Why BTC is not cash, and why cash is not infinitely divisible.

[brandon]

And don't you have to download the block chain and update it with every transaction?? What about when the file gets too big to store in most computers?

You don't have to, but you probably should. Newer BTC clients don't pull down the entire chain.

Currently it already takes several days/weeks to download the full block chain so it is a very real problem that will need to be addressed sooner than later.

 

[specsaregood]

Given the OP's clear bias against BTC, I'm wondering if this thread was commenced to deliberately muddy the waters for those that are new and trying to comprehend the BTC ecosystem. Anyways, +rep.

The OP does not have any unfair bias of BTC. As usual, you say something that the drones disagree with and automatically you are accused of conspiratorial intentions.

 

[amonasro]

Given the OP's clear bias against BTC, I'm wondering if this thread was commenced to deliberately muddy the waters for those that are new and trying to comprehend the BTC ecosystem. Anyways, +rep.

Thanks. Seems the FUD is strong with this one.

And don't you have to download the block chain and update it with every transaction?? What about when the file gets too big to store in most computers?

Good question! If you use Satoshi's original client, Bitcoin-QT, yes the user must download and sync the entire blockchain. There are other clients, like Electrum, that don't require this and rely on multiple servers to keep a copy of the blockchain. There is also functionality in the original code that allows the download of the block header instead of the entire block. Not sure if this has been implemented yet.

 

[FSP-Rebel]

The OP does not have any unfair bias of BTC. As usual, you say something that the drones disagree with and automatically you are accused of conspiratorial intentions.

Like I said, I was wondering and didn't make a blanket statement. Amonasro cleared up the fog, no worries pal.

 

[newbitech]

Thanks. Seems the FUD is strong with this one.



Good question! If you use Satoshi's original client, Bitcoin-QT, yes the user must download and sync the entire blockchain. There are other clients, like Electrum, that don't require this and rely on multiple servers to keep a copy of the blockchain. There is also functionality in the original code that allows the download of the block header instead of the entire block. Not sure if this has been implemented yet.

Bitcoin is in fact one large piece of data. How I spell bitcoin is as meaningless as the original nominal amount of 50 assigned to the genesis block. I am not making an assumption. I am simply defining bitcoin in real terms. It really is one "thing". What you currently "own" is the right to create a marker in the bitcoin data by creating a division of the nominal amount assigned to that particular "block" or code segment in the data. You don't actually own bitcoin, you can't.

You argue for the nominal value which why the idea of there only being one bitcoin goes past you.

It doesn't matter how large the block chain gets there is still only one bitcoin. That is a strawman. I never said anything about the amount of bitcoin having anything to do with block chain size. This is again because you correlating the nominal value to the price that people are willing to pay for the right to divide the nominal value. I ignore the nominal value because I understand that it is meaningless and is only used in the protocol because without a nominal value, people cannot commence to dividing that value, thus the entire point of the math function that generates all this data becomes meaningless (0/x = 0).

Bitcoins are not digital rewards. This is the "token" increase to the nominal amount. The reward is the right (key) to infinitely divide that nominal amount. There is only one bitcoin. What is being sold for real debt is the right to divide the nominal amount (the right to place infinitely new division markers each with their own unique access key with inherent rights to subdivide)

Yes the system does give the miner rights to divide that nominal amount. That is all a miner gets. It doesn't matter what the nominal amount is since all that the miner has control over is the right to subdivide that amount and he could do it an infinite number of times. His hope is that he can sell his right for real debt or goods or services. He hopes he can find someone that wants the right to divide his piece of the bitcoin further.

You should understand that bitcoin is nothing more than a big ol fat nasty data file. It's nice that people refer to these nominal subdivisions as their own unique little entities and subdivide them into infinitely. It's also nice that people say they transact and spend them, but really that is not what is happening.

What people are doing is manipulating the big of fat nasty data file. They pay for the right to do this. Sure you could pay 700 million and be the proud owner of the number 1 million inside of the bitcoin and have the right to divide 1 million until your heart is content. That sounds fantastic! But I could just as simply pay 700 and have control over the number 1 inside of the bitcoin and DO THE EXACT SAME THING.

 

[Petar]

I'll give you 1 gold atom for 0.000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000001 BTC.

 

[angelatc]

Given the OP's clear bias against BTC, I'm wondering if this thread was commenced to deliberately muddy the waters for those that are new and trying to comprehend the BTC ecosystem. Anyways, +rep.

Just for the record, I don't understand much about Bitcoin, but even I realize that dividing Bitcoin is not inflating it.

 

[muh_roads]

Bitcoins aren't anonymous.

It's anonymous if you know what you're doing. PRISM could probably link most people to their address as most have slipped up either not hiding behind a VPN, putting their wallet addresses in their signatures, etc. But the SR investigation even proved that the tumbler system DPR used was really damn solid and they couldn't trace it back to the original wallet address outside of Tor from where the deposit into the escrow came from.

That system is now integrated into blockchain.info and called "shared send". Bitcoin laundry's have existed for a while now but the new shared send feature makes things simple to understand.

 

[amonasro]

What people are doing is manipulating the big of fat nasty data file. They pay for the right to do this. Sure you could pay 700 million and be the proud owner of the number 1 million inside of the bitcoin and have the right to divide 1 million until your heart is content. That sounds fantastic! But I could just as simply pay 700 and have control over the number 1 inside of the bitcoin and DO THE EXACT SAME THING.

Are you high? The value of 1 bitcoin does not equal the value of 1 million bitcoins.

 

[newbitech]

I'll give you 1 gold atom for 0.000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000001 BTC.

still thinking in terms of notional. But suffice to say

I can give you 1/2 that amount of BTC's can you give me half an atom of gold?

 

[muh_roads]

Real simple.

Cash transactions have no record of the transaction.

BTC records every transaction.



There is only one(1) Bitcoin in existence. That Bitcoin is the block chain. The reason why the block chain will grow into infinity is because the block chain is a record of all of the divisions of the original bit coin.

From the first "transaction" until today, each time a BTC is "spent" it is simply recording a division of the original bitcoin. Bitcoin creation aka mining is nothing more than mathematically encoding each division into a cryptographically obfuscated set of data (block).

Cash is not infinitely divisible because it is exists as matter. Same for gold. Eventually you will reach the atomic level at a point where if you divided that gold atom, it would no longer be gold.

BTC on the other hand can be infinitely divided. This is the hidden inflation inside of BTC. And of course this manifest thru the easily observed growing size of the block chain.

#1 Adding numbers to the right of the decimal place isn't supply inflation. Adding to the left is. You want your currency to divide further to keep up with deflation. If we were still on a gold standard, we would want that 5 cent cup of coffee from many decades ago to cost 5/1000 if we were still on a gold standard today. If the US Dollar could be broken up beyond 100 units instead of adding to the supply we would all be much better off. Your money is stronger than before and can buy more of those 5 cent coffees now as time went on.

#2 The purpose of the public ledger of the blockchain is so the supply is visible. We're tired of asking our King's & Queen's to audit the Fed. The blockchain means we can now Ignore the Fed. A public ledger prevents the powers that be from lying about the supply. Be it the metal vaults like the COMEX that consistently lie about their supply to JP Morgan's bullshit aggressive naked shorting of silver. The loss of anonymity is a natural consequence if you don't know what you are doing.

 

[newbitech]

Are you high? The value of 1 bitcoin does not equal the value of 1 million bitcoins.

there is not 1 million btc. There is 1 btc. You are speaking of the notional amount that was arbitrarily assigned. That 1 million means nothing, it's just some number inside the bitcoin. The bitcoin is only 1 very large hunking data file that is constantly being changed by people doing some math with an infinite amount of variables.

Those variables are the private keys that allow the person controlling the keys to divide some number inside of the hunka hubba hubba data file.

Oh you have the right to divided 1 million? Cool! I have the right to divide 10. What makes your right any more valuable than mine? All we are doing is marking a division of the arbitrary notional value inside of the data. Nothing special about division is there? You are just creating a fraction and paying for the right to create a fraction inside of the data file.

That is what you get for your purchase of bitcoin. Then you are hoping that someone else will be willing to trade you something way cooler than math for the right you have to do math inside of the bitcoin.

 

[brandon]

Yep, he's high

 

[newbitech]

#1 Adding numbers to the right of the decimal place isn't supply inflation. Adding to the left is. You want your currency to divide further to keep up with deflation. If we were still on a gold standard, we would want that 5 cent cup of coffee from many decades ago to cost 5/1000 if we were still on a gold standard today. If the US Dollar could be broken up beyond 100 units instead of adding to the supply we would all be much better off. Your money is stronger than before and can buy more of those 5 cent coffees now as time went on.

#2 The purpose of the public ledger of the blockchain is so the supply is visible. We're tired of asking our King's & Queen's to audit the Fed. The blockchain means we can now Ignore the Fed. A public ledger prevents the powers that be from lying about the supply. Be it the metal vaults like the COMEX that consistently lie about their supply to JP Morgan's bullshit aggressive naked shorting of silver. The loss of anonymity is a natural consequence if you don't know what you are doing.

1.) in this case it is, since the bitcoin is not physical, there is no limit to its divisibility. The supply is not the notional value, rather the supply is the right to divide the notional value. That is all you get when you buy a piece of the bitcoin. You get the right to divide that fraction into an even smaller fraction. So regardless if you buy the number 1 or the number 100 or the number 0.001, all you have bought is the right to divide that number. Of course you could divide it to yourself thereby increasing your notional value. But you do not prevent increasing the supply of rights to divide, since anybody else can still divide whatever there number is infinitely.

2.)The blockchain stores the entire supply of rights to divide. The more rights that are created, the larger the block chain becomes. In fact, the block chain will continue to grow thereby increasing the supply of divisions, even if you never exercised your right to divide, as long as someone was willing to do the math to find the next block. This is how the genesis block was found, by dividing into the nominal value of 0. Of course that process increased the nominal value by 50 thereby guaranteeing that the system would always have a different hash result in the next block (even if no rights to divide had actually been executed, which they hadn't until block 170). Beyond the initial genesis block, the system needed to make divisible each new nominal amount as a piece of the calculation (create an address).

 

[newbitech]

Yep, he's high

no, I understand what bitcoin is. There is only one unit of bitcoin. That is the bitcoin it self. Event the name should give you a clue. Bit. It's a piece of something. It's not the thing. You place a nominal value and say you have 5 bitcoin. You have 5 bits. I could divide your 5 bits 1000 times. Now you have 1000 bits. Lucky you!

Oh but that nominal value is so important cause there will only ever be 21 million (???) of "them". Uh huh..

 

[newbitech]

btw, thank for taking time to rate the thread. I bet if you could give it half a start you would. Hell you'd probably give it .0000000001 of a start. Im just curious would there really be a difference in 1 star or half a star? Don't think so. Cause for this thread, there can only possibly ever be 5 stars. But wait!

I could get 5 stars from 10 people now and still never actually have a 5 start thread! Why is that? Is it because those stars are infinitely divisible? Why yes, it is. So what value I place on a star? hmm take a wild guess.

 

[danda]

The OP is playing semantics games. Yes, bitcoin is divisible. So what?

If I have 10 of those divisions that people value at a dozen eggs, and I hold onto them, and later people value them at 12 dozen eggs, then my wealth in real world terms has increased by 11 dozen eggs. I'm not going hungry. It doesn't matter if that 10 can be divided a billion billion times or not.

Further, this is no different from anything else. A bar of gold? It is nearly infinitely divisible as well. Ever heard of electroplating? And it is also only worth what people believe it is worth. If tomorrow we discover that mount everest is actually made of gold under all the snow, the relative value of gold to eggs is going to plummet. Is that something I worry about? NO. Just like I don't worry about people suddenly realizing that bitcoin is .... OMG .... divisible.

So what do you have to say to that, OP?

 

[PaulConventionWV]

Bitcoins aren't anonymous.

Better stated, the debtor gives up anonymity when borrowing from anyone. There is a certain amount of verification that must take place before any lending takes place. Bitcoin itself is anonymous to an extent, but the creditor would doubtless require an identity before lending anything, just like with dollars.

 

[newbitech]

The OP is playing semantics games. Yes, bitcoin is divisible. So what?

If I have 10 of those divisions that people value at a dozen eggs, and I hold onto them, and later people value them at 12 dozen eggs, then my wealth in real world terms has increased by 11 dozen eggs. I'm not going hungry. It doesn't matter if that 10 can be divided a billion billion times or not.

Further, this is no different from anything else. A bar of gold? It is nearly infinitely divisible as well. Ever heard of electroplating? And it is also only worth what people believe it is worth. If tomorrow we discover that mount everest is actually made of gold under all the snow, the relative value of gold to eggs is going to plummet. Is that something I worry about? NO. Just like I don't worry about people suddenly realizing that bitcoin is .... OMG .... divisible.

So what do you have to say to that, OP?

gold is not infinitely divisible. In fact I think that you will find that the value of your gold decreases as you attempt to infinitely divide it.

For instance, let say a 1cm/1cm block of gold is worth 500 dollars. Do you think that if you divided your gold into 100 pieces that each piece would be worth 5 dollars?

Or another way to see this is, can you buy a pack of gum with a piece of gold? No gold is not infinitely divisible. And neither is it practical to divide gold as you describe.

But here is the problem with your argument. Gold, no matter how many times you divide it still has a finite amount that can exist on the planet or within our means of discovery.

Bitcoin on the other hand essentially discovers an ever increasing amount of divisions every 10 minutes. The amount of divisions is infinite. You really need to understand that all you have when you say you own bitcoin is the right to divide the bitcoin. Bitcoin doesn't exist without divisions. In fact bitcoin nothing but an infinite series of divisions of the original arbitrarily and perhaps random data string. Of course hashed and encoded a quadrillion times quadrillion times over.

You get the right to manipulate this data from the source. All divisions come from the source division. So in the real sense, not the abstract nominal value sense, people are playing with money inside a huge block of data. One. Huge. Block. One. They play by dividing that block up into an infinite series of pieces.

People pay for the right to add their significance (if any) to that series. That's it.

 

[PaulConventionWV]

Inflation is always allowed to happen with any currency in any healthy economy. It must happen. The key difference between the inflation of BTC and the inflation of the dollar is that BTC can inflate, but it cannot be inflated. There is no central authority, and so nobody can arbitrarily inflate the currency; it must happen through the market. The inflation of BTC must be supported by the market, and will not go to infinity no matter what happens. The halving of the block chain effectively prevents this from going too far down into the decimal places. It is also limited by common sense factors like the unwillingness of people to use absurd forms of scientific notation to buy a cup of coffee. What's more, just because the central authority that controls the dollar doesn't divide their currency into more than .01, doesn't mean it couldn't be done. It could ALL theoretically be done, but I don't see any need to worry about these minute details.