"And they disable SELinux because they probably don't have anyone who understands how to use it, much less use it well. MAC is great for security, but requires a depth of knowledge of your systems that most places just don't have."
Not talking about government agencies but there certainly are a lot of people who don't understand SELinux, mostly because it is confusing as hell and poorly documented. But even if you do understand it, it is cumbersome, it never becomes a silent player that just works, and to get any real benefit out of it requires TONS of additional time and overhead in system configuration.
What I usually see is people leave it on until the first instance of cryptic failures that can be traced back to SELinux problems.
Admins want certain core systems needed to admin a box to be standardized. It's an init system, there is only so much benefit you can have from one over another and those benefits don't outweigh the problems of distributions all being different.
An admin should be able to log in to a box and perform basic administration without having to care what distro it is running.
The United States made claim the moon in the same manner as early explorers, by planting the nation's flag. Unless China is looking for war with the US it wouldn't seem wise to steal US resources from the moon.
Agreed. I answered another post and talked about how using idea of a floating reference called the "bitdollar" (all rights reserved) which equates to the decimal place of the bitcoin unit that has reached dollar parity we can actually turn it in to an inflationary currency and that as the BTC decimal that corresponds with the Bitdollar shifts it becomes more stable. For instance now the bitdollar is the bitmil or.001 BTC and when the market shifts by $100 it shifts $0.10 fluctuations of the bitdollar. If BTC were valued at $10,000 that $100 shift would represent $0.01 change in the bitdollar relative to the dollar, and so on with a factor of 10 reduction in variation with each shift.
It's much like a stock split really. I wish the clients and exchanges would express BTC this way because there is a psychological barrier that makes it easy to accept small price variations in something like a Bitdollar and difficult to embrace ever higher values of a single BTC.
Of course the market has to reflect the higher values for a whole BTC. I guesstimate based on how many dollars are moving around the exchange that BTC should be at least $1081 (see my other post to see where I got that number) to cover the amount of money flowing through MT GOX in a day extrapolated over a year. So it is currently under valued but the current 'bitdollar' would still correctly equate to.001 BTC. If people speculated and traded on bitdollars we'd see a couple slower than now but relatively fast splits and then the bitdollar would stabilize to something much more reasonable.
Theoretically, this can work as far as 1 BTC being a lot of $100,000,000 BTD and something likely traded by national banks and not individuals and the BTD would be the most stable unit of currency we've ever known. It would be solidly backed by BTC with zero chance anyone has miscalculated the global supply of this limited resource and no chance of counterfeiting. It survives the rise and fall of nations, corporations, deaths, etc and can't be manipulated by any of them as long as there are others to keep them in check.
P.S. "And if it were to shift 4 more times from there fluctuations of $600 in the price of 1.0 BTC on the Bitdollar could not be expressed in something as unstable as the dollar even on the FOREX." There are only 3 more shifts to make... leaving something that could just be expressed with the fifth decimal on the FOREX and I'd have inflated my original bit dollar to 100,000,000 BTD's that are more stable than any currency in the world.
Prior to a couple hundred years ago all money was based on precious metals, gems, and other physical goods of innate value which are by definition deflationary.
"By the way, can you explain to me why it matters that BitCoins can only be dived by 100,000,000? Why is this limitation important? If I have 1 BitCoin, and there is deflation, I can now convert my BitCoin to 1.0 coins. Or maybe 1.0000 coins? How does adding extra digits to the precision of the value affect the effects of deflation on value."
Because the most critical purpose of inflating or deflating a currency is provide more units of it so that there are enough units of currency to readily facilitate trade. If there is not enough supply of currency the price goes up, by creating more units you drop the price back down. That is creating units by shifting the decimal to the left. You theoretically you can shift the decimal point an unlimited number of times so there is no limit to the amount you can inflate the currency.
People are used to this because that is how inflationary currency always worked. Deflationary currency has the same effect except that it creates units by shifting the decimal to the right. This also theoretically allows the supply to grow to unlimited quantity but in practice deflationary currencies have always been based on physically limited goods that ultimately could not be subdivided.
People are very used to thinking about money in whole units. Those people are looking at the price of Bitcoin and thinking about the price of 1.0 BTC. They refer to 2.0 as Bitcoins instead of 2 Bitcoin. If valuing against dollars 1.0 BTC was relevant at dollar parity..1 BTC became the relevant unit of trade when it hit dollar parity..01 BTC when it hit dollar parity, and.001 BTC when it hit dollar parity, etc. I'd call this the bit dollar. With every shift further back from the decimal point the bitdollar goes the more stable a unit it becomes because it requires an exponentially more significant change of dollar value relative to 1.0 BTC to change it.
We can shift this around and show that by applying the purely logical concept of the bit dollar we can magically turn bitcoin's deflation into inflation and thus prove that mathematically they are equivalent with the only mathematically significant factor being the rate. So if I had 1.0 BTC at parity I had one Bitdollar. When.1 hit dollar parity I would have had 10 bit dollars. When.01 hit parity I would have 100 bit dollars. When.001 hit parity I would have had 1000 bit dollars. So if I'm logically paying attention to the BTC it's deflating. If I'm logically paying attention to the effective unit of trade, the bit dollar or BTD suddenly I have an inflationary currency. This is economically sound because any currency is given value relative to another. These first shifts were fast because the economy is small, it is still relatively small. In order to shift the bit dollar again BTC would have to grow 10 fold. If you are familiar with the FOREX the same thing occurs by on the opposite side of the decimal. Because the currency is inflationary they trade massive quantities of it on sub penny changes.
But does it reflect the real market? Somewhere else I calculated out that the BTC volume of mt gox (the largest BTC exchange) * the average price * days in a year divided by the number Bitcoins that will ever be mined works out to $1081 and we know at least 10% of that amount flows through black market trade alone thanks to the FBI. Thanks to Bitpay and miners we know substantially more is solidly backed with white market trade. Bitcoin is currently floating between $600-$1200 per BTC. The Bitdollar is shifting between $0.60 - $1.20 over the course of a week. The same $600 shifts in BTC price if the bit dollar were to shift would be $0.96 to $1.04, if it were to shift another decimal the prices would be sub penny. And if it were to shift 4 more times from there fluctuations of $600 in the price of 1.0 BTC on the Bitdollar could not be expressed in something as unstable as the dollar even on the FOREX.
It helps keep a distinction between market speculation and the rate at which supply of currency increases/decreases which is pretty important if you don't want to confuse the effects of the two things together (being that they are distinct) in a discussion.
That's a reason it sucks to OWE debt with a deflationary currency not a reason you don't want to be OWED debt. But it comes out in the wash.
In the current world, currency inflating by 1.2% (someone quoted this from bureau of labor and statistics but it might as well be X for this example). Banks have to increase the interest rates they attach to loans by this amount so that they aren't losing money. For example, $100 loaned for 1 year would only have the buying power of $98.80 so I'd have to charge 1.2% interest just to break even and get paid back $101.20 + markup interest.
In another world, currency deflates by 1.2%. In this world banks simply charge markup interest because the money they are paid back will be worth more than the money they loaned. So, the same $100 loaned for 1 year would have the buying power of $101.20 + markup interest when paid back.
Either way the person taking loan has to come up with 101.2% of the borrowed amount of purchasing power plus markup interest. The only real difference is that in the deflationary world the lender doesn't have to try to measure, predict, and include the rate of deflate/inflate in to the interest.
"Say you loan me 25 bc. Let us assume I earn 1 bitcoins per week, and that amount will buy 5 MacBook Pros. At the end of six months, that amount will buy 10 MacBook Pros, and I am earning only 0.5 btc per week."
That's some pretty extreme deflation let's go with a more realistic and still high rate say 10%. Let's make it a year. So I loan you 25BTC for 10% interest so you have to pay back 27.5 BTC. Let's say you selling MacBook Pros and currently sell 5 MacBook Pros a week (0.50 BTC cost and 0.20 BTC profit each, so.70 BTC to consumer) and earn 1 BTC a week. By the end of the year (I'm going to ignore amortization because it doesn't change the concept and I don't want to bother calculating it). At the end of the year your MacBook Pros would be sold for.63 BTC, cost.45 BTC and net.18 BTC profit each. So yes, you'd need to increase your sales to pay back the loan but your potential customers salaries would be worth 10% more year on year so they could afford to buy 10% more of your product. The result of this is that deflation means 10% more goods/services would need to be produced to cover deflation. Just like 10% inflation would mean 10% more goods and services would mean the same.
Unless you are talking about a salary of say 1 BTC a week. It isn't like an employer would be able to cut salaries for deflation, they also wouldn't need to increase salaries to offset inflation like they do now, merely for merit. So you'd still make at least 1 BTC a week, it would just buy 10% more goods and services. That works out because your company and everyone elses increased production by at least 10% to cover salaries and pay back debts. That was easy for them to do because their goods and services are flying off the shelf 10% faster because their clients have 10% more to spend on their goods/services and their costs dropped by 10%.
"right, and for just a small percentage of my income & purchases, I get the privilege of not paying taxes..."
Not sure where this comes in but it wouldn't be with using bitpay... it's crediting to your bank account.
As for whether or not it's worth ones time. There probably aren't enough customers wanting to pay in bitcoin at the moment for it to be. On the other hand, it is trivial to flip it on and costs nothing to maintain. 1% of transactions, no chargebacks, and $0 a month or 0% of transactions, no chargebacks, and $30/mo is better for everyone than any credit card merchant account.
For me it's worth it in the same way it's worth trying to support local businesses. Bitcoin is detached from government meddling, safe from creditors/bankruptcy/divorce, and a handy app on my smartphone that is much more handy than cash or credit cards.
He's talking about economic "theory" (which is hypothesis to anyone who knows what a theory is supposed to be) which has been tested for less than a century on a system with investments that old or older and 20% of that duration common and which was more less debunked when it led to global economic meltdown. Deflation on the other hand was the basis for essentially every economy in the world for a few thousand years before that. Inflation was only implemented because there weren't enough currency units to go around. Bitcoin does not have that problem.
They don't have to auction it that's for goods. It's digital currency in the US. Why do you think the FBI and DOJ were so crazy in favor of it before congress?
If you do enough volume to qualify for the $30/month option with 0% fee it might end up being more desirable than cash as well. It costs money to count and process cash plus there are losses to counterfeits. There is no counterfeit bitcoin, that is it's unique property that gives it innate value.
"I don't know which comment you're talking about but I definitely said that as a small business owner (which I am) taking BTC just doesnt make sense b/c of the 'last mile' where the BTC become $$$ in my biz bank account in real time."
There might be merchant accounts that do this for credit cards but I've yet to see one. They will often initiate a transfer to your bank daily which is exactly what Bitpay does, it converts the Bitcoin to the dollar amount of the transaction in realtime and initiates a bank transfer daily. There is a 1% fee for a free account or no fee for a $30/month account and unlike credit cards there are no charge backs.
Bitpay gives small businesses the option of accepting Bitcoin easily without any risk of being impacted by fluctuation in the speculative market. I can't understand why just about everyone isn't doing this. At 1% with no chargebacks you can accept and promote a new payment option that highly desirable vs credit card and just or more convenient than a credit card. Other than initial setup costs (labor) there is no ongoing cost, just leave a sticker up letting customers know the option is there and don't sweat it if the volume is low. If you have a high enough volume to need to pay the drop to 0% fee offsets it. Cash carries no fees or chargebacks as well but is less convenient for customers and has costs associated with counting/handling/counterfeits so if you do large quantities of currency Bitpay might be more desirable for you than cash as well.
Why? If I loan you $25 and you pay me back $30 is the $30 not going to be worth just as much when I get it back as it would have been if I'd sat on it? It's not like you'd reduce the amount owed due to deflation.
I prefer to look at the successful global use of deflationary money for a few thousand years before that. Next to that anything the past 50 years can merit hypothesis status at best especially in a world with 20yr mortgages. The only problem with the deflationary currency used was that as population increased there weren't enough units of currency to go around. There are 21,000,000 Bitcoins to be mined and 100,000,000 units of currency within each "Bitcoin" and that can be increased by network consensus (enough people install clients that support it) without inflating or deflating the currency. Inflationary currency on the other hand caused a global economic meltdown in less than one century.
The volume on MT Gox (the actual largest bitcoin exchange in the world, BTC China passed it for only a couple days) is 109225 BTC * the weighted average price of $569.03 that is $62,151,732 extrapolated that is $22,704,027,962.62 a year. If we divide that by the total of Bitcoins that will ever be mined 21 million, we see that Bitcoin should actually be valued at $1081 if no other exchanges existed in the world... including BTC China. Thanks to the FBI we know that at least 10% of that is the Bitcoin based internet drug trade alone and not mere speculative trading. The merchant catalog utilizing Bitpay, Amazon pay gateways, etc indicate a substantial white market trade as well.
So obviously it wasn't the people who bought at $700 before on the first word of the China thing that were morons, it's the people who sold on the news and caused the drop. The market will eventually correct Bitcoin to $1081+
Just because the price vs fiat has changed doesn't mean the currency has inflated or deflated I wish people would stop repeating that. Deflation or Inflation are changes in valuation related to supply of the currency the price changing due to market speculation is neither deflation nor inflation.
"You mean banks, who lend out a mixture of money they borrow from the government and money they borrow from savers. They lend it out to borrowers and receive payments back, and those payments decline in value with inflation. If they hold on to those loans as assets, they're in the "hurt by inflation" set."
Generally they don't loan out money from savers they use it as collatoral to borrow from government and loan that money out. Which makes sense since the interest rates from the Fed are so low as to be non-existent and they are allow to borrow a double digit multiplier of the money they are holding.
It's the size of the market. Warren Buffet could single handedly raise the price of bitcoin back to $1235 in a day. The market skyrocketed when the congressional hearing indicated bitcoin was golden and shiny and everybody should have one or ten (I suspect because the FBI is sitting on millions in bitcoin seized from Silk Road).
With that green light there was a ton of investment as everyone and their dog in the financial world added some to their portfolio.
Backward to what, thanks to Fincern you know the exchange account is theirs but you have no way to determine if the address that sent their exchange wallet money was theirs or the address that sent that address money. If I sell you a lamp and ask you to pay me at address A, then I transfer the money to address B there is nothing to prove address B is also mine. I may well have turned around and used the money to pay a debt. You might say, it's the same amount so it's probably mine. What if I then transfer to C,D, and E different amounts that add up to that amount. Well you'd say they are probably mine too but it's slightly less probable. There is no way to actually know that, figures matching could be me shifting my money around my own accounts or it could just be that my purchases added up to that amount because it's the amount I had to spend!
Swiss banks turn over your information to foreign governments on request. Once upon a time funds in a Swiss account were protected from random states opinions about what was or was not a crime. Now the swiss hand over data to the US on a routine basis.
Who is a criminal and who is not? One state might take one view and another a different view. Making sure your money wasn't at the mercy of the views of any state and protected from them was what the Swiss Banks and Swiss neutrality were supposed to be all about.
A state might be able to imprison me and try to coerce me in to handing over my property but ultimately the responsibility to resist that and keep my money despite it once rested with me if my money was in a Swiss bank. Now it isn't secure at all, it is at the whim of random nations.
The swiss numbered account as a bastion of privacy is a thing of the past. The swiss turn over bank information on request to the US. Why on earth would we even begin to trust them with our data? That's no better than giving it directly to the NSA to begin with.
"You've somehow got your macroeconomics completely mixed up; half right, then reaching the exact wrong conclusions"
No. I just haven't reached the same wrong conclusions that have fscked the global fiat economy.
"Deflation is a dividend paid to everyone holding any quantity of money --- which benefits no one but the ultra rich with money to sit on."
An assertion that is commonly touted by those who support the idea that inflation is needed to drive an economy and which I thoroughly debunked in my previous posts in this thread. You don't need inflation to force the rich to try to use their wealth to become more wealthy. The rich spend, and need to replace what they spend, additionally the rich are greedy like everyone else and want to increase their wealth. The rate of deflation/inflation just a set minimum bar for the returns your ventures must yield to be worthwhile. Deflation sets the bar higher, and since return on investment directly correlates to risk a higher bar means assuming more risk. That means ease of access to credit because higher risk credit yields greater ROI. Ease of access to credit means more startups and more ventures. Businesses in turn will need to expand in order to do better than they would do by simply sitting on their money.
Deflation provides interest without a bank. To everyone, every minute of every day. If you make 25 Bitmils/hour you will get a built in raise from week to week at the rate of deflation. That means your employer must expand operations or otherwise increase the value they offer to continue to pay your salary. The deflation doesn't magically come from air. It comes from increased goods and services.
Someone who legitimately just sits on their wealth and hoards it has little to no impact on the economy since their money isn't in circulation and the reduced supply of money will cause the value of each unit that is in circulation to increase to compensate. That doesn't cause a problem unless there aren't enough units of money. That is a problem on the gold standard. That is no problem in Bitcoin. Bitcoin has trillions of units and it is actually fairly simple to expand the number of digits used to track Bitcoin. So even though Bitcoin is deflationary, it can expand to a theoretically unlimited number of currency units. It could also cause a problem if there were a huge number of people in that position but like you said, we are talking about a very tiny number of wealthy people and their personal contribution to the production of goods and services is essentially nil and their consumption of goods and services is already far below their personal wealth.
As opposed to the tiny wealth hoarding class that gets the cost of inflation trickled up to them from the bottom?
Either way you look at it consumers and laborers are what drive the economy and investors leech from it. Inflation and Deflation don't change any of that. Deflation actually benefits those with less because it increases the buying power of their wages and forces investors to assume more risk in order to generate returns higher than deflation. Higher risk means more freely available credit and a greater chance of losing, which will cause more investment in new business and wealth to shift hands more quickly.
Inflation is a tax on everyone holding any quantity of money. It encourages producing more money. Deflation is a dividend paid to everyone holding any quantity of money. That dividend ultimately comes from higher risk credit and increased production/consumption of goods and services. So deflation encourages the production of more goods and services. That benefits everyone.
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"And they disable SELinux because they probably don't have anyone who understands how to use it, much less use it well. MAC is great for security, but requires a depth of knowledge of your systems that most places just don't have."
Not talking about government agencies but there certainly are a lot of people who don't understand SELinux, mostly because it is confusing as hell and poorly documented. But even if you do understand it, it is cumbersome, it never becomes a silent player that just works, and to get any real benefit out of it requires TONS of additional time and overhead in system configuration.
What I usually see is people leave it on until the first instance of cryptic failures that can be traced back to SELinux problems.
Admins want certain core systems needed to admin a box to be standardized. It's an init system, there is only so much benefit you can have from one over another and those benefits don't outweigh the problems of distributions all being different.
An admin should be able to log in to a box and perform basic administration without having to care what distro it is running.
The United States made claim the moon in the same manner as early explorers, by planting the nation's flag. Unless China is looking for war with the US it wouldn't seem wise to steal US resources from the moon.
Agreed. I answered another post and talked about how using idea of a floating reference called the "bitdollar" (all rights reserved) which equates to the decimal place of the bitcoin unit that has reached dollar parity we can actually turn it in to an inflationary currency and that as the BTC decimal that corresponds with the Bitdollar shifts it becomes more stable. For instance now the bitdollar is the bitmil or .001 BTC and when the market shifts by $100 it shifts $0.10 fluctuations of the bitdollar. If BTC were valued at $10,000 that $100 shift would represent $0.01 change in the bitdollar relative to the dollar, and so on with a factor of 10 reduction in variation with each shift.
.001 BTC. If people speculated and traded on bitdollars we'd see a couple slower than now but relatively fast splits and then the bitdollar would stabilize to something much more reasonable.
It's much like a stock split really. I wish the clients and exchanges would express BTC this way because there is a psychological barrier that makes it easy to accept small price variations in something like a Bitdollar and difficult to embrace ever higher values of a single BTC.
Of course the market has to reflect the higher values for a whole BTC. I guesstimate based on how many dollars are moving around the exchange that BTC should be at least $1081 (see my other post to see where I got that number) to cover the amount of money flowing through MT GOX in a day extrapolated over a year. So it is currently under valued but the current 'bitdollar' would still correctly equate to
Theoretically, this can work as far as 1 BTC being a lot of $100,000,000 BTD and something likely traded by national banks and not individuals and the BTD would be the most stable unit of currency we've ever known. It would be solidly backed by BTC with zero chance anyone has miscalculated the global supply of this limited resource and no chance of counterfeiting. It survives the rise and fall of nations, corporations, deaths, etc and can't be manipulated by any of them as long as there are others to keep them in check.
P.S. "And if it were to shift 4 more times from there fluctuations of $600 in the price of 1.0 BTC on the Bitdollar could not be expressed in something as unstable as the dollar even on the FOREX." There are only 3 more shifts to make... leaving something that could just be expressed with the fifth decimal on the FOREX and I'd have inflated my original bit dollar to 100,000,000 BTD's that are more stable than any currency in the world.
Prior to a couple hundred years ago all money was based on precious metals, gems, and other physical goods of innate value which are by definition deflationary.
.1 BTC became the relevant unit of trade when it hit dollar parity. .01 BTC when it hit dollar parity, and .001 BTC when it hit dollar parity, etc. I'd call this the bit dollar. With every shift further back from the decimal point the bitdollar goes the more stable a unit it becomes because it requires an exponentially more significant change of dollar value relative to 1.0 BTC to change it.
.1 hit dollar parity I would have had 10 bit dollars. When .01 hit parity I would have 100 bit dollars. When .001 hit parity I would have had 1000 bit dollars. So if I'm logically paying attention to the BTC it's deflating. If I'm logically paying attention to the effective unit of trade, the bit dollar or BTD suddenly I have an inflationary currency. This is economically sound because any currency is given value relative to another. These first shifts were fast because the economy is small, it is still relatively small. In order to shift the bit dollar again BTC would have to grow 10 fold. If you are familiar with the FOREX the same thing occurs by on the opposite side of the decimal. Because the currency is inflationary they trade massive quantities of it on sub penny changes.
"By the way, can you explain to me why it matters that BitCoins can only be dived by 100,000,000? Why is this limitation important? If I have 1 BitCoin, and there is deflation, I can now convert my BitCoin to 1.0 coins. Or maybe 1.0000 coins? How does adding extra digits to the precision of the value affect the effects of deflation on value."
Because the most critical purpose of inflating or deflating a currency is provide more units of it so that there are enough units of currency to readily facilitate trade. If there is not enough supply of currency the price goes up, by creating more units you drop the price back down. That is creating units by shifting the decimal to the left. You theoretically you can shift the decimal point an unlimited number of times so there is no limit to the amount you can inflate the currency.
People are used to this because that is how inflationary currency always worked. Deflationary currency has the same effect except that it creates units by shifting the decimal to the right. This also theoretically allows the supply to grow to unlimited quantity but in practice deflationary currencies have always been based on physically limited goods that ultimately could not be subdivided.
People are very used to thinking about money in whole units. Those people are looking at the price of Bitcoin and thinking about the price of 1.0 BTC. They refer to 2.0 as Bitcoins instead of 2 Bitcoin. If valuing against dollars 1.0 BTC was relevant at dollar parity.
We can shift this around and show that by applying the purely logical concept of the bit dollar we can magically turn bitcoin's deflation into inflation and thus prove that mathematically they are equivalent with the only mathematically significant factor being the rate. So if I had 1.0 BTC at parity I had one Bitdollar. When
But does it reflect the real market? Somewhere else I calculated out that the BTC volume of mt gox (the largest BTC exchange) * the average price * days in a year divided by the number Bitcoins that will ever be mined works out to $1081 and we know at least 10% of that amount flows through black market trade alone thanks to the FBI. Thanks to Bitpay and miners we know substantially more is solidly backed with white market trade. Bitcoin is currently floating between $600-$1200 per BTC. The Bitdollar is shifting between $0.60 - $1.20 over the course of a week. The same $600 shifts in BTC price if the bit dollar were to shift would be $0.96 to $1.04, if it were to shift another decimal the prices would be sub penny. And if it were to shift 4 more times from there fluctuations of $600 in the price of 1.0 BTC on the Bitdollar could not be expressed in something as unstable as the dollar even on the FOREX.
It helps keep a distinction between market speculation and the rate at which supply of currency increases/decreases which is pretty important if you don't want to confuse the effects of the two things together (being that they are distinct) in a discussion.
That's a reason it sucks to OWE debt with a deflationary currency not a reason you don't want to be OWED debt. But it comes out in the wash.
.70 BTC to consumer) and earn 1 BTC a week. By the end of the year (I'm going to ignore amortization because it doesn't change the concept and I don't want to bother calculating it). At the end of the year your MacBook Pros would be sold for .63 BTC, cost .45 BTC and net .18 BTC profit each. So yes, you'd need to increase your sales to pay back the loan but your potential customers salaries would be worth 10% more year on year so they could afford to buy 10% more of your product. The result of this is that deflation means 10% more goods/services would need to be produced to cover deflation. Just like 10% inflation would mean 10% more goods and services would mean the same.
In the current world, currency inflating by 1.2% (someone quoted this from bureau of labor and statistics but it might as well be X for this example). Banks have to increase the interest rates they attach to loans by this amount so that they aren't losing money. For example, $100 loaned for 1 year would only have the buying power of $98.80 so I'd have to charge 1.2% interest just to break even and get paid back $101.20 + markup interest.
In another world, currency deflates by 1.2%. In this world banks simply charge markup interest because the money they are paid back will be worth more than the money they loaned. So, the same $100 loaned for 1 year would have the buying power of $101.20 + markup interest when paid back.
Either way the person taking loan has to come up with 101.2% of the borrowed amount of purchasing power plus markup interest. The only real difference is that in the deflationary world the lender doesn't have to try to measure, predict, and include the rate of deflate/inflate in to the interest.
"Say you loan me 25 bc. Let us assume I earn 1 bitcoins per week, and that amount will buy 5 MacBook Pros. At the end of six months, that amount will buy 10 MacBook Pros, and I am earning only 0.5 btc per week."
That's some pretty extreme deflation let's go with a more realistic and still high rate say 10%. Let's make it a year. So I loan you 25BTC for 10% interest so you have to pay back 27.5 BTC. Let's say you selling MacBook Pros and currently sell 5 MacBook Pros a week (0.50 BTC cost and 0.20 BTC profit each, so
Unless you are talking about a salary of say 1 BTC a week. It isn't like an employer would be able to cut salaries for deflation, they also wouldn't need to increase salaries to offset inflation like they do now, merely for merit. So you'd still make at least 1 BTC a week, it would just buy 10% more goods and services. That works out because your company and everyone elses increased production by at least 10% to cover salaries and pay back debts. That was easy for them to do because their goods and services are flying off the shelf 10% faster because their clients have 10% more to spend on their goods/services and their costs dropped by 10%.
"right, and for just a small percentage of my income & purchases, I get the privilege of not paying taxes..."
Not sure where this comes in but it wouldn't be with using bitpay... it's crediting to your bank account.
As for whether or not it's worth ones time. There probably aren't enough customers wanting to pay in bitcoin at the moment for it to be. On the other hand, it is trivial to flip it on and costs nothing to maintain. 1% of transactions, no chargebacks, and $0 a month or 0% of transactions, no chargebacks, and $30/mo is better for everyone than any credit card merchant account.
For me it's worth it in the same way it's worth trying to support local businesses. Bitcoin is detached from government meddling, safe from creditors/bankruptcy/divorce, and a handy app on my smartphone that is much more handy than cash or credit cards.
He's talking about economic "theory" (which is hypothesis to anyone who knows what a theory is supposed to be) which has been tested for less than a century on a system with investments that old or older and 20% of that duration common and which was more less debunked when it led to global economic meltdown. Deflation on the other hand was the basis for essentially every economy in the world for a few thousand years before that. Inflation was only implemented because there weren't enough currency units to go around. Bitcoin does not have that problem.
They don't have to auction it that's for goods. It's digital currency in the US. Why do you think the FBI and DOJ were so crazy in favor of it before congress?
If you do enough volume to qualify for the $30/month option with 0% fee it might end up being more desirable than cash as well. It costs money to count and process cash plus there are losses to counterfeits. There is no counterfeit bitcoin, that is it's unique property that gives it innate value.
Except with lower fees and no chargebacks.
"I don't know which comment you're talking about but I definitely said that as a small business owner (which I am) taking BTC just doesnt make sense b/c of the 'last mile' where the BTC become $$$ in my biz bank account in real time."
There might be merchant accounts that do this for credit cards but I've yet to see one. They will often initiate a transfer to your bank daily which is exactly what Bitpay does, it converts the Bitcoin to the dollar amount of the transaction in realtime and initiates a bank transfer daily. There is a 1% fee for a free account or no fee for a $30/month account and unlike credit cards there are no charge backs.
Bitpay gives small businesses the option of accepting Bitcoin easily without any risk of being impacted by fluctuation in the speculative market. I can't understand why just about everyone isn't doing this. At 1% with no chargebacks you can accept and promote a new payment option that highly desirable vs credit card and just or more convenient than a credit card. Other than initial setup costs (labor) there is no ongoing cost, just leave a sticker up letting customers know the option is there and don't sweat it if the volume is low. If you have a high enough volume to need to pay the drop to 0% fee offsets it. Cash carries no fees or chargebacks as well but is less convenient for customers and has costs associated with counting/handling/counterfeits so if you do large quantities of currency Bitpay might be more desirable for you than cash as well.
Why? If I loan you $25 and you pay me back $30 is the $30 not going to be worth just as much when I get it back as it would have been if I'd sat on it? It's not like you'd reduce the amount owed due to deflation.
I prefer to look at the successful global use of deflationary money for a few thousand years before that. Next to that anything the past 50 years can merit hypothesis status at best especially in a world with 20yr mortgages. The only problem with the deflationary currency used was that as population increased there weren't enough units of currency to go around. There are 21,000,000 Bitcoins to be mined and 100,000,000 units of currency within each "Bitcoin" and that can be increased by network consensus (enough people install clients that support it) without inflating or deflating the currency. Inflationary currency on the other hand caused a global economic meltdown in less than one century.
The volume on MT Gox (the actual largest bitcoin exchange in the world, BTC China passed it for only a couple days) is 109225 BTC * the weighted average price of $569.03 that is $62,151,732 extrapolated that is $22,704,027,962.62 a year. If we divide that by the total of Bitcoins that will ever be mined 21 million, we see that Bitcoin should actually be valued at $1081 if no other exchanges existed in the world... including BTC China. Thanks to the FBI we know that at least 10% of that is the Bitcoin based internet drug trade alone and not mere speculative trading. The merchant catalog utilizing Bitpay, Amazon pay gateways, etc indicate a substantial white market trade as well.
So obviously it wasn't the people who bought at $700 before on the first word of the China thing that were morons, it's the people who sold on the news and caused the drop. The market will eventually correct Bitcoin to $1081+
Just because the price vs fiat has changed doesn't mean the currency has inflated or deflated I wish people would stop repeating that. Deflation or Inflation are changes in valuation related to supply of the currency the price changing due to market speculation is neither deflation nor inflation.
"You mean banks, who lend out a mixture of money they borrow from the government and money they borrow from savers. They lend it out to borrowers and receive payments back, and those payments decline in value with inflation. If they hold on to those loans as assets, they're in the "hurt by inflation" set."
Generally they don't loan out money from savers they use it as collatoral to borrow from government and loan that money out. Which makes sense since the interest rates from the Fed are so low as to be non-existent and they are allow to borrow a double digit multiplier of the money they are holding.
It's the size of the market. Warren Buffet could single handedly raise the price of bitcoin back to $1235 in a day. The market skyrocketed when the congressional hearing indicated bitcoin was golden and shiny and everybody should have one or ten (I suspect because the FBI is sitting on millions in bitcoin seized from Silk Road).
With that green light there was a ton of investment as everyone and their dog in the financial world added some to their portfolio.
Backward to what, thanks to Fincern you know the exchange account is theirs but you have no way to determine if the address that sent their exchange wallet money was theirs or the address that sent that address money. If I sell you a lamp and ask you to pay me at address A, then I transfer the money to address B there is nothing to prove address B is also mine. I may well have turned around and used the money to pay a debt. You might say, it's the same amount so it's probably mine. What if I then transfer to C,D, and E different amounts that add up to that amount. Well you'd say they are probably mine too but it's slightly less probable. There is no way to actually know that, figures matching could be me shifting my money around my own accounts or it could just be that my purchases added up to that amount because it's the amount I had to spend!
Swiss banks turn over your information to foreign governments on request. Once upon a time funds in a Swiss account were protected from random states opinions about what was or was not a crime. Now the swiss hand over data to the US on a routine basis.
Who is a criminal and who is not? One state might take one view and another a different view. Making sure your money wasn't at the mercy of the views of any state and protected from them was what the Swiss Banks and Swiss neutrality were supposed to be all about.
A state might be able to imprison me and try to coerce me in to handing over my property but ultimately the responsibility to resist that and keep my money despite it once rested with me if my money was in a Swiss bank. Now it isn't secure at all, it is at the whim of random nations.
The swiss numbered account as a bastion of privacy is a thing of the past. The swiss turn over bank information on request to the US. Why on earth would we even begin to trust them with our data? That's no better than giving it directly to the NSA to begin with.
"You've somehow got your macroeconomics completely mixed up; half right, then reaching the exact wrong conclusions"
No. I just haven't reached the same wrong conclusions that have fscked the global fiat economy.
"Deflation is a dividend paid to everyone holding any quantity of money --- which benefits no one but the ultra rich with money to sit on."
An assertion that is commonly touted by those who support the idea that inflation is needed to drive an economy and which I thoroughly debunked in my previous posts in this thread. You don't need inflation to force the rich to try to use their wealth to become more wealthy. The rich spend, and need to replace what they spend, additionally the rich are greedy like everyone else and want to increase their wealth. The rate of deflation/inflation just a set minimum bar for the returns your ventures must yield to be worthwhile. Deflation sets the bar higher, and since return on investment directly correlates to risk a higher bar means assuming more risk. That means ease of access to credit because higher risk credit yields greater ROI. Ease of access to credit means more startups and more ventures. Businesses in turn will need to expand in order to do better than they would do by simply sitting on their money.
Deflation provides interest without a bank. To everyone, every minute of every day. If you make 25 Bitmils/hour you will get a built in raise from week to week at the rate of deflation. That means your employer must expand operations or otherwise increase the value they offer to continue to pay your salary. The deflation doesn't magically come from air. It comes from increased goods and services.
Someone who legitimately just sits on their wealth and hoards it has little to no impact on the economy since their money isn't in circulation and the reduced supply of money will cause the value of each unit that is in circulation to increase to compensate. That doesn't cause a problem unless there aren't enough units of money. That is a problem on the gold standard. That is no problem in Bitcoin. Bitcoin has trillions of units and it is actually fairly simple to expand the number of digits used to track Bitcoin. So even though Bitcoin is deflationary, it can expand to a theoretically unlimited number of currency units. It could also cause a problem if there were a huge number of people in that position but like you said, we are talking about a very tiny number of wealthy people and their personal contribution to the production of goods and services is essentially nil and their consumption of goods and services is already far below their personal wealth.
As opposed to the tiny wealth hoarding class that gets the cost of inflation trickled up to them from the bottom?
Either way you look at it consumers and laborers are what drive the economy and investors leech from it. Inflation and Deflation don't change any of that. Deflation actually benefits those with less because it increases the buying power of their wages and forces investors to assume more risk in order to generate returns higher than deflation. Higher risk means more freely available credit and a greater chance of losing, which will cause more investment in new business and wealth to shift hands more quickly.
Inflation is a tax on everyone holding any quantity of money. It encourages producing more money. Deflation is a dividend paid to everyone holding any quantity of money. That dividend ultimately comes from higher risk credit and increased production/consumption of goods and services. So deflation encourages the production of more goods and services. That benefits everyone.