Bitcoin Forum

This is a complaint I hear pretty often:


I think I have a pretty good understanding of why the bitcoin generation scheme is better, but I'm not going to discuss that now, my theories haven't convinced anyone as far as I know.

I propose we try it out. Modify the Bitcoin code to simply continue generating the same number of coins/time forever. You could even call it a time limited currency. At any given time there will be a limit on how many coins exist, maybe this will be god enough to lure some people who are on the limited/unlimited fence. It is still surely better than a centrally issued currency where we can't tell at what rate money will be printed or what the distribution rule will be.

The infrastructure that exists already for Bitcoin can mostly be converted in minutes and this applies to all infrastructure that will be created in the future. A BTC/TC exchange site would be trival to set up and be virtually riskless legally. This would let Timecoin piggyback on all the existing and future BTC to state currency exchange sites. Just go to a BTC/TC exchange then take your BTC to MtGox or wherever. If it catches on there will be direct exchanges I'm sure.

My point is that people don't have to be really really devoted to this idea to make it happen like the developers of bitcoin are. They only have to think that this one difference is even a slight improvement, everything else is already available, practically free. There are even a bunch of miners already set up that could switch on a dime.

If Timecoin allows for a growing market and Bitcoin does not we'll know for sure and don't need to worry about theory.

Empiricism!

Why would people convert from hard bitcoins into an always inflating currency?  (of course, I won't stop them from doing so...they can feel free...but I doubt in the long run that people will be storing their money in it.)  Fundamentally, as long as the two currencies are freely exchangeable, and there is no state forcing everyone into one currency instead of the other, then the two currencies could be freely traded with eachother.  But since timecoin looses value over time, I would think that since there is a fixed number of bitcoins, the number of timecoins needed to purchase a bitcoin (after bitcoin is close to its 21mill limit) would gradually incase according to its rate of inflation (other things being equal).

Of course, people should feel free to mod the bitcoin client into a timecoin client, and maybe the will be proven right if people for some reason prefer to trade in inflating currency, but I doubt the market would choose that.

I think of shares on the stock market. A given company may never sell more shares than a set amount, and their shares may become worth a lot more, but they can simply split the shares, meaning that people can buy fractions of shares, which are now of the same value as what the shares were worth before.

Because a currency that inflates allows a growing (inflating) economy. It's pretty simple.

Same with a currency that's infinitely divisible, no?

Not true, afaik.

Companies issue new stock. The reason it doesn't devalue previous shareholders is that those shareholders now own a smaller part of a company that has more cash, in exact proportion to the dilution.

Are you suggesting that things will get cheaper? Why would people produce if they were getting paid less and less. Plus they could use Timecoin instead and get paid more and more.

This is far too inviting an idea to pass up, Timecoin needs to be implemented asap.

Maybe getting higher and higher wages is worth being stolen from. And if you are going to be stolen from why not have it be by the people who are enforcing the rules of the network instead of the guys who are throwing you in jail for smoking pot?

Weak objections in this thread. Someone make this happen, people obviously want it.

Timecoin.org is available. Satashi who? I want to hear about the guy who invented Timecoin: The Currency of our Time.

All the people here who object to taxes do in fact object "being stolen" by those who enforce the rules of society. You're not going to convince them with that argument.

I am not suggesting that people here switch to Timecoin at all. I don't want to convince anyone, I've only been explaining why there are people who want the features provided by Timecoin. I used to spend time convincing those people that Bitcoin was better. I realize now that I was foolish, let there be both and we will see what people want.

No one can predict what prices will be.  That is all a function of supply and demand.  Some things get easier to produce with increased technologies and efficiencies in the economy, so their supply curve will drop, leading to decreased price (other things being equal).  Some things, such as non-renewable resources, will have their supply curve increase due to lower availability, so prices will increase (other things being equal).  But assuming a fixed amount of bitcoin currency at 21million, and assuming that there is technological improvements and growth in the number of goods in the economy, then the price of goods in bitcoin will drop.



They might get paid a higher numerical amount for their salary if paid in inflatable timecoin, but the purchasing power of their timecoin salary will not necessarily be greater than had they been paid in bitcoins.


Dude, you can do whatever you want.  It seems to me that implementing timecoin would just require modifying a few lines of the bitcoin code.  Go ahead, do it.  It will divide the network.  People will put their money in what they think is a better store of value and medium of exchange.  In the end, I just see there being some steady exchange rate for price of bitcoin in terms of timecoin, which will gradually increases as timecoin inflates but bitcoin doesn't.

Fundamentally it doesn't matter either way.  The (profit) incentive for people to mine bitcoin or timecoin equals the revenue generated from the current market exchange rate value of the coin produced minus the costs to generate the hashes for the block (which includes energy, mining computer equipment, opportunity cost, etc.).  Note that the bitcoin network continues to produce blocks and coin even when there are 20,999,999 bitcoins in existance.  Due to economics (i.e. incentives and assuming rational, self-interested bitcoin miners), the profit margin for block production in perfect competition at equilibrium approaches 0, so the market value of coins produced will be roughly equal to the mining costs.  Therefore, at equilibrium, the value of the bitcoins produced in the last marginal bitcoin block will be roughly equal to the amount of energy (and computer equipment, opportunity cost, etc.) spent in that 10-minute time period (on average) to solve the block.  Likewise for timecoin, at equilibrium, the value of the coins produced in the last marginal timecoin block will be roughly equal to the amount of energy (and computer equipment, opportunity cost, etc.) spent in that 10-minute time period (on average) to solve the block.  Assuming that there are negligible transaction costs for trading between bitcoin and timecoin and assuming that miners could freely choose to mine for bitcoin or mine for timecoin (and will chose which one to mine for based on expected profit), the phenomenon you will see occur is that the market value of the last bitcoin block produced in that 10-minute time period will roughly equal the market value of the last timecoin block produced in that 10-minute time period.  And even though the nominal coin inflation rates may be different, the nominal rate of block production will be the same for both bitcoin and timecoin.  Therefore, regardless of different nominal rates of coin inflation, the market value of added bitcoins in each 10-minute period will equal the market value of added timecoins in each 10-minute period.  Q.E.D.  (Please point our possible errors, aside from grammatical and language, in my proof.  I could have more easily communicated this using calculus with mathematical equations, but that's a quick verbal draft of the proof.)

Dude, money is just the medium.

Anyway, despite this proof, I'm sure your average layman will not care or be able to understand market equilibrium.  And they are likely to be many people who are believe in the false promise of "price stability" by timecoin and who desire a (nominally) inflationary currency.  Therefore, I encourage them to jump on and build a timecoin network that will exist besides the bitcoin network.  (And hey, redundancy is a good thing).  The more people using distributed peer-to-peer cryptographic timestamp networks, the better...

I should emphasize that the government currently uses violence to force us to use an inflationary currency.  Without force, you will have competition between currencies.

Who gets to decide the rate at which the coins get produced?

The trouble with going down that road is that suddenly you get timecoin 2 and timecoin 3 each with different amounts of coins produced per hour and different inflation.

Who sets the rules and who can change it?

Thats the bad side of it now for a suggestion....

I say kill two birds with one stone and use timecoins as the basis for a domainchain  and bitdns.


The extra inflation would compensate for the extra overhead of included data and domains give it value from the start.


People would spend timecoins but save in bitcoins.

except that in timecoin the tax is being paid to everyone, randomly.

It would be fantastic to have both and see what people want. I know which I want though.

Until someone implements timecoin, this issue will never go away. There will be a constant stream of people demanding more inflation. I say let those people have all the inflation they want, in some other currency than bitcoin.

Okay, I'm sorry I went on for so long.

Of course I know that a limited currency is better. My point is just like you said though, the layman doesn't get it right now. He hears about Bitcoin and says "Won't work, it's limited money". Now you have choices, I've been going "blah blah blah limited is better because blah" and I get tuned out or dismissed with the crap I've been spouting in this thread. Another option would be "Oh, you might like Timecoin then". Now maybe they load it, generate a few, go to TimecoinExchange.com or Timecoin2Bitcoin.com and then they know which can store value. But instead of wasting time arguing theory they got some experience and worked with a system that works just like Bitcoin, they copied an address, they learned to be careful, they get how an online wallet works, etc. It's silly for people to keep using gov money because they lack some knowledge and want to argue.

You'll have deflation even with constant generation. The growing economy will outstrip Timecoin's inflation. This is happening to Bitcoin right now, as the value of each bitcoin continues to grow even though 7200 BTC is created every day.

If detractors believe that price stability is the most important factor, then they will require some method of adjusting the rate of inflation to counter change in value.

Yes, linear generation will approach 0% inflation. I'm prepared though with Expocoin.

This is the point I made after my draft proof about market-equilibrium: there will be those who flat out reject any inflation-limited currency, and will therefore ignore the many benefits of the distributed p2p network proof-of-work cryptographic currency model.  These people simply won't join bitcoin.  So they currently aren't helping the cause.  But if someone creates a timecoin mod of bitcoin, then they will help the cause.  Only drawback, I think is that it might take away contributors to the bitcoin network.  But as I argue, in market equilibrium, these arguments about inflation vs. deflation currency are in a sense irrelevant.

What is the cause, you ask?  Why, the cause is freedom, of course.  More specifically, allowing people to trade freely without the control of governments.

Think about Linux.  There are soo many varieties of Linux out there.  Various Linux kernels: embedded linux kernels, desktop linux kernel, cellphone linux kernel, supercomputer linux kernel.  Various Linux distributions: Ubuntu, Fedora, Suse, Arch, etc.  Various architectural to compile for: x86, arm, sparc, etc.  Everyone has their own little niche, and their own little silly preferences (even though they may be silly).  But all this variety is good, because it gets more people behind the cause of freedom!

Edit: another negative drawback of having timecoin (in addition to splitting the network power) is that vendors will have more currencies to support (in addition to whatever fiat currencies, paypal, google checkout, visa, mastercard, etc.).  So if you do intend to go the route of making a timecoin client, please make it as compatible with bitcoin as possible.  I'd say it is even possible to have one client program that can generate both bitcoin and timecoin, and maybe switch between the two with a simple command-line option or menu option.  That way, a supporter of timecoin could easily change into a support of bitcoin.  (heck, it would even be possible lateron to have a slider to select the percentage of hashes spent for timecoin vs bitcoin).

There is one big difference here...it would be voluntary to join. That means I support it.


 :)

I dont know if youll change the mind of people who disagree so just do it and if the product is good people will use it.


Plus I want to buy timecoins at .001  lol.

Exchange between bitcoin-like currencies will be deadly simple. Vendors can safely just take the most common one or their favorite or whatever and people can convert on the fly. I don't think there is an equilibrium that includes a lot of chains with similar rules, but if that is where we end up I don't think the vendor thing is a problem. And even if they had to set up to take multiple types directly, all of the hardware will be identical and the software will have minor changes and be easily available anyway. And of course there will be demand for seamless integration into one interface.

I'm not planning on generating timecoin, if someone wishes to pay me for services in timecoin, I'd prefer he or she buy bitcoin with his or her timecoin and pay me with that.  If it doesn't easily trade to bitcoin I don't want it.

In related news, people are offering to buy testnet coins for bitcoin on bitcoin-otc.

I posted a similar proposal a few weeks ago : https://en.bitcoin.it/wiki/Controlled_inflation
However, I believe that it is way too early for such a thing to be created.
For the moment we should focus on how to expand the Bitcoin economy.

When I first read the original post I thought "oh great, the primary reason I loved bitcoin is being undermined".  But the more I think about it the more I support the idea of timecoin.

As a marketing exercise, timecoin makes sense for the reasons FreeMoney has already outlined.
It will also make an excellent economics exercise.  People will be able to see quite obviously the benefits of a non-inflationary currency like bitcoin as their timecoins dwindle in value on the BTC/TMC exchange.

So I'm in!  Let me know when/where I can download the timecoin client.

Yes, I agree...that's why I'm saying make it as similar to bitcoin as possible, for ease of support.

I think that they will eventually.  Many enlightened people didn't believe that the public would long suffer fiat currencies once fractional reserve banking was legalized, and many more believed that worldwide abandonment of the gold standard would lead to major monetary crisis (true) and that the economicly educated among the world powers would clamor for a return to sound money. (false)

If bitcoin takes off, it will not be because of it's limited monetary base, since it's going to be inflationary for a very long time.  If it takes off, and I am betting a great deal that it will within three years, it will be because it's a more efficient and more convient monetary system than otherwise currently exists.  At which point, the refusniks will either begrudingly drop their objections in order to participate in the new economy, forever waiting for the day of the "great Bitcoin collapse"; or simply drop out of Bitcoin economy and render themselves irrelevant.

If someone were to implement Timecoin, how would the initial distribution of the currency work?  Bitcoin has solved this problem elegantly, but if Timecoin has a fixed inflationary structure, say 2% per year, how would this be enforced by the network?  Would you start, say with everyone there at the genesis block sharing a fixed starting amount, and then each block then distributes whatever amount would equal a 2% APR?  (Say starting with 10.5 million coins, first block would be 3.9954378, second would be 3.99543531, etc).  Talk about getting screwed if you are the guy who joined the network 6 minutes after teh genesis block.  Enough people on this list bitch about the advantages of "early adopters" with Bitcoin.  If you choose to distribute teh first 10.5 million coins in the same way as Bitcoin, and then switch to a 2% APR forever, it would be decades before the problems with inflation would be noticed.

"I refuse to use Bitcoin, it doesn't lose value over time!"

That's just silly and shows how people got brainwashed by the XX century monetary system ::)
Anyway, go ahead and try...

Timecoin does not have a fixed inflation rate that would be something called Expocoin. Timecoin has a fixed generation rate, the % increase drops over time. We can try them all. I suppose the currency best suited for a growing economy would be Expocoin with a high % corresponding to the rate of growth you want. 2%, 3%, 15%, 100%, whatever. Everyone knows economies are limited by the growth of the money base, that's why the FED has to print print print.

Are you being serious here or sarcastic?

IMO if money is produced ad infinitum, then people will mostly just want to sit and farm all day, and then want to get rid of the timecoins they earned from it due to the fact that the longer they hold onto bitcoins, the less valuable they become. The market will be full of people trying to get rid of coins, and nobody wanting to receive the coins. It will cause huge inflation problems.

I suppose sarcastic. I'm just trying to demonstrate the silliness of arguing with people who don't want to be convinced. I'd like them to have the opportunity to learn (or prove to me they are right!) by actually using Timecoin.

So you can explain to those people that 7200 new bitcoins are generated every single day! And, although the rate will decrease in the future, it won't drop to zero until after most of us are dead.

The thing is that with today's advances the deflation of Bitcoin could be too big for an economy. Right now as someone pointed out we should focus in growing the economy.(The BTC/USD is now 0.4) There should be vendors everywhere promoting Bitcoins. If I don't see at least 100 persons daily adopting bitcoin from now on we must do a better effort.

The deflation can't be 'too big' for the economy because it is cause by growth in the economy. More stuff on offer with a limited amount of coins means higher price per coin. If the bitcoin accepting economy shrinks then the value of a bitcoin will shrink.

Obviously I'm all for growing the economy, not contradicting that sentiment at all.

How about BernankeCoin™, whose interest rate changes at will of Bernanke.  It would be pegged to the US dollar.  I think it'll be just great!  And look at how many people use the US dollar...that means BernankeCoin™ will be very popular!  :P

that wouldn't work either, because you are then dependent upon some financial institution's ability to defend the peg.

If someone really wanted to attempt this, one way to do it would be to keep Bitcoin's halving pattern, but double the term with every halving of the reward.  If the starting term were still 4 years and the reward 50 Timecoins every 10 minutes or so, then 21 Million coins would be distributed in the first 12 years, and 31.5 million after 28 years, and so on.

feel your pain trying to change the thinking of sheeple, but that doesn't mean you have to implement the bad idea to prove they're wrong, there's no need, just watch the fate of US dollar (and other fiat currencies in the same sense). -- oh wait, has history seen enough failed currencies already?

Federal reserve and central banking have perfected the art of inflationary currency, I don't think timecoin can do better than that.

Anyway, I am still worried about the downside: split networks, added confusion, overextended resource, malinvestment...why don't we concentrate on what we believe is right?

It's so easy to implement that it is going to happen. It'll be a better experiment than the dollar because only one simple variable will be changed.

I think the split network concerns are unjustified, bitcoiners aren't going to bail en mass. Some new people will try Timecoin and see very few people accepting them as payment and a ridiculously low exchange rate to BTC and decide to switch to Bitcoin, and now we have a stronger network. It will be a temporary thing, unless it actually has some economic merit.

The fundamentary flaw of this timecoin idea is that it is no different from "normal" currencies.
What makes bitcoin so special is that it is a "gold standard" currency - it is also a commodity, contrary to Timecoin, which will get inflated forever.

Bitcoin is "physical" in a way, because it behaves similarly to physical bullion - after you mine all of it from the ground, it's gone. Timecoin is not like this.
Essentially, it's scarcity that creates value. Abundance destroys value.

----
EDIT:

So what You're actually proposing here, is to create a clone of Bitcoin, which has all the properties of Bitcoin, except it has less value than Bitcoin by design. People will never go for this.

For Timecoin to work, it would have to be just scarce enough. Although, for the currency to act as a proper counterpart to Bitcoin, wouldn't each node decide on its own rate of inflation?

The biggest resistance to Bitcoin I've seen is:
- Deflation (we want our currency to lose value).
- Mining (baww it's unfair- cry me a river).

Did anyone tell inflation-adherents that the rich don't keep hard currency, but put their money in property, stocks, 401ks .etc? I've read all the pro-inflation arguments and they don't make logical sense. The concepts are shady.

As a matter of fact I could decide right now that each block is worth 100 BTC. The Timecoin client could fight the Bitcoin deflation and just whichever has more support wins.(In the Bitcoin blockchain) :/

Instead of fragmenting each client should have the option to choose inflation or deflation and to which extend.

Isn't this possible?

It will never be as scarce as Bitcoin. Think logically: You have two currencies which are identical with exception that one has more value which is expected to rise faster. What will people choose ?


You mean like allowing each node to print as much money as it wants ?
Wouldn't this be a Zimbabwe-style disaster ?

--
No, seriously. Why the hell would i want my savings to lose value ?.
Saving with hard currency is so easy. No need to buy physical things. You just keep money and they make profit. Isn't this beautiful ?

Bitcoin clients will always ignore invalid blocks, no matter how long the Timecoin chain is. Timecoin could treat Bitcoin blocks as valid, but this would result in Timecoin being identical to Bitcoin unless Timecoin becomes bigger.

Yes.

This whole Timecoin thing does not at all speak to me.
In my opinion, this is a waste of time (Wastecoin) :-)

As time approaches infinity, TimeCoin is, I suspect, superior to BitCoin and Expo/BernankeCoin in that its money supply is mathematically guaranteed to be constant and thus have neither inflation nor deflation and avoid both inflationary and deflationary spirals.

The best analogy to the money supply in *Coin is to consider a vessel into which water is being poured (via money creation) at irregular intervals (but the pour occurs instantaneously) and evaporating (e.g. lost wallets in the block chain currencies & sufficiently damaged notes in fiat currencies).  If, as I suspect, the percentage of the water in the vessel that evaporates is connected to a variable that has no correlation to time, volume of water in the vessel, or the amount of water being poured (and can thus be effectively considered to be its long-run average over t=(0,inf)), then (where v(t)=volume of water in vessel at time t, e=percentage of water at time t that evaporates between t and t+1, c(t)=water vapor that condenses in the vessel between t and t+1 (analogous to lost wallets being "recovered") and f(t)=volume of water poured into the vessel instantaneously at t):

v(t+1)=ev(t)+f(t)+c

For BitCoin: lim(t->inf, f(t))=0 and df/dt: never positive
For TimeCoin: df/dt=0 => f(t)=x (x: positive & real)
For Expo/BernankeCoin: df/dt=(r+e)t (r=the desired inflation rate... actually the better term is arguably King (http://en.wikipedia.org/wiki/Mervyn_King_%28economist%29)Coin, given that the BoE theoretically has only an inflation target unlike the Fed)

In the case of fiat currencies, I suspect that c is zero (though I suppose that c could just stand for counterfeiting...).  For the block chain based currencies, c is vanishingly small (basically being the chance that someone randomly creating secret keys finds one that's already been used and lost) and likely to have a rather large variance (it may be years between successes even if the mining collectives turn their computing power to finding keys to harvest [hopefully lost] coins): it can essentially be ignored (and will have the basically same effect in any block chain currency (the effect on confidence in block chain currencies if a secret key is duplicated not being considered here)).

Assuming positive e:
For BitCoin, as t->inf, f(t)-ev(t-1) approaches zero from below thus lim(t->inf, v(t))=0
For TimeCoin, lim(t->inf, f(t)-ev(t-1))=0 thus lim(t->inf, v(t))=y (y: positive & real)
For Expo/BernankeCoin, f(t)>ev(t-1) thus lim(t->inf, v(t))=inf

e is, it should be noted, unknowable (since it's impossible to tell if a given key is lost or merely not circulating).

I also suspect, however, that there is little incentive for TimeCoin adoption prior to t being arbitrarily large...

Bitcoin cannot be changed the rules are already set.
Some type of "Timecoin" with very slight, 100% predictable inflation might help to combat deflation.
Better for merchants (more stable pricing), not as good for hoarders?

TimeCoin can potentially fork off BitCoin at a few times and use the same block chain up to the point of the fork.

The only definitional difference between a TimeCoin implementation and a BitCoin implementation is that TimeCoin doesn't reduce the reward for solving a block as time goes by (instead, say, continuing to only accept blocks that award the solver 50 BTC as valid).  So if TimeCoin were released today, it would interact with BitCoin until such time as BitCoin clients only accept blocks that award the solver 25 BTC.  Before that, there need not be any difference between what blocks are accepted by TimeCoin or BitCoin.

Thoughts, notes, etc.
* TimeCoin and BitCoin addresses are thus equivalent (being the same keys but existing in different block chains)... they can almost be considered as slots in the same address.
* Whatever BTC balance one has at the moment of the fork in the chain carries on as both the BTC and TMC balances.  This isn't quite a double-spend opportunity because the two chains will repudiate/ignore each other's transactions.  It's perhaps analogous to a corporation distributing 1 class B share for every class A share as a dividend.
* This also guarantees a certain amount of initial exchange between BTC & TMC: a BitCoin partisan with, say, 100 BTC at the time of the fork would have 100 TMC that they would be willing to sell for BTC and a TimeCoin partisan with the same balance at the fork would find themselves with 100 BTC that they would be willing to sell for TMC.  Of course, the BitCoin partisan would only be able to liquidate their TMC by running TimeCoin for at least a short time alongside BitCoin.
* Exchange between TMC and BTC is rather easy if Alice and Bob are running BitCoin and TimeCoin alongside each other:
Alice sends BTC from her BTC slot to Bob's BTC slot
Bob sends TMC from his TMC slot to Alice's TMC slot
* TimeCoin may possess a greater chance of a successful fork than other forks because the fork occurs at some point in the future as opposed to when the first implementation tries to participate in the block chain.

Why do you want to combat deflation?
I bet you will say "because it causes hoarding and stops commerce".
To combat hoarding you don't need inflation, you can use demurrage. You can use freicoin instead of timecoin.

The austrians will say: "don't call it hoarding, is saving".
Again, save != hoard.
Hoard is just one way to save, being money time-resistant is the better.
You can save by storing things you will consume in the future (like Robinson storing fish to have time to make a ship). You can also save by lending (even at zero interest, after all the fish of crusoe is not durable).

Following on from


* Immediately after the fork, the exchange rate would be set by the relative holdings of BTC partisans relative to TMC partisans.  If the ratio between TMC being sold by BTC partisans relative to BTC being sold by TMC partisans is 2:1, then it's reasonable to expect the equilibrium price to be somewhere near 1 TMC=0.50 BTC.

* If the exchange rate is above 1 TMC=0.50 BTC, then it's more profitable (ignoring transaction fees received in either block chain) for a miner to solve a TimeCoin block for 50 TMC and convert that to >25 BTC than it is to solve a BitCoin block for 25 BTC.  Miners might even implement software that tracks the exchange rate and switch between chains on the fly (e.g. if the spot rate is more than 1 TMC=0.55 BTC).

* If the fork is when there's been 10.5 million BTC mined (and thus TimeCoin starts with 10.5 million TMC) the debasement rates for the next 10k blocks (a bit more than 2 months) would be 2.38% for BTC and 4.76% for TMC.  Thus 1 futureBTC would be worth 0.9767 presentBTC at the fork and 1 futureTMC would be worth 0.9545 presentTMC.  Since at the instant of the fork BTC and TMC are identical, then the expected exchange rate between TMC and BTC 10k blocks after the fork would be 1 TMC=0.977 BTC.  This may make "on-the-fence" traders/speculators willing to buy TMC with BTC at the 1 TMC=0.50 BTC rate, preventing a dramatic fall in the exchange rate when the partisans have completed the process of trading their respective disfavored coins.

*  If the TimeCoin chain ends up with more hashing power than BitCoin then it becomes more immune to double-spend attacks and thus TimeCoin transactions engender more confidence.  We may then see the store-of-value function partially decouple from the medium-of-exchange function as merchants decide that TimeCoin transactions have a lower fraud/repudiation risk than BitCoin (in which case the merchant is basically deciding that the extra protection from being the victim of a double-spend attack is worth losing 0.3% daily due to the extra debasement in TimeCoin... of note is that merchants are currently generally willing to pay almost an order of magnitude more to the credit card industry for taking most credit risk off their hands).

A smart trader will realize the depreciation before the actual drop and bet on it in advance. A smarter trader will do it earlier. Many of us are so smart that we will bet it all on Bitcoin and none on Timecoin from the first block.

But again please try it and we can lay it to rest with the experiment.

Is this typical of the Bitcoin community?


Bitcoins will eventually face some kind of competition, and people who act like this actually help to devalue your precious Bitcoins, IMO.


Gold, for example, has a continual increase in overall supply, due to mining in the real-world.
If there is demand for an experiment (which does not change Bitcoins rules) with very slight, 100% predictable inflation, then why put a huge effort into fighting against it?

Gold and Silver both had severe Bear markets for over 20 years, was that beautiful?   :P

I'm not fighting against other bitcoin-like currencies. In fact, I'm trying to maintain a list with all proposals, even thought I think is too early to support the competitors when the success of bitcoin is not secure yet.
On the other hand, I don't like much Timecoin.
It tries to solve the "deflationary bitcoin" problem, but I don't think the solution is good.
First of all, Bitcoin is only deflationary if there's economic growth. To avoid timecoin deflation, it issues a constant quantity of timecoins each year (instead of a decreasing quantitiy until convenrgence).
If we assume a constant growth of 1%, Timecoin will become eventually deflationary too, since the constant issued timecoins (50 per block) are a lesser percentage of the total supply each year.
Timecoin isn't good to solve the problem it is intended to solve.
If you want to see the list of proposed alternatives:

http://bitcointalk.org/index.php?topic=7500.0

My proposal is Freicoin, but nobody seem to like demurrage nor Gesell here.

^^^
I'll look at the list, thanks.  :)

Interesting indeed.

The first argument against it seems to be that no one would use such a currency if it's not enforced, but I think merchants will accept them because they would lose sells otherwise. There's some local currencies with demurrage already functioning in Germany (and probably in other parts of the world). Here's an example:

http://en.wikipedia.org/wiki/Chiemgauer
There's 424.400 CH in circulation.
I guess all this people are just stupid.

Uh huh.

There are trillions of USD in circulation and billions of users this is not an indicator of a good system.

Ok. you're right. People using it doesn't mean it's a good thing.
Also this last sentence was unfortunate:


I still think it has advantages for the users. The probability of "getting back" a freicoin you spent "soon" (for a good/service you deliver) is greater than for a bitcoin.

Sounds kind of like namecoin, does it not?

As far as I know, the total supply of namecoins coverge to a maximum like bitcoin's.
The only difference between namecoin and bitcoin is that the namecoin chain allows domain registration/sell transactions and the sells and registrations can be made atomically by paying in namecoins.

Anyone, please, correct me if I'm wrong.

I did not read this whole thread but here's my thought,

Many people here think from a miner standpoint.
The fact is that generating these BTC is becoming polluting as hell.  (more than 1.5 Gigawatt)

That's one of the reason why a Gold based economy is not a good idea.

When block will become 25btc we'll see great service offers.

I agree.  I don't think TimeCoin is in any way ready for prime time until a few reductions in the block reward have come in... until then, it's an interesting thought experiment.


BitCoin is guaranteed (assuming a non-zero long-term rate of key-loss) to have a maximum usable money supply at some point in time (after which, of course, the money supply will contract asymptotically to zero).  A contracting money supply is generally deflationary.


The gross creation rate of TimeCoin never goes below zero... if no TMC are ever lost, 50/100 trillion is still greater than zero (the gross creation rate will asymptotically approach zero).  If there are periods where the rate of coins lost to key-loss is greater than the creation rate, the money supply will have a short bout of contraction before equilibrium is restored (barring a case where the loss rate monotonically increases... the only situation I see that occurring in is one where users simply abandon TimeCoin, in which case there's nothing that can be done at that point).

Contraction of the money supply tends to lead to deflation.
Increase of the money supply tends to lead to inflation.
A constant money supply (zero net long-term money creation) is the option least likely, IMO, to lead to deflation or inflation.


The issue with Freicoin is that it exacerbates the contracting supply feature of BitCoin (if it preserves the continuously decreasing block reward), as demurrage implemented by destroying coins is equivalent to losing coins through key loss.  Implementing demurrage through transaction fees is also likely IMO to have the effect of reducing transaction volume ceteris paribus as people hope that clients that don't enforce demurrage become predominant before they need to spend.

To be honest, I'm not much worried about wallet losses.


The key thing here, I think, is that artificial monetary inflation/deflation leads to unwanted results. I agree, a constant supply would be better that anything else but a magical formula that tells the system how big the reward have to be to maintain "stable prices". Too complex (if possible).


No. The nominal reward is constant in freicoin. The total supply will converge when demurrage fees equal the reward.
Implementing destruction of money supply (to be able to keep rewarding miners) by "destructive fees" would only solve the problem of wallet losses and, as you say, would discourage trading.
Although demurrage diminish some effects of price deflation, the main point of demurrage is to reduce interest rates, not purchasing power of money.

It's impossible in practice to determine whether prices are stable or a reflection of differences in preferences.  Thus it's absolutely reasonable to adjust the components of a price index; it's impossible to know how to properly adjust said components, especially in an economy offering a plethora of choices.  Such adjustment is also an invitation to rent-seeking.


That's what will happen with TimeCoin as well, as long as key loss occurs at a non-zero rate.  Demurrage effectively imposes an extra level of key loss (so it may converge faster, but will probably also gyrate more wildly).


Is reducing interest rates necessarily a good thing?

If the reward is greater than the wallet losses, the supply won't converge.


I think so.
http://www.community-exchange.org/docs/Gesell/en/neo/part5/2.htm
This and the following two chapters give an explanation why "interests are bad".

That's true presuming that long-term change in number of unspendable coins is not positively correlated with the number of spendable coins over the period.  I'd say that the case for that presumption is weaker than the case for a positive correlation.

I'm not sure I did understand you, but are you saying that 50 timecoins (or wathever the reward is) will be lost every 10 minutes on average?

If the number of coins lost in the average ten-minute period is generally increasing as the number of spendable coins increases (equivalent to a positive correlation between losses over any time period and the supply), then there is a number of spendable coins where the expectation of coins lost in the next ten minutes equals any positive constant you care to name.

If the rate is 0.00009% of spendable per block (which annualizes to about 0.5% per year, which I suspect is the right order-of-magnitude), then a reward of 50 TMC implies about 526 million TMC as the equilibrium supply; 2 TMC implies a 21 million supply at equilibrium.  TimeCoin implemented as BitCoin with a 2 TMC minimum block reward would not fork until the BTC reward drops to 1.5625.

FreiCoin isn't BitCoin plus demurrage... it's TimeCoin plus demurrage (or BitCoin plus constant block reward plus demurrage) ;)

I think now I understand. The bigger the total supply, the more units will be lost (with each generated block). That's why the supply of timecoin would converge too: when the losses equal the rewards.


Well, if timecoin and freicoin will have a constant supply and bitcoin a decreasing supply, maybe it's more appropriate to define freicoin as timecoin with demurrage.
I was considering that bitcoin and freicoin will have constant supply and timecoin won't.
The constant block reward of freicoin could just be deduced from constant supply (in the end) and demurrage.
I was ignoring the effects of wallet losses in supply.