you would be planning to setup BTCBanCorp would you?

Bytemaster speaks the truth!

quite, what's wrong with a bit of fun?

best way for you all to make bitcoin work is to not take it too seriously.

That may sound like a silly statement but have a think about it before hitting reply.

MarkM, I agree.

All you are talking about is the separation of the medium of exchange and store of value functions.

Oh, look, its already happened!

doesn't that rather depend on the USDBTC rate given that eleccy and rigs are priced in USD?

You need to distinguish between momentary profits, due to speculation, or sustained profits.

If sustained profits are on offer, more and more profit seekers enter.

In the latter case, profits will be driven to zero by competition, and then below zero.

Then some people get out, with losses.

Profits go up, people get back in.

What then is the average profit of the average player?

OK, so the profitability goes up and down as people go in and out. But what is the average profitability once you smoothe out the swings?

The original point made was that the average profit will tend toward zero.

If the average profit is above zero it must mean someone else is bearing the costs, like, your network provider.

if the profit is the same, as you imply, then people will try to get in on the game - competition - which forces prices down.

which changes what exactly?

Absolutely correct, IMO. Classic externalization of costs.

So what? You mean to imply a metaphor between money and water when the comparison is specious. If you have a mostly immobile  sand dune and every so often a grain is picked up by wind and moves to a nearby dune that is a more appropriate metaphor for money.

Another metaphor is is two roads. The high road moves very fast, with a small number of cars, and many collisions. This is the hot money flow.

The low road moves very slowly, and is always gridlocked. This is the saving of ordinary people.

There is an on-ramp and off ramp to the high road. This is an appropriate model. And yields a totally different way of thinking, and highlights totally different problems and solutions, than the image of water moving in pipes.


A high (or low) 'velocity' is neither here nor there. A single coin with ultra high velocity is as good, you say, as many coins with low velocity. In fact they are equivalent according to the MV=PQ.

The force you term Velocity arises from the technology associated with money, cultural norms, and imbalances like interest rate differentials. It is therefore not something that can be forced, but an emergent property of all these things.

Hi JT, F% of the amount of each coin is lost each time its spent.


Their are equal pros and cons in each case. but..


...I hate that equation. Money doesn't have 'velocity' contrary to popular imagination. Most of the time a money token just sits in one location. Very occasionally it moves. At the moment, each dollar of base money moves about every 8 months. Thats not like velocity, like water thru a pipe, its more like electrons tunneling. So more of a stochastic, quantum type event than a flow.

I don't think that equation is that useful in the real world.

Secondly, you say you don't like interest but demurrage per year is not only interest, but it is imposed artifically.

Whereas what I propose, the fee charged when spent is a transaction fee , which I promise you will make more sense to everyday people than a negative nominal interest rate will do.



Its a shame you feel that way. You cannot load political or ideological views on a money system and expect it to succeed. Ripple is a pure system of bilateral agreements and as such there is no business for you or I to impose a particular form on these voluntary bilateral contracts. If two consenting adults would like to charge one another interest, so be it.

OTOH, the transaction fee is perfectly understandable as a fee payable to the community who enable, via the donation of their MIPS, trade to take place.

That is exactly what I suggested above. Bitcoins are added to the supply each time a block is solved (incentive to contribute CPU resources), but bitcoins erode each time they are transacted with. So, inflation is balanced.

The hard part IMO, is that you don't always want a balanced inflation. When the number of users of the ripple-bitcoin system is growing, you need more bitcoin liquidity. I have never believed in the built in deflation in bitcoin, it seems to me an unnecessary restriction.

So that hard part, is how the bitcoin-ripple money supply is automatically adjusted to grow with the volume of transactions, or equivalently, how a more or less fixed bitcoin velocity is maintained in this system of balanced demurrage and supply inflation.

that's pretty cool !

yes, but what would make bitcoin fly is a highly valuable service that ONLY accepts bitcoins as payment.

ideally that service would be something generated by and for the community.

a simple marketplace doesn't count because there is nothing to stop two parties, having established a co-incidence of wants, to just use dollars to settle, or another cryptocurrency for that matter.

agreed, but the similar value in question may be zero, or any other number on the 'value line'.

security is a 'necessary but not sufficient' condition for establishing currency value.

demand-binding is also a necessary but not sufficient condition.

likewise, scarcity.

I don't think that is very likely. The problem with bitcoins is that they are not scarce in the limit condition, since while the number of coins per blockchain might be limited, the number of potential block chains is essentially infinite.

IMO to make bitcoin valuable there needs to be some important service or obligation that can only be obtained or settled with bitcoins. Governments use tax and legal tender laws to establish this tension of demand. While you may or may not find such a binding-of-demand morally deplorable, it is necessary for  the creation of a successful currency, whether fiat or metal or crypto.

from the same link:


There is no legal basis for pursuing debt denominated in bitcoin. So if Jen defaults here Bob is hosed.

Possibly I'm wrong on the legals here, but if so I'd like to know why.

no you couldn't, because there is no market established to enforce such a contract denominated in bitcoins.

I guess you could try writing your own contract but it would be shaky ground.

why would you ask that?