Bitcoin 2140 A.D.

2140 A.D.,

By this point, hopefully, Bitcoin has become a global currency and maybe a heliocentric currency as well. This message may come later as the mining power may very well have exceeded expectations. As the Bitcoin network has initially distributed(1) close to 21 million bitcoins, the human population(2) should be around the billions. High deflation(3) may have taken place before. The idea of increasing supply may come up. This idea isn’t new. It’s something the creator Satoshi Nakamoto had encountered on Bitcointalk(4). This message from the past is a reminder of the idea Mr. Nakamoto had — to add more denominations of Bitcoin as more decimal places and/or move the decimal place to the right X times, where X in place of an integer.

The smallest denomination, as of writing, is a satoshi(one hundred millionth) and so further units could be allocated such as the decisatoshi? (10^-9), centisatoshi?(10^-10), millisatoshi? (10^-11), … The unit naming won’t matter but the place value will.

When small numbers become cumbersome to work with, Satoshi as his example had the decimal move a period. In the unlikely scenario, all but 1 Bitcoin was burned, and the smallest unit is a satoshi.

1.00000000 →1,000.00000

Don’t trust, verify. Not your keys; not your coins.

2021 A.D.

(1)

Ray Dillinger:
> the “currency” is inflationary at about 35%
> as that’s how much faster computers get annually
> … the inflation rate of 35% is almost guaranteed
> by the technology

Increasing hardware speed is handled: “To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they’re generated too fast, the difficulty increases.”

As computers get faster and the total computing power applied to creating bitcoins increases, the difficulty increases proportionally to keep the total new production constant. Thus, it is known in advance how many new bitcoins will be created every year in the future.

The fact that new coins are produced means the money supply increases by a planned amount, but this does not necessarily result in inflation. If the supply of money increases at the same rate that the number of people using it increases, prices remain stable. If it does not increase as fast as demand, there will be deflation and early holders of money will see its value increase.

Coins have to get initially distributed somehow, and a constant rate seems like the best formula.

Satoshi Nakamoto

(2)

It is a global distributed database, with additions to the database by consent of the majority, based on a set of rules they follow:

- Whenever someone finds proof-of-work to generate a block, they get some new coins
- The proof-of-work difficulty is adjusted every two weeks to target an average of 6 blocks per hour (for the whole network)
- The coins given per block is cut in half every 4 years

You could say coins are issued by the majority. They are issued in a limited, predetermined amount.

As an example, if there are 1000 nodes, and 6 get coins each hour, it would likely take a week before you get anything.

To Sepp’s question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don’t know a way for software to know the real world value of things. If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that.

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.

(3)

There would be a command line switch at runtime to tell it to run without UI. All it needs to do is not create the main window. A simplistic way would be to disable “pframeMain->Show” and “ptaskbaricon->Show” in ui.cpp. The network threads don’t care that the UI isn’t there. The only other UI is a message box in CheckDiskSpace if it runs out of disk space.

Then a separate command line utility to communicate with it to do things. Not sure what it should be named.

“natural deflation”… I like that name for it. Yes, there will be natural deflation due to payment mistakes and lost data. Coin creation will eventually get slow enough that it is exceeded by natural deflation and we’ll have net deflation.

(4)

Eventually at most only 21 million coins for 6.8 billion people in the world if it really gets huge.

But don’t worry, there are another 6 decimal places that aren’t shown, for a total of 8 decimal places internally. It shows 1.00 but internally it’s 1.00000000. If there’s massive deflation in the future, the software could show more decimal places.

If it gets tiresome working with small numbers, we could change where the display shows the decimal point. Same amount of money, just different convention for where the “,”’s and “.”’s go. e.g. moving the decimal place 3 places would mean if you had 1.00000 before, now it shows it as 1,000.00.