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Neuco inc vs bitcoin exchange
Bitcoin is unique in that only 21 million bitcoins will ever be created. However, this will never be a limitation because bitcoins can be divided up to 8 decimal places 0. As the average transaction size decreases, transactions can be denominated in sub-units of a bitcoin, such as millibitcoins 1 mBTC or 0.
Currently, as of this writing, there is a total just shy of 12 Million BTC in existence. The deflationary spiral theory says that if prices are expected to fall, people will move purchases into the future in order to benefit from the lower prices.
That fall in demand will in turn cause merchants to lower their prices to try and stimulate demand, making the problem worse and leading to an economic depression.
Although this theory is a popular way to justify inflation amongst central bankers, it does not appear to always hold true and is considered controversial amongst economists.
Consumer electronics is one example of a market where prices constantly fall but which is not in depression. Similarly, the value of bitcoins has risen over time and yet the size of the Bitcoin economy has also grown dramatically along with it. Because both the value of the currency and the size of its economy started at zero in , Bitcoin is a counterexample to the theory showing that it must sometimes be wrong.
Notwithstanding this, Bitcoin is not designed to be a deflationary currency. It is more accurate to say Bitcoin is intended to inflate in its early years, and become stable in its later years. The only time the quantity of bitcoins in circulation will drop is if people carelessly lose their wallets by failing to make backups. With a stable monetary base and a stable economy, the value of the currency should remain the same.
The next sentence goes on to state that it is more accurate to say Bitcoin is intended to inflate in its early years and become more stable in its later years. Wow this sounds like great stuff. If you want to ride on the speculative wagon you must get on early and hang on for the inflationary ride to stability that will occur once BTC has aged to maturity. The United States of America tracks the total number of currency in circulation.
As of June M2 was If you recall from earlier there is almost 12 Billion BTC in existence. A very small portion of BTC currency actually exists in the over all scheme of things. Those must all be added to the USD side of this equation and compared to the 21 million possible BTC that will ever exist.
I have to admit that I do not understand deeply how mining works. In gold was found in the west. People rushed out west to stake their claims and start pulling the yellow metal out of the ground. At first gold mining was easy and it seemed that the gold was just laying on the surface. After a few years, however, the quantity of gold being pulled out of the ground was starting to diminish. Many gold miners went out of business because their operations cost more than the gold they could acquire would pay off.
Other miners innovated and came up with better methods for mining. They turned to strip mining and they could drill holes to test the ground for higher concentrations and veins and focus their efforts in more productive areas of the land. This gave them an advantage and a way to optimize their mining operation to make it cost effective to continue mining. BTC mining operations are working the same way to a degree.
The limiting factor of BTC mining is that once the land rush is over and the supply of BTC is diminishing that it will require more searching to find less BTC how will the miners optimize their operations without increasing costs? I am not a miner but do know enough to state that mining innovation is going to be almost impossible at a point. This will drive out less efficient miners and hobbyists and leave only the big players.
At some point in the game though the electric bills will shut them down because the supply acquired in a duration of time will be too little to keep the machines running.
Another item to think about is that a gold miner at the end of the day would actually have something in his hand that he could touch. A BTC miner just has some digits on a ledger that may or may not be able to exchange for anything that will keep the bills paid. Prior to any dictionary that you would find stated that the definition of inflation was an increase in the money supply.
Today the definition has been changed to be related to a general rise in the overall price level. These are 2 completely different definitions. One definition is about the quantity of money in the system and the other is about the level of prices. Thinking back to ECON everyone knows that prices are set by supply and demand. Inflation makes more sense when we look at the money supply being inflated like a balloon.
The money supply is increasing and if the demand for it is flat a result is the prices of real goods and services get higher. That said my definition of inflation is the pre related to the quantity of currency and not the over all price of goods.
As the dollar price of 1BTC increases and everyone believes they are getting richer the value of the BTC will be diminishing to the right side of the point. The current market capitalization of BTC is just shy of 7 billion dollars.
To show scale we have to understand that BTC is a global currency. People the world over are using this to complete transactions on anything and everything today. I showed earlier that M2 in USD is Then you also have to factor in every other currency in the world and add that to the USD side of the ratio since BTC is a world wide currency.
The current quantity of BTC is infinitesimal compared to the global currency supply. BTC is small compared to the world currency supply and small compared to Madoff, but it is a scam. Many will make money playing this game but in the end many will not. The only thing that keeps BTC valuable at this time is that it was the first out the gate and had many adopters. Other than that all the reasons why someone would choose to use BTC over other available currencies become moot. Where can you do this with cash?
Many will get very wealthy but many will get stuck with digital nothingness when the popularity wanes. At one point, P. Your email address will not be published. The FAQ then goes on to the next frequently asked question: Will there be new ways to calculate the hashes to simulate drilling? That said, I find it hard to believe that 21 million BTC will ever come into existence. Those BTC rigs require gold to make them run.
BTC Inflation 21 million is the magic number but it may be next to impossible to ever reach that. BTC will inflate to the right of the decimal point. Barriers To Entry None. Conclusions Bitcoin is very small compared to the real world. The full 21 million coins will never be reached forcing inflation to the right of the point. Mining will end due to the costs of diminishing returns. There are zero barriers to entry and only popularity gives it value. At least during the tulip bubble people at the end of the mania could grow a pretty flower.
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