Bitcoin DO NOT WANT!?

[pairunoyd]

Money substitutes have to be based upon an easily quantified, long-lasting store of wealth or you cannot effectively price money substitutes when loaning it to others.

When the price of borrowing money substitutes (interest rates) is based upon those easily quantified, enduring stores of wealth, i.e. money, it gives the market an indication as to the quantity of money available.

There’s a disconnect between bitcoin and the actual wealth it is supposed to represent. The valuation of money substitutes is based upon what that money substitute represents. The price of borrowing money substitutes is partly based upon the supply of money substitutes, which itself should represent money.

So if the bitcoin were to be made available for loans, what would the interest rate be based upon? Would it only be based upon the risk associated with the borrower or would it also be based upon the particular wealth that its valuation is based upon? If it’s not based upon particular things of wealth and is based solely upon the value of itself, then you are saying that the bitcoin itself is money. The bitcoin has value in and of itself.

However, it is superior money because while silver, gold or flour can’t be moved around the world at the speed of light, the bitcoin can. What I want to know is if the bitcoin’s moving at light speed to nearly all points of the earth is a wealth producing action, then how would this hyper-efficient distribution of bitcoins compare to gold, silver and flour if it were also as easily distributed?

I grant you that much of gold’s value apart from its use as money and jewelry is pretty limited, but how much more enriching is it if bitcoins can get around the world in milliseconds and gold can take a week? How much more enriching is it if bitcoins can go from coast to coast in nano-seconds and it takes flour 3 days? Remember, this is referring to bitcoins as money and not as a money substitute, i.e., an end, final product.

And how much more enriching is the lightning quick distribution of bitcoins as money versus the lightning quick distribution of money substitutes? You say that money substitutes are inferior because they have the problem of redemption. Well, if we remove this problem of redemption and simply promote money substitutes to money itself and limit single units to 22 million and simply enjoy their lightning quick distribution, how are they different than bitcoins and how is their distribution as an end product enriching?

IMHO, bitcoins are money substitutes based upon themselves.

Yes, it’s difficult to argue things when it forces you to dig deep into the nature of things. I’ve found it most challenging, for instance, to define the simplest words. The bigger words seem to have meaning based more in relationships, whereas the more commonly used words such as ‘the’, ‘is’, and ‘as’ require a lot more. I think that the acceptance or rejection of bitcoins is such an exercise.

It’s obviously the tired, old re-employment of a Ponzi scheme with the addition of the latest technology. Whether you’re passing something hand-to-hand, mail box to mail box or email to email, if it’s value is based upon how effortlessly it was delivered, it has no value…

What many see is how it can be used in the interim. It’s currently going for $6 or $7, I can convert this fiat into 1000 bitcoins and get it where I want to get it near instantaneously. It’s the same thing with the US Dollar. Even though it’s a fraud and its inability to survive the rigors of the market has been bypassed with the guns and cages of the US government, we have produced a heck of a lot of wealth with these wickedly enforced fraudulent pieces of paper. But this is because in spite of their intervention the usefulness of money substitutes yields its value.

Wealth could be produced in the soviet union in spite of their interference in the market. Many things still yield a portion of their worth in spite of the interference from deception. Bitcoin is such a misconception and in spite of these errors, those economic actors involved are finding value. If man’s creations couldn’t produce unless they were fully truth, we’d have perished not long after the garden of eden. It’s a question of how costly particular deceptions will be. It’s not the job of truth to dictate your actions but to be available for your use. But the less that truth is used, the more you will suffer.

DON’T BE DECEIVED

[pairunoyd]

How Is Fiat Money Possible? | Hans-Hermann Hoppe

http://www.youtube.com/watch?v=pBI1fv8YrzU

[Seraiah]

The fact that Bitcoins travel quickly doesn’t “produce wealth”, it just makes it valuable as a medium of exchange. I expect you knew that anyway.

If a donut were immortal, could be divided into 2,100,000,000,000,000 (21 million + 8 decimal places), and be transferred to anwhere in the world very quickly at almost no cost, then yes, a donut would be as valuable as Bitcoins as a medium of exchange.

(lol!)

[ClaytonB]

The fact that Bitcoins travel quickly doesn’t “produce wealth”, it just makes it valuable as a medium of exchange.

Bitcoin+ is valuable in exactly the same way but it’s a money-substitute. In other words, there’s nothing about digital media that makes it inherently money-like rather than being employed as a mere money-substitute.

Clayton -

[Seraiah]

@Clayton

In other words, there’s nothing about digital media that makes it inherently money-like rather than being employed as a mere money-substitute.

That’s absolutely true, the simple fact that it’s digital doesn’t mean anything one way or another.
But the reason I would shy away from calling Bitcoin a “money substitute” is because Bitcoins are scarce, and also because they aren’t subsituting anything. There’s no contract to redeem; they have value only through voluntary transactions in the free market.

[pairunoyd]

More important than what could cause a loss of confidence, because a loss of confidence in just about anything is natural, is how resilient the bitcoin would be to a loss of confidence. A loss of confidence is fine when it involves things that have a lot more going for them than just confidence. The bitcoin is a confidence game and it’s a major existential threat when that vital factor is affected.

What could cause a loss of confidence in the bitcoin?

Realizing that it has no end-user value

Realizing that limiting the number of units of a thing with no end-user value doesn’t add to the end-user value

Realizing that sending something that has no end-user value around the world in 1 second adds no end-user value

So the next stage of thought is, But doesn’t its value as a money substitute mean something?

It makes no claim on money.

Therefore it isn’t a money substitute.

Then what is it?

It is fiat.

It is money because it is said to be money.

How does one valuate this proclamation?

What other proclamations has he made?

Do you have full confidence in all of his proclamations?

Is it not his proclamation that you value but the usefulness of bitcoins as money?

But it’s not money.

And it’s not a money substitute.

There is no confidence in bitcoin.

There is confidence in his proclamation.

There is confidence in succeeding proclamations.

There is confidence in the deception.

There is confidence in the continuation of this deception.

Don’t be deceived.

Lol. Just kidding.

[Laughing_Man]

I’ve never even seen a Cain-Dollar before. Ergo, they must be extremely rare. Ergo, they must be extremely valuable. This is an incredible offer!

For your excellent answer I have gone to my private stash and decided to give you a Schrute buck. Congratulations!

[Seraiah]

@pairunoyd

Lol. Just kidding.

lol!

[shurdeek]

Money substitutes are (Mises in The Theory of Money and Credit):

The special suitability for facilitating indirect exchanges possessed by absolutely secure and immediately payable claims to money, which we may briefly refer to as money substitutes, is further increased by their standing in law and commerce.

While I have issues with this definition, as there are evidently instruments which act as substitutes from economic point of view, but are not claims, the point here is that money substitutes are not subject to a distinct appraisal process, but their price is derived from something else. To say that something is a substitute of itself makes no sense.

However, Bitcoin has features which were empirically so far only present in money substitutes. This is because a balance transfer can occur either with a transfer of the private key itself, or by injecting a transaction into a Bitcoin network. This dual character is something new and almost entirely neglected by economists. But at least one Austrian economist realised this. Lawrence White writes in “Competitive Payments Systems and the Unit of Account” (1984):

Coinage reduces transaction costs compared to simple exchange, because of authentication and weighing. Bank liabilities also reduce transaction costs. But these are empirical factors, and not something inherent in all possible monetary systems. [emphasis added]

Also, Bitcoin is not fiat money, as fiat money requires a special legal status (see again Mises in Theory of Money and Credit). It is either commodity money (if you relax the requirements a bit), or a type of money that Mises neglected, and which Selgin calls “quasi commodity money” in a paper with the same name.

Interest rates depend on the time preference and the elasticity of money, not on whether they are done with substitutes or not. Bitcoin lending market is too disparate for a uniform interest rate, but if Bitcoin spreads widely and becomes money, its interest rate (assuming the supply remains inelastic) will be low. For a description how interest rates works with an inelastic supply, I recommend de Soto’s Money, Bank Credit and Economic Cycles.

[shurdeek]

Also I find it peculiar when someone claims that just transferring something quickly does not create value, and does this on an internet forum instead of using something “real” like chalk and blackboard.

[ClaytonB]

But the reason I would shy away from calling Bitcoin a “money substitute” is because Bitcoins are scarce, and also because they aren’t subsituting anything. There’s no contract to redeem; they have value only through voluntary transactions in the free market.

I agree, Bitcoin is not a money-substitute. It is (currently) a medium of exchange in certain contexts. But the fact that Bitcoin is a medium of exchange and not a money-substitute doesn’t in itself make it more valuable or a more reliable store of value than a money substitute that works exactly like Bitcoin in every respect but is also redeemable in money (the hypothetical Bitcoin+). The point I have been making all along is that Bitcoin’s unbacking is only useful/valuable in combination with the present political state of affairs in the global financial market - heavy financial surveillance, global regularization of tax law, elimination of shelters and havens, increasingly stiff penalties for anything that even hints of tax avoidance, etc. If we imagine a world where governments are ambivalent about money production and leave it to laissez-faire money producers to sort out, it is clear that Bitcoin+ would be preferable to Bitcoin.

What makes unbacked digital currencies possible where such a money had not been possible before is the combination of cheap, military-grade cryptography and “always-on”, widely-available, cheap, high-speed digital communication (the Internet) to make the nearly costless transfer of unbacked, but un-counterfeitable tokens possible. And this is the key. If someone had devised an essentially costless way to print un-counterfeitable (at any price) paper notes in, say, round about 1971, such notes could conceivably have come into use as an “escape hatch” from the post-Bretton Woods paper money system, even before gold ownership was legalized in 1974. But the key to remember is that such notes would only have remained valuable (to the present day!) in tandem with the insanity of the global, government-created fiat paper money system. If, at any point, the government had simply thrown up its hands and said “We’re done! No more fiat money, no more global inflation, we’re calling it quits, we’re now going to leave you guys alone to live in peace and prosperity”, the value of such a currency would experience a tremendous collapse and would only retain value as either a collector’s curiosity or as a “shadow money” in much the same way that Somalis still use Somali shillings despite their permanent collapse in value over two decades ago.

So, I am predicting that Bitcoin will continue to grow in value and expand its user base so long as the global financial control grid continues to cinch the noose on global capital. People buying Bitcoin are essentially betting that this trend will continue and that Bitcoin will be more attractive in the future as an escape-hatch from the global financial control grid than it is today. All in all, I think that’s a safe bet. My concern in debating this issue is to have theoretical clarity on the precise status of Bitcoins in monetary theory.

Clayton -

[shurdeek]

Clayton,

adding “backing” (i.e. Bitcoin+ being a money substitute) would increase transaction costs compared to Bitcoin. All convertible money substitutes carry costs associated with maintaining reserves and their redeemability (see Hoppe - How is Fiat money possible?). Not to mention that the liquid markets (exchanges) would collapse as there would be no reason for their existence.

So Bitcoin+ is a fail. It’s like an attempt to add physical “backing” to the Internet because Internet is only virtual. Same with language. Or, to use a different metaphor, when upon realising that the emperor is naked, you attempt to hastily throw a cloak around him before someone notices. You miss the whole reason why money comes to being (because it decreases transaction costs).

Whether Bitcoin could have emerged in a free market gold standard world is, of course, an entirely different question. Undoubtedly the state has, unintentionally, made it easier for Bitcoin to compete with other media of exchange. But once Bitcoin already exists, gold cannot compete with it on transaction costs, even if we eventually end up with anarchocapitalism. Even if technological issues disrupt Bitcoin, a new and improved cryptcurrency would emerge, as Bitcoin has shown that it can be done. Long term, gold or other physical commodities are doomed as media of exchange. At best they will be redelegated into stores of value.

[Seraiah]

@Clayton

…it is clear that Bitcoin+ would be preferable to Bitcoin.

The administrative overhead of redeeming Bitcoin+ for a commodity (Which would translate into higher transaction costs.) would make it less preferable to Bitcoin.

[Seraiah]

What the heck? Why’d I repeat what he said… So dumb.

[jtimon]

You miss the whole reason why money comes to being (because it decreases transaction costs).

Interesting that you mentioned the Criterion of the quality of money for Silvio Gesell.

You seem a well documented person, at least on austrian theory. I’ve been asking for a serious critique of the free-money theory of interest from the austrian school with no success. Here and here.

Can you help me with that?

I’m trying to convince people that a cryptocurrency with demurrage (http://www.freicoin.org/) would be better than bitcoin. Would decrease the costs of commerce even further by removing the burden of the basic interest. If I’m wrong, I would like to know why.

[Anenome]

@skylien

@Anenome

Again, loss of confidence doesn’t just happen. It is precipitated by some event. The certificate issuers can inflate, as can the fiat runners. Commodity backing simply gives you a way to get some of your money back when the people controlling the currency screw up so badly that the floor drops out.

What can impair the monetary component of value except government mismanagement with the supply of it:

1: Political reasons (e.g.: Government outlaws it, throws people into jail for using it, which is highly likely in case BTC becomes politically/economically significant)

Sure, but that really only stops it in a region. It can take root anywhere, any-time. And will likely prove impossible, in time, to block bitcoin transactions and also allow citizens to have computers and internet access. I dunno how hard it would be to incorporate something like the tor network into bitcoin… The whole world would have to crack down at once to cause a loss of confidence. Not even sure that would work if it did happen. It would probably drive people to it.

@skylien

2a: Hacking (Not so much the BTC system itself, as the wallets of people. If people start saving big amounts in BTCs this will increase. And thanks to electronics and the internet such attacks could be done by a few people quite effectively. The biggest security issue are the users itself not how well designed the system itself is)

True, but the free market will take care of this by itself. This wouldn’t likely create a mass loss of confidence, but rather isolated incidents. Where there’s value to be protected there will be those willing to provide that protection, and they will.

@skylien

2b: Fraud (Don’t know of course how likely this is, but who really knows if the programmer hasn’t left some kind of back door in the code. At least the normal user like me never could be sure, and this is something that makes BTC for me that less attractive)

Nah, it’s open source, not really an issue. Code’s been combed.

@skylien

2c: If there really goes something wrong, whatever/whoever the cause there is nothing you could sue, no private and no public entity. The strength that no one is responsible for its issuence is also a disadvantage because there is no one liable.

Eh? Not sure I see the point. Do people sue the Fed when dollar bills go wrong or something? Huh?

@skylien

3: Simple competition. (Competition in the money/currency market is heavily controlled by government at the moment so it depends mostly at what they will do. In any way there is always the risk that a competitor whether fiat, commodity or other more hip or technically better crypto is coming up and taking market share…)

The only thing likely to beat a crypto-currency at being currency is a better crypto-currency, so really a non-issue in the long term, as you’d be trading up in essence. There wouldn’t be a devalutation in such a case, but rather some discounting, as people traded good money for better money. If your point here were accurate, all other fiat currencies with less confidence than the dollar would’ve been repudiated long ago, but they haven’t been.

@skylien

4: Add all of them together, incorporate the fact that BTCs have no industrial component of value in them

That fact is really a non-sequitor. And there’s a number of mitigating points to your above list.

@skylien

and don’t forget about market psychology (how fast markets can move at times) and in my view it is really quite risky to have lots of value in BTCs.

I would agree that it is risky, but primarily because of the age of the currency, which means it hasn’t proven itself. Four years simply isn’t long enough.

@skylien

Since the time I became aware of the fact that monetary value is not guaranteed but only industrial value is,

Industrial value isn’t guaranteed either. Silver has crashed several times historically. Gold prices right now are ridonkulous and will crash at some future point. It’s not industrial value that makes gold $1600 or w/e an ounce right now. Get that fallacy out of your head. It’s gold’s value-store ability which is what’s making it so valuable right now. And that value store ability has almost nothing to do with industrial value and everything to do with uninflateability. Gold’s primary use in human history is as money.

@skylien

I always thought about in what to save while keeping the spread between monetary value and industrial value as small as possible especially in times of permanent financial crisis mode like now. It really amazes me that proponents of BTC try to paint it as an advantage that with BTC this spread is infinite.

It’s not infinite, as was pointed out in this thread, but rather vanishingly small, as the energy which makes up the 1’s and 0’s of each bitcoin do have innate value in themselves. That miniscule amount of energy has about as much utility to you in the real world as an ounce of gold, which you cannot eat, drink, or make anything of industrial use out of. The only thing you would do with an ounce of gold is trade it. Ala, it’s value is from its utility as money. And it’s physical properties are what make it especially suitable as money, but these, again, have nothing to do with industrial use.

@skylien

No I don’t deny BTC’s usefulness in times like this. And please don’t think I am saying you shouldn’t make use of it. But don’t believe any currency/money including BTC only can be destroyed by hyperinflation.

I’d sum up your post as mainly saying the following: BTCoins are a complex technical thing which most people don’t and indeed cannot fully understand and that creates various uncertainties, also hacking of the hardware people would need to use to trade BTC is a huge issue.

All true, but would this cause a general repudiation of BTC? That’s an open question.

In essence, BTC is relying on cryptography in the same way that any commodity currency relies on its physical existence to limit the ability to cheat reality. You can’t copy gold any more than you can copy a crypto-currency.

[Anenome]

@skylien

With industrial use I of course meant every use of Gold apart from monetary use.

Gold is used in trace amounts to cover electrical components to prevent corrosion. We’re talking vapor deposition processes that deposit less than a penny’s worth of gold on electrical contacts. What other industrial uses are there? A few ranom chemical uses. They don’t constitute much demand. You have decorative uses, sure, but these aren’t strictly industrial per se. Mainly you have people producing gold to serve as money. Who’s buying lots of gold? China. India. Not to use in some industrial process but to lock away as a value store.

@skylien

Everything else wouldn’t have made sense. And this includes Jewelry, which is the biggest driver of the Gold price!

Sure, but gold’s value as a decorative metal is because of the same physical qualities that make it a good money. Namely that it is incorruptible, meaning it doesn’t rust no matter what. Would be rather important to make sure your money doesn’t just rust away. This is gold’s premiere quality.

Bitcoin too is rust-proof, via a completely different mechanism.

Gold is heavy, and heavy things feel valuable somehow. Also, gold’s mass makes it easy to distinguish between fake and real gold.

Bitcoin’s cryptography makes counterfeiting impossible generally, and it’s actually much easier to validate a BTC than to put a gold coin through its paces to verify its composition (the really only good way being to melt the coin completely, etc.).

Gold is “pretty”.

Well, BTC is pretty cool conceptually

@skylien

Last year’s figures show (2011 was a year with a huge demand for investment purposes) percentages for industrial versus investment demand of 43/57. And on the average in the years before it was about 60/40. (I am not saying the price would move in exactly those lines, but there is nothing that would suggest a price drop that would in the long run be only 10% or lower from the actual price.

Have you got a source for these ratios? I’d be quite interested in how they determined such a thing. If I was doing armchair mathematics:

Price of gold in 1990 = ~$350 - $400 an ounce.

Today, ~$1600 an ounce.

Even in 1990, some large fraction of that price had to be its value as a money store.

Let’s be conservative and say that fraction back then was only 50%.

So, true price of gold for industrial purposes, $175 - $200 an ounce.

Have any new industrial uses for gold been discovered that would cause a surge in industrial value? Not hardly. In fact, gold rings have become less and less popular in favor of platinum, silver, and tungsten, etc.

So, $1600 an ounce today? $175 is nearly ~10% of that figure.

Oh, look how nicely the math works out

[Anenome]

@JackCuyler

@Anenome

I don’t understand how bitcoin, the first currency literally immune to inflation, could face a crisis of confidence.

Off the top of my head:

• Rumors (founded or not) that the system has been “hacked” or is somehow controlled by .

That would have to be accompanied by a pretty radical volatility on the currency market for BTC indicating an actual exodus. I suppose that could be triggered, but when the truth was revealed, that the whole thing was a manipulation, as surely it must be, it might no cause a general repudiation. And whoever pulled the stunt, by buying large amounts of BTC over a long period then suddenly selling it all at once timed to the rumor, would lose a great deal of money doing so, possibly more than anyone else. It would be pretty analogous to stock price manipulation–buy bunch of stock, put out rumor, short the stock. However, that hasn’t led to a complete sell off, much less a repudiation, of the stock market itself. People who know there’s real value tend to absorb the values being offered and even it out. People start selling BTC, in massive quantities, at a discount, and those with the technical knowledge to laugh the rumor off can make a killing buying the suddenly cheap money. So, there’s a good chance such a plan would fail outright.

@JackCuyler

Large-scale power outages. Almost the entire East Coast of the US lost power for a day or two in the last decade, so this is not that far-fetched.

That’s interesting. However there’s free market solutions available which are simply illegal in most countries. Did you know there’s still about ~20 pacemakers out there which have been operating continuously for 25+ years without a change of battery? Yeah, they have nuclear batteries. However, the US gov doesn’t trust people with such things anymore. We could easily have nuclear powered cellphones and the like. Neither do power grids need be centralized leading to mass blackouts. The future may very well see home power generation being done in decentralized fashion making a widspread blackout a thing of the past.

So, true, you make a good point, but it is one that the future will likely solve permanently. Which means it’s a conditional objection, not a structural problem with BTC itself.

@JackCuyler

Government interference. This could include attempts to regulate or ban to simply a strong propaganda campaign. Most people are going to do what their government says, and that includes not accepting Bitcoins.

They don’t have to. All fiat currencies will eventually crash and at that point people will ignore silly laws like this and do whatever they can, including buying BTC, to store value. That is one of my near-term predictions for how BTC uptake could take place in a large economy.

@JackCuyler

If Bitcoins ever catch on to the point that they are widely used, there would certainly emerge Bitcoin-backed money-substitutes, as I really can’t imagine the desire to perform transactions exchanging physical cash will go away.

You can’t? Why can’t you? Near-field communication, cell-to-cell sales, and the ubiquity of cellphones makes going 100% digital currency beyond easy.

@JackCuyler

That is, there will always be “offline” transactins. These money-substitutes would be subject to the risk of inflation, though admitedly, not to the extent that gold certificates are.

I disagree that such a need for offline transactions will continue to exist. Face to face transactions can be done between cellphones + online, which will be even more ubiquitous proceeding forward than it is now.

@JackCuyler

Something “better” comes along. That I can’t tell you what this could be is irrelevant. It seems as unlikely to you as the idea gold being replaced by the market did to Rothbard.

I too thought of this, that I would wait for v2 or 3. However, looking deeper into the tech, it’s not really a point. In an extreme circumstance, the BTC network could get together an amend the protocol, essentially updating it, without destroying the network. So, it contains its own v2 and v3 mechanism already. So, no point in waiting.
Again, I find a lot to mitigate these obejctions.

[Anenome]

@jtimon

I’m trying to convince people that a cryptocurrency with demurrage (http://www.freicoin.org/) would be better than bitcoin. Would decrease the costs of commerce even further by removing the burden of the basic interest. If I’m wrong, I would like to know why.

Demurrage is not a desirable feature in money. Your suggestion that it is alludes to the velocity of money fallacy.

Ludwig von Mises offered a more philosophical criticism, “The main deficiency of the velocity of circulation concept is that it does not start from the actions of individuals but looks at the problem from the angle of the whole economic system. This concept in itself is a vicious mode of approaching the problem of prices and purchasing power. It is assumed that, other things being equal, prices must change in proportion to the changes occurring in the total supply of money available. This is not true.”

Looked at your link, and have to say that the use of demurrage there is a bit unusual, but the actual proposals are the worst sort of social engineering imaginable, look at this stuff:

There is another option of what to do with the demurrage that has been subtracted from people’s coins as they were used to pay for things.

In Gesell’s universe, the demurrage fees were to be used to pay out to members of society, more specifically Gesell proposed to give that money to the mothers who are holding together a family and bringing up children.

In our case, distributing the demurrage fees directly could be a point in favor of using the currency. My proposal would be to limit rewards to miners to a reasonable amount of coins, and to directly distribute the remainder to all accounts equally. That means that demurrage is positive for small users (they get back more than they pay in demurrage) and it is negative for the large users, or those who hold on to many coins for a long time. Those users will pay more demurrage than they get back through direct distribution.

You would create a digital sales tax, call it demurrage, and redistribute the proceeds via cryptographic coercion to whomever your value structure thinks needs free money. Frankly, it’s despicable.

[Anenome]

@jtimon

I’m trying to convince people that a cryptocurrency with demurrage (http://www.freicoin.org/) would be better than bitcoin. Would decrease the costs of commerce even further by removing the burden of the basic interest. If I’m wrong, I would like to know why.

Demurrage is not a desirable feature in money. Your suggestion that it is alludes to the velocity of money fallacy.

Ludwig von Mises offered a more philosophical criticism, “The main deficiency of the velocity of circulation concept is that it does not start from the actions of individuals but looks at the problem from the angle of the whole economic system. This concept in itself is a vicious mode of approaching the problem of prices and purchasing power. It is assumed that, other things being equal, prices must change in proportion to the changes occurring in the total supply of money available. This is not true.”

So, looking at your link, you wrote:

With the current proposal, all the accounts are charged no matter if the owner moves the coins or not. That money is “destroyed” and when the maximum supply is reached, the amount “destroyed” is equal to the amount given to miners.

Is the idea to convince miners to continue processing the block chain in perpetuity? Is that the main reason for such a proposal? Doesn’t seem to be a direct connection between amount of mining done and who receives how much and why. You’d have to implement it via money movement I’d think, if paying back miners is even a problem.