Interesting take on Sanjuro's Assassination Market

David Vorick david.vorick at
Mon Nov 25 16:04:51 PST 2013

You've validated my statement.

Your problem is if bitcoin becomes a world economy. That means bitcoins
usage grows by something like 2 orders of magnitude. Except that bitcoins
are already halfway mined, which means that the circulation will not keep
up. That is what drives the price up.

If you want a currency that will scale with it's global usage (IE when the
market cap hits $21 trillion, there are 21 trillion in circulation), you
need some mechanism that knows how to equate 1 bitcoin to 1 dollar, that
way more bitcoins can be printed as the market cap goes up.

On Mon, Nov 25, 2013 at 6:17 PM, Jim Bell <jamesdbell8 at> wrote:

> I don't agree with your statement, "Bitcoin is only deflationary because
> the number of people who use it is growing faster than the number of coins
> in circulation.".   To the contrary, my understanding is that a number of
> factors have combined with the net result that Bitcoin is
> hyper-deflationary.  One major factor has been the shift of bitcoin
> 'mining' from computer CPUs, to video graphics processors (GPU's), to FPGA
> (Field Programmable Gate Arrays), and ultimately ASICs (literally,
> "application-specific integrated circuits"; what used to be called 'custom'
> IC's decades ago.)  While I don't have a specific number, I would not be
> surprised to hear that an ASIC miner is 1000x faster than even the fastest
> x86 CPU.  If that were the only factor, it would appear that new bitcoins
> should be 1000x more available than in, say, 2009.  However, I also
> understand that the 'difficulty' of mining bitcoin has been algorithmically
> increased regularly, in order to make it more difficult to compute to find
> individual bitcoins.   This is programmed into the entire bitcoin system.
> In fact, it is to the point where the limiting factor to the cost of
> 'mining' bitcoin is the electricity cost of running the machines, not the
> cost of the machines themselves.  The bitcoin system 'programs' the
> appreciation of bitcoin by gradually increasing the difficulty of that
> mining operation.  This translates into an increase in the market value of
> bitcoin.
> In fact, this is essential to the (theoretical) outcome of bitcoin.  I
> think of it this way:  The system is programmed to only allow the
> generation of 21 million bitcoins.  If bitcoin is ultimately to be used to
> run the entire world economy (why not?) there should be at least one
> million times more.  (Say, 21 TRILLION; 21,000,000,000,000 bitcoins, if we
> think of the ultimate value of a bitcoin as being roughly equal to the
> current value of the US dollar, the Euro, the British Pound, etc.)  But
> since they are limited to 21 million, by algorithm, the value of a 2013
> bitcoin will have to be increased by a factor of 1000  to stretch to the
> task of funding a world's market.  And that means that the 2 million BTC
> currently in the wallet most likely owned by Satoshi will presumably
> increase in value to $2 trillion  (USD).  "Nice work if you can get it".
> Is this a problem?  Who, instead, would claim that it ISN'T a problem!
> Bitcoin has many great features, its possibility (through Zerocoin) of
> being anonymous one of the most intriguing,  but there is nothing about a
> digital currency that requires that it deflates at the rate historically
> associated with bitcoin.  I view this deflation as being arbitrary and
> capricious, and wildly too large.  Like I've said, I don't begrudge Satoshi
> $1 billion (USD), but I DO begrudge him $2 trillion.  If Satoshi's bitcoin
> rescues us from all governments (enabling 'AM'), perhaps he should be
> entitled to $10 billion (USD), but not $2 trillion (USC).
>          Jim Bell
>   ------------------------------
>  *From:* David Vorick <david.vorick at>
> *To:* Jim Bell <jamesdbell8 at>
> *Cc:* Kelly John Rose <iam at>; "cypherpunks at" <
> cypherpunks at>
> *Sent:* Monday, November 25, 2013 2:20 PM
> *Subject:* Re: Interesting take on Sanjuro's Assassination Market
> How do you think something like that could be managed?
> Bitcoin is only deflationary because the number of people who use it is
> growing faster than the number of coins in circulation. But how can you
> measure the number of people who are using it, and how can you measure how
> much they are using it? (IE are they speculating, are they actually using
> it to hide money from their government, are they buying needs like
> food+water?).
> Any cryptocurrency hoping to 'appreciate by at most 5%' has to have some
> reliable metric for measuring it's value in the real world. Otherwise coin
> generation algorithms are just a shot in the dark, hoping to mimic the
> expected growth of the coin or having some authority that can provide input
> about it's real dollar value. And anything that tries to get insider
> metrics will need some defence against liars and sybil attacks.
> On Mon, Nov 25, 2013 at 5:07 PM, Jim Bell <jamesdbell8 at> wrote:
>   ------------------------------
>  *From:* Kelly John Rose <iam at>
> *To:* cypherpunks at
> *Sent:* Monday, November 25, 2013 8:00 AM
> *Subject:* Re: Interesting take on Sanjuro's Assassination Market
> On 11/25/2013 4:26 AM, Lodewijk andré de la porte wrote:
> >> Why suddenly all this attention for yet another assassination market?
> >> Because it's more "hit them and earn the bounty", like at a fair, style?
> >I wonder what would happen if multiple people claimed the same date for
> >the death of a celebrity.
> I haven't read enough of the 'AM' system to know what that system would
> do, but it seems to me that a logical outcome would be to split the reward
> based on the size of the contribution included with each prediction.  For
> instance, if Person A correctly predicted with 1 BTC, and Person B
> correctly predicted with 9 BTC, Person 1 should get 10% of the reward,
> while Person B should get 90%.
> Incidentally, one problem I see with Sanjuro's 'AM' (Assassination Market)
> system (at least, so far) is the setting of a minimum bet at 1.0 BTC, which
> is about $800 when I checked a few seconds ago.  In writing my AP essay, I
> anticipated that very small bets (say, 10 cents US) would be allowed.
> Except in unusual situations, few people would want to donate $800 (USD) to
> see somebody dead; Far more would be willing to donate $1 (USD) for that.
> I don't know if the current minimum bid in 'AM' has something to do with
> the granularity of 1.0 BTC, but the existence of digits to the right of the
> decimal point in the prediction totalizations suggests that this is not the
> case.   If the problem is that the prediction totalization is currently
> being done manually, rather than automatically, that is a limitation that I
> think must be fixed in order for 'AM' to operate well.  And with a minimum
> bet of 1.0 BTC, it might be portrayed as if 'AM' is a tool of the wealthy,
> rather than that of the average person.
> To the extent that this is a problem now, it will be worse as Bitcoin
> continues to deflate (increase in value) as it was no doubt intended to
> do.  What happens when 1 BTC = $10,000?   I consider that one of the few
> disadvantages or problems with Bitcoin is its hyper-deflationary nature:
> How can a currency function as a currency, if it is 'scheduled' (by
> algorithm) to appreciate in value far faster than any commodity?  Another
> related problem is that Bitcoin is effectively programmed to excessively
> reward early-adopters.  While I feel that the inventor of Bitcoin should be
> richly rewarded for doing the work necessary to give us such a beneficial
> addition to society, the limit of my generosity is about $1 billion (USD).
> Ultimately, I think that a replacement for Bitcoin ("Bitcoin 2.0"?) is
> necessary, one that won't appreciate in value more than, say, 5% per year.
>          Jim Bell
> Disclaimer:  I am not associated with Sanjuro's 'Assassination Market' in
> any way.
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