This isn't a matter of 'a majority of bitcoin miners refusing to increase the limit'. This isn't something the miners could pull off themselves even with perfect cooperation among them. Producing additional coins above those specified by the bitcoin protocol is visible. Everyone can see whether the number that happens to be hashed represents a bitcoin or some other thing the miner decided to make (a NotBitcoin). The task of the miner then is to find someone who is willing to buy his newly minted alternate currency for the same amount that a bitcoin sells for. That is difficult. Very difficult. Especially since the change is from something stable to something that is already known can be changed on a whim.
I should have been clearer about what I meant by increasing the number of bitcoins. I meant altering the bitcoin protocol so that either the per-block reward is increased or the number of blocks between the reward-halving is increased, or that the fraction by which the reward decreases is decreased. Changing the current per-block reward would be much more difficult because it wouldn't be accepted by the majority of clients. Changing the reward-halving rate or fraction would be easier because it could be implemented in the current clients to occur far enough in the future that the vast majority of clients would accept blocks with the altered protocol. If a sufficient number of miners began using the new protocol it would be difficult for exchanges and normal users to stay on the old protocol after the fork; the delay between blocks in the original-protocol chain would increase significantly until the difficulty adjusted and having a split networkd would make it very difficult for the minority supporters to do business with bitcoins. Perhaps the old original chain would continue and be revalued according to its new utility, kind of like gold and silver coins were kept around for quite a while after the Federal Reserve started issuing notes. Neither chain would have precisely the same value it did before, but they could diverge fairly smoothly and slowly if it was a small change in the protocol.
In other words; if enough people think a permanent finite supply of bitcoins is a bug, it will be treated like previous bugs in the block chain. It will be fixed in advance, with users and miners given enough time to update to the new clients. So long as at least one exchange and the majority of miners agree on a protocol change I think it's inevitable that it will happen.
This is true but an innaplicable and entirely misleading analogy. To try to express what it would mean in those terms it would be if there were federal reserve notes called "dollars" that can be redeemed for silver and an entirely different kind of note that someone tries to call "dollar" that cannot be redeemed for silver. Expecting people to assign just as much value to the latter as the former is difficult. Especially if there is no government there decreeing that it is law that everyone must accept NotDollars as legal tender.
But that's precisely what happened. A US Dollar(1792) is worth "three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver". A US Dollar(2013) (Federal Reserve Note) is worth less. If you actually possess a US Dollar(1792) it is still worth 371.25 grains of silver by definition, but probably quite a bit more to a collector. I don't know the complete history of the Dollar, and its change in value didn't happen overnight, but it's probably mostly because of the length of time it took for that change to occur. I don't think a large change to the bitcoin protocol would be accepted today. But a planned change that would occur in 5 years and was expected to incur a minimal change of value at that point? Definitely.
If a sufficient number of miners began using the new protocol
So say that these miners, who are incidentally nearly always owners of significant numbers of bitcoins decide that they want to inflate the currency and voluntarily devalue their assets (because people totally do that kind of thing).
Should you probably donate a bitcoin to your future self?
Bitcoin has been in the news a bit lately. In case anyone hasn't been following recent events, its price hit $266 per coin, toppled to $50, and then climbed back to a rate which has been between $80 and $140.
This goes to show its high volatility at the present time, which means that any individual trade you make will be something of a gamble with a noisy, hard-to-predict outcome. You could be buying in right before a boom or a bust. Buying and then selling at random intervals will probably cost you more money than you make, due to transaction fees. Trying to outsmart the market in the short term with nothing but your own human instincts and powers of induction will probably cost you even more money because Markets are anti-inductive. The most realistic way of making much money with bitcoin -- sans owning your own exchange, having skill and resources for serious technical analysis, a faster-than-usual trading bot, or fantastic luck -- is if you can determine that the current price is very poorly calibrated relative to its future value, and if you buy and hold very long-term.
Market swings constitute a psychological attack, assuming you know and care about them, so employing the buy-and-hold strategy can be more difficult than it looks. However, as it happens, you can render bitcoins almost purely unspendable (i.e. impossible to transfer via the network) for a finite period of time as a technical matter. You could for example create a brainwallet based on a lengthy memorized passphrase with a random value appended to it. The larger that appended value, the (exponentially) greater the amount of processing time needs to be spent to find out what it contains. Having access to the memorized passphrase gives you the overwhelming advantage over a brute force attacker, whereas the appended random value immunizes it against dictionary attacks. (Todo: Find or write a program for this. Prove it works, and move some of my bitcoin holdings to a wallet requiring a day or more to unlock.)
Early adopters with moderate crypto skills could thus have a distinct advantage compared to the average investor and realistically hope to beat the market on that basis if mere human psychology and resistance against short term panic-selling is the fundamental constraint. So that's one consideration that could play to our advantage. Assuming, that is, that bitcoin is worth taking seriously to begin with, and not just a matter of geeky fun.
The question that matters for that consideration (the one that differentiates long term speculation on bitcoin from various speculative bubbles in gold, real estate, tulips, etc.) is this: Of all the possible worlds, where is the probability mass concentrated with respect to the future of bitcoin, in terms of how it will actually be used? Is there an overwhelming tendency for bitcoin to fail and be replaced by other things (e.g. other cryptocurrencies, or fiat dollars) -- or is it actually likely (in at least the minimal sense of "not overwhelmingly unlikely") to turn into a major store of wealth in coming decades?
I rather think it is the latter. But first, let's consider what I believe to be the strongest argument against it, which unpacks to three parts:
Taken together, this seems like a pretty good knock-down argument. It apparently implies, as a matter of basic economic law, that some other cryptocurrency must win over it in the long term, and/or that fiat money will retain its dominance. But the thing to notice is that it's not so effective against bitcoin as a massive store of wealth per se, so much as a currency that will be directly used, in a manner directly analogous to how government-backed monetary units are used. Non-currency forms of wealth which serve some other purpose can safely handle quite a bit more volatility, because their value is not dependent on being trusted as a currency, but rather as a value storage mechanism.
Here is the general scenario that I think holds more probability mass than bitcoin-as-a-traditional-currency, and yet works as a fairly realistic alternative to bitcoin-as-a-flop:
Can this be done? Consider the following more specific scenario as an example:
This is just one example I've come up with, and may not be the best. Various other schemes are possible. (For example, it could be possible for any dollar-owner to convert them back to bitcoin, as opposed to the person who originally minted them.) What the various possible models for doing this have in common is that they allow you to set up currencies which dynamically increase and decrease in supply, depending on how much bitcoin people are willing to invest into them, and how badly people want bitcoins back later on.
A competing scenario to the above would be one in which a better-optimized cryptocurrency protocol implements this, or some other stability-prone algorithm and thus outcompetes the volatile, easily manipulated, "primitive" bitcoin protocol in use today. I used to think I could just jump on the bandwagon when this comes around, maybe strategically sell someone a pizza and end up a millionaire.
However, I've somewhat lost faith in that possibility of late because I realized that bitcoin is much more powerful than it seems, and is capable of substantial self-modification if needed for compatibility with a newer and better system. The only thing locking us to the current protocol is the degree to which bitcoin-owning miners find it in their best interests to continue to use it as it is. A competing algorithm that makes bitcoins more valuable without violating existing expectations would probably not be hard to get people to update to.
Another thing that makes me think bitcoin will tend to self-improve to the point of winning against competitors is that at least some people with substantial assets in bitcoin form are likely to be very proactive in defense thereof. Assuming they remain committed to the long game, and are able to acquire sufficient short-term wealth to pursue their goals, they can do a number of things to defend it against the various plausible attacks: Hiring programmers to improve the client software and render it less hackable, hiring lobbyists to protect it against regulatory interference, employing botnets to attack competitor currencies, slowing down or preventing transactions that appear to be going through anonymizing laundries that could be associated with tax-dodging and illegal drugs, and so forth.
So it seems to me like owning at least one bitcoin and holding onto it for long-term purposes is probably a good idea.