Contracts and Economic Majority
"So the ability for a protocol change to be successfully implemented ultimately rests with those who accept bitcoins in exchange for value." "So by default, ultimately a protocol change has to be welcomed by those who hold bitcoins."
These are, of course, probably two different types of people in the near- to medium-term.
Agents who accept BTC for value, "vendors," are generally going to be most concerned with price stability; they want to be able to quote prices that are predictable. Agents who hold BTC for more than the short term, at this time, are mostly speculators, and they want appreciation. There's nothing that prevents us, technologically-advanced folk that we are, from producing new price quotes daily (or every minute for that matter), like a gas station, based on any number of underlying market conditions -- convertibility to sovereign currency, input commodity, specie, whatever -- but it'd be a huge cultural shift for a contractor, who's primary input is labor, to have to quote a different rate on a regular basis.
Also worth considering is that there is a whole class of users that don't exist now but probably will in the future: people who hold futures contracts denominated in BTC, in and out of the money. A service provider who makes a long term deal -- for instance, his wages over the term of a contract -- will want BTC's values to stay as predictable as possible, just as commodity vendors at the end of a growing season will want predictability, if not BTC deflation relative to his negotiated deal. On the other side of the equation are people who hold out-of-the-money contracts on the value of the BTC, which is just a fancy way of saying "debtors." Loans aren't a BTC phenomenon yet, and with the engineered deflation they aren't liable to be a phenomenon for a while, but employers and commodity speculator/brokers, people who negotiate long-term deals in BTCs, will likely be constantly trying to bend the value curve flatter, because it means they win more value.
Contracts and futures can hold significant notional value, perhaps several multiples of the total capitalization of the market.
Question: Do people who don't hold BTC, but hold contracts in BTC, deserve a say in changes? And how would we recognize this? Do we favor people who hold in-the-money bets, like employees or lenders, or out-of-the-money bets, like debtors or employers. --Sigaba (talk) 05:19, 13 August 2012 (GMT)