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BITCOIN ECONOMICS

Everything about Bitcoin and crypto currencies


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Here are some famous quotes to give you an initial impression of Bitcoin and blockchain:


"I've developed a new open source P2P e-cash system called Bitcoin. It's completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. ... The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible. ... With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless. ... The result is a distributed system with no single point of failure."

Satoshi Nakamoto (2009)

"In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value."

Satoshi Nakamoto (2009)


"It's the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste."

Satoshi Nakamoto (2010)
"The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price. In later years, when new coin generation is a small percentage of the existing supply, market price will dictate the cost of production more than the other way around. At the moment, generation effort is rapidly increasing, suggesting people are estimating the present value to be higher than the current cost of production."

Satoshi Nakamoto (2010)


"As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties: boring grey in colour, not a good conductor of electricity, not particularly strong, but not ductile or easily malleable either, not useful for any practical or ornamental purpose and one special, magical property: can be transported over a communications channel. If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it."

Satoshi Nakamoto (2010)


"Imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world. Current estimates of total worldwide household wealth that I have found range from $300 trillion to $100 trillion. With 20 million coins, that gives each coin a value of about $10 million."

Hal Finney (2009)


"We shall demonstrate to the world two things, first, the practiability, second, the desirability of displacing gold as the basis of currrency and substituting in its place the world's imperishable natural wealth... the American people will never again consent to the issuence of an interest-bearing bond... The function of the money seller will have disappeared... Under the energy currency system the standard would be a certain amount of energy for one hour that would be equal to $1."

Henry Ford (1921)


"I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop."

Friedrich Hayek (1984)


"I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that's missing, but that will soon be developed, is a reliable e-cash ..."

Milton Friedman (1999)


"Instant transactions, no waiting for checks to clear, no chargebacks, no account freezes, no international wire transfer fee, no fees of any kind, no minimum balance, no maximum balance, worldwide access, always open, no waiting for business hours to make transactions, no waiting for an account to be approved before transacting, open an account in a few seconds, as easy as email, no bank account needed, extremely poor people can use it, extremely wealthy people can use it, no printing press, no hyperinflation, no debt limit votes, no bank bailouts, completely voluntary. This sounds like the best payment system in the world!"

Trace Mayers (2013)


"Bitcoin will do to banks what email did to the postal industry."

Rick Falkvinge (2012)


"As the adage of the entire internet once went, »I just replaced your entire industry with 100 lines of Python code,« that's exactly what we're doing with bitcoin."

Andreas Antonopoulos (2016)

"Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly."

Vitalik Buterin (2016)


"... bitcoin doesn't care if you're a person, a piece of software, or you know, an automatic dog feeding bowl... So, imagine a self-driving car that can give passengers rides as a taxi, and using the money it earns, buy gasoline or electricity to maintain itself, and then also buy service and maintenance, even perhaps lease more cars in a self-running corporation without any human owners."

Andreas Antonopoulos (2016)