Bitcoin Forum

Economy => Economics => Topic started by: GCInc. on October 21, 2013, 02:47:01 PM



Title: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 21, 2013, 02:47:01 PM
This may have been sidelined here a few times. I need help of the bright thinkers!

Say you want to develop a cryptocurrency for semi-closed environment that, to unknown extent, is planned to replace the national currency during many years ahead. Yeah grand thoughts, don't worry about that (note unknown extent)! You may consider this as a thought experiment.

Management, PR, valuation mechanisms, even technology are well planned and going to be in good hands. A major issue is the economic experience that we not only lack, but realize to be largely nonexistent. Formulating the best course of action for a p2p currency for with centralized issuance is in no books. But maybe some economic theories can be put into use here.

Theoretically, the currency is going to be majorly controlled by "the state" - whatever it means in the future (face it, the state is the single most powerful entity using and holding the bulk of funds in a nation).

The mode of minting the currency needs to be different from the start-from-scratch-and-let-everyone-mine-their-own-coins model. This is because:

- there are a handful (ideally <10) of organizations that in co-operation control the release of currency to public, arrange basic income / new currency adoption rewards for citizens, grant bounties for companies to motorize development of both technical and systemic reforms etc. These organizations not only regulate the release of tokens to benevolently oversee the adoption process, they also require mass funds converted to old world currency to continuously to keep the ball rolling.

- there are supposedly hundreds of second level operators who receive grants with limited release rights

- mining is supposed to remain tightly distributed - no ASIC not even GPU miners unless very sophisticated software is impemented

Now, the obvious solution for the above is PREMINE. [Let's omit the fact that has become a curse word in the pyramid crypto games. We are talking about a completely different scenario where centralizing the bulk of coins serves a purpose other than the storage guards becoming rich.]

The obvious remaining question is: How much premine?

The crypto needs to be fully issued in approx. 10, say max 15 years. This coin is not the final solution, but an important step towards eventually more healthy value transfer systems of unknown type.

We want the crypto to be relatively scarce. This with the time span sets the range for the block time, rewards, final # of coins etc. that need to be adjusted according to the level of premine eventually decided.

Having put in quite hard thinking already, I simply can't see even a ballpark figure of the premine % to start with! On the other hand the reputation of large premine puts us off, although there are valid points above that would make 90% or even 95%+ premine feasible.

Naturally, we need a healthy portion unmined to keep the incentive for p2p network to solve blocks for the 10+ years to come. What proportion would be healthy? Remember the centrally held premined millions are not to be partied with. They are held as reserve and to propel productivity. Thus, for being scarce (although mined, but unavailable), the coins should be well desirable.

50% would just be a "nice" symmetric figure as well. But I don't see great benefits with that. It only dilutes the circulating money and puts the rate at risk. We want a deflationary currency initially, like Bitcoin. Deflation brings along desirability and pulverizes many otherwise impossible obstacles for adoption. Receiving 10 coins a day out of 5 million (eg. 5% of 100M) available-to-mine-coins sounds actually more thrilling than receiving 10 coins out of 50 million (eg. 50% of 100M) available coins when you turn your head around that a bit.

Is it sufficient to arrange the required level of trust for 95% "premine", or is it doomed to fail like Ripple seems to have gone with their premine? XRP didn't handle it quite well from the beginning, which may turn out to be the crux of their likely failure. But can you still see some inherent economic problems with the large proportion central depository? Fractional banking is out of question, so this would still be fair money, just not to the extent where fair is understood as complete creation by the markets.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: notme on October 21, 2013, 08:12:04 PM
Centralization means single point of failure.  Why would I want a less robust cryptocurrency?


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: justusranvier on October 21, 2013, 08:19:08 PM
"Will someone help me design a better slave restraint system? Things have been working out well for a while, but ever since this neighbouring town opened up that doesn't recognize slavery a lot of mine are escaping. This is getting to be a problem for plantation operations, so I need someone to help me build stronger restraints. All help is appreciated."


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 21, 2013, 10:06:54 PM
Centralization means single point of failure.  Why would I want a less robust cryptocurrency?
Either you didn't read my post or didn't understand it. Part of the currency storage is centralized - nothing else, so users will be better off if that point fails completely. Until it fails, it means more robust cryptocurrency compared to completely non-centralized minting such as everything on the market.

Hah!



Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: notme on October 21, 2013, 10:38:27 PM
Centralization means single point of failure.  Why would I want a less robust cryptocurrency?
Either you didn't read my post or didn't understand it. Part of the currency storage is centralized - nothing else, so users will be better off if that point fails completely. Until it fails, it means more robust cryptocurrency compared to completely non-centralized minting such as everything on the market.

Hah!



Yeah, no.

I trust math.  I don't trust the state.  Failure could mean many things, including flooding the market with their premined coins.  But keep gloating about being so clever.  It really makes me want to take you seriously.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 21, 2013, 10:49:58 PM
It really makes me want to take you seriously.

I don't need you. Less arrogant people who are capable of taking the presented model seriously can step in. I'm not sure such are using this forum any more though.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 22, 2013, 07:32:55 PM
"Will someone help me design a better slave restraint system? Things have been working out well for a while, but ever since this neighbouring town opened up that doesn't recognize slavery a lot of mine are escaping. This is getting to be a problem for plantation operations, so I need someone to help me build stronger restraints. All help is appreciated."

Decentralized transactioning is not slavery. The more sinister half of the concept: mostly centralized issuance, is admittedly hard to swallow for the Bitcoin ultra-libertarians but is not so for the general public. They will view carefully authorized & distributed fair, eventually decentralized money as a great step towards freedom, which is appropriate.

Short term plutocracy is required to bootstrap the system past harsh competition
. The parties controlling issuance are provably benevolent and prudent, and will be giving up excess control by the continuous distribution. Only monies necessary to handle commons are retained. In addition, there will be the 5% to 50% of freely minted coins.

Transition from the current sick and twisted fractional reserve system to centrally overseen P2P-transacted fair money, is in closed ecosystems more doable than technically intensive switch to market minted cryptocurrency. But my intent is to discuss the practical implementation rather than defend the principles behind the concept.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: spiral_mind on October 23, 2013, 06:16:42 AM
Theoretically a government could declare a crypto-currency they issue as the new legal tender and offer an official conversion rate for people to exchange their old currency. The problem with getting this system implemented would be political rather than technical however. The current fiat system gives government total control over the money supply already, and cash has zero transaction fees (unless you send it electronically). Moreover the inefficiencies of the current system (ie the transaction fees) prop up a network of bankers that is highly intertwined within the governments of the world. Money and political power are never far from each other. Just look at how easily the bank bailout was passed in the US.

Adopting crypto-currency as the official currency of a country is therefore highly unappealing to governments because they already have the system that gives them the maximum of power over money and greatly benefits the most politically influential people of the world. The US can literally print its way out of massive amounts of debt over time. It can also acquire that debt at an insanely low rate through things like QE. And all the people who make money off of this system basically have the Congress and Senate in their pockets ready to write a check whenever they are in trouble. What makes crypto-currency uniquely useful is the fact that it can circumvent the traditional money system without the need for a centralized authority (read Satoshi's whitepaper).

Centralizing crypto-currency is trying to reinvent the wheel as a square and expecting it to work better.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Mike Christ on October 23, 2013, 06:21:58 AM
Ripple?


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 23, 2013, 07:35:04 AM
Centralizing crypto-currency is trying to reinvent the wheel as a square and expecting it to work better.
I agree with everything you say, except that; Centralizing issuance in short and medium term is used to circumvent the near impossible adoption for the current government.

The central authorities of the new currency are not the state now, however they stand chances of becoming one after the large structural transitions in society - including the monetary reform by the initiating non-state operators - are through.

Quote
Ripple
Yes, I mentioned that in the opening, it has many similarities but fails on many fronts which my concept has addressed.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Erdogan on October 23, 2013, 08:57:33 AM
It's too late. Bitcoin is.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 23, 2013, 11:45:18 AM
Not mandatory. No regulation policies. All regulation happens technically through the central issuance.

 
premine as much coins as existing in the soon to be replaced currency, and to distribute them in a forced way at a one for one exchange rate. Then declare the old currency unusable.
That's impossible without violent revolution. Preferably discarded.

I disagree about being late. Bitcoin is far from being adopted in mass scale in numerous semi-closed environments. There is fair chance it is surpassed by another more user friendly system before becoming de facto. A better money can be deployed leaving Bitcoin in the shadows, by strong central operators with relative theoretical ease. Even Bitcoin could, but we'd rather see a technically superior cryptocurrency be the one that large societal resources are allocated to.

I would hate to have my children wait 10 minutes for every transaction to clear for the next 200 years before the next value token reform.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Rogue5pawn on October 23, 2013, 12:20:30 PM
Well.... seeing as this a thought experiment game AND there is a reward for the best thinker... Hmm... lets see....

Let's assume that the government is also going to be mining the currency after publication/distribution of the blockchain, for both profit and regulatory purposes, and only the citizens of that country will be allowed to participate in the mining process (how this can be legislated and enforced is one for the programmers, likely special wallets and machines limited to the regions IP range). In order to prevent a 51% attack, the government should regulate the distribution of the mining equipment and themselves so that the citizens as a collective will maintain 51% of the hashrate. Also, Proof-of-Stake could be used in the design along with other mechanisms that encourage spending rather than hoarding. Include a few deflationary measures, such as a variable ranged fee per transaction that is destroyed, and there would be no need to put a cap on the ultimate number if coins to be created. This is just a quick thought on what the coins and their creation could entail.

As for Premine: given no maximum coin creation number, a % of Premine based on the max coin count could not be determined. However, knowing the expected time to block (10-20 minutes?), the block reward (50-100? people like round numbers and multiples of 5 :-P ), the government's expected rate of income from mining, and what the network hashrate will be soon after release... I think these numbers could indicate how much to Premine. The % could be figured according to, say, keep the government ahead of the curve. Without sitting down to do the math, and knowing that the government's chance to find a block will be a near constant of not more than 49%, they could Premine somewhere between the first 1000 and 5000 blocks. Using my min/max numbers, that would give them 50k/500k coins to start.

Even with a predetermined max coin count and the government participating in the mining process as already mentioned, I would guesstimate a mere 10% of the grand total would be advisable to mine because they would still continue to have 49% of the hashrate and be generating blocks at a much faster rate than any other Pool :)

Thanks for letting me play, Hope I win!


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: mirelo on October 23, 2013, 01:20:05 PM
What about using the Obamacare website for distributing the currency? We could give a certain amount of OCC (ObamacareCoin) to people who bought heath insurance (I hope there is nobody from the government reading this, or they may take it seriously).


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: notme on October 23, 2013, 03:20:43 PM
It really makes me want to take you seriously.

I don't need you. Less arrogant people who are capable of taking the presented model seriously can step in. I'm not sure such are using this forum any more though.

Pot, meet kettle.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 23, 2013, 09:17:12 PM
Let's assume that the government is also going to be mining the currency after publication/distribution of the blockchain
Not necessary. Government has other routes for profit (tax and production primarily).

Quote
for both profit and regulatory purposes, and only the citizens of that country will be allowed to participate in the mining process (how this can be legislated and enforced is one for the programmers, likely special wallets and machines limited to the regions IP range)
Would not happen, regulation is not feasible.

Quote
In order to prevent a 51% attack, the government should regulate the distribution of the mining equipment
See above.

The state will need to have resources to thwart any 51% attacks occurring from uneven hashrate distribution on the free market.

Quote
Proof-of-Stake could be used in the design along with other mechanisms that encourage spending rather than hoarding.
Correct, PoS would be important to prevent the 51% attack. I have an intuitive feeling partial PoW would still be good to have like PPCoin.

Quote
Include a few deflationary measures, such as a variable ranged fee per transaction that is destroyed, and there would be no need to put a cap on the ultimate number if coins to be created.
Interesting idea, deflation is indeed desired in the upswing. Nonstopping coinage doesn't feel right, but I can't put my finger on it why it wouldn't be just perfect to keep the max amount stable by destroying fees and minting coins continuously. Would it perhaps be difficult to keep the circulated amount stable?

Quote
government's chance to find a block will be a near constant of not more than 49%, they could Premine somewhere between the first 1000 and 5000 blocks. Using my min/max numbers, that would give them 50k/500k coins to start.
Government doesn't mine, so most of these calculations doesn't apply. What's the basis of your figures, constant income from mining?


Quote
Thanks for letting me play, Hope I win!
There are no other serious contenders at this phase ;)

Quote from: ghdp
Your new currency will need to earn trust and you can not earn trust by saying "Hey, give me your money, I own the bank"

The bank does not ask for money, it almost exclusively gives money (coins) out. In my opinion that's a competitive way to earn trust.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Rogue5pawn on October 23, 2013, 09:53:29 PM
Perhaps we can have this discussion on two threads, as I had started a similar thread posing the question:  What would the Perfect Altcoin be?
Unfortunately I cannot offer a prize due to lack of funds. (I started day trading on Cryptsy about 2 weeks ago, and have gone from 0.00079625 BTC to a whopping 0.07283193 BTC via Cryptsy's mini-money market... *brags* a whole factor of 8000)(hope that's something to brag about, because I really have no reference points) https://bitcointalk.org/index.php?topic=315835.0 (https://bitcointalk.org/index.php?topic=315835.0)

Please, take a look at that and see if it qualifies as part of this discussion.... or just check it out and let me know what you think over there.

In the mean time, I will carefully consider your reply and get back to you soon. Cheers


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Rogue5pawn on October 24, 2013, 01:38:39 AM
Ok, governments don't mine. I actually prefer that. With POS and the gvt holding/receiving a portion of every transaction fee (and the remainder destroyed) and the "interest earned" on their Reserve Balance, as well as the usual taxation practices already in place, I think they could easily stay well ahead of the curve. (Reminder: In order to manage a 51% Attack under a POW /w POS system, the attacker would have to have both 51% of all coins in circulation and 51% of the network hashrate.)

As for keeping the circulation amount stable, I think it would have to do with how the blockchain's algorithms were laid out. Just as difficulty is adjusted every so many blocks, the fee/tax rate could easily fluctuate higher or lower as the system required in order to maintain a relatively steady rate of growth, and the POS Interest could also fluctuate as needed even to the point of demurrage (use it or lose kind of thing) if it's held in reserve too long. Also, some of the current altcoins already have a variable block reward (PPC has had a historical low of, I think, 7 coins from a block and as high as 1010). Some of these variables could rely on such information as: quantity in reserve balances, value/volume of all transaction over a period of time, target block time vs actual block time, and figuring out how many coins have simply gone MIA due to human error (accidentally reformatted hard drive and lost all backup wallet.dat files, for example). It is actually the human error side of permanently lost coins that causes me to suggest no max limit to mined coins. If Mr. Pirate really does have 600k BTC that the kind people at the FBI are holding for him, then that's 600k absolutely missing and gone from circulation forever, 21,000,000 - 600,000 = 20,400,000 BTC to ever be seen in circulation, not to mention all the uncounted lost coins from other human practices and error.

I'm not a programmer by any means and have no idea how any or all of this could be implemented within the blockchain info and mining algorithms, but I do love my math and spreadsheets and mathematics professor friends. In the end, it's a just a program, and programs can be made to do whatever we want them to do.
----------------------------------------

As for that 49% thing, I'm helping a friend decide if it's worth buying four of those 2Th/s January pre-order Cointerras. At 8Th/s on a network of 3000Th/s, if one were to Solo Mine, 8/(3000+your h/s) = 0.2659% of the total network h/s... and so it is foolish to Solo Mine. But with that same 8Th/s on a coin that is currently at 10Th/s, then you would have 8/18ths of the network h/s, or 44.444% of the network h/s and so you would average to find 44% of the blocks over a period of time. I understand this over simplifies things, but it's an effective way to get numbers across to people that don't have a head for such things. Cases in Point: BTC Guild holds around 32% of the total network h/s and finds blocks at about that rate, while BitMinter only has around 16% of the total h/s and finds blocks at that as an average rate. (Nice Pie Chart here: http://bitcoincharts.com/bitcoin/)



Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on October 25, 2013, 08:15:36 AM
You are thinking of the number of coins as mostly the crucial factor against the 51% attack. I'm inclined to leave the risk of attack to less emphasis (especially with PoW and dedicated attack mitigation team). I'm inclined to think The relative ownership and distribution proportions of coins - or rather everyday payment units, in case one unit is 0.00001 coins as often is - is the defining aspect in the formation of success. For this adjusting the various parameters you mentioned is imperative.

We could probably use your math professor friends' skills for rate projections etc. if we just find out what sort of derivations they'd need to calculate... game theory anyone?

I'll have a word on your thread later, it's a good thread and not so far from this one.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Rogue5pawn on November 03, 2013, 10:56:29 AM
Had to think on this for a while before responding.

First, in response question posed in the thread topic itself, I have come to the current position that anyone publishing a cryptocurrency is technically the "centrally issuing" party. However, as the question was expanded upon in the OP, the question seems to be relative to a central government of some kind being the issuing party. Could this be viable? In the most general use of terms, the only answer is, "Yes." I think the more relevant question, and the one you were aiming at, is: Without outlawing all other forms of currency, would the populace at large come to use this government created cryptocurrency as the preferred medium of exchange? And what could be done to make it the preferred medium of exchange? How would pre-mining affect its popularity? These all assume, I think, the standard cryptocurrency model (Bitcoin) as the template.

I think any issuing government could pre-mine as much as they needed if the coin had no max production cap, and as much as 20% if there is a max production cap. However, they could only use these pre-mined coins for self-funding, not as a direct means of inflation/deflation control: they could only add large sums of currency to the economy (decreasing purchasing power), but not remove large sums from the economy (increasing purchasing power). Of course, part of (or all of) the inherent transaction fees/taxes could be directed to a central wallet as a means of temporarily extracting currency from the economy, but this trickle effect wouldn't have the necessary impact during a time that needed an immediate adjustment.

In order to have the power to immediately remove large sums of a cryptocurrency from the economy, they would have to be able to directly change features of the blockchain, the minting algorithm, and/or any other features whenever they wanted/needed to..... effectively negating the very principles of being a cryptocurrency and, instead, making it nothing more  than a digital fiat currency.

In summary: A government could publish digital currency can call it a cryptocurrency, buy no one would be able to fully trust the issuing government or put their full faith behind the currency itself for the reasons explained above.

And just in case I won  :P
BTC: 1EMj11KZKQYryLwksQrURLANjME2F9WA1e
LTC: LZrtsbuttz1wVM5b4936hLCPeFAP5uc7Wy


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers [PAID]!
Post by: GCInc. on November 18, 2013, 07:59:37 PM
Although the thread failed to concretely address most issues we would have hoped, some valid ideas were presented. Rogue5pawn, you have been paid 0.012 BTC for your contribution. Thanks! (You may still reply  ;))


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: greenlion on November 19, 2013, 07:17:35 PM
A centrally-issued currency does not need to be either P2P- or cyptography-based, because you've already assumed the counterparty risk of central control that P2P or crypto cannot solve.

The US dollar already exists in this form when it comes to open market operations at the Fed.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on November 19, 2013, 07:33:50 PM
A centrally-issued currency does not need to be either P2P- or cyptography-based, because you've already assumed the counterparty risk of central control that P2P or crypto cannot solve.
Does not need to be? Well, p2p cryptocurrencies are just about the best form of digital cash available. Centralized or not, why make it inferior?

The comparison to some aspects of USD is valid, but on many fronts USD stinks and a quota bound cryptocurrency would make away these, like most of the uncontrolled money supply problems plaguing fiat since the beginning of their times.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers [PAID]!
Post by: Rogue5pawn on November 20, 2013, 10:45:40 PM
Although the thread failed to concretely address most issues we would have hoped, some valid ideas were presented. Rogue5pawn, you have been paid 0.012 BTC for your contribution. Thanks! (You may still reply  ;))

I was wondering where that random Recieve came from. Thank you.

Am still considering things. It are what I do.  8)


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Mike Christ on November 20, 2013, 10:53:06 PM
A centrally-issued currency does not need to be either P2P- or cyptography-based, because you've already assumed the counterparty risk of central control that P2P or crypto cannot solve.
Does not need to be? Well, p2p cryptocurrencies are just about the best form of digital cash available. Centralized or not, why make it inferior?

I agree; why make it inferior with centralization?


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on November 21, 2013, 05:01:47 PM
I agree; why make it inferior with centralization?
Central issuance reasoning was addressed in the opening post:

there are a handful (ideally <10) of organizations that in co-operation control the release of currency to public, arrange basic income / new currency adoption rewards for citizens, grant bounties for companies to motorize development of both technical and systemic reforms etc. These organizations not only regulate the release of tokens to benevolently oversee the adoption process, they also require mass funds converted to old world currency to continuously to keep the ball rolling.

- there are supposedly hundreds of second level operators who receive grants with limited release rights: To promote, facilitate adoption and development

- mining is supposed to remain tightly distributed: To combat disproportional accumulation of coins to mining conglomerates or early adopters

There you have it. All of these require an uncertain amount of premine (=central issuance) to work more effectively than a system born "fairly distributed" from square one.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on November 21, 2013, 11:00:19 PM
Who will give those funds and why would they give them ?
Nobody gives them. Funds would be received through purchases from third party operators who provide services and packages for their audience and public - services created by the governing organizations and second level operators, to which access is allowed against purchase of the currency.

It has just come to our attention that there are at least three major cryptocurrency endeavors currently going on utilizing the central issuance model:

- eMunie
- Mastercoin
- Nxt

It seems all of these are relatively large projects in already advanced phase. We are happy to notice the support these models receive, despite the neglect from the traditional ponzicoin crowd. It validates our proposition that the central issuance model is viable to operate a centrally issued cryptocurrency on a national level.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: greenlion on December 19, 2013, 05:54:41 AM
I agree; why make it inferior with centralization?
Central issuance reasoning was addressed in the opening post:

there are a handful (ideally <10) of organizations that in co-operation control the release of currency to public, arrange basic income / new currency adoption rewards for citizens, grant bounties for companies to motorize development of both technical and systemic reforms etc. These organizations not only regulate the release of tokens to benevolently oversee the adoption process, they also require mass funds converted to old world currency to continuously to keep the ball rolling.

- there are supposedly hundreds of second level operators who receive grants with limited release rights: To promote, facilitate adoption and development

- mining is supposed to remain tightly distributed: To combat disproportional accumulation of coins to mining conglomerates or early adopters

There you have it. All of these require an uncertain amount of premine (=central issuance) to work more effectively than a system born "fairly distributed" from square one.

Every single one of these premises is completely absurd.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: GCInc. on December 19, 2013, 12:17:23 PM
Every single one of these premises is completely absurd.
Most of them are now adopted, as well as a large portion of the other ideas I presented - in a form or another by the 2nd Generation centrally distributed cryptocurrencies such as NXT, eMunie and Mastercoin.

I was early and I was right.


Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: spartacusrex on December 20, 2013, 05:04:17 PM
CryptoCurrencies have LOTS of nice features.

If you wanted to use one for your country, there would be lots of benefits.

Let's say, in this thought experiment, that a small country that used it's own currency, wanted to use this wonderful technology. Why? Well..

1) You can send money at any time. To anyone. Anywhere. Almost instantly.

2) No-one can fake a transaction from you to a third party. The cryptography makes sure of that. No counterfeiting.

3) No-one can charge back a transaction. Once the miners have accepted it.

4) In the case of a Brain Wallet, unless someone 'beats' it out of you (let's hope THAT never happens..), your coins can't be stolen. Very secure. And your private key, in the normal case, can be encrypted also.

5) The Open Ledger would make accounting easy, and the possibility of financial fraud hard. If not impossible, for both the citizens of the state AND the Government. They would be forced to comply, or at least be discovered in their treachery.

As the Government of the country your role would be simple. The Government would pre-mine ALL the initial coins. Say 1 Billion coins - or a number that would be large enough for the economy to be sustainable.

Then you would go to the country's exchange, and put a MASSIVE sell order for 1 Billion(All the coins) coins at 1 unit of your currency. Any citizen could use the exchange.

Then you would let the currency, go. You'd also have something no other coin has managed. Price Stability.

After a while there would be none of the original 'paper' currency left. Everyone would be using the crypto coin.

The mining would be left to the Market, with fees being the only incentive. Yes - the government would also do this, and probably in a very large way. To make sure that the 51% attack was never going to happen. You could even regulate who was allowed to mine. Maybe some kind of license. They may not even need to tax it's citizens if the fees proved enough?

No - this would not be a decentralised unregulated crypto coin, like the 'Bitcoin' we all love. But it would be JUST AS GOOD as whatever currency the Government was peddling before, and in fact, quite obviously, better.
 
Yes you would have to trust your government. But you all ready have to do that.



Title: Re: Viability of centrally issued P2P Cryptocurrency - best answers tipped!
Post by: Ibian on December 20, 2013, 10:27:26 PM
Okay, having read the first four six (im drunk) posts...
Centralization means single point of failure.  Why would I want a less robust cryptocurrency?
/thread. it really should have ended there. Especially with the attitude the op has.