Bitcoin Forum

I have been thinking about ways to improve Bitcoin that might promote its more widespread adoption.  Apart from relatively minor issues of ease-of-use, security, etc. (which will improve naturally as tools improve), I see two major fundamental structural problems with Bitcoin at present:

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).  I think that a major reason why the BTC peaked at $30 and is only around $4 now is that it is just too hard for most people to believe that each unit of a new, relatively untested currency could possibly be worth much more than a dollar.  (Yes, I know that absolute exchange rates are meaningless, but they are psychologically significant for most people nonetheless.)

2.  Regardless of supply considerations, there is no floor on the value of each Bitcoin - i.e., there is nothing to prevent the BTC value in terms of other currencies from just drifting down and down until it reaches zero.  This would happen if, for example, over time, everyone just got bored with it and give up on it.

I have a suggestion that would solve both of these problems:

Start a brand-new Bitcoin network from scratch (call it "Bitcoin 2.0", 3-letter currency symbol BC2), with the following key differences from the original Bitcoin:

     (A) The asymptotic maximum number of BC2 that will ever exist is set at 10 trillion (instead of 21 million), a number comparable to the base money supply of traditional sovereign currencies.  This gives the currency much more room to grow, without running afoul of anyone's instincts about how much 1 unit of a currency should be worth.

     (B) The initial rate of creation is set at 500 billion BC2 per year, and every 10 years the creation rate is cut in half.  So in 10 years there will be 5 trillion, after another 10 years 7.5 trillion, after another 10 years 8.75 trillion, and so forth.  So in only a few decades, the supply of BC2 will become comparable to the base supply of existing currencies.

     (C) Each user of the reference client, which is copyrighted in every country, is required to first register their real-world identity with a central service, and sign a legally-binding contract promising that, in exchange for a perpetual license to use the reference client or any other software derived from the reference client, they will, in perpetuity, accept 1 BC2 from anyone in place of at least US$1 worth of any existing sovereign currency that is owed them (based on the exchange rates on the date that the BC2 block chain was started).  International patents are also secured, to ensure that other clients following the protocol but not derived from the reference client and not subject to its licensing agreement cannot be distributed.

Now, some neat things to note about this new system:

* Suppose the difficulty is calibrated by the algorithm so that on average, 1 new block will get added to the block chain every minute.  Then the reward for each new block is
500B/365/24/60 = 951,293, or almost a million dollars' worth of BC2!

* Due to this, if you think the growth of the existing Bitcoin network was impressive, the gold rush towards this new system will be so explosive that it will make the growth rate of the existing system look plodding in comparison!!!  In almost no time, everyone will switch over to mining BC2, because the rewards will be so much greater than with BTC.  

* Further, the contractual agreement will give all participants in the new system the confidence that the value of BC2 will never fall below that of existing currencies, so merchants and ordinary people will much more quickly come to feel safe investing both their working cash and their savings in the form of BC2.

Any thoughts?

[Edit: Just wrote a blog post on this idea: http://minetopics.blogspot.com/2011/10/how-to-fix-bitcoin.html (http://minetopics.blogspot.com/2011/10/how-to-fix-bitcoin.html).]

once you require a central service, you're vulnerable to government intervention and you'll suffer the same fate as egold et al. heck, if you want to rely on something central, you could run the transaction database centrally as well and leave out all that mining stuff.

the only thing to ponder is that it's true that anonymity (as in no id necessary) is not required for a currency to save world economy. but as long as governments are not interested in saving the world economy, it has to be done by a digital grassroots movement like bitcoin, which demands for anonymity simply because there can't be a central authority to verify identities.

amen

Just to get this straight - you want to create 10 Trillion BC2 and you want me to back each one with $1 USD? I fear my funds might not be equal to the obligation.

A dollar is divisible to 2 decimal places ($0.01). A bitcoin is divisible to eight decimal places (0.00000001). If you express the total number of bitcoins to two decimal places, you get 21,000,000,000,000.00 (21 trillion).

+1

When considered correctly, there are actually 2.1 quadrillion "bitcoin units."  If Bitcoins rise in price to such an extent that we cannot efficiently purchase a coffee with the smallest such unit, then we can all relax, because the currency already succeeded in taking over the world.

We say there are "21 million" just as a notational issue. But each of the 21 million pieces is a group of 1 million smaller units.

Exactly. Let's call it Bitcoin 2.0, with 7-letter currency symbol "satoshi". There will only every be 2.1 quadrillion of them. Then the common man can really get behind it.

Ergo, each Bitcoin unit if currently worth $.000000000535762122. I am currently selling 7,466,600,000 of these Bitcoin units, commonly referred to as B8, for the ridiculous low price of only $5.29. This price will fluctuate up and down, so use the timestamp of this post as a guide. e.g., if you want to purchase 52 hours from now and the MtGox price has dropped $.04, then my selling price will only be $5.25--$.04 lower than when this post was posted.

The reason I'm able to sell so low is because I deal in volume. I currently have several million B8s currently in stock, with more being purchased exclusively from a well-known mining pool daily.

For other deals, please visit myb82u.com.

FAQ:

Q: Can I buy a B8 with Bitcoin?
A: Yes.
Q: Can you be trusted?
A: Search the internet. You won't find a single negative comment about myb82u.com.
Q: What state are you incorporated in?
A: http://www.youtube.com/watch?v=lj3iNxZ8Dww

Kill it with fire.

I returned a $200 printer, possibly a $400 dollar printer sold "at cost", because the box claimed that by using the printer I was subject to a patent license (which required using the print catridge exactly once, then mailing it back to Lexmark). I now avoid the store I bought the printer at becuase they are willing to sell products that impose unreasonable conditions on their customers.

Bitcoin is still experimental. If bitcoin really is good, a pyscological price barrier won't last long. If you think there is such a barrier and that bitcoins are undervalued, you should be buying them up cheap.

Just a small detail... but can I request that we have bitcoin 1.0 first? :P

Why is everyone focusing on the central service part? The most striking part should be the legally-binding contract for $1/coin part.

So.............  the OP want a new Bitcoin that would that miners would pump out 950,000 coins every minute = 1,368,000,000 coins a day. And these coins will be sold to bitcoin users who are FORCED to buy them at at least $1 per coin.

I think there's around 100,000 - 200,000 bitcoin users (based on Mt.gox hack last few months revealing 60,000 accounts). Probably, less than half of that is active.

You know what, i'll up that number and give you 1,000,000 bitcoin users, who will be absorbing the coins from your new system. This means each user today will have to spend $1,368 a day to buy the coins popping out from miners. Would you like that? (If they don't buy it, the miners will trade them for $1/coin worth of goods from Bitcoin-accepting merchants anyway)

In short, you solve declining price by fixing a minimum price, and want more growth by pumping out 100 times more coin.

Sounds really promising... I have a few questions:

... How old are you? If you're over 13, are you high when you post this? or just plain silly.

because a central service is what breaks the back of  p2p....

wow this is really a terrible idea...

You get points for trying though

I feel that bitcoin 1.0 is still over much on the beta stage to consider bitcoin 2.0 and subsequent.  More talks on 2.0, 3.0, 4.0 may just prove confusing and divisive.

This post should be in "Alternate Currencies".
Thanks.

Bitcoin 0.5 is due out soon.

Sorry for quoting my own post, but...

Great News:

My B8 2U, over at myb82u.com, is now able to sell a single B8 for only $5.40. This is due to the $.11 decrease in value of Bitcoin since the first posting of this post of which this is only the second post related to myb82u.com. Remember, from my first post, a B8 currently equals 7,466,600,000 Bitcoin Units (BU) and was originally priced at $5.29. I will keep you posted of any further updates in this thread. I would have started my own thread, but I didn't want Theymos moving it, making it difficult for you to find.

My exclusive mining pool is hashing away and I'm buying partial blocks continuously, restocking my B8s on hand.

For a limited time only, with each B8s purchased, I will throw in an extra 1,000 BUs for free. Give them away as gifts as one gal who PM said she would do. I hope I'm not letting the cat of the bag, but she mentioned creating a facet to give away her extra free B8s calling it "B8 on V8"--great idea!

Also new on myb82u.com, I'm selling alpaco cocks for only 6 B8s a pair with free delivery within the lower 48.

Bitcoin 2.0 is the greatest invention since slice bread: http://www.youtube.com/watch?v=xBIVlM435Zg

I'm not saying you have to "back" them, as in, make them convertible to dollars - I'm just saying if someone owes you $X, you agree that they can pay you with X BC2 instead.

Yes, but I think it's a serious problem that the entire Bitcoin community has been talking in terms of the larger unit since inception.  If we had just been using the smaller units all along, the BTC price might not have attracted so many attacks, and might still be growing steadily and quietly.

I'm saying the psychological barrier is currently preventing Bitcoin from growing as much as it otherwise would be able to.  If we redefined the standard BTC unit to a smaller one, it might indeed help the situation.  It's the same reason why companies do stock splits - because a stock priced at $200/share looks frighteningly "expensive" to the casual observer at first glance, regardless of whether it is actually overvalued in terms of fundamentals like market cap or earnings per share.

OK, look, NO ONE would be "forced" to buy any particular amount of coins a day, nor are miners required to sell all coins mined each day (indeed, at these prices they would not need to).  If you normally buy $100 worth a BTC a week today, just continue buying $100 of BC2 a week in the new system.  The miners would be socking away wealth (in the form of BC2) like crazy, but because of this, more miners will rush in, and so over time, the difficulty will increase until eventually miners are only just breaking even again.  But in the meantime, because mining is so lucrative, everyone will be joining the Bitcoin network to mine (hey, free money!) and signing the contract, and so acceptance will skyrocket, and approach 100% very quickly.  Soon, everyone will be accepting BC2s.

Well, it's not even so much a different currency - it could use the exact same basic technology, with small tweaks to parameters, but those tweaks are not even essential.  It could be implemented as just a different spin on the existing currency - a new contractual agreement between users, and a redefinition of the base unit, e.g., 1 BC2 = 0.000001 BTC.  With this conversion rate, 1 BTC would be worth $1,000,000. 

The only real problem with the existing BTC which is stopping it from attaining such levels is that there is no agreement between the existing users that prevents the value of each BTC from becoming (and remaining) indefinitely small relative to the level that would be needed for BTC to take over the world economy. 

BUT, if all members of the existing Bitcoin community simply signed an agreement that we each would accept 1 BC2 (0.000001 BTC) in place of $1 owed to us in traditional currencies for any purpose, then this would effectively increase the BTC value to a floor of $1,000,000, and instigate a new gold rush of people rushing into Bitcoin, a rush that would make the currency's past growth look tame in comparison.

Have you tried pitching NORMAL Bitcoin to ordinary people yet? It sounds like a crazy internet scam enough without financially dangerous legal agreements. What incentive does the lender have to ever denominate in fiat instead of BC2? It would only be used against him.

The secret to Bitcoin success is not more lawyers.

Then lenders would quickly switch over to denominating all loans in BC2, which would help the new currency to more quickly gain acceptance!

That's quite a commitment. I'm still primarily a Bitcoin user, but what if something better comes out?

I know, I'm already using it with the Qt GUI.

I am saying that is nonsense.  Many people believed that for decades but that have been numerous studies and no indication that splitting stocks helps stock price.

Today many successful companies don't split stocks.

Ever heard of Apple, Google, Amazon, Netflix, Priceline, Mastercard, Blackrock, Goldman Sachs and the company which had a high stock price before it was common Berkshire with a stock price of $112,200.00 per share.

I am sure there are a hundred more companies with high stock prices and no plans to ever split them.

splitting stock prices lowers the barrier for entry.

This may or may not help, but it allows the little guy to buy 2 or 3 shares under 100$ easily enough.

Agreed. It makes even less sense for a Bitcoin which is already designed to be divisible. It's more complicated to own a quarter of a Berkshire share than a quarter of a Bitcoin.

I have one problem with your statement that miners get them for free, most miners do not

To mine a coin you have to invest heavily in not so cheap hardware and last but not the least the energy price and other costs like taxes on that energy
Simply said if i want to break even i have to wait till bitcoin gets a value of 12 $ each minimal so your statement is wrong
Some do however run their rigs on the cost of their parents or boss so they are the lucky ones until the owners find out.

If a boss finds out you are stealing his electricity in such huge numbers i bet he will not be happy.
See the legal papers about this issue, many network admins got fired because they ran distributed computing without asking their boss for permission. The result was instant loosing their jobs and most of them had have been ordered to pay the loss in electricity back to the owners.
I believe bitcoin to have a future and there is in my view no need for a split yet, until the 21 million coins do arrive, the only thing i would like on a sort of split is that you see as a miner faster result from your investment.



 

The only GOOD idea in here is ... uh...

Anyway, once Bitcoin hits about $271 (https://secure.wikimedia.org/wikipedia/en/wiki/E_(mathematical_constant)) then it'll be time to move to mBTC.

Yes, that's a big problem with Bitcoin - there's absolutely nothing to prevent people from switching away from it in droves as soon as something better comes along.  The fact that a mass flight away from it is possible makes it a very risky investment.

Whereas, with the contractual agreement regarding BC2, even if people switch away from it, they have to still keep accepting it for at least a certain minimum value.  Kind of like how $2 bills are no longer made, but they are still legal tender (and still worth at least $2).

The point of my "free money" remark was simply that, if each BTC had a contractually-enforced floor value of (say) $100,000 or $1 million (corresponding to $1 per BC2, if BC2 were defined as 1/100,000th or 1 millionth of a BTC, respectively), then, right now, mining would be essentially free, in the sense that the costs to mine (for the time being) would be miniscule compared to the value of coins received (assuming that enough people actually agreed to the new contract).

As word of this spread, and millions of new people rushed into mining, obviously the profit margins would quickly fall from near 100% to a much smaller value, but on the plus side, after the rush, millions more people would then be using Bitcoin (or BTC2), and promising to accept it, and so in the end, it would be much more viable as a new currency.

The people who trade Berkshire Hathaway stock are plenty sophisticated enough to understand that the fundamentals are what is important, the size of the nominal unit is not.

However, the "man-on-the-street" who first hears about Bitcoin is not that sophisticated.  If you tell him, "Hey I'm using this new currency Bitcoin, and 1 Bitcoin is worth $30!" (Like last June, or worse, $100,000, if it ever got that high), he'll think, "Wow that sounds like a really high price for a currency unit, is that really for real?"

I'm not disputing that having people locked into it, even if obsolete, would keep up Bitcoin prices. What I'm not seeing is an incentive for individuals to opt in and be forced to subsidize those prices no matter what. It's scary. You first.

Point taken.  But, if there were some way to declare, as a community, "After such-and-such date, only people who agree to such-and-such price floor will be allowed to continue to use Bitcoin AT ALL going forwards," that could be a good thing.  Everyone who thinks that Bitcoin should grow would then be forced to put their money where their mouth is.  Put up or shut up.

If no one agrees to take that risk, then Bitcoin will die, but at these prices, one could say it is dying anyway (in that the total value of all Bitcoins today, at this price, is only a tiny, insignificant fraction of the world economy, and declining).

One way to implement such a declaration would be if bitcoin.org distributed a change to the reference client to cause it, after a certain date, to only approve a transaction to or from any address if a contract agreement (agreeing to a certain minimum price floor, or higher) that is digitally signed by the address's owner is on file (included as an attachment to the transaction).   If the major pools adopted this protocol change, it would become the new de facto standard for lengthening the block chain, and so effectively Bitcoins would become unspendable by anyone who didn't agree to the new contract.

However, the signed contract would only have teeth, legally speaking, if the address was traceable to a real-world identity - so the contract would have to include real-world contact info. 

Of course, this would kill whatever shreds of anonymity Bitcoin has left, but such a sacrifice might be worth it to help Bitcoin expand from the tiny status it has today into a true global phenomenon.

@OP

It sounds like you want to change bitcoin to not be what it was meant to be just so you can make money.  Go to the alt crypto sub-forum if you want to try to get your own one started up.

As I said in an earlier post, these changes could be implemented within the existing Bitcoin framework (and even on top of the existing block chain) by making small tweaks to the standard client that automatically take effect after a certain block number - so it would not necessarily even need to be a new currency, just a new release of the existing one.  As long as the changes were accepted by the major pools, they would become the new de facto standard as to what Bitcoin itself is.

As I see it, without some way of enforcing a price floor in terms of existing currencies, Bitcoin will remain too risky for most people, and too small to have much of an impact on society - unless, of course, all the existing currencies collapse on their own.  (This might still happen, but I'm not as worried about that happening in the near future as I was a few months ago.)

It sounds like you want to create a fork of the block chain with different rules. Why do you think it necessary to call your rules Bitcoin while the original rules (what is essentially Bitcoin)
 die or go by a different name? If it is not necessary, then all you have to do is say that at some block in the future, you will create a fork of the block chain. This fork will enforce the rules you propose, but will go by a name other than "Bitcoin".

Be sure to name it Ripoffcoin so that everyone knows what they're getting into in advance.

They do stock splits because stocks are not commonily divisible. You own 1 share or more or you don't own any. Not a problem with bitcoin. If the price get to high I can just say "I'll buy that there rolex for 100 milli-BTC".

Well, it's a somewhat bigger deal than that, because for the new rules to make sense, there would have to be a process to verify the real-world identities of users signing the price-floor contracts, so that the contracts could be potentially enforceable in the courts.  Setting up such a process requires a fair bit of new infrastructure, and so it is probably not going to happen unless a large share of the community gets behind it.

I'm saying that we should all get behind such a system, because if we don't, then I'd say it is likely that interest in Bitcoin will continue to just gradually peter out, as it seems to have been doing since June...

One of the benefits of bitcoin is the pseudo-anonymous nature. If you tie each address to a real world identity, anybody can inspect the block chain and see where my money goes or comes from. No thanks, that's even less privacy than the current banking system!

If your idea cannot survive on its own, then it is not meant to be.

I want the last 5 minutes of my life back :(

The same thing could be said about Bitcoin itself.

What? Bitcoin does stand on its own. You propose to hijack it.

It is not standing very well...  If it wants to become a major currency, it needs to keep increasing in price by leaps and bounds, like 10x per quarter, or at least 100x per year, otherwise there will not be enough total value in the currency to have much of a global-scale impact any time in the next few years. 

Instead, for the last quarter the price has been falling, not rising...  On the log chart the former rising trend has clearly plateaued...

If the price is falling, that means people who are interested can buy in at lower prices, and people who aren't interested are giving up their coins. If in fact those always-scary early adopters are cashing out now, all the better, as their "hoarded" bitcoins will be distributed to new blood.

No, the price does not need to keep increasing by leaps and bounds. That's not for you to decide, but the market. If you think the point of Bitcoin is to constantly rise in price, why the hell should we listen to what you think Bitcoin 2.0 should be?

LOLZ.  100x per year?

So value of bitcoin in USD = $2.5 * 100^(years)
In 7 years 1 bitcoin = $20T USD (roughly global monetary supply).  We could erase the other 21M bitcoins and just use a single bitcoin to run the world economy.

In 20 years 1 bitcoin = or $30 septillion dollars each (roughly equal to number of stars in observable universe)

If you goal is 100x increase annually you will be sadly mistake.  You are aware that the actual global economy hasn't ever expanded at 100x annually, nor has global net asset value, or global monetary supply.  It simply isn't going to happen.  Hell bitcoin adoption likely won't increase by 100% at height of adoption.

It did increase at that rate for a time - it went from $0.20 to $20 (a 100x increase) in about 6 months, in the first half of '11 - that was a rate of increase of 10x per quarter or 10,000x per year!

Anyway, obviously it would have to plateau when it reached the size of the world economy, but I was hoping it might get there sooner rather than later.

If Bitcoin does not rise in price at a fairly good clip, then it will not become a significant player in the world economy any time soon.

@mpfrank

Everything you say just makes me think your only concern is making (lots of) money off of bitcoin.

Or that he's YASAT (yet another something awful troll)

You like most pump and dump get rich quick types have it completely backwards.

Bitcoin doesn't need to rise in price to be adopted by global commerce.
An increase in adoption of bitcoin for global commerce will result in a rise in price.

It does seem likely.

About the "ideas": NO

2011, the time was not ripe for such a thing.