Quote from: evoorhees on September 27, 2011, 07:47:06 PM

Founder - I gotta refute this stuff.

Yes, your figures are 100% accurate. Nobody is refuting the numbers. Rather, it is the implications you're drawing from those figures which are problematic.

- A $100,000,000 fall in the market cap of Bitcoins is not correctly described as a "$100,000,000 loss". The aggregate value of all coins fell by $100,000,000, true, but only after rising by more than that immediately prior. Just as if you bought Apple stock for $100, and it rises to $200, then falls to $130, it would be misleading to say that one's investment brought about a $70 loss. What you're doing is taking the potential loss of a person who bought at the peak, and applying that to the entire bitcoin community, and claiming a hundred million dollars have been lost.

- And I've seen you post frequently on the topic of inflation. You seem severely against the fact that coins are created so quickly - and you ascribe the loss in market value to this inflation rate. This too is misleading. Remember, the inflation rate HAS NOT CHANGED at any time since Bitcoins were worth less than a penny to when they were worth $30. The fact is that their meteoric rise earlier this year occurred in the exact same inflationary environment. In other words, the inflation rate is not the primary driver of market price. Rather, it's the sentiment of individual buyers and sellers which is the primary driver of market price. If sentiment changes, the price can quite quickly skyrocket again, regardless of the 7200 coins printed each day.

- Finally, you said, "the whole bitcoin economy is decreasing value so fast." This is utterly false. You are again confusing the market price of a Bitcoin with the value of the economy. Just as the market price of a dollar doesn't determine the value of the USD economy, neither does the market price of a Bitcoin determine the value of the BTC economy. Similarly, just as the value of the dollar has fallen continually for the past 80 years, the value of the USD economy is vastly larger now than it was then. Same with Bitcoins - just as the value of the Bitcoin has fallen continually for the past few months, the value of the BTC economy is larger now than it was back then.

Confusing the value of all the economic behavior and production of the Bitcoin world with the current spot price of a Bitcoin is folly, and I can tell it's bringing you great distress. The Bitcoin economy is getting more valuable, productive, diverse, and secure with each passing month, and a falling spot price of Bitcoins does not in any way refute this claim.

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- The peak price was used of course to show the magnitude of the problem, however even at $17 dollars it's still a $100,000,000 dollar loss.

- Regarding inflation .. I know the inflation rate hasn't changed, that's the problem... because the demand changed but inflation didn't match the weakening demand... and the point is that the BTC economy HAS shrunk... while we're printing them off at a crazy astronomical rate.

- I will cede to you that new software and development is going into bitcoins, I personally put $100,000 USD into flexcoin ... I'm sure Mt. Gox, Tradehill, CampBX and others have invested as well... so yes it's getting better .. but still not enough at that inflation rate to increase demand.

Quote from: Steve on September 27, 2011, 07:50:17 PM

Do you honestly think that if you had $250 million that you could buy 7 million bitcoins today? I doubt it.

No what's I'm saying is that I could buy all the bitcoins technically at a fraction of that, 36 million. However in real life everyone knows that if someone went on a buying spree of that magnitude of course the prices would rise .. I might get about 25% of all the bitcoins out there however with just 36 million... If demand increased 36 million it would most likely send bitcoins to about 9 dollars if done over the course of a few weeks..

Quote from: Steve on September 27, 2011, 08:04:16 PM

This is not quite correct. The inflation rate has in fact been steadily declining. From block 0 to block 1, the annualized inflation rate was infinitely large. From block 1 to block 2, the annualized inflation rate was 5,256,000%. Currently the annualized inflation rate is ~35.7%.

That is correct, but the creation rate (not percentage) is still set at about 250 dollars every 10 minutes... (50 BTC per 10 block) ... as a percentage it decreases... because the amount of bitcoins is so bloated and getting bigger.