Bitcoin Forum

I am willing to pay for the implementation of a very simple fork to the bitcoin protocol.

There are two difference that my fork and bitcoin will have.

1) Block discovery reward will not half, but remain constant at 50 until 2)
2) Once the annual rate of inflation is less than 2%, the block reward will adjust to fulfill a 2% annual inflation and the block reward adjustment will occur at an annual basis.

3 bitcoins if anyone is interested please PM me.


I created an extensive thread in Economics of why I believe deflation is bad for bitcoin.  The thread can be found here:
https://bitcointalk.org/index.php?topic=12109.0

Have you heard about Freicoin (http://freico.in/)?

Yes, i don't find the protocol particularly attractive.

It is possible that Freicoin runs into the same problem as bitcoin because the mining reward is not compounding.

In any case, while there's a maximum block size, bitcoin can survive on fees. It is unclear if it could survive only on fees without a block limit. But many core devs think so and I find their arguments convincing enough.
But since you're concerned with this, Freicoin will have perpetual reward and is certain that you will not have to worry about this problem you discuss in the other thread.

My work is done here.  :)

I have a problem with Freicoin in that

1) Since it is not compounding the 5% surcharge will always have the same mining profit unless the price of the coins increases.  An inflationary crypto, mining profit increases if price remains static.
2) the 5% surcharge makes it easier for a miner to accumulate a share of all coins proportional to his share of mining hash in a period of ~30 years.

To be clear, Moore's law is equal for all miners, honest and attackers, and by the way, it's not a law.
You don't need compounding reward.
Does it have to be compounding on nominal or real terms?


No, no. Mining profits don't necessarily increase if the price remains static. That depends on how many other miners are out there.
Ideally mining profit tend to zero in perfect competition in ALL CRYPTO-COINS. The only thing that would change (with ideal perfect competition) would be hashing power.
Profitability depends on competition, not on nominal reward. And the difficulty filter tends to adjust even if there's only two miners.


Sorry, I don't understand what are you talking about here.

Can you create the fork with the specifications i listed?

why 2%? that is too low. I think inflationary should be about 5% to 8%

but, good idea

I don't think that it's possible without serious protocol modifications. Just because available coins volume is unknown, we are able to see only sum of available and destroyed coins. The actual inflation rate should depend on active coins volume. Otherwise there will be no sense.

My proposal is not possible why?

I'm not concerned with active or inactive coins, only how many coins have been generated.  If you base the inflation rate on active coins it creates all sorts of problems.

It has no sense. Inactive and dead coins simply doesn't exist for market. You can't predict destruction or inactivation rate in the future, so you can't use fixed emission rate to keep constant coins value. It's something like the nuclear reactor control by using a sledge hammer. One small mistake and... BAAM  ;)

You need adaptive algorithm, which will be based on active coins volume.

You cannot judge if a coin is inactive because it can either be stored in a vault or lost forever.  You cannot know.  Thus, it is not necessary to differentiate between inactive or active coins.

It also creates a problem because an rogue agents can buy coins and destroyed them, lowering the inflation rate and making the crypto that is designed for inflation, actually deflationary.  Thus, destroying the whole purpose of your inflationary coin.

I do not want to judge between active and inactive coins.  It is a benefit of the protocol that the inflationary rate should be based on all coins mined rather than coins in circulation, active or inactive.

2% inflation requires the crypto market cap / mining hardware cost to be approximately 12.5
3% inflation requires the crypto market cap / mining hardware cost to be approximately 8
8% inflation requires the crypto market cap / mining hardware cost to be approximately 3.15

8% inflation seems excessive. 2% preserves value and also benefits miners while having a 12.5x multiplier which is not outrageously high.

Can someone develop this?

3 coins isn't really pocket change.  I'd be willing to use a trusted forum member as an escrow for the transaction.

Bump

I don't understand what you mean, mining hardware cost....

8% is probably the true US dollar inflation when you really look hard at the numbers. Most agree at least 5%. that is what people are used to.... 2% is barely noticable

@sweft, You might want to consider prefixing your title with the term [StableCoin]. We are using that to help associate related threads. If you search for it, you will find people who share your same interests.

The other day there were guys creating their own coin just to learn how "NoobCoin" I think is what they called it. They also have #noobcoin on freenet IRC if I remember correctly. Most of them were young. They would probably jump at the coins.

I was considering LinearCoin (<-- search for that) myself as the same kind of learning project. I've changed my mind and decided to spend my time on another project. You might talk to the guy proposing "LinearCoin". I think he would like your even better.

Edit: I linked your thread here
https://bitcointalk.org/index.php?topic=179918.msg1878011#msg1878011

It sounds like what you are proposing, in essence or in effect, is that in some far future year when the 50 coins per block that GRouPcoin constantly mints happens to work out to be 2% of the number of coins generated up until that moment (up until that block, in practice), the time will have arrived for GRouPcoin to adjust its rate of coin-minting if, by that far future time, your theories as to what would be the perfect mining curve still seem to be as valid as they seem today and the benefits are actually worthwhile enough to actually bother to change the number of coins per block.

Thus I suggest that the coin you want is already up and running, has been for years, and still has years to go before it will need a tiny tweak to make its generation rate stick at 2% (or whatever percent has been determined, by that future point in time, to actually be the exact precise perfect percent rather than just some guess made by you years in advance of the actual coming into effect of such a rate change).

So we might as well just keep chugging along using GRouPcoin and simply add to our over the coming years concerns the concern that possibly it might prove beneficial, at some future date, to cause the generation rate to stick at some percentage of the total coins minted, so that over those coming years we can make observations and track statistics and so on that will enable us to know, come that far future, what exact percentage is in fact ideal. (If it does turn out to be 2%, how many decimals of accuracy is that? 2.0%? 2.00%? 2.000%? To what number of decimals has it been determined that "zeroes all the way down" is in fact the ideal?)

Basically though, there are years yet to work out the exact best percentage, in the meantime the 50 coins per block has been chugging happily along and will continue until the exact details of the later stage are worked out / negotiated.

Please note also that your concept of "annually" can be a whole can of worms, because nodes are not synchronised in time, their synchronisation is by block number. So we also will not even know how many blocks any given year will actually consist of until we know how much up and down see-saw of hashing power will be happening during that year...

(For example the advent of ASICs is likely to make a "blocks counted year" much shorter than a "calendar year" this year for bitcoin...)

-MarkM-

@markm, Which GRouPCoin thread would you like me to link at the [SteadyCoin] Introduce yourself thread?

I'd forgotten GrouPCoin was still running. Someone else was asking about a LinearCoin like that. Except one that forked off the existing BTC chain. I'll point him your way if he still wants that.

DeVCoin also keeps generating the number of coins per block forever.

Lolcust recently informed me too that Tenebrix or GeistGeld or both also do, I think maybe it was probably Tenebrix he was talking about.

Groupcoin's thread is https://bitcointalk.org/index.php?topic=67991.0

-MarkM-

Linked it. Thanks markm

Bump.

Looking for devs.

I don't think people will like the idea of a changing cryptocurrency.  That's why they support bitcoin, and the devs have stated all economic protocols will not be subject  to change.  It.is better to make a currency and present your case why it is superior to bitcoin.

Bump.

I think people don't like the idea of a changing cryptocurrency because bitcoin is a pyramid currency and changing it threatens the bitcoin elite. Plus hard forks are a bitch.

Are you a dev?

Yes, but I'm not interested in making your bitclone--sorry--because I have plans of my own. If you really want a stable coin with an unbound monetary base, the link for that and a lot more is in my signature.

Seems fairly complicated.  What happens if a double spend occurs right before consensus block?

Stepping stone currencies do not advance the medium much if at all. Shouldn't cryptocurrency 2.0 be tried?

Bitcoin will be inflationary for the next 100+ years.

I have discussed this at length and it simply isn't true.

Please read.

https://bitcointalk.org/index.php?topic=12109.0

When you refer to the money supply regarding inflation and deflation, it is typically taken to mean the units of account in circulation. Meaning, stuffing dollar bills under a mattress takes money out of money supply. So does hoarding bitcoins. Money supply deflation due to lost coins (or lost dollars) is generally irrelevant compared to the changes of the units in circulation.

Bitcoiners like to confuse the money supply vs price inflation/deflation terms for various reasons, mostly because Milton Friedman said that inflation is always a monetary phenomenon. They still don't even get what he meant--hint: it is only partly due to "gubment printing dollerz".

The gist of what Elwar is saying: "bitcoin will be inflationary for 100+ years but what I really mean is that while the total number of units increases at a predictable rate, we will cause massive price inflation for the next round of suckers when we bring large amounts of bitcoins back in circulation--oops look at how high the price is!"

Bitcoins that are lost still exist. The fact that more bitcoins are created means their amount of bitcoins is inflating for over 100 years.

His statement is basically irrelevant because the amount of inflation decreases to a negligible amount.

The second point is that lost coins are deflationary as much as taking dollars and burning them is.  In all practical terms, you have destroyed money.  Someone can buy bitcoins to intentionally destroy them, which is another flaw of a deflationary currency.  There's a difference between hoarded coins and lost coins because hoarded coins come into circulation every once in a while, while lost coins will never come into circulation.   And the fact that people know whether or not the coins were hoarded or destroyed would have an impact on the supply and demand.  Thus the two are not equivalent.

The other issue is that claiming lost coins are not lost is like claiming burned money can be recombined at the atomic level.  The only way the lost coins can be discovered is through brute force and if those lost coins are discovered the whole bitcoin protocol is rendered useless.

And the fractional lending you speak of is only a problem with fiat currency that is easily counterfeited.

The point point is that lost coins will be eclipsed by routine changes in the money supply--units in circulation. You have the wrong definition of money supply, and this is mostly the fault of the group-think and group-propaganda around here. The change of the total units added to the total supply or total units provably removed from the supply is irrelevant. There can still be an increase in the base money supply after the block chain award has gotten so small it no longer fits in 8 decimals. And there can be, will be, and are decreases when someone puts coins in an account intending to leave them there for a significant length of time.


Yes, with all of the incentives to treat bitcoin like gold--starting FR on digital IOUs or even paper IOUs could never happen. ::)

Units in circulation has nothing to do with the supply of money.  You can move the decimal point wherever you want, it doesn't change anything.  I can chop a gold coin into 12 pieces, i still have the same quantity of gold.  Think of it this way.  If i owe you 10 BTC then some fool says 10 BTC is now 100 BTC, do i owe you 10 or 100?  It's not that complicated

Secondly, you made the point that lost coins are the equivalent of hoarded coins.  That is unequivocally false.  Hoarded coins, even if nobody knows you have hoarded them except yourself, affects the supply and demand of said coins.

Etlase2, it is starting to sound like what is really meant is the guy wants in on the make your own new coin of the day, so even if your coin matched his proposal 100% in every detail all that would mean is he needs to modify a detail...

-MarkM-

I clearly stated in my original post my ideal coin, which is just an inflationary form of Bitcoin.  What is so hard to understand?

For one thing, you still have not addressed the problems such as the fact there is no such thing as annual since you do not know how many blocks that will be exactly; it varies.

If you try to use a network atomic clock or whatever there are apparently big problems with such ideas, which is why bitcoin has a big fudge factor on any attempts to guess what the actual real time was when a block was made.

Also you have not substantiated any reason for the totally abitrary (it seems) guess at how many percent will actually turn out many years in the future to be the ideal. Thus in effect you are pretty much motivating or calling for up to thousands of similar coins, each with a tiny tiny difference in the exact percentage as their "justification" for why your coin cannot serve the purpose and therefore their coin is justified - it corrects the incorrect percentage you chose way back in 2013 or so, or their crystal ball is better than yours or whatever.

Come some far future time when the inflation rate starts actually approaching the general range would be a much better time to determine what the exact percentage should be in order to actually be ideal by then. YOu have not shown any whitepapers or scholarly researchg etc that indicates 2% is better than, say, 1.99% or 2.01%, or even 1% or 3% or 0% or 5% or any other number.

In the mean time the coin might as well just keep on chugging along at 50 coins per block until the precisely ideal percentage at which to change that has been empirically determined or thoroughly derived mathematically or whatever, not just made up out of thin air.

There will be years to fine tune / measure / determine the exact best percentage, no hurry to plug it in right from the start when we have only seen about two years so far of how just the plain old 50 coins per block forever works out. (Hint: so far it is one of the least popular coins, and that is without it even being old enough yet that not halving the reward at 4 years has even actually hit, as it it not yet four years old.)

If you are correct that changing to doing the 2% thing will make it ideal, then, being a very unpopular coin without that added feature, it should seem very reasonable to add that feature when the time comes.

-MarkM-

Etlase2's point is that the exchange market dose not distinguish between lost and hoarded coins, it deals only with circulating coins and the demand for those coins, the supply curve is what is actually offered, not what could theoretically be offered if every coin ever made was in circulation and offered for trade.  

If you say hoarded coins can be enticed by high enough prices to come back into circulation then is simply admitting the correctness of Etlase2's point in that only once those coins have become circulating coins do they have an effect on the valuation that we call inflation, so long as they are not circulating they have no effect.  To the market a sufficiently ballsy long-term hoarder is indistinguishable from a bozo who lost his private key.

If we use (minutes per year / minutes per block) do you know the maximum amount this can vary?  If it is within a couple of weeks it shouldn't matter much since anywhere from 2-2.5% inflation is acceptable.

My point is that hoarded coins have an affect on the demand on coins since the hoarders demand is altered by the act of hoarding.  Thus, the hoarding is reflected in the supply and demand of coins.  The reasoning is sound.

Did you get anyone yet Sweft?

I want to implement an interesting coin that can inflate forever and adjust its inflation according to demand. It is different from what you are proposing but it will be a lot more interesting of an experiment than any other alt-coin.

I wrote the gist of the concept here.
https://bitcointalk.org/index.php?topic=179918.msg1942413#msg1942413

If you are interested, a 3 coin bounty might be a fun reason to actually implement it.

Gold has been inflating at a rate of 2% per year since 1850, so it is primarily based on that fact.

Secondly, a coin that has a constant block reward will become deflationary and have the same problem as Bitcoin.  There is not much difference.  I can't find much of a reason anyone would favor it over bitcoin.

How will you adjust according to demand?

By any economist's definition, it is the defining factor of the base money supply. You are free to use definitions that are not accepted, but all this does is create a microcosm of bitcoinomics. Nobody outside this sphere of influence is going to know what you're talking about.


I think you have made an honest mistake here in reading what I wrote. Twice I said that lost coins are irrelevant. I did not say equivalent.


Of course it affects the supply, I'm saying it will far outweigh any notion of lost coins causing some deflationary spiral or whatever it is that you're implying that needs to be fixed with this currency proposal. This currency will have almost the exact same problems as bitcoin. Pyramid, pyramid, pyramid. Just because it is slightly less top heavy does not mean it is not a pyramid.

The problem is that Litecoin is not really the silver to bitcoin's gold, or, if it is, then really scrypt coins are silver to SHA256 coins' gold.

So it is SHA256 based coins in general, or scrypt coins in general, that would need to be constrained to the 2%, not any one "specie" or "species" of such coins.

To merely plonk that arbitrary number onto just one brand / imprint / blockchain of such coins is more akin to one specific form of gold having been stable in price at 2% inflation of that specfic brand or form.

Have gold ear-rings been inflating 2% per year all that time?

have Canadian Maple Leafs?

How about Golden Guineas?

Etc.

One individual blockchain is more akin to one of those than to a raw material such as gold, cryptography, or even blockchains in general.

You are confusing the raw material - cryptocoins, or blackchain-based cryptocoins, maybe, more likely than which hash type of cryptocoins - with one particular imprint / brand / blockchain built out of such raw material.

-MarkM-

Unless you're also using unorthodox definition of units in circulation.  I responded to this statement you made.


The claim you seem to be making is that any units lost would be dwarfed by changing the decimal point.  What your stating is impossible because changing the units will necessarily also change the units of all coins lost.  So if you lose 10 coins and i change one unit to 1000, then i have lost 10,000 coins.  So no, changing the units will not be eclipsed by routine changes in the money supply.  Your statement is false.

If i change the decimal point i don't have a larger supply of bitcoin, i have a revised definition of bitcoin.  Changing the unit measurement of a bitcoin will not increase the total units of bitcoin.

There's also a reason people don't routinely change units.  It's because contracts are written and signed for specific quantities and changing units would be disastrous to debts and contracts.

Changing the definition of bitcoin is not equal to increasing the supply of bitcoin.

Where are you getting this "changing the decimal point" stuff?

I thought the argument had been that coins people hide in their mattresses do not count regardless of whether they ever dig them back out of their mattress thus also regardless of whether they even still have the ability to dig them out.

-MarkM-

From that.

s/account/mattress/

I rest my case.

-MarkM-

Then you misinterpreted me an additional time. I was referring to the mining subsidy, as it does eventually reach zero when bitcoin can no longer shift the bit anymore. I was making the point that even if no new money is created, the money supply can still increase or decrease. Whatever the measure of unit it does not matter. $1, $5, $0.01, mBTC45--those are denominations.

I can't make a point for you if you keep taking some weird misdefinition and completely reinterpreting what I said--exactly what I was warning you about with bitcoinomics.

edit: I looked back and did say "generally irrelevant compared to the changes of the units in circulation" and I could see that being confusing in a bitcoin context, but the sentences I wrote before it should have made the meaning clear. I'm talking delta units in circulation, not the common measure of unit.

That's simply not true because total units added have one channel by which they enter the system, and that's through miners.  So, no, total units can never be irrelevant because even if it does not affects units in circulation, it still affects the rational decisions of miners whether or not to mine.

This whole discussion has become convoluted and quite frankly idiotic.

I may have found a developer.  Hopefully, we will see.

This is hopeless.

Once someone gets it into their head to create a scamcoin, rational arguments are usually fruitless.

They are going to do it regardless, even if they end up throwing their rationalisations away and just admitting yeah I wanna make another scamcoin, its a free world, now shut up and let me get on with it.

-MarkM-

The idea is to create a StableCoin that is complementary to the volatility of BTC. The initial primary users would be BTC speculators. STC gives them a stable, safe counter position to trade into when BTC values are falling. When they think BTC will rise again, speculators will trade STC for BTC. Such a complementary coin doesn't exist.

Most of the other alt-coins have fixed monetary policies similar to BTC. While they don't rise and fall in perfect sync, coins like BTC and LTC do seem to trend together. This makes them competitive rather than complementary. No sense trading out of BTC and into LTC when both are falling, nor when both are rising.

So what makes my StableCoin stable? The BTC speculators' themselves.

I'm proposing a coin with a dynamic minting policy. Let's say we start the system out minting 50 STC a block. Then during each block building period, we let STC owners vote to raise or lower the minting rate of subsequent blocks. STC owner vote by irrevocably burning coins. A vote to raise the minting rate requires burning 1 coin. A vote to lower the minting rate requires burning 1 coin. The vector sum (positive up votes plus negative down votes) sets the direction and magnitude to change the minting rate. So 10 positive votes and 8 negative votes gives a net +2. This means subsequent blocks will mint more BTC per block than the current block will mint.

Consensus on policy can be determined by comparing the vector sum to the magnitude of the vote.
So in this case there were 18 total votes that summed to +2. Mostly disagreement. So we should raise the coins/block rate, but not by much. If however the up or down vote was nearly unanimous then we should change the rate much faster. The ratio of (net votes) to (total votes) describes the external market for coins.

Minters will vote up when they think their personal benefit will exceed the cost of their up-vote. STC hoarders will vote down when they think inflation might eat into the value of their hoard. The "social contract" of the coin is to keep its value stable. When minters and hoarders work together, monetary policy can be adjusted quickly and cheaply. When they work against each other both burn money accomplishing nothing.

Here is how a sudden demand increase for STC might play out as block votes progress:

0:0 = Exchange price is at the StableTarget. Everyone is happy with the current minting rate.
1:1 = (Initial Detection) Exchange price is slightly above target. Increase minting some.
10:10 = (Consensus) Exchange price is way above target. Open the minting flood gates.
6:10 = Exchange price is correcting. Slow rate increases.
0:10 = (Disagreement) Exchange price is correcting. Don't change rate.
-2:10 = Exchange price is over correcting. Reduce the minting rate.
-1:5 = (Growing ambivalence toward change) Exchange price is recovering.
0:2 = (fading disagreement over rate change) Exchange prices is converging to StableTarget

Somewhere in the deltas of those two values is a non-linear function that describes how to change the minting rate. I'd have to look it up, but I'm pretty sure this is directly related to balancing an inverted pendulum.
http://en.wikipedia.org/wiki/Inverted_pendulum

It is of course possible for speculators to "drop the pendulum". In this case that would mean:
1) Run away deflation. (zero minting in the face of growing demand) Or
2) Run away inflation. (continued minting during falling demand)
Letting either of these cases happen runs counter to BTC<->STC speculators' best interest. 1) creates a useless BTC clone that nobody will buy into. 2) creates a crashing STC that speculators can't sell out of.

So the "experimental" nature of this coin explores cooperation among self-interested parties sharing a common goal. Anyone interested?

It's sad to listen to programmers talk about Economics. The OP's idea about a fixed monetary inflation is actually very sound. It was first proposed by the monetary economist Milton Friedman in the 1960s who, as a matter of fact, won a Nobel Prize for it. Back then, it was technically impossible to implement. Now it is possible, but people forgot about Monetary Economics, it seems.

The OP confuses the terms "monetary base" and "money supply". I suggest googling it. Many of his following posts are backed by flawed arguments, unfortunately, which do not help his cause much. There is no reason to think "2% monetary inflation is best" or "4% monetary inflation is best" although Milton Friedman talked about 4%, I believe. There are several tendencies which go against each other in terms of what the ideal should be. I could list a few:
1) Close to all newly minted coins will be costs in the long run as competition prevents any significant profit on mining. Costs are ineffectiveness of the currency, obviously, and they lower the currency competitiveness. (My home currency, the Czech Crown, for example, has minting/printing costs estimated to about 2% for cash.)
2) The monetary inflation has a strong positive correlation with the money supply. For a growing economy, the closer the change of money supply goes to zero, the higher the speculation on the currency exchange rate. It is so because at zero, the growth of the economy translates fully into the appreciation of the currency. Investing into the currency has the same returns as investing into the economy, but has lower risks, resulting in everyone speculating on the currency exchange rate (everyone who expects risk-adjusted returns to his investments lower than average for the economy). The higher the change of monetary base, the lower the speculation on the value of the currency. More stable currency is then more competitive.
3) Price inflation is strongly correlated to monetary inflation. People prefer price stability. For prices to be stable, the money supply must grow at the same rate as the economy grows (considering constant speed of transactions and liquidity preference etc.)
4) People also like their currency to be the store of value. The higher appreciation of the currency value, the lower incentives to invest using the currency. There is a trade-off between the currency usefulness for transactions and its ability to be the store of value (hence between high and low monetary inflation).


 In a fractional-reserve banking system, the monetary inflation is lower than the change of money supply (the coeficient between the two being called money multiplicator).

As you can see, the ideal monetary inflation depends on people preferences, banking system and it cannot be determined. 2% is probably not a bad guess at all though.

Bitcoin 2.0 as you like to call it, will most likely include some form of long-term monetary inflation. However, there are many other issues with bitcoin that need to be addressed and changing just one will simply not cut it. The ones that I can think of are transaction speed and anonymity. Ripple technology deals with the former, Zerocoin add-in with the latter.

If you could offer a coin with at least these 3 changes as well as security improvements, you would have a chance of beating BTC.

The OP's idea is actually not very sound, because Milton Friedman was talking in terms of a sovereign currency. It does not apply well to bitclones.

Even if you assume that somehow this currency has gained wide acceptance, a 2% yearly increase in the money supply means that close to 2% of the economy's resources will be wasted on producing new money via mining. This is a horrific economic motivator. More efficient mining equipment does not make this better, it just makes new competition. The alternative is to centralize the creation of new money, which is also the source of network-approved transactions. Conflict of interest, anyone?

In my proposal for decrits, this is solved by separating the creation of money from network security. Money does not need to be constantly created, and security is paid for by transaction fees. There's a lot more to it, so I'll just say check out the link in my sig if interested.

Please, do not negate if you add no arguments. I explained thoroughly why inflation is needed and even added references. You said it's not true, but didn't say why. That is a kind of discourse I will not follow.


If you were kind enough to have finished reading my post, you would have realized that that is precisely what I stated. 2% monetary inflation = 2% wasted costs.


I have it bookmarked, but I doubt I will agree, based on how you just presented yourself. Either way, I am sure there is a solution to the unnecessary costs of mining. I am intrigued to learn more about it.