I doubt Fisher ever even imagined that his theory would be applied to understand a money with arbitrary hard transactional volume caps!

This is an interesting discussion. It's making me think that perhaps the price can't be directly related to only velocity. The effectifve supply is dependent on how people are using the currency. If people need to stockpile large amounts of currency to use it efficiently, wouldn't this decrease the size of the effective money supply?

 

[AdrianX]

..., basically one way to think about it is with higher velocity, less monetary units are capable of performing the same amount of exchange work.

This is correct, I'm not stating the opposite, this is what I understand.

With a higher money velocity less monetary units are doing the same exchange work, each monetary unit has more exchange potential than with a low velocity. So when we have a higher velocity we have more exchange potential which is capable of doing more work in the economy.
[doublepost=1485284150,1485283436][/doublepost]

So, paradoxically money is worth more if it is less usable.

that's a Keynesian paradox. it's more money is worth more if money has a low velocity.

 

[AdrianX]

This is an interesting discussion. It's making me think that perhaps the price can't be directly related to only velocity. The effectifve supply is dependent on how people are using the currency. If people need to stockpile large amounts of currency to use it efficiently, wouldn't this decrease the size of the effective money supply?

Yes indeed, saving / hording bitcoin is in fact reducing the active money supply - looking at it this way "bitcoin days destroyed" (now missing from blockchain.info) is not so much a measure of velocity but a another measurement of the expansion and contraction of the money supply. this is not so much new, I've always though of bitcoin holders as a decentralized central bank expanding and contracting the money supply.

 

[Roger_Murdock]

I don't think this was ever posted here, but for those of you who haven't seen it, @Zangelbert Bingledack had a really nice write-up a few weeks ago explaining why miners -- and not developers -- are the natural stewards of the network, and how Core has tried to steal that role for themselves. I've found myself linking to it a lot lately on reddit.

Core's Miner Envy and Bitcoin's Adolescence

 

[freetrader]

Wow, didn't realize this was going on (next Satoshi Roundtable).