Bitcoin Forum

2 da m00n !!!
(somebody had to post it :P )

On a serious note: I don't think it is overvalued at the moment.
When the GUI + pool is ready, and we are on a real exchange, I guess MRO can become a top10 coin in market cap very soon.
A valuation of 10 million USD is not impossible in the short term. Asuming 1 million coins in the near future => 10 USD/MRO = 23 mBTC.

Current exchange rate is 1.75 mBTC

so let's be conservative. A tenfold increase seems to be realistic...

My correction of Anotheranonlol claim from the other thread :


No.

18400000 MRO x 0.00175 BTC = 32200 BTC ~ 13.9 Millions.

Above Darkcoin, its competitor. Above Blackcoin (that is overpriced). Under Namecoin & Mastercoin.

The price of Monero perfectly matches its market.

Current and only interesting marketcap is:
bc_height 27654

27654 * 17.7 (approx) = 489 475 MRO

489 475 * 0.00175 BTC = ~ 856 BTC
856 * 430 USD = 368 080 USD

This. And actually 0.00175 is max price. So it is actually less. I cant understand why we need to consider max coins 8 years before we reach max coins.

 

We don't, all other market capitalization numbers are based on available supply. So yeah, we're at about $300k now.

Cross-posted from the OTC thread (https://bitcointalk.org/index.php?topic=578192.msg6578861#msg6578861), because I discovered this thread later and also because it should be interesting for readers of both threads.

---

Price of monero still climbing on the three indexes (max price, average price, median price). This means (IMHO) that the climbing shall continue.

("max" is the least representative, "median" is the most, "average" is in-between)

Source: Monero trading (https://docs.google.com/spreadsheets/d/1sOz5me3AaFHB2IzFnnIo6AKBhpAdZ6nOcaq380_zvXU/edit#gid=0) (you can leave comment on this document, for typoes, oversights or feature requests, I will read them)

Which mean we are entering the top 50 after only two weeks with no premine, no instamine, no exchange, no pool and not even a GUI wallet.

as an example; let's imagine a coin that will be fully mined in 2016. only 10% of supply on market today, if current market cap based on last 24hr trade and total current supply is 300k and you are buying TODAY with intention of holding long-term. $100k worth (ie, not a short term speculative flip) you need to believe that coin can achieve 3 million by 2016. if you held till 2016 and total valuation is 2.5 mill you've lost money on that trade, really as simple as that. Of course 95% people don't care about the coins value long into the future when total supply reached; hype and mania in such new markets promising to make early adopters rich will take over all common sense, guaranteeing an exit along the way. also it will be dead before 8 years. in cryptocurrency space 8 years is long time. But for serious investment it's not so long at all.


no exchange no pool, no wallet can contribute to price increase. Low liquidity /High barrier to entry means It's a sellers market, and a lot easier to manipulate price on such shallow market. Buyers get word of 'the next bitcoin'  want their slice of the pie & largely have to put up or shut up with the asks or risk nothing getting filled, it can be like bidding sniping war. Real price discovery comes on functioning pool, noob friendly wallet and exchange rather than antiquited forum thread
 

Except that you forgot the most important : the value of FIAT money in the future will be lower than now.




Monero doesn't pretend to be the next Bitcoin but it is actually one of the most interesting existing cryptocurrency. You have the right to not like it but everyone should admit that its potential is huge. Just compare it to 99% of the altcoins that are just scrypt-clones made in 5 minutes with stupid names and kids hyping them.

I believe Monero competes with untraceable coins. Tracability matter in a lot of transaction (especially when public funds are at stake). DRK should be worried, not BTC.

Of course, there will alway be groupies claiming it's the next bitcoin. I don't know if, as official representative, we should say something in one way or another.

you see what you do there don't you? you are comparing 4,2 million dark coins to 18 million mro - afaik the total supply of darkcoin after the end of mining will be 21 (or 18) million dark. in this case you could simply take the price of both and compare them 0.00175 to 0.00375. dark market cap is in this case at least 2,25 higer than the one of monero.

I didn't know Darkcoin was PoW, is it ?

In this case I agree that MRO is underpriced.

Ofc. It is the first X11 coin.

You must be kidding ;D I like concept of Monero (Cryptonote) but it has no GUI, no community, no API, etc. MRO is highly overvalued for its time.

I confuse with Blackcoin, that's why.

Jesus with the GUI. Its like 3 copy paste!

These are the early days and anybody investing knows that Monero is the only real alternative to Bitcoin. Heck its not even an alternative, its is better than Bitcoin with privacy, aka Darkbtc

No.



If you could back at the beginning of Bitcoin knowing what it will become, would you complain about GUI ?

MRO will necessarily have a GUI later but it will be too late for you to buy.

You have really no idea, the daemon, the wallet and everything has a wonderful RPC JSON API and a high level api....

Monero will never become popular without plain wallet/GUI that can be used by any typical user. It will stay forever a toy for geeks.

According to MRO subreddit 32bit miner is out (http://www.reddit.com/r/Monero/comments/24swan/086_now_avaiable_with_32bit_mining_download_now/). This means the coin will be botnet raped.

Why hasn't it reached exhnages yet?

1. Theres a GUI Bounty and people are working on it, and instead of screaming here you could just make one.
2. Exchanges are working on it, its no Bitcoin clone they have to rewrite everything...

I agree with superresistant (but again, remember I am part of the team and so I am biased)

DRK showed us what people are ready to pay for more anonymous coin.
Now, MRO vs DRK.
DRK has three things: X11, DGW, Darksend.
- MRO's CryptoNight is IMHO better (X11 is not CPU-only anymore but more than that, the requirements of CryptoNight are such than the very physical architecture of GPU should be changed - read the Cryptonote's white paper or at least their website.
- DGW. Again, CryptoNight scores better. On this one, I can only trust better tech than I am, so takes this one with an extra pinch of salt.
- Darksend. Ring signature is much stronger, even Evan recognised it (https://bitcointalk.org/index.php?topic=421615.msg6104683#msg6104683)
So, everything DRK does, MRO (and other CN) does it better. What is needed now is building up a community. For a coin without GUI, pool or exchange and only three weeks old, MRO is performing very well.

Plus, DRK suffers from the "instamine incident" in January, as well as a curve favouring early adopters more.

For more on this, eizh made a fantastic job on the OP (https://bitcointalk.org/index.php?topic=583449.0). Look for "How does this compare to other anonymous solutions?"

Finally, what is the most marketable coin? monero (people's money) or Darkcoin (l33t haX0r's coin). On this one, I would tend to say the former, monero (of course) but OTOH, lack of tracability may not be a good thing for public spending - althoug we have a very, very, very long way to this kind of mainstream adoption (public bodies using cryptos) - even major NGO seldom if ever accept BTC - let alone others.

On top of this, add the "boundless setting" ("no fixed-value" as they say) nature of CryptoNote.

Of course, history is full of technological breakthroughs which lost for less technically powerful alternatives. VHS, HTML, Flash, SDRAM... all were technically inferior to the competition. What they  had, though, is widespread adoption. This is fairness of distribution (which brings widespread adoption) that will matter. Here, Darkcoin may succeed or not. Here will be the difference between various CN coins.

Yep, like Bitcoin.
Lesson is: GUI is necessary to pass a certain treshold of adoption. But not at the beginning (of course, to have it from day 1 is better).

BTW: I updated the monero trading sheet (https://docs.google.com/spreadsheets/d/1sOz5me3AaFHB2IzFnnIo6AKBhpAdZ6nOcaq380_zvXU/edit#gid=0) with the avg24 and med24: med24 is 125 000 sat

I would to but I'm just a casual coder.

AFAIK monero is a fork of bytecoin that appeared months ago and no exchanges so far. They had enough time to bring it up.

You forgot approaching zerocash/zerocoin.

This is the problem. CPU coins are always botnet raped and get lost rate quickly.

P.S. I'm not against MRO I like both Monero and Darkcoin. I just wanted to say that monero is overvalued at this stage.

this is the main issue that needs to be solved 


regarding overpriced/underpriced - the whole crypto sphere is willing to pay expectations, this holds true for bitcoin in its most mature state, as well as for drk or for monero

No it is only about 19 days old according to the block chain.

But how ??

i don't think that's possibile at all

Quite simply by not worrying about it. If a coin is profitable to mine then many regular miners will come and mine it, and so will botnets.

If a coin isn't profitable to mine, then it isn't worth it for botnets either, because they can either mine something else, or use their botnet for a less risky activity.

Who else is mining the coin really makes very little difference.

There is this myth that botnets are infinitely large and free to operate and therefore you can't compete with them, but that is really quite false. Botnets are a highly scarce and valuable commodity and they will only mine what is profitable to mine.

In the short term the most important thing to do is grow the coin so even a small botnet doesn't overwhelm the currently-tiny network. At sufficient size botnets don't matter.

First MRO Technical Analysis post, for the lulz  :p

https://i.imgur.com/Ksdty4R.png

We are following the red exponential trendline ;)

Good job with the charts dna, ill add it in OP

please add this one instead ;)
It auto updates when I update the chart :)

https://dl.dropboxusercontent.com/u/2050232/MRO_trading.png
https://dl.dropboxusercontent.com/u/2050232/MRO_trading.png

Added

What do you mean by growing the coin ?
More miners ?

In every way. More miners, more users, more developers of services, more value, etc. There are only a limited number of botnets and they have limited size, and they have many different uses. A large enough coin can't be affected by botnets. If bitcoin were still CPU mined, it would be too large for botnets to matter. That's the goal. At least the short term goal.

https://i.imgur.com/jQyugt2.png

TA update :P

Long term exponential trend intact!!! Volume is coming back !!!
BUY BUY BUY  ;D ;D ;D

Sadly for the Monero fanboys, your currency is a bit late to the game. DRK is going to gain momentum and real world use before you guys even have a wallet/GUI that is accessible to anyone other than a geek. DRK's developer, Evan, has committed 2 years of full time work to DRK. Good luck with your Bytecoin clone :)

And why are you darkcoin fanboys looking scared?

I think this might be a good thread for this, so here's the cross post:


I think the proposal is a good sign that he's recognized the need as valid.

What I also think is that both of your solutions don't really target the "non-arbitrary" direction that is persistent in CryptoNote.

Especially for something like an annual debasement -- is there any way to work the 2.8% proposed by a minimum of 1, or yours at 2% into something that is more adaptive?

What drives the need for inflation? Are these variables trackable in the protocol? Can they be applied in a fashion that would allow a variable rate of inflation based on some specific need for it -- more like a window from 1% to 3%. Would that be more ideal?

Clearly we can't have the value of these coins approaching infinity, so I can agree that there needs to be a debasement. But, to what extent does it need to be debased?

Another cross post . .


I was wondering about side chains just a few hours ago in relation to Anonymint's Transactions Witholding Attack thread.

Do you have good sources of information about side chains that you're willing to share?

Can you further explain how the side chains would hold a value in relation to what you'd use them for in preventing a Transaction Witholding Attack? I feel like they would be an interesting way to prevent a tragedy of commons for processing transactions, but could you bring this idea more into the light?

What do you mean "garbage-collecting the chain"? I've never heard anything referred to as that. Does it just mean: Define a minimum balance, and let miners reap dust? Can your garbage-collection proposal where most of the block chain is eliminated be compatible with side chains?

The idea of "smart" debasement is something that I've been thinking a lot about. Perhaps the block reward could increase or decrease depending on the transaction volume, with less movement requiring more debasement. However, could such a system be manipulated by miners to receive a larger block reward? Additionally, even if we perfected such an adaptive system, I'd guess it would be a tougher pill for the community to swallow than to simply say "3% fixed forever no matter what." If you're suggesting we somehow calculate the debasement on-the-fly to keep trade value steady, that would be an extremely tall order, and not necessary anyway. There are plenty of other vehicles where people can store value, a currency for spending shouldn't be one of them.

I'm not sure what the minimum effective dose would be, but debasement is also important for keeping the wealth distributed and the network decentralized. This is why I think closer to 5% (or maybe higher) might be appropriate. As long as the block reward is high enough for the miners to not rely on fees, then we can cap the tx fee to a small percentage of the block reward, and the payers won't have to enter a bidding war to get their transactions included.

if blockchain size is key to eliminating botnet appeal just make it bigger with a large random block. problem solved.  

there are no crypto vehicles for storing value which provide a usable and robust level of anonymization.  mro has that potential, and that is why it is interesting.  if that potential is removed, it will be useless to me.  there are better ways to spend money.

Botnets.

In order to mine coins you need connectivity to peers.  If we whitelist peers, then botnets will be excluded.  I suggest this as a temporary measure.  It is good for miners because they don't have to compete with botnets.  It is good for monero because it does not suffer reputation damage as a botnet coin.  It is good for botnet victims because it is one less criminal purpose for their systems. 

I think this works well if it is incorporated into the daemon as an optional feature.  That way it is easy to use.  Any comments?

Can't a botnet tunnel all of the traffic through one ip?  :-\

Also, now we have pool software so botnets will be able to mine on a pool. Even if the public pools reject botnets, a botnet owner can set up a private pool.

It still has to connect in order to mine on the main chain.  I'm not saying it will be easy, but it is certainly possible to deny connectivity to botnets.  The easiest way being a whitelist.

We don't have to make it impossible to mine with a botnet.  We just have to make it hard enough so that it is better for the botnet owner to mine another coin.

This will not work. They just need one node on the whitelist. How will you know its a botnet? I have a bunch of computers. Or do I? Maybe I just have a botnet proxied behind my IP address. You can't tell the difference.

Alternately, the botnet itself may spread until it reaches one node on your whitelist, then p2p its own node and proxy everything through the whilelist node.

In a sense any p2p coin network itself resembles a botnet. The only real difference is the intent of the owners and you won't be able to reduce that to code.

Nor would I seek to do so, because, as you say, it would be futile.  The whitelist is a control.  A control requires an operator in order to effect the will of the operator.  The only way to prevent an operational botnet from being beneficial to its controller is to deny access to the chain.  The whitelist will in fact deny access to the chain.  When a botnet connects, after it is identified, it can be disconnected by removing that address from the whitelist.

As I said, you can't "identify" the botnet. It doesn't have an IP address of its own and it doesn't behave any differently from a normal miner.

But if you think this is a good idea, I suggest you go and design it, including all the implementation details you are glossing over, because it isn't anything like the crypto coins that exist today.

This is not going to happen in Monero. In AminorexCoin, maybe.

Anonymous value storage is useless. You could use MRO to purchase bitcoins anonymously (or any other crypto-commodity), and nobody would know you own it. What the world needs is an anonymous medium of exchange.

It seems like what you want is more out of convenience, but you cannot have both. A long-term value store does not have the properties to allow high volume trade.

I actively disbelieve you.  Gold certificates are a counter-example.

You must be the BDFL.  I'm surprised that you are so friendly to botnets.

Gold certificates have no value, only a promise.

That would be quite the promotion!

Some promises have value, while others do not.  Which are which will vary over time.  The same is true of other commodities, although promises are typically more volatile.  Gold certificates have been successfully used as a long-term store of value and as an exchange medium for high-volume trade -- for suitable values of "long-term" and "high-volume".

Physical metals have persisted in storing value longer than anything else, and were used for essentially all trading worldwide for centuries.  Arguably, some of the features of gold certificates which make them more usable for larger volumes of trade (in excess of say, a million dollars in value, pick a number, corresponding to the strength of your back) also contribute to their inferiority as a value store, relative to physical metal.  That does not mean that they are not suitable for both uses, within their actual limitations.  Gold or silver certificates which are fully backed by deposits and have the full faith and credit of their issuer are a pretty darn good value store.

Please explain your thoughts on this, because it is not obvious to me.  I consider anonymous value storage to be an extremely high priority.  Without it, you are unlikely to be able to retain wealth during a sovereign crisis.

a botnet has i.p. addresses.   a whitelist has i.p. addresses.  as long as the two do not overlap, the botnet cannot connect to the chain.

I have nothing useful on side-chains yet.  It is in my todo queue.

By garbage collecting the chain I mean eliminating all of the historical transaction data, and distilling the information content down to the minimum that is required to operate the coin:  The association between controllers and the summed outputs which they control.  Currently, almost no one is mixing, and the chain is growing about 2.3 gb/year.  If it were transacting actively and mixing was in heavy use,  I can see Moore's law running out of runway long before Monero ceased to be important.  Definitely in my lifetime.

Yes, my promise has a value.

;D

Excuse me, I'm Dagobert Duck and want to change my Gold into certificates. Where can I do this?

I should clarify... what I meant to say is:

High volume trade is certainly possible with a long-term value storage vehicle, but very unlikely because the properties of such an entity actively discourage it. This is why bitcoin has such a small circulating supply relative to the total available coins... nobody wants to spend their bitcoins when they can just accumulate them and watch the price go up. This is why I don't think bitcoin will ever be a "spending currency" so to speak.

A great currency for trade is one that is both easy to get and easy to spend, and this quality is acheived by deteriorating its long-term value integrity. Bitcoins are neither easy to get nor easy to spend, as the PoW increasingly favors the privileged, and the coin's deflationary qualities force you to fight logic to spend it.

Gold certificates are actually a great example of deteriorating value to achieve volume. Goldsmiths learned very early that they could print many more certificates than they actually had gold to back up, because such few people ever bothered to redeem them. This kind of debasement was an early form of fractional reserve banking, and one of the first steps toward ultra-high volume trade.

Regarding anonymous value storage, I'm saying it's useless because all you really need is anonymous currency. You can use that currency to purchase bitcoins or anything you want with anonymity. "Unnecessary" is probably a much better choice of word.

I agree with all of your points, for the most part -- with two exceptions:  

Firstly, it is, for the present, more challenging to buy bitcoin anonymously than your text suggests.  Even an easy, effective anonymous currency does not suffice to make it easy to buy bitcoin with reliable and effective anonymity.

Secondly, I think that for quite some time the valid theoretical point of Gresham's Law is largely irrelevant, in practical terms, because the overwhelming barrier to use of crypto as currency is lack of infrastructure and vendor support, next to which all other considerations are secondary. (And which renders crypto useful only for a very special class of typically very high value or else crucially private transaction, where Gresham's Law doesn't really apply.)

Both of these conditions are accidents of history, and will hopefully change in the future, but while they pertain, they do bear strongly on the desirability of an anonymous coin as a value store.

The biggest reason why it would be well for Monero not to commit to a perpetual debasement just yet is that the decision may have irreversible impact detrimental to the establishment of the coin.  Gresham's Law works in favor of the increased adoption of a deflationary currency during times such as we are presently in, times when infrastructure does not allow the quotidian use of crypto.  It only works against the purpose of facilitating anonymous transactions when, in the hypothetical future, infrastructure is sufficient to allow reliance on Monero for general transactions.  

Hoarding is part of the PR, as is price appreciation. If you are debasing early, you tend to lose value early, which turns people away from the coin.  BTC is much more usable than DOGE, presently, for example, which is in serious decline and unlikely to recover a growth trajectory, whereas BTC has never lost its exponential growth momentum despite a price collapse, in part because it is deflationary.  I.e. the empirical evidence at present is contradictory to Gresham's Law, and I claim this is because of the immaturity of infrastructure, but will change eventually, to bear out Gresham.

For these reasons, I would suggest that any persistent debasement be tied to the number of active transactors in the ecosystem, e.g. a 7-day moving average.  If the number is stable or declines over time, debasement should be nil.  If the number is increasing, debasement should kick in.  If the number is accelerating, debasement should accelerate.  But even that is premature until infrastructure exists to support an economy, so I would suggest another factor, to threshold at some level of activity indicative of a working bootstrap. 

The result of such a policy should be enhanced price stability:  The value of a currency scales as the square of the number of transactors in the economy.  Price deviates from value due to exogenous factors, but converges to a mean which approximates the value increasingly well over time.  If you adjust issuance in accordance with value, price will tend to adjust along with it.

Your suggestion of transaction-dependent debasement is similar to what I mentioned a couple of posts back, but as I said then, I fear it would only hurt adoption, as most folks aren't particularly keen on an indeterminate future. There is comfort in knowing exactly how large the money supply will be 5, 10, 20 years from now.

If BTC's success compared to DOGE is in fact due to it's deflationary nature, it's merely perceptual, as both coin's money supplies are presently increasing. Perhaps that's your point. If by "debasing early" you mean making your intentions transparent that the money supply will forever increase, are you suggesting it's better to "advertise" a finite supply with the intention of debasing in the future? The "give the people what they want now and change it later" approach makes sense, but can be quite challenging with decentralized systems :P

I agree with your statement that the infrastructure isn't ready, but it never will be if there isn't a demand for it. A cryptocurrency has to achieve tx volumes high enough to push the limits of current infrastructure before more scalable solutions will be put in place. I fear we will never get to that point with deflationary money... and even if we do, then what? Hard fork? I don't see it happening at that point. What will happen is a new inflationary alt will be introduced, and we will be right back where we started.

That's why I think it's important to have these features in a currency from the beginning. With a bitcoin style emission, it would be decades before the block reward would start to reverse anyway. We just have to figure out how to educate people and get them to adopt it.

Indeed we've seen a lot of drama surrounding the tuning of parameters already.  Your point about indeterminacy is well taken.  But I don't think these really militate against a principled, formula-driven adjustment mechanism.  PoW difficulty adjustment has worked pretty well and is very comfortably familiar to crypto users.  Instituting a formula-based deterministic (but yet undetermined) inflation which is designed to stabilize price, is a change in contract, and there would always be some who were disillusioned by any change whatsoever, but it is not a change in the present contract.  It would have no impact until it became needed, and thus wouldn't bother most of the present users.  A substantial proportion of them would agree that a stabilizing inflation would add to the value of the coin, it's distinctives, and it's likely future transaction volumes.  There is also comfort in the expectation that price will be more stable, so it's a trade-off.  After all, we're not talking about orders of magnitude here, just a few % in supply annually, at most, and only years in the future.  It doesn't change the near-term speculative supply/demand picture at all, and offers some incremental improvement in the long-term value-investment picture.  I think it would work, for Monero.  There are several arguments in favor of it, and I haven't noticed any strong ones against it yet.  Still listening though.  Unlikely though it may be that any such change is adopted in Monero, it seems worthwhile at least to build a change-set which implements such a mechanism, as it would clarify the issues and methods.  Adding it to my TODO list.

The entire market cap at the moment is about 700 BTC with about 4% of it traded each day. With the advantages MRO gives over the other concurrent cryptocurrencies the market cap is very small I think. A lot of FUD going on now, but I won't sell mine at this price. In order MRO to get to the DRK market cap the current price of MRO should be 0.08 BTC - about 87 times higher then it's now.

Edit: I actually sold with all those dumps. Now it's time for the price to rice.

Awesome discussion here guys, sorry I cross posted and left. Things got busy and I hope to contribute soon.

Before I do though, I'm cross-posting this because it seems like it's heavily economically related

Am I able to mine this coin with my old dual core -computer?
Thx for an answer.

Yes, you can mine on pools. Or you can try your luck at solo mining.  :)

A goal of the original design is "egalitarian mining" which means ordinary computers can be used for mining. Obviously newer and more expensive and powerful computers will mine faster, but you should get your fair share (small).

Is this coin now scam or not? I'm interested in buying this coin but on the main thread of monero there are some members saying this is scam.

So guys, please tell me the truth about Monero Economy.

Thanks in advance.

read the announcement op.  it is factual.  'scam' is not well-defined, but mro has been carefully planned to avoid any taint of scamminess such as bytecoin, darkcoin have suffered due to premining.

In another thread,  the plausible argument was made that MRO is presently overvalued at 1/342 BTC.  This is a reasonable position, if one takes the historic price series of bitcoin to imply a discounting curve, and apply that to MRO.

I had considered this previously, but rapidly rejected the argument, on two principal grounds:

1) The adversities which BTC overcame during that time constituted existential threats.  No successor crypto faces those adversities.  Much has been learned.  The probability of a flaw or event fatal to the project is vastly -- and I do mean vastly -- lower.  However it is challenging to accurately quantify how much lower.  I would dearly love some input on this point.

2) The adoption process must be expected to be much more rapid for a successful candidate to the privacy-enhanced niche, because of the precedent and conceptual familiarity created by bitcoin.  What BTC did in 5 years should be done in a fraction of that time in MRO, if it is to inherit that niche.  But again, even a very crude quantification of how much more rapidly would be essential to a rational application of the discounting method to estimate fundamental value.

I need parameters.  I will work on this later, as time permits, but this message is a solication of comments, input, facts, numbers, theories. 

This is actually a solvable problem, if only by degree, with error bars.  And the value of solving it can be quite large.  It will require some creative and some rigorous thought, as well as factual data.

While this fundamental approach to valuation is a reasonable one, it is not comprehensive.  There are many ways to value an instrument.  In theory they should all tend to converge to the same value.  This theory has been true in the case of bitcoin, and it will be informative to apply it to monero.

I'm working my way down the thread post by post.


If Monero was accepted as having similar characteristics to gold, would you see these promises manifesting outside of the blockchain, or as a part of it? I could send someone a certain amount of gold, or I could issue a promise that their gold (ex: Monero) will be ready to be placed in their hands on demand. I've imagined an infrastructure, like banking, that can be built on top of Monero .. specifically utilizing the tx_extra field (or perhaps not, as it may be better utilized in things like recurring monthly payments). I'm unaware of how this could come together, or if "banking" is even the correct word for what I'm trying to describe. Your mentioning of certificate issuance indicates, to me, that you are of a similar opinion.


I'm trying to define a word here. When you mention volume, are you referring to trading volume (# shares traded) or something else like the specific amount of value traded (not # of tx's) in a certain amount of time? In bold, which features  of metals do you see, other than being fully backed by one's strength, lean toward high value transactions, while at the same time "contribute to their inferiority as a value store"? Could one be that they have functional uses other than a store of value (eg, electroplating)? Or something more economically related, the fact that they are capable of being more easily seized/become a target of seizure with an increased size of holding?

Got it, thanks. I think I mentioned in my above post that perhaps much of this historical transaction data could be kept off chain .. in something similar to a trusted banking system that issues certificates based on its own Monero holdings. How this protocol could scale with microtransactions/high trading volume is something that is yet to become fully apparent to me .. as we don't currently have need for them. I would suppose those with far more time evaluating cryptocurrencies than me would have useful insight here. Perhaps it could be done on chain though, to remove bloat and still keep on-chain transactions?

Large-scale botnets that are on the orders of magnitude higher than a few amazon EC2 instances are what I'd be worried about. I have seen them come up numerous times as being a limited resource, so my fresh opinion is mixed on the issue.

If something massively scaled were to pop up, I would think it would be interesting to see exactly what extent would be necessary to prevent them through whitelisting. Though there are currently far more dangerous aspects of the protocol that would cripple botnets.

I think we all agree the tendency to accumulate could be offset with a form of inflation (static or dynamic), but I'm coming to see that the tendency to accumulate may still be there despite that (I'll have to do quite a bit more reading on this, and know right where to look). A perfect inflation would manifest as a constant balance to keep the marketcap approaching infinity at an uncontrolled rate. Presently I know that a certificate issuing agency, based off of Monero holdings would be highly critical of an inflation ... but at the same time I can see that same accumulation impeding the ability to keep it a "spending currency".


I hold the opinion that both a store of value and the need for it to be currency will come to be a central point in this currency. I could see many troubles with a $77 million business trying to operate within the confines of what Monero, being only a currency, and not a valid store of value. Imagine trying to use purchase orders, only to have your currency be worth 2% less than it was when you sent it out last year. I see that some form of debasement is necessary, but for it to do both value would have to trickle out very slowly. Maybe this is a malformed opinion, but perhaps you could share insight?

This is a good point. If your initial trade into the currency isn't anonymous, per bitcoin's publicly available blockchain .. then your pursuit of anonymity is potentially (most likely) lost. You may still have private transactions that can't be traced if you were to trade into Monero, but the fact that you traded first into Bitcoin and then to Monero would be a weak link in the anonymity chain. I guess the question that would come up is exactly how one would obtain Monero (other than mining) in the first place without compromising identity? I've been told avenues using coinjoin over tor/i2p are only partially anonymous at best .. so that puts us back to buying into it face to face for now. Unless you have other ideas?



I'm trying to take understanding from your correlation. Are you saying there is largely no "good money" to drive out, in the cryptocurrency markets currently? If that's true, then I'm starting to see where you're coming from in your desire to pursue a store of value first rather than a currency for everyday use. I think I understand your stance now. The question that I'd ask here is : If we were to build a currency from the ground up .. would you start with having a store of value on which you may trade something representative of that value for value (notes for market goods), or would you start with a bartering system where the store of value is what is traded (rather than the value) for value? Let me know if I'm way off here.



With the massive amount already being produced daily, i agree that we have enough debasement for now. I think the main focus I see come up is how to handle it when the large block rewards are close to zero (quite a number of years)


Have you considered this in respect to the adaptive block sizes and rewards? Factoring in another scaling variable may prove problematic to tune correctly .. when the block size itself is still a factor in the equation. Would you support a move to this at the end of the high block rewards above 0.xxxx MRO (almost dust sized rewards), or would you see it as something that can be included and tuned well before that time. Where would transaction fees come into play here? Could they overcome the sliding inflation?

Toward this I would only expect claims of people "getting something for nothing" from the Bitcoin (or any alt) community in respect to the amount of hurdles that had to be overcame in Bitcoin. I do; however, think you're correct in your rejection of this. The claim is founded on those that present their opinion that they were overcoming these adversities for their own currency, when in fact they were overcoming them for any future implementation of any cryptocurrency by the simple grace of the open source mindset that's prevalent here. Anyone saying differently is just worried about their market cap. Maybe I should spend some time understanding what these licenses are though before I say more about that.

To say that you appreciate, fundamentally, someone else's work and then continue it in your own way is by no means wrong or worthless. What makes value, here, is the ability to withstand whatever comes in future that you have created for yourself (and make sure that it will indeed be different than the one you've branched from), not only what those have done in the past. The key here is to never forget that you once or still stand on the shoulders of giants -- even in your own pursuit of becoming one. I say this under the presumption that if put into the same scenario, I would have made an attempt to overcome it in a similar fashion.

As far as being able to quantify a lower risk of failure, well that's an incredible concept. It's as if you're asking : What, of value, have we created here? Amongst a sea of questions, that is one of the biggest. To me, value is one of the major factors of calculating the "probability of a flaw or event fatal to the project". While what defines value, to me, is what Monero is quantified by.

In that mindset, Monero has a constantly growing team of developers, community members and speculators. It is based on CryptoNote technology. It has begin to provide the tools of mass adoption for the CryptoNote technology, rather rapidly in my opinion. Those three things I know for sure.

Other variables I'd like to see are a specific outline (in list form) of CryptoNote technology as it is now and what we can add to it (I know Taco already did something with MIP's on github - awesome way to start), and improve on it. I'd like to see a standard usage protocol for the tx_extra field, for at least until a time in which that responsibility can be dictated to other groups. It's data recorded on our blockchain and we should have a say of what it is, in my opinion. I'd like to see large sized businesses become a welcomed addition to the variables, as well as one man shops. I'm sure there's a lot of other things that can be added here, so I'd like to hear some ideas other ideas as well (I'll try to think of some more as well).


Talking about this problem, as constructively as possible (and learning how to tune out the noise when it comes -- it has and will always continue), will be one of the major innovations of this currency. A currency/store of value that knows what it wants and where its going will grow up quick.

I'd like to see it just go away. There is not really any good reason to store blobs of data in the blockchain and there are good reasons not to. However, before that can happen the tools need to improve, especially APIs for wallet access. The tx_extra field is a workaround right now because exchanges can't feasibly create a separate deposit address for each user the way they do for every other coin. I don't have any inside knowledge but I would guess they rather hate it anyway, since it must cause no end of support problems when users mess it up.

Ah, so it's more of a crutch that doesn't need to be necessarily part of the blockchain. I hadn't considered it like that at all.

How would you see payments from pool wallets direct to exchanges? That was a major part, along with the API, that I saw busoni in IRC talking about. Granted when one usually sends money this way -- it's for dumping onto the market .. but people are losing money either way and telling them to send to their personal wallets first is just an extra nuisance that can be figured out with code.

A correlation I might see here is how would one setup automatic monthly payments without the usage of something like the tx_id field? I would hope this could be totally outside of the blockchain for numerous reasons, but by what route would it manifest? Moreover, with previous posts in this thread regarding this as a store of value or a currency .. do we even view a scenario where automated payments happening as possible?

Either way, from what I'm gathering this would be best solved by a capable API?

I don't see your point. Governments can still force exchanges to collect your ID whether you're buying Monero or Bitcoin. What's the difference? How will an anonymous crypto solve that?


You cannot have it both ways. Long-term value storage is slow money. Fast money is easy to get, easy to spend. It's a hot potato. Fast money burns a hole in your pocket. There is urgency by design. Economies of scale depend on fast money. High volume trade requires stimulation. People don't just pull out their wallets en masse for no reason.

Liquidity always has a cost. Wealthy folks don't store their money in savings accounts. They own appreciable assets that are liquidated on an as-needed basis.


The U.S. Dollar inflates much quicker than 2% a year, has no intrinsic value whatsoever, and billion dollar businesses handle it just fine. In fact, they need it, because such businesses depend on fast money.

Also, just because the money supply increases by 2% does not mean the trade value of your coins decreases by 2%. Crypto is not fiat, and so the same rules do not apply. PoW currencies have real intrinsic value, so increasing the money supply does not affect the buying power in the way you might imagine. As an example, the world's gold supply is debased by around 3% annually.

Even if inflation was that simple, you'd have to significantly inflate the circulating money supply in order to see a decrease in trade value. An increase in total supply does not automatically mean more money exchanges hands.

The great thing about crypto is that there are no need for promises. Cryptocoins have proof (Proof of Work). That's far better than any promise. Proof of work is what makes gold (or any commodity money in existense for that matter) valuable. Excluding fiat, all money from the beginning of time had proof of work in some form or another. The mere presence of gold is proof that someone, somewhere, put it real effort to obtain it. Proof of work is the most basic form of intrinsic value.

A certificate is a promise that such proof exists. As mentioned upthread, this was important for trade, as paper money (promise) is much easier to carry and store than heavy gold coins (proof). However, as I already stated, promises can, and will be, abused:


Again though, such a promise is unnecessary in crypto, as the proof is right there in the coin.

I'm not sure I follow exactly, but the way most exchange deposits (and web wallets, and merchant payments, etc, etc.) work with other coin types s that each user has his own deposit address(es). When you sent to that address it is credited to your account on the exchange. This is done by the exchange by creating a new address for each user (using a relatively lightweight wallet API) and then storing that address in a database.

The cryptonote coins don't have a wallet with multiple addresses. Each wallet has three files and one address. There isn't an API to create a new address, nor one to create an entirely new wallet. So integration with the above model is problematic.

So what the exchanges do now is have one wallet for all deposits and users identify themselves to the exchange for account crediting purposes with the payment ID.

A redesigned wallet with a proper database of addresses and a corresponding API would solve this problem. It is going to come up again and again with every type of service that wants to receive payments from customers, especially those that are already designed around the address-per-customer model that is universally used in crypto outside cryptonote. So it needs to be fixed.


Not sure what you mean by automatic? Are you thinking of some kind of autonomous agent or something else?

Isn't this extraordinarily risky? This could be another Mt. Gox all over again.

Nothing says they keep all the coins in that wallet, but as for risky, I consider all these crypto exchanges risky. No real oversight or transparency. Some or more trustworthy than others, but as hard as it is to believe some otherwise intelligent people were saying that about MtGox right up until the time it failed. I advise extreme caution.

My advice to large holders and miners considering dumping:  If the chart is not making higher lows and higher highs, hold.  If you must sell, don't pee in your own pool:  Sell OTC, at whatever discount to market is necessary to get a buyer, if you must sell perforce.  Rising price attracts buyers, which helps to build the coin by creating dispersion, and therefore an incentive for merchants to accept the coin, as well as making it more attractive to buy-and-hold investors who relieve oversupply.  If the uptrend appears unsustainable, try to cool it a bit by dumping gradually.  Try not to make a hard ceiling with a large limit order, because price tends to bounce off of that and reverse down.  The downtrends can be quite severe, and last a long time, when supply is imbalanced.  

If the collective social intelligence of the miners and large sellers is good enough to accomplish it, I think the ideal would be for no low to be lower than the previous low, and for at least every third high to be a new ATH.  That would probably roughly optimal, in that it would tend to prevent unsustainable ramps ending in deep crashes, discourage some speculators, encourage long-term investors and merchants.  Don't chase DRK prices or you will meet DRK's end.  Instead seek to defeat DRK in terms of stable appreciation, Sharpe ratio, if you will.  So far it is following such a path remarkably well, since the initial liquidity event of exchange listing finished playing out at 0.0026.

I think issuance is too high for price stability to come naturally in this phase, before adoption, and, as a hobby miner, I would prefer less reward on a coin which is worth more, and especially, on one that is worth more in the long run.  The potential is massive.  Leadership is here, now, and seizing the top billing from DRK is quite feasible, even likely, and that, my friends, is the brass ring.  The best way to improve the issuance situation would be to increase the block time.

I see the competitive situation as a contest between MRO and DRK for a massive niche in the global economy.  One which might well prove larger than BTC's niche.  You do NOT want to mess that one up.  Yes the tech is better, but people are not necessarily that clever.  I plan to work on ease of privacy use myself, as an investment in a better future for all of mankind, and for my progeny.

I don't see the problem with Payment ID, since you can ask the site to change it each time you make a new transaction. Ok it could be a problem for direct pool payment if you wanted to separate/anonymise all your pool payment. But otherwise, the pool can provide an option for the miners to enter the ID.

A question :
Is the payment ID encrypted in the blockchain or is it readable to anyone ?

It's not needed and is bloat, and see below. If you want it changed it each time, then you can't use it for pool payments. That's exactly what regular MRO addresses are for! (i.e. "Unlinkable payments") They are changed each time and prevent linking of payments.


It is readable by anyone. You can literally read them right in the block explorer. The exchange can encrypt the contents of the payment ID, but there is nothing to require them to do so. I know in one case they are being generated using sequential numbers. What other information is leaked is hard to say.

It's fine as a temporary workaround but really not a good design.

Moon ero

Yes, payment ID should have been encrypted .
But as you said exchange or merchant could decide to accept encrypted payment ID.
You would just have to encrypt it with the same public key of the merchant, and maybe add a flag to say it's encrypted.

I think the reason it's not a good idea to have a new address for each merchant client is that the merchant would have to scan the blockchain for each of its client address, and that would take to much time.

I get that the proof of work is in the coin, but issuing promises(bank notes) based on gold reserves was still a reality at some point. The gold miners themselves don't really get a say on whether or not the person they sell to decides to issue promise notes based on their own holdings (in order to support things like a modern present-day economy) .. other than quitting mining. If that were to become our reality, then mining difficulty would just decrease to where anyone could sustain mining and continue issuing the same amount of "gold" to be produced otherwise. We've effectively blocked our own shot on this one (in a pretty neutral way).

As far as why anyone would want to issue promises for gold/monero reserves .. I can think of a few. The total supply of Monero is limited to 184.4 billion units. Currently we use numbers as high as 1000 trillion to define deficits of "promises". One number is bigger than the other, and we got there by issuing promises. Personally I don't see any specific reason (currently) to issue promises as well, because as you say the proof of work is right there in creating the monero .. but that same proof of work was also available by the very fact you have a 99.9% gold bar of "x" weight in the first place. All I'm saying is that I can see it happening again, because people will try to fit this into a world that they understand.

OK I get it, this can be fixed by an API and infrastructure to trade untraceable coins, rather than being something that rests solely on us. Thanks for the explanation. It's neat getting to rely partially on a world that's more willing to support cryptocurrencies. Things that were once considered major selling points are now just as easily taken care of by a third party. For example, http://targetmoon.com/ has recently added support for MRO.

They offer price monitoring and email alerts for many coins. Most people have email right to their phone. I can remember specific apps for each coin used to be a major marketing point, now handled with ease. This is one of the things that I feel can add to the fundamental valuation of the coin -- a world that's more prepared to receive these currencies.

Other groups like minergate, though I know there is heavy negative pressure on them due to the closed source nature, has offered the simplest one-click mining opportunity that could easily be considered a holy grail in cryptocurrency mining. My point here is that this is a third party, outside the focus of Monero itself, who has offered mostly freely something that would have otherwise been a major burden for a community to come up with. Specifically i'm referencing this against the time it has taken to build functional open source pools .. which I hope we can all switch to. I'm not alone when I say that minergate is good enough for some people though, and as such they are supporting us as a third party.

Sorry to go off on the tangent, I'm just trying to make the point that the world is much more capable of supporting crypto in general .. and Monero is in a fantastic strategic position because of it.



Yes, completely autonomous. Specifically ... today if I wanted to pay my power bill with my money in the bank ... all I would have to do is sign onto the power company website and either punch in a debit card number or give them my banking information and then consent to their terms of payment and we're done. I have the ability to set this up to occur every time on a certain date a month. My interest lies in how that can be done with Monero. Maybe it's a little too far ahead to think, but the future's never a bad place to be thinking about. What led me to having this thought is -- how can pool users send directly to exchanges rather than to their own personal wallet first, automatically ... either without the tx extra field or based on a tx field recommended protocol?

I will review the efficiency issues with an open mind. I do see some potential issues there, but I believe the disadvantages (which would prefer not to fully enumerate at this time) to unstructured blobs in the block chain to be extreme and there is a high probability they will in fact be removed, or replaced with some alternative solution.

EDIT: Encrypting them might be acceptable. This will require some more analysis.

Now I think I see what you're getting at. You're essentially asking, "why couldn't someone issue bitcoin/MRO certificates as a fractional debasement for the means of facilitating high volume trade?"

This is what scares me. If we aren't careful this will happen and it will be the death of decentralized crypto. Once promises begin to be issued we have a debt-based currency and we're back on track to centralized fiat. We have to bake these high volume properties into the coin or it's only a matter of time before we get "Government Cash 2.0: Backed by Bitcoin(TM)!"

This happens by means of easy credit. If people can go to banks and easily borrow tender in the form of debased Bitcoin certificates, then the certificates will take over as the primary form of trade. Then in 2071 President Nixon VI will take us off the BTC standard entirely.

I realize it's a slippery slope but my point is that these featues must be included in the currency itself, or a centralized party will eventually do it for us. The good news is that debasing a PoW crypto does not result in the same value loss as debasing fiat. We need a steadily (and infinitely) increasing money supply.

I don't know if this is the righ place to post it (since we are more on macro-economics than on trading), but still :)

Extended 10/200 strategy (http://david.latapie.name/blog/extended-10200-strategy/)

I agree with you. If you want anonmity, the whole chain must be anonymous
Currency prying => monero
Exchange prying => cash OTC
IP prying => I2P or TOR

Sure, it is much less convenient (especially cash OTC). Maybe with TOR of I2P, cash OTC is not necessary.

He will not be a crook.

Hm, our conversation seems to have moved away from being centered around Monero itself and is now toward addressing fundamental economic theories. Anyone that has contributed so far, has my attention ... specifically for the fact that you even have an opinion on the matter. That's rare enough right now.

Anyways, I'm going to make a point that I've tried to make before in the past .. that I didn't at the time have the ability to unfold even a little bit. I mentioned that value must be able to be stored into a currency, to a point. It cannot flow too fast outward, nor should the value pour into the currency too fast else there will be major over-concentrations of value.

Before I go into it, my views of inflation can be understood rather well by this article: http://www.drlwilson.com/Articles/INFLATON.htm  . Specifically, if you think constantly increasing the money supply (exponential growth) in order to target an inflation is the most acceptable thing to do, please consider the largely ineffective, even possibly detrimental, tool used most recently by a group of relatively intelligent people: Quantitative Easing.

These people have been thinking about these problems of "wealth concentration" for much longer than us here at Monero (them years-decades, us a month), they are more than us and are much better equipped to actually put the tool to work than us. They still came up with something that didn't work. That's why I say we go with what's worked for 6000 years, a constant supply (effectually a constant depreciating inflation, an exponential decay of debasement being added yearly) of "money" until someone or some group of people has a much better picture of the situation at hand. Just because the understood inflation rate of gold can be reported to be as high as 2.5% (I've personally found numbers closer to 1.5%) does not mean it's been historically that high. I would rather think it's been historically lower, much lower than even 1.5% ... but perhaps someone will be great enough to provide me proof of either?

Continuing this argument, allow me to make an idiotically simplistic strainer analogy. Consider a situation where you are trying to fill up your strainer under a kitchen faucet. In this comparison, the water itself is value, the flow of the water is a variable we can never be able to predict (and the main reason I say we stick with what's worked for 6k years, and go w/ constant supply) is the speed at which value flows into this simplistic economic system. The size (or number) of the holes is the targeted inflation you want, and the size of the strainer is comparable to constant supply (where the height of the container itself grows constantly).

What I think we want is a situation where we can fill the strainer to the brim, without overflow and without the strainer being totally empty. When you say things like 5% inflation could be necessary ... well I think that's a situation that won't hold water .. too many holes. On the opposite hand, keeping the number of holes the same ... while increasing the actual size of the strainer will give the ability to hold more water over time (while also having a form of debasement, though less relative to the amount in existence today). The balance between the two can only be reached with an accurate understanding of the faucet and the speed at which it will likely pass your strainer water, and exactly how many holes we need as well as the height of the walls at any particular time. We are in a point where we don't have a clue where this is leading, thus my previous stance that either of the most likely situations will give adequate time in which the issue may be solved.

Specifically, I have to believe that wealth must concentrate to a point (the brim), else the entire system loses value too quickly (out the holes). We will end up in a situation where, one day in the future, in under 24 hours the entire money supply existing today will be created in less than an instant with un-damped exponential growth that would be invited with a constant inflation.

I realize that this is probably a miserable analogy, and I think it's been better attributed to dilution of a fluid ... but I was just so excited. Either way, I'm focusing on the micro scale of the viewpoint of one person wallet (indicating that wealth may concentrate because one person may have multiple wallets) -- while I feel the fluid dilution analogy would be better at describing the system as a whole

I still maintain that the creation of a damped harmonic function, by combining an exponential decay (constant supply) with an exponential growth (constant inflation) of supply will be the only correct solution to this. I also maintain that the exponential decay (of increased money supply) model achieved through constant supply has worked for 6000 years, and can provide the historical basis to most likely work until a correct solution is discovered.

No. Fiat economics and cryptoeconomics do not play by the same rules. Before bitcoin it was impossible to manipulate the work/reward relationships of money. We cryptocurrency folk are the first people to ever experiment in this arena.

Quantitative easing is a mechanism of fractional reserve banking where the central controllers give banks more lending leverage by purchasing their financial assets. The money used to purchase these assets is generated ex nihilo, as is the resulting money that is created from this leverage.

That should not in any way be compared to an increase of a proof-of-work based money supply. If the "proof" and "work" scale proportionately, there will be minimal effect on value. I think I have a thought experiment to explain this:

Imagine you are the ruler of some midieval kingdom, and you need to somehow turn the economy's 100,000 gold coins into 110,000 gold coins for whatever reason. You have two options:

Option 1) you simply mix cheap metals into the gold to create 10,000 more coins, resulting in each coin having 10% less gold.
Option 2) you sack a nearby village and steal 10,000 pure gold coins.

Both scenarios result in an increased money supply, but only one comes with a significant value cost.

Supply inflation in cryptocurrency is like option 2. There's no loss of intrinsic value.
Quantitative easing is like option 1. Actually, QE would be closer to creating gold-colored plastic coins and using the plastic coins as leverage for distributing plastic coin certificates :P


Whether the rate of increase of the world's gold supply was historically lower or higher doesn't change the fact that the buying power of gold is (roughly) the same today as it was a thousand years ago, despite centuries of exponential inflation. Why? Because the "work" and the "proof" scaled proportionately.


We will never know the minimum effective dose because we will only know when we fail, but never when we succeed. Personally, I'd prefer to overshoot and risk losing a little value each year than underestimate what's necessary and end up with centralized fiat notes in 10 years.

I've got some reading to do on QE for sure, I was trying to point out that the inflated money supply was supposed to spur banks to give out more loans (IE trying to curb concentrations of money by providing incentive to part with it rather than hold it). Clearly it's not the best example. Actually I half-admit it can be seen as a tactic to detract from an argument I didn't have the understanding to debate properly. I did a bit of reading since then, and have reformed my opinion .. and it's much more in line with your stance :) Thanks for the debate!


I had made statements that I hadn't researched properly. Historic gold inflation rate has been 1.3265% based on reasonable studies on gold supplies over >6000 year periods. (Links below).

I'd advocate for sticking with what can be agreed on, of a value over or at 1%. Perhaps maybe a little higher. 2% is insanely high:

Consider we start with one single pound (as .0005 tons) of gold 6000 years ago. Inflating that 2%/year for 6000 years gives an insane number that we're nowhere near (4.2385050037e+22 tons). Rather, assuming the very first gold deposit/amount collected 6000 years ago (the last source leans toward this claim) were only one pound ... only a 1.3265% inflation rate would give us the amount of gold in circulation today.

One point I don't agree with you on is the purchasing power of gold. Over the last few decades, it has not maintained its constant purchasing power. In fact it has swung quite drastically ... perhaps because of no gold standard, the need for it, a hedge against fiat inflation?


Sources (If nothing, check out the last one):

http://www.numbersleuth.org/worlds-gold/

http://inflationdata.com/Inflation/Inflation_Rate/Gold_Inflation.asp

http://www.goldfacts.org/en/faqs/#q_how_much_gold_is_left_in_the_ground

http://www.reuters.com/article/2013/11/20/gold-mine-output-idUSL5N0J44T720131120

http://www.telegraph.co.uk/finance/newsbysector/industry/mining/8180569/A-history-of-gold.html

http://www.mining-journal.com/knowledge/Mining-Explained

http://www.rapidtables.com/calc/math/exponential-growth-calculator.htm

http://www.utdallas.edu/~rjstern/egypt/PDFs/SE%20Desert/KlemmAU.JAES01.pdf

edit: I'm still trying to build a basis for exactly why it would be a good idea to build what I've seen mentioned as "a robber" into this (constant supply/%) .. and exactly what type of "robber" this is .. my initial opinion needed to be formed by what is happening currently before I could make ground on that though. I've got great links for those (think you've provided some), but it'll probably take a while to go through them all.

I did understand your original point regarding QE, and it was a valid one. As we've seen, however, allowing people to borrow more money does not necessarily give them the confidence to spend more money. I think that's a pitfall of a debt-based currency more than it is a failure of supply inflation to incentivize trade.

--------------------------------

The purchasing power of gold and it's dollar price are not the same thing, so we have to be careful making fiat comparisons. That said, the price of gold in 1833 was $18.93, which according to MeasuringWorth.com's "historic standard of living" is roughly $542.00, not far from the 2006 price of $603.46. The value certainly does fluctuate, but my point was that the exponential increase of the gold supply has had little effect on its value.

This is why demurrage and inflation are not the same thing in cryptoland. Demurrage (by design) reduces value via direct taxation. Inflation doesn't necessarily reduce value at all (though it certainly can). I apologize for regurgitating the same arguments over and over again. The view of inflation as "robbery" is justified in fiat, because every new dollar taxes the old ones. However, in crypto economics inflation would be more appropriately seen as "redistribution."

If you view inflation as "robbery" then yes, 2% may indeed be high.
If you view inflation as "redistribution" then 2% is probably not enough to have any positive impact.

Effective inflation has dependencies, of course. For example, exponential inflation applied to bitcoin would only hasten its demise, as mining is limited to the privileged. Wealth would largely be redistributed to the wealthy. This means an egalitarian proof of work like that in Monero would be a prerequisite for redistribution by inflation.

It's a pity that I haven't seen that coin before its launch..
Do you think it is still possible to mine many Moneros as a single miner?

That depends what you mean by many. If this coin is very successful and goes up greatly in value, then whatever you can mine now will be worth a lot, and will seem like a lot compared to what people are mining in a few years. Similar to mining bitcoin in say 2011.

Only about 6% of the target supply has been mined. On the assumption that the coin is successful it is not even remotely too late (and if not then it doesn't matter). This is not a premined or instamined coin.

Yeah.
Imo monero will have an amazing future. You can invest all your capital in it with no doubt

+1 to you sir. Monero is so stable, thats why horses always wanna stay with it. =D

Monero seems to be very good and profitable altcoin. I think we should invest our capital in it.

Dude you should be more carefull. The graphics was added here for a mounth ago. But i must to admit that monero is still quite good.

No1 cares btw. And all altcoins have a tend to repeat their curves sometimes. So i think this guy was carefull enough.

After checking out some threads it seems like monero is the most possible to be just a scam. Ill investigate more...

Indeed (https://bitcointalk.org/index.php?action=profile;u=11425).

LOL.  'nuff said.

I saw a topic on reddit in which one guy analyzed BTC curve. He notes all takeoff point, stability tends and said that the cycle is repeated once a year with a difference of a few months. So maybe you are right.

I don't get what this profile info speaking about. Can you explain pls?

That profile is Gregory Maxwell, a Bitcoin Core developer.

Right now there is no "Monero economy"... it's a CryptoNote assembly line.

And the CryptoNote economy consists of...

(1) Rolling out a new CN coin every few days (there are now 7... soon 50 or whatever).

(2) The same 50-100 people mine the shit out of the new coin with optimized tools.

(3) List on exchange... and dump to "sophisticated" bagholders.

(4) Each new coin is probably worth as much as $500,000 to this group.

If you take Monero as an example...
The average price for first 7 days on Poloniex was about 530...
And about 1,000,000 coins changed hands in the first week.

To oversimplify...
So the Monero group mined them at about 100... sold around 500...
And all the bagholders are happy with the "next Bitcoin" at 200 and sinking...
Wow... it's really smart to be 50% under water when you own the "next Bitcoin".

The group then moves on to the next CN Ducks, Mount, whatever... rinse and repeat.

Who needs a complicated GUI wallet with database, RPC API, etc...
When there's another 50 coins in the pipeline to mine and unload on bagholders.
 

Oh shi~

So it means that monero isn't a bunch of scams? Was the phrase "indeed" a sarcastic?

We still have all our monero.

The whales sold -- as whales do.

Interesting opinion. But is it true? I thought that there are the way more people who "mine the shit out of the new coin with optimized tools." More like 300-500 but not are 50-100

Imo the number of miners is smaller that you believe in.

I will be formalizing the proposal for the fixing of blockreward at year end of year 10 of Monero emission; a couple of charts are below:
https://i.imgur.com/y2bTFB6.png

A is the current projection.
B is the fixed subsidy projection.

As you can see from the images, there is only slight inflation at this time.
Final block subsidy: 0.117061151915
Inflation starting at year 11: 0.335774683775%
Inflation starting at year 20: 0.325925311615%

system B: permanent but low inflation. I could agree on this.

I think that something like 0.5% to 1% would be better as it really doesn't eat into our wealth that much and it offers an incentive to miners in 50-100 years.

It would be nice for Monero to be amoung the first coins designed for very long term use. I know I was one of the original supporters of the fixed block reward but after thinking about it more it I am not sure. I feel it has the effect of pushing Monero prices into the infinite territory over 100 years or causes a weaker network where we're not attracting enough hashpower.

Would something like 0.8% inflation for all time be better?

Any people good with economics here? I think the decision between fixed percent or fixed amount should be well reasoned.

If we are releasing 0.8% per year. And Monero is worth $50,000,000,000 in 100 years. That's about $400 million a year for the reward. Or less than Bitcoins reward now.

That means to me, that Monero will still be very secure on 100 years time.

I'm on my phone so I can't work out the same figure for a fixed reward. Anyone care to try?

If that's your concern than continuous adjustments correlating to market cap could be realised. Although that would of course give rise to unhealthy issues.
Planning 100 years ahead is likely overkill, I'd say. But the more traditional suggestion of continuous inflation or limited inflation coupling miner's reward with difficulty are probably the only feasible.


My vote goes to: continuous inflation of a healthy 1%

I think that only giving a miner the incentive to continue mining is part of the issue I see come up (can be solved with either a constant reward or constant inflation). Recently, there's been discussion on how to keep wealth from accumulating and cause heavy centralization and hoarding of funds rather than spending them (which won't ultimately be solved with a constant reward but might be solved with a constant inflation).

I currently agree that network stability can be bought with a constant block reward, but am still trying to comprehend the second half of the picture (where I'm still at a loss because the 'tendency' to centralize does not immediately correlate to 'absolute' centralization for me yet .. and many other things).

It depends on what people think should be the ideal inflation. Central banks like to keep inflation between 2-3%. That's too much in the crypto world.

We should work backwards to figure out the "ideal" rate of growth. What do people think is acceptable? Should the supply double in 30 years? 50 years? How about 100 years?

A doubling of the total supply every 100 years works out to be about 0.69% interest per year.

Is that acceptable? Well, not many will see their 100th birthday so I doubt you should care about your wealth since you'd be dead by then.

I support an annual inflation of 1% as well.

I actually think there needs to be some dynamic market mechanism for pricing the service provided by miners (processing transactions and securing the block chain). I haven't seen a convincing model for how do this though.

Part of Satoshi's insight is to just fix the supply and let the market adjust around it, which if correct (and many doubt this), means that it doesn't really matter what inflation rate is chosen (including 0%)

The reason I chose such a small percent as 0.3% is that it's impossible to know how many coins have been destroyed over time. For instance, it may be that case that 50% of the coins end up missing/destroyed 10 years down the line. This would make effective inflation 0.6%, which we did not intend. If we made inflation 1%, the effect is more dramatic, with us all ending up with 2% inflation instead. If even more coins are destroyed somehow, the rate of inflation could end up being catastrophic. So, we must be careful and choose a conservative number.

There was tons of stuff on the FreiCoin forums about this sort of thing, and maaku etc spent months on the problem to eventually abandon it for demurrage. If there is an answer, it's not an obvious one.

The lack of a clear answer likely includes it not being clear that any of these approaches are necessarily better than satoshi's (though also not clear they are not). Therefore I largely abstain from these debates.

just some feedback - that is incorrect -

the number will be 2% in effect but you have to take into account velocity, the simplest way to explain this is to say how can the Fed balance sheet be over 4 Trillion dollar right now ?

the answer is because the Velocity of currency is not being felt to have an inflationary effect on prices (because that 4 Trillion is just being effectively buried, exported even)

so a 2% "inflation rate" at the effect of a bunch of lost units is not the catastrophe that it would seem.

The net likely effect on velocity of that many lost units would possibly find equilibrium because it could drive valuation higher thus encouraging spending as your "2%" replenishes the equilibrium in velocity is found.

the EQ reward is very flexible -  simply because humans are flexible

; )

nice choice of wording.

No it is not. In fact crypto currencies can inflate much, much more than fiat without losing significant value.
Please take the time to read upthread, because I've already explained the differences between fiat money and crypto in detail.

I think the ideal case for exponential inflation is with a merged mining chain.

Maybe I will implement this in the future, when the Monero codebase matures a bit.

I forgot the "lost coins issue"
In that case, I would suggest a fixed block reward at a certain point and NOT a fixed inflation rate.

Reason: when we fix the block reward, the inflation nrate will go down, but if the number of coins goes up, this overall would cancel out (less or more)
Fixed inflation will always end badly, because coins get lost. That's how it works. You can't avoid it.

Right, my proposal fixes block reward at 0.117061151915 once the chain reaches that.

ah, ok, so NO adjusting block reward based on the number of coins. That sounds good.

0.117061151915 is an odd number. Why not just use 0.1 XMR?

It's the reward at block 5,781,600 (at the last block of year 10 of the chain). Perhaps I can simply lock it then at 0.12 then, and prevent coinbase dust.

or just wait a little longer until the reward is just above  0.1 XMR. But it doens't really matter ;)

+1

both the divisible nature of crypto and the flexibility of velocity mean this is most likely the more viable option - its simple and elegant.

the numbers will just change on your cap etc.

Sounds fine. Unless you have a particular economic theory to test, I think the 'pick a number' between 0% and 2% approach is reasonable. 

Agreed!


Any idea which FreiCoin forums/threads? Would be nice to have a link, that was a bit before I started posting here. If not I'll look around when I get time.

One approach not yet considered, which is motivated by the lost coins issue, would be to emit in the following year however many coins have remained unmoved for the past 10 years.  Actually, it would make more sense to make it a full human lifespan, but the emission curve is too aggressive to do that gracefully, and lifespans may change a lot, so whatevs.  If you don't want to get diluted, just be sure to move your coins every 10 years.  Sadly I can't control whether someone else moves their coins, so it's a bit unsatisfactory in that regard.  

Regardless of such minor issues, recycling lost coins as rewards does make a lot of sense.  It would be a deeply compelling idea if the emission curve tapered over 80 years or so.  But even on a shorter frame, if the shelf period is uncorrelated with the demographic cycle, this would also have an adaptive effect, with respect to velocity fluctuations resulting from that cycle -- assuming that newly issued coins have higher than average velocity (which seems certain).

Adjusting emission depending on velocity read directly from the blockchain is such a bad idea that I won't go there again.  But counting idle coins provides a somewhat similar benefit, without all the pitfalls.  It is certainly less dependent on committing to a particular economic theory.

Edit:  I should not have said "recycling".  I was thinking in terms of recycling the days-destroyed, rather than the coins themselves.  "Recycling" per se would only be reasonable if actual lost coins could be identified, but they can't, in principle, so actual recycling attempts would be ill-advised.

Would fixing the rate at 1 Monero per block be too much?

I much prefer the immortal final reward to be something really nice and even, like 1 instead of 0.1 or 0.12.

I feel this might be ok because Monero is quite a fast release coin with 80% mined in the first 4 years. I really think we could justify 1 Monero per block.

I still prefer something like 0.5% - 1%

Someone said that 0.69% is the same as the doubling of the coin supply every 100 years (not including lost coins). I liked that idea.

I think we need to have a simple solution (fixed % or amount) without worrying about lost coins. Over time there will be less and less lost coins and I doubt we'll ever have the same lost coin situation as Bitcoin.

Monero is worth about $1 in it's first month, it took Bitcoin years to get to that point.

I'm not sure, if a miner holds many coins they are inclined to leave as many as possible sitting idle so that their mining rewards in 10 years are higher. Anything like this can be gamed too easily.

If you leave coins idle past the shelf time, you get diluted.  It's an incentive to move coins.  Incentives to move coins are good for the economy.  As I see it, there is no downside to the game.  It's just a question of how much win there is.  (Probably one would cap the maximum emission, so that massive hoarding would not be incentivized.)

Well, me and someone else personally destroyed 600 by accident, I'm sure there will be more.

Additionally, it's likely that hundreds or thousand of monero were lost due to TFT's block reward bug: http://monerochain.info/charts/reward

I don't really see how moving coins to yourself is good for the economy. In fact it seems like a waste of resources, though the benefit of certainly over lost coins might be worth it.

It's not.  But keeping coins moving is.  Any waste of resources in this instance is negligible.  But I am more likely to spend coins if I am consciously aware of them as a resource, as would be required in order to move them.  The good for the economy part is emission which compensates for lost coins.  They will have higher velocity than average.

What did you accidentally do?

Is it a pitfall others could avoid if you tell us?  ::)

Anyone else think this coin is undervalued?

Inflation is not an incentive to spend unless you are forced into using only that currency, like governments do to their own people.

Do you have plans on forcing everyone to use Monero? Because if you don't, this will fail. I love everything about this coin, except for the inflation. And I talked to many bitcoiners and they independently arrived to the same opinion.

One of the main uses for Bitcoin that a lot of people like, is as a store of value. It rewards saving, like gold, as opposed to what fiat does, which punishes saving and responsible spending.

This also has ethical implications, like supporting or not consumerism and its ecological impact. Why do you want to force people into buying things they don't need? The economy can't grow undefinitely, sometimes it has to shrink for the benefit of the world and all of us. If someone is selling a product that people don't need anymore, what's wrong with him moving into something else? Why not "force" him into building things we need (if anything at all), instead of forcing us into buying them anyway? Inflation goes against the free market in that sense.

Also, if you want the price to go up, there's nothing better than having people use it as a store of value. Being able to use the currency (utility) also drives the price up, though not immediately (but the good news can have a fast effect). Forcing people into spending it won't. And it will certainly not attract new savers.

I come at this not from a macroeconomic point of view (I consider virtually all macroeconomics to be junk science) but from a practical one. I want to continue to pay miners without relying on transaction fees, because the latter forces consolidation, and worse, to give miners the market power to charge more than marginal cost. 

If you don't have inflation (or demurrage, which I consider equivalent) how are you going to pay miners?

What did you accidentally do?

Is it a pitfall others could avoid if you tell us?  ::)
[/quote]

Check out the behaviour of "make clean" in the makefile
Before I changed it, it didn't used to prompt you to remove the build directory...

On the ethical side, you need to look at the equilibrium between the cost of electricity and the value paid out to miners.

Let's use CPI, consumer price index as the unit.

If we assume for simplicity that mining power per CPI is flat over time (no new CPU tech), then mining equipment can be bought once and after some time it is the business of converting eletricity to coins.

Therefore it is an equilibrium between the value of electricity and what miners are paid.

In a society where the M1 money supply consists mostly of XMR, spending 1% on miners a year means that of the total money supply, the equivalent to 1% of that money supply is exchanged for electricity, and wasted.

This can be a significant part of the power produced in the world.  Therefore, the ethical solution is not to fix this as a percentage of the total money supply.

There is no logic to having a linear correlation between the value of the money supply and what miners are paid.  Having 100x as many miners does not make the system 100x as secure.  Having 2x the miners and spending 98x on developing mathematical proofs for the code base is probably a much better proposition.

The only sensible action is for miner profits to go down, in percentage of the total money supply, almost to zero.  This is based on the assuption that XMR increases in value.  There is simply no point in having 100k miners to secure the ledger.   That's like chasing insignificant risks when the big elephant in the room is the fact that the code base is written in C++ instead of Haskell.

I agree. I'm not saying "This is true because my teacher said so". I only had one class of economics at school and it sucked, it was all dogma. I'm just using observation and logic. Everyone is free to tell me "your observation/reasoning is wrong because X".


You are going to have to pay them one way or another. I only see two ways: inflation or transaction fees. The former would be paid by everyone (inflation is not free money), the latter only by those who need to transact. I don't know why you believe it's right to make everyone pay for a service they are not using. That sounds a lot like a government. What's wrong with letting people pay for the services they use? Nothing good can come out from letting people (in this case the senders) spend money that isn't theirs. Let's imagine an extreme scenario: A currency with zero fees. People would generate a ton of transactions they don't need at all, just because it's free. It would also attract trolls and spammers, and other scourges. That can't happen if it is their own money they are spending.

Ok, you say it forces consolidation. That doesn't seem intuitive at all. Do you have any evidence for it? All PoW coins seem to favor consolidation. I don't think it has anything to do with the relation between fees and inflation. Can you elaborate on this?

In a competitive market prices converge to marginal cost. In the case of transactions, this includes things like the cost of electricity to actually verify the transactions as valid, bandwidth, and the increased risk of orphans if you include more transactions in your block. It does not include the cost of performing proof-of-work. The only way miners who are "paid by transactions" are able get paid for performing proof-of-work is by overcharging by the transactions themselves, and they can only do this if they have some sort of market power. Thus it is impossible for mining to be competitive if proof-of-work is paid by transaction fees. It also results in further destructive incentives, as miners try to scoop up and horde transactions (for example using a sybil attack), since transactions are no longer competitively priced, but no represent a source of profit to be "mined."

There is also the free rider argument. If long-term-holders just hold and don't perform transactions (i.e. generate fees), miners won't do work, and the block chain won't be secure. The holders could do the mining themselves, but again only if they collude. Individually the incentive is for each holder to sit out and let the others holders pay the costs. The higher transactions fees go (to pay for proof of work, remember?), the greater the incentive to just sit on your coins and not pay them. This only reaches an equilibrium if some individual or group acquires all or most of the long-term holdings, so that individual or group can pay the mining costs without being exploited by free riders. Failing that, you have insufficient security, and likely such a coin will never become very successful (this includes bitcoin, although I think its possible now that bitcoin becomes a version of fiat).

So no structural mining reward means either extreme concentration of power, either in mining or holdings or both. One way to look at a structural reward is a consensus among the holders to share costs (since all holdings are being diluted by inflation) instead of relying on individual decisions to incur costs and suffer from a free rider problem.

Pricing remains an issue though, as no one has come up with a good model for how much mining should be performed, and how it should be paid for. "None" is clearly wrong though, in the proof-of-work model. Using proof-of-stake (if that can be made to actually work) or something else is another question.

Bitcoin can't be a version of fiat even if it is consolidated. For example:

- Miners can't steal your savings
- Miners can't add inflation or anything like that, because they can't change the protocol

No one will hold forever just because it is deflationary. And even if someone does, he doesn't need to secure his own coins. Like I said your coins can't be stolen. You only need security at the time of receiving money, because you don't want to be played by a double-spender. Of course you also want security for the coins to hold value. But everyone spends. You can't live without spending. Imagine a world in which Bitcoin has reached its full potential. There will be no "Herp derp, I will hoard coins and only spend fiat". Even today, bitcoiners like myself are already paying for everything or almost everything in Bitcoin, simply by refilling their wallet after a spend, or periodically. A deflationary currency won't make you do anything you don't already want to do. Not letting people save is just cruel.

Forgive me for saying this again, but using inflation as a means to pay miners (or anyone else) sounds a lot like a government "trick". "Not enough money? No problem, just print more! Steal from the savers! Those idiots, lol!".

I have one example that might help further explain the unfairness of this. Imagine a person that is a huge saver, very responsible, very austere life, only spends on what he needs, and is always thinking about his and his family's future. If there is inflation, at some point the person won't be able to earn any more money. At some point, the percentage that is taken from him will be equal to what he earns. How is this possible? How can this be fair? One should be able to do whatever one wants with his own wealth. Want to save everything for harsher times? Good for you. No "Hey, u have too much! Gimme some!" bullshit.

I definitely think PoW consolidation is bad, and I'm excited about proposals like this one: https://bitcointalk.org/index.php?topic=584719.0

But I continue to disagree on that inflation can stop consolidation, or that it will let miners not "overcharge". Transactions cost what the free market decides they cost. If transactions end up being too expensive for small buys like a soda, I don't see what's the problem. Just use offchain transactions (like Satoshi predicted) or a separate and less secure currency (which you could think of as a subtype of offchain transactions).

Also, if you let miners live without transaction fees, won't they be able to manipulate us by overcharging? If you don't pay a huge fee, they don't add your transaction. They don't need it anyway, because inflation will pay for everything. Nothing good can come up from giving people free or unconditional money.

But if they need your transaction fees, an equilibrium will be reached between their need for the fees and your need for the service, or else they will run out of business.

hbadger, please take the time to read upthread. You are making assumptions left and right:

Nobody says crypto inflation is "free" money. That's the point. All new coins require work, inflation or not.

If it is true that inflation is not an incentive for spending, then we are in trouble because fiat does have incentive to spend, and we won't be able to compete.

It is well established that finite money supplies don't work over the long term.

Why?

- Hoarding + privileged mining = shrinking supply in circulation
- Little to no block reward means tx witholding and competitive fee escalations
- Perpetually increasing value means disincentivized spending
- Perpetually increasing tx fees mean disincentivized spending

What is the takeaway here? You are punishing the spenders. Not a promising strategy in a currency.

Gold has done just fine for thousands of years. There are only two reasons why nobody spends it:

- The problems it has due to its physical nature
- Government bans

But a lot of people including the biggest banks use it as a store of value, hence the price it has.

Smooth was just telling us how he sees economics as a pseudoscience, and I agreed. So please don't say things like "it is well established that" inflation is good and deflation is bad. It's like a fallacious appeal to authority. Precisely one of the things Satoshi wanted to experiment was going against mainstream economics. If we want Monero to succeed, we shouldn't change every aspect of Bitcoin.


I know. I'm just saying it's unfair to make people pay for services they don't use. The discussion would be easier if instead of saying "inflation will pay for  that" we simply said "savers will pay for that".


Agreed. And I think this is the case and we are in trouble, unless we back off from this idea that inflation is good for a currency that people is not forced to use. For a currency that people is forced to use, it's not good or bad, it simply doesn't matter for its survival because people will have to use it anyway. But it's bad for the people.


I wouldn't say you are punishing spenders, since you are not forcing them to do anything, and you are not stealing anything from them. In the case of an inflationary currency you are punishing the savers by stealing from them. You could say they shouldn't have saved in such a currency to begin with, but where will that leave the price?

There is a common belief that the amount of transactions is far more important for the price than the savers/investors, which is absolutely false. Number of transactions is only an interesting indicator that the currency has a lot of utility, that it's accepted everywhere. Utility drives the price up, spending for no reason does not. One guy above was even suggesting that we punish stale coins, and that we move our coins for the sake of it. That's dogma right there.

If you, like me, want to see the price go "to the moon", what you want is savers/investors. It's a virtuous circle, and we have seen it on Bitcoin: Investors jump in, price goes up, mining becomes more profitable which brings more hashing power, therefore more security, which makes it more interesting for more conservative investors, prices goes up, we hit the news, and so on.

Also nobody answered this: What's wrong with using offchain transactions for small buys? That way nobody is punished, not even spenders.

It is, in a way, except that it's exactly Satoshi's trick that makes these coins possible. Since the network has no access to resources from outside the network, it can only rely on internal resources to reward miners. Which basically comes down to issuing coins out of thin air. No one disputes that this is how PoW coins work. The only issue is what happens "in a long time" when the rewards diminish to near zero or zero.

If you don't like issuing coins out of thin air, then you really can't like Satoshi-style PoW coins. You wouldn't be alone, BTW, there are plenty of critics.

Obviously there is a difference between issuing coins until certain max cap is reached (or at least tending towards a limit - as in calculus -), and issuing coins forever at an ever growing rate (which is what happens when you set a % of inflation).

One resembles the mining of gold, the other one is exactly like fiat.

It's not like exactly like fiat regardless of the inflation number, as you correctly explained, because the rules can't be changed, at least not without some sort of consensus. They certainly can't be changed "by fiat."

The supply of gold has been inflating by 1.5% - 2.5% for thousands of years. Thank you for strengthening my argument.


I'm sorry if your judgement is getting clouded by facts. If you and smooth think econ is junk science, then any reasonable debate goes out the window. It's like arguing with religious folks where any logic gets defeated "because God says so."

I didn't say anything about "good" or "bad". I said a finite money supply has a limited lifespan:

Wealth is power-law distributed: http://physics.umd.edu/~yakovenk/papers/PhysicaA-299-213-2001.pdf

The quantity theory of money ( M x V = P x Q ) says that if supply M remains constant or decreases, then velocity V must increase exponentially, which is not sustainable. Hell, I'll just quote AnonyMint:


As time increases, circulating supply will shrink to nothing. This is true because math (and common sense) says so (unless you disbelieve that as well).


Savers are useless non-contributors. Not that there's anything wrong with saving, but economies of scale don't depend on it, and so there's no economic justification to encourage it.


Careful, this is starting to sound a lot like economic theory ;) But I agree with you on the stale coin matter. It's a non-solution that's dancing around the heart of the problem.


I don't want to see the price go "to the moon." I see that as an unambitious (and somewhat selfish) perspective. What I want is an ultra high volume, massively scalable world currency, capable of competing with or replacing fiat. That cannot be achieved with a finite money supply.

Goddamnit no. All of the critics are wrong. PoW coins are not created out of thin air. It costs thousands of dollars in computing power to mine a single block, and that doesn't even include the computing costs of all the miners that didn't win the block. That is real, intrinsic value.

- fiat money is created out of thin air
- Proof of stake coins are created out of thin air

Proof of Work is value by design.

Sort of. First off, the cost to mine a block does not exclude the miners who didn't get a block. They'll get another block, covering their costs.

Second, there is no direct link between the cost to mine a block and the value of the block, except insofar as the market creates one. That's essentially Satoshi's model. Instead of trying to peg the value of the coin to some intrinsic value, you set the value of a block at 50 otherwise-worthless credits, and let the market adjust.

But in theory, the market can adjust to just about anything, as other coins have shown. As long as the coin doesn't fail altogether, then the market has adjusted to its reward schedule, and non-failed coins with all sorts of reward structures exist. So you can't really argue the reward structure must be one way or another on this basis.

The argument for non-trivial perpetual rewards is that coins without them would actually fail. Miners wouldn't mine, or would only do so under conditions that are otherwise viewed as dysfunctional, such as monopolization and transaction hoarding. That's somewhat speculative, but I do think it is pretty clearly possible to set up a coin that fails. If it is possible to do by design it is also possible to do so by mistake, and perhaps easier.

I agree with this for the most part. I just don't like the comparison to fiat money printing (out of thin air), as PoW coins have an inherent effort/reward relationship that is consistent with historical currencies and establishes trust value if nothing else.

I am not arguing that inflation is good for the economy.  I am arguing that spending is good for the economy.  I am arguing that spending is more likely if you are aware of your funds.

I am not arguing in favor of punishing stale funds.  I am arguing in favor of replacing lost coins.  Stale coins are a proxy for lost coins.

Aside from argument, my disposition is thus:  I do not favor inflation.  I favor deflation.  I also favor securing the network, and indeed consider it a priority above most other considerations. 

Because of these dispositions, I think constant emission is a good trade-off, but do not think that exponential emission is a good trade-off.

Inspector Clousseau asks if minkey like Monero.

the magic monkey is definitely not equipped to evaluate monero.  the monkey depends on lots of information which isn't yet available for monero.  my personal views on monero are therefore not tied to the monkey in any way.

You cannot be more wrong. Saving is simply deferred spending. It's spending later vs. spending now. You could argue that incentivizing spending over saving is transferring prosperity from the future to the present. In the end it's a zero sum.

+1


-1

I don't see any need to re-issue lost coins, rather just allow a deflation in the money supply. Economists hate deflation, but investors love it.

One unintended consequence might be that investors are more likely to delegate their holding to a third-party (e.g. a bank) to ensure the coins are moved in a timely fashion.

Only one?

I never said econ, just macroeconomics. I't nearly impossible to test any meaningful theories about an entire economy or even make testable predictions. The whole thing is entirely unrepeatable, which almost by itself precludes science.

Theories about the behavior of individual markets or actors are testable and tested all the time. That part of econ is much more sound.

What about coins that are simply "never created" due to the block reward penalty? Specifically, what does such a penalty achieve in the first place? I think the current penalty is set to never exceed 9% of the intended subsidy .. leading to a minimum of ~1678000 coins rather than the intended 18440000 in the design. Should these be taken into account somehow?

Edit: I'd like to add that I could use Darkcoin as an example here .. evan based his block reward off of difficulty. If difficulty were to drop into a range that would yield >5 DRK / block the exact coin supply (when planning for the future) would be unknowable. What kind of effects does an unspecified emission have when taking into account some kind of fixed block reward toward the end of emission?

The total number of coins doesn't even matter. You can have a coin with 17 million or 17 billion. It's all the same thing except the number of zeros.

The block penalty is miners (mostly pools) being stupid and burning their own coins, something you can't prevent with any coin. For example, minergate is still using the old code with larger penalties. You can't stop stupid.

Is that whose been doingallowing those tx's? I guess I'll stop mentioning them as a pool for people to use unless they can convince me that there's some logic to using the old daemon. Wierd that they put so much time into development daily but don't update that .. maybe there's something behind it? It does seem pretty stupid.


It's just an interesting mechanism to me really. What purpose does it serve? People will issue transactions probably using more space than they need, miners verify the transactions without regard to their subsidy and profit, and an investor providing liquidity in the markets now will ultimately profit more in the future because the investment could be worth as much as 109% more than planned when subsidy drops to zero. I don't see the necessity .. why not just limit the block size and have no penalty? I'm sure there's something I'm missing thats simple otherwise it wouldn't be done at all.

OTOH, people could seek to maximize block size on purpose, miners can just deny all tx's because they won't know if it's on purpose or accident (anonymous) and verify zero tx's at all and just continue to mine blocks. I'm just not seeing where decreasing subsidy makes any sense at all .. do you know?

It's supposed to be a soft limit, where miners don't include transactions more than the limit (so they aren't penalized) beyond a a small amount which causes a very small penalty (the penalty is quadratic -- i.e. squared -- so exceeding the limit by 5% causes only a 0.25% -- 5% of 5% -- penalty).  

The small excess size of blocks indicates to the network a high demand for transactions which in turn over time causes the block limit to grow. The reverse mechanism causes it to slowly shrink during periods of low demand.

The whole scheme seems designed to avoid spam and bloat but at the same time avoid persistent scarcity of block space that would lead to high transaction fees.

This was implemented, perhaps somewhat correctly though with at least one bug, in the original bytecoin code. TFT broke it when it forked off to bitmonero and tried to fix the bug (poorly).

Since this is experimental and was never quite implemented correctly it is unclear at this point whether Monero will continue to fix it or just drop it.

Four years ago it cost a couple hundred bucks in computing power to mine a single block.  How can a coin created four years ago and a coin created today have the same intrinsic value?

How long until someone releases a cryptonote coin with 100% premine, and then issues the coins to a stakeholder list similar to NEM?

Seems like an obvious thing to do. Maybe add some inflation and transaction fees to keep people running their clients. Might be an interesting experiment. 'GreenNote'

After reading this whole thread and some topic on reddit i understood that there is no monero economy. Everything seems to be a fake. I'd rather invest all my money to BCN. Coz all of MRO's homies are doing the only business - talking about how smart they are, but in fact BCN team IS the team who work hard, and it’s their right not to communicate if they choose not to.

Wake up, dude. Welcome to the real world -_-
I don't know why everybody were so excited with these altcoins... If you want to waste another usefull minutes of your priceless time you can read others mro's threads and find out more information about monero's dirty schemes!

Are you sure that we should trust them?
Of course i know a lot of info about Bytecoin and i'm thinking that Monero is a regular clone of this amazing currency but not everything that you can read here is obviously true. Never forget about scams...
And never forget that BCN is much more cooler than MRO.

Newbie having monolog with himself, lol
Someone is afraid of competition, just sell, it's not too late to escape out of BCN and you only lose 50% of money, better than waiting and lose 99%.

Don't be ridiculous. If the economy were to collapse tomorrow all your "deferred spending" and "future prosperity" did nothing to help it. Trade volume is always low when saving is incentivized, and won't increase in the future because people decide to suddenly stop saving en masse.

And what should we do? Forget about monero?

Why not? You said somewhere that BCN is the way more amazing than MRO and i'm totally agree with you.

+1 lol

https://i.imgur.com/cxcehHa.jpg

Definitely just saw this from part of david latapie's post a few weeks ago comparing darkcoin and monero...i am heavily invested in both, but he kind of hit the head on the nail here with this. plus I lol'd

The economy could use some work but that can be said about any coin I'd say.  All I know is I wish I had bought on the last dip.  Just like any other coin timing is everything!

I bought on teh dip (below 2 mBTC) but should have bought more :P

Anyway, I really hope that in a few months time, a TSR-like website will accept XMR ;)

It's a must, imho. Auction style, a la Ebay, or something like SR.

Well, actually, in reality there are always some more uneconomic gold reserves that would become economic if the price went up enough.  And no one knows the number and size of the as-yet-undiscovered gold fields..... so the economics of gold as a currency is nowhere near as clear cut as you imply.

That, and the big one is that there's really no way to know the amount of gold that's been mined already.  There's a popular figure that's often bandied about, but it's really just an educated guess - and there's no way to confirm it.

roy

There have been a lot of discussions why the community chose Monero over Bytecoin. Bytcoin was 80% secret-mined for example. You can be sure that just a few people have like 50 % of all Bytecoins which will ever exist.

Subbed.

More than that.  Saving is required for capital formation.  Many enterprises and much innovation depends upon capital formation.  Without capital formation it is much closer to net zero-sum.  With capital formation, it is more like win-win than it is without it.

Until proven otherwise you should assume you have no timing edge and just use dollar cost averaging to buy in.  It works.

That would work, to a certain extent but I prefer to actively manage my portfolio and increase in btc and usd valuation, while aiming to hold a good amount of xmr over time.

Yup. http://en.wikipedia.org/wiki/Savings_identity

The caveat is that not all investment is actually useful investment. For example, building up inventory of unsold goods is considered investment in accounting terms, even though the goods may not be wanted and may never be sold.

That said, you do need savings for there to be (good) investment.

Guys I'm not claiming that saving is unimportant. I'm talking about savings in the form of unspent currency. I was responding to hbadger's claim that inflation punishes savers. There are plenty of appreciable saving/investment vehicles that will result in greater long term yields. Incentivizing saving in the currency itself, however, will only serve to kill its velocity. Economies of scale require a currency that moves.

I hate to bring fiat into the argument, but despite all it's problems the U.S. dollar does a great job at supporting large-scale economies. Even with a 2.5% - 4% annual inflation (definitely not "saver friendly"), capital formation does not seem to be a problem. Go figure.

It's not a claim, it's a fact. If you make people lose money you are punishing them. And since you don't have the monopoly of violence, you have no power over them and people will simply use a coin that suits them better as a store of value. Individual savers will never care about creating artificial incentives for their economy, let alone a foreign or global economy. Only politicians care about that, because it lets them deliver better looking economic growth indicators which will help them with their propaganda.

Also, you keep pushing the false dichotomy that if someone saves, he can't possibly spend. Meanwhile, actual data shows that bitcoiners spend all the time, but even more during spikes. Go figure.

You're still dodging the question of why it's necessary to save in-currency! Answer it, please. Smart people store wealth in a diversity of assets outside their currency.

Not once did I say it's "impossible" to spend. I'm saying that in any given moment, spending is discouraged due to perpetually increasing value. Just because people do spend doesn't mean they're spending fast enough.

And Bitcoin has less than 50 million transactions in its entire life, so don't even pretend like you know if it's capable of supporting any economy of scale.


The people are not punished. Only their behavior is. If you want to save long-term, then invest in mutual funds or real estate or whatever you want, but don't sit on your currency.


I disagree. People will use whatever the hell is put in front of them. The coin that's easiest to get and easiest to spend will be the one that acheives mass adoption.

This is good advice.  Also consider what constitutes proof of timing edge.

Or... I can invest in Bitcoin, which doesn't tell me what to do. That's what it was created for, remember? We are supposed to be in control, and not have our wealth stolen through inflation or other trickery. If you are in doubt of this, go read the genesis block.

A currency that is just like the USD is not interesting and I won't use it, no matter what your theories say.

Bye.

We have far less inflation then other currencies, after 4 years nearly all coins are mined... you dont have that on ltc for example (at the moment already 28 mio ltc are out - prolly more then we will ever have mro and its still a lot higher priced than mro).

If we have a block reward < 1 mro per block that is simply nothing, i guess it will make up for lost wallets and not more and keeps the incentive to mine.
You don't lose anything and you still have the same amount of mro than u had before...

Currency cannot behave like currency if the value constantly trends upward. An asset's value appreciation tends to be the inverse of its liquidity.

If you like Bitcoin so much then invest in Bitcoin. That's the whole point I'm trying to make. The bulk of your wealth should not be liquid, because that's not what currency is for, and you will likely not see a comparable ROI.

I'll just go ahead and link to this again: http://physics.umd.edu/~yakovenk/papers/PhysicaA-299-213-2001.pdf
Power-law wealth distribution means that with a finite money supply, your wealth is pretty much guaranteed to be eaten over time, as more money flows into the infrastructures of the economy than flows back to the consumers.

You want to be in control and not subject to the whims of banks and governments? Me too. We are on the same team.

Do you want to continue to pay pay 2-4% per year (plus income/capital gains taxes) to greedy bankers who only want to take countries and people into debt? Or would you rather pay 2-4% per year back to the miners to reduce wealth centralization, prevent escalating transaction fees, stabalize trade value, and maintain the overall security of the network?

If your answer is "neither" then I'd love to hear some of your free solutions to the above problems. If you think Bitcoin (or any other crypto for that matter) is untouchable by centralized parties, then tell me right now what's stopping banks/governments from
lending out debased "bitcoin-backed" dollars at super low interest rates and calling it Legal Tender?

How much are you willing to pay to keep the greedy fatcats out of the cookie jar? I would love more than anything to see a "bullet-proof" crypto, but lets not fool ourselves into thinking that such security comes at no cost.

Crypto-equities are something new. You can't take the results of a body of economic theory that applies to a single nation, governmentally mandated currency system and just transfer the theories seamlessly to something fundamentally new. You need to return to fundamentals to see if the assumptions backing the theories still hold.

I anticipate keeping the bulk of my savings in a private form, immune to theft, which protects me and my family from extortion, kidnapping, &c, by its privacy.

Productive assets need not be in-currency, in fact cannot be in-currency, because currency is not productive.  Savings and transactions in XMR are compelling exactly when privacy is most important -- i.e. when you have the most to lose.


Infinite divisibility means that the floating portion is always capable of providing a transmission mechanism.  Increasing value means less of the float is required to perform the transmission function.  It is a self-adjusting mechanism.


In the long run, demurrage games have vanishingly small impact compared to the forces they would mitigate.  Any distribution improvements would be a tiny marginal one.  The cost of those improvements would be destabilization and shrinkage of the in-currency economy, as capital fled to other media.  Separating transmission and storage creates a friction, an inefficiency and ill-liquidity in conversion, which I expect does more damage in aggregate than any improvements in distribution would be able to offset.  Most of the social value created by a currency is created by liquidity.  Any impairment of liquidity is catastrophic, if only because competing media will not suffer the same impairments, and hence will dominate.

As great as it sounds, a coin that "does it all" will neither be a great store of value nor a great exchange medium. Instead, it will be mediocre at both.

Considering block reward, I'm sure that most if not all can agree that vanishing reward model is not unconditionally stable, and that fixed inflation model may not be sustainable on finite resources. Fixed block reward model, as the one proposed by devs, is in between those two - where the soft spot is. A note to skeptics, in it inflation also tends to zero with time - but much slower than in vanishing reward model.

I would put my hand up for a fixed block reward model. To me it seems prefereable to a vanishing reward implementation.

I suggest focusing on the block reward once the primary supply has been minted in several months, at the moment Monero needs focus on the core code, the GUI, the marketing in general, fighting the FUDsters.

Too much is going on right now to have a real serious discussion about the final immortal supply. Remember this doesn't come into effect for many years anyway.

My vote has been for 1 Monero fixed per 2 min blocks. But we'll see when the developers are ready for this to be decided. At the moment keeping this coin alive is the most important thing. Many people on this forum are actively trying to destroy Monero through FUD.

Today I installed the Monero Windows GUI wallet by Jojatekok (https://bitcointalk.org/index.php?topic=683365.0) and so far it's working great.

It was a little struggle to import my old wallet in there but with the help of this post (https://bitcointalk.org/index.php?topic=683365.msg7830399#msg7830399) I got it working in a few minutes.

Also most of the people trolling Monero seem to be Bytecoin shills who are either paid by the Bytecoin devs with their 82% premine stash, the Bytecoin devs themselves with alt accounts (since almost all accounts are newbie or jr. members) or they just don't understand what it means if a coin is 82% premined :D

No matter how many times people point to the facts they just keep going on, well can they do whatever they want with their premine coin which will be worth 0.001 satoshi soon. We all know it will all ends up in tears but they can't say they haven't been warned ;)

Dear sirs,

I made some calculations on the distribution of XMR balances using the same methodology that I use in BTC wealth distribution calculations (https://bitcointalk.org/index.php?topic=316297.0). Please refer to the link for methodology.

- I use 1 XMR as the cutoff grade since it is a nice round figure and its value is reasonable to be the lower threshold of what can be considered an investment.
- Other than the cutoff, there are the parameters that specify the:
  * largest holding;
  * number of holders;
  * j-value ("wideness" of the distribution);
  * to which extent power law (http://en.wikipedia.org/wiki/Power_law) applies to the high end (increasing the number and share of large holders).

To compose the result, we need to set the parameters. With any coin, especially XMR which is anonymous, it is impossible to know the parameters. So they must be estimated. The laws of statistics and the law of large numbers (http://en.wikipedia.org/wiki/Law_of_large_numbers) dictate that the actual holdings between the endpoints do conform to the calculated result, if the endpoints (parameters) are estimated correctly.

Estimate 1:

Parameters:
- Largest holding: 100,000 XMR
- number of holders: 6,800
- j value = 0.58
- power law: no

Results:
10,000 or more: 23 holders
1,000 - 10,000:   435  <=half of the XMR are owned by this group
100 - 1,000:    2,300
10 - 100:    3,000
1 - 10:     1,050.

Questions, comments, what parameters to change in order to get a more realistic calculation?

I don't doubt the other numbers but how did you extrapolate the number of holders?

Booyah!  I am in the top 85% of XMR hodlers.  (Except I'm a swing trader).

Good thing it's anonymous, or chicks would be after me.

You could not be more wrong. During the unfettered fiat standard (1971-), the by-far-the-most-glorious-and-economically-strong-empire-the-world-has-ever-seen has reduced itself to a miserable leech, a cancer to the world's economy, destroyed its productive capacity, essentially producing almost nothing that the rest of the world wants, utterly dependent on extorted energy and finished goods from the rest of the world, with half of the middle class already destroyed, youth unemployment soaring etc.

I could not have envisioned a better way to reduce the land of the free and home of the brave to its current wretchedly pitiable state than fiat money.

http://i448.photobucket.com/albums/qq209/YoDaddy61/shut-up-hippie-nixon.jpg

I will just post this because i am laughing hard every time i see that picture!

I was checking the poloniex accounts and estimated how many of them have bought XMR.

Do you think the largest holding is realistic? It would have to be a guy that we know. Myself, I don't have nearly that many :)

It is fairly close

Yes.  I would imagine that is possible.  I think it is also (somewhat) possible a semi connected (to the project)  botnet master might also have mined to keep rather than sell.  If this is so they would be sitting on a possibly bigger holding.

Thing is with Polo is a lot of people jump in and out of the coins and also don't have particuarly large balances what sort of parameters did you use to estimate this?

Yes its realistic, my guess would be that its not quite that large but not far off.

Your other guesses in terms of holders above a certain threshold I think are a little low in most the ranges  but without a real way of knowing its a fairly pointless argument.

I wonder for the amounts of folks we see in the 1 to 1k realm...  if you are right about your estimates this implies an escalating  general knowledge about Monero out there.  I have thought up to now it has been a fairly strong insider community.  If we are starting to see any "mainstream" alt crypto interest it could mean the current price direction is somewhat sustainable. ;)

Oh crap, I'm doing the rich thing all wrong!

I think we know with good certainty that it is not capable of supporting a global economy today, but that it is feasibly evolvable to do so.

They are not guesses but the outcomes of the mathematical fitting procedure, and as such they are true to the given parameters.

Only the parameters are guesses.

Gresham's law is supply-side driven.  If the demand side rejects your bernankebux, the law no longer holds.  By the time BTC is big enough for the economics peculiar to it to have a significant impact on the global economy, we are very very near the singularity, and no one will accept an inflationary currency.  Until it gets pervasive, global, it's not a problem.  When it gets pervasive and global, its not a problem for a different reason.  

If you hold 100 USD, and 100 mBTC, and the mBTC appreciates rapidly, while you spend all your depreciating USD, then soon you have no more USD to spend.  Your reserves are dominated in mBTC, and you must spend mBTC perforce, for lack of an alternative.

Coase's theorem indicates that distribution of BTC will tend to optimal.  That implies that the flows required to optimize the productivity of the distribution of capital (which are exactly the flows which are most productive) will occur.

There are numerous directions to come at this, but they all have the same conclusion:  BTC will tend to circulate to the degree it is beneficial to circulate BTC.  

When your liquidity is infinitely divisible, there is never an insufficiency of liquidity.

My take:  XMR needs to bootstrap.  It can't bootstrap if no one will take it.  If it is inflationary, no one will take it.  The only way to get people to accept an inflationary currency is to hold a gun to their head.  Crypto has no guns.

I could not agree with this statement more.  It is just another way the black swan of cryptocurrency is blowing up the way we understand finance.  Folks keep trying to appy the limitations of current systems to this new one.

I am curious what your thresholds are for it being inflationary/deflationary/stable.

Arguably the best period of organic growth in the US was 1870-1913.  Amazing incentive system.  It is a period which includes the inception of all the technical infrastructure which provided, by inertia, economic growth during the exchange standard, bretton woods, and debt-based eras which followed. 

The issues are two-fold:
1) It seems unlikely that fees will properly secure the blockchain a long time into the future. There have been numerous comments from the core devs (eg Peter Todd) and academics at Microsoft about this.
2) Any blockchain that has logarithmic decay for subsidy will eventually face persistent and random deflation when coins are lost, causing wild speculatory price fluctuations.

Tiny inflation (0.1 XMR at year 10 as I have proposed (https://bitcointalk.org/index.php?topic=597878.msg7202538#msg7202538)) that tends to zero slowly as time goes on probably alleviates both, so I don't see why it's so controversial.

[perpetual debasement] Can somebody summarize the proposals that have gained enough support to have a chance to be implemented?

Debasement as above is non-perpetual; over time the inflation rate goes to zero slowly with a fixed subsidy. For instance, at year 11 annual inflation is 0.335774683775%, while at year 20 it is 0.325925311615%.

Okay. Are there other proposals that enjoy any support with the devs?

That I'm not sure. Johnny Mnemonic proposed exponential inflation, which I think was ill received as a lot of people think it'll turn Monero into the next FreiCoin.

How much is required to secure the chain?

Also - have we discussed the theoretical issue of levying fees for balances, since it's mainly the security of balances we need to protect, and not so much the security of transactions. (The easiest way to levy a fee on balance is naturally the creation of new coins, diluting all balances).

It is somewhat controversial because people have various pet economic theories about how "currencies" are supposed to be. These have little to nothing to do with the technical issue of maintaining a distributed proof-of-work blockchain (which I happen to think requires a mining reward, though I acknowledge that some believe transaction fees can work), so in a sense the two sides are often talking past each other.

The quantity required is an open question, and it depends on the value of 1 XMR in 10 years time. If 1 XMR is $10k USD, then 0.1 could be very attractive. If it ends up at $10 USD, it will be very unattractive, but then the price of fees will be low so transacting on the network will be cheap and can be used to pay the miners if sufficient volume occurs. If the price of fees is high ($10k USD per 1 XMR), then a small subsidy like that will likely be essential in keeping the chain secure in my mind. Without a secure blockchain, the entire system will fall apart.

In regards to the second question, the other way to do so is FreiCoin's system, which over time destroys the balance of all accounts equally through demurrage. The FreiCoin devs insist that this is totally different from inflation, but I haven't been able to follow that argument (and it diverges into a lot of economics I'm not well versed in).

One thing we can do is make an official merged mined currency alongside Monero with exponential inflation, to provide a fiat-like adjunct that can one day be traded in a decentralized manner with a two-way peg.

Has a subsidized draw been considered?  A minimum block reward paid when the fees cannot meet that minimum?  This could be a flexible way to allow the health of the economy and value of the currency have at least partial determination over the inflation.  Perhaps this is exactly what has been discussed and if so forgive me as I am getting up to speed.

This is similar to adaptive block sizing, which applies a penalty for generating blocks over the median size. The cost of the penalty is supposed to be mitigated by the value of the fees. My opinion is that this will not work well.

Such a mechanism doesn't work for this reason: miners generate their own blocks and include whatever tx they choose too, however the smaller the block, the less likely it is to ever be orphaned. If there was an overlay PoS network (like for MC2) you could try and enforce tx being included into blocks even at some level of reward penalty, but naturally miners will just include as many high fee transactions as possible without destroying any of their reward. Such a method of securing a blockchain is highly experimental and may not work for other incentives reasons (that's for the MC2 thread). As PoW stands now, miners are free to manipulate the transaction volume/fees volume in the network as they desire, and so subsidy penalties will not really work.

The value required for securing should be proportional to the value stored, in other words a constant %-age, irrespective of value.

If all balances are directly and proportionally reduced, it is deflation. But it does not matter since it is applied to all equally. If a corresponding number of coins is generated elsewhere to be used for some purpose, it is inflation. Taking both into account, it equals a tax or a fee.

I suppose this could also cause voluntary transaction fee payment to dry up a little as well.  If the network will pay the "fees" through inflation then miners might nnot be so choosy.

I think I mostly like the idea of a convertible subsidy which can even disappear if the network no longer needs it, but one that reappears when it is needed.

I appreciate the fact you guys are struggling through this decision.  I think it could be one of the most important fundamental choices to be made.

I disagree with my friend tacotime about the adaptive block sizes not working. I think they can work if the parameters are right. Certainly it won't work to expect miners to incur a large penalty, but a penalty function that is non-zero though still small relative to transaction fees can work; if users include a larger than normal fee, their transaction may get added to an otherwise full block (because the fee is higher than the penalty a miner would incur by adding it), providing faster service at a premium price. This in turn signals to the network that there is high demand and the block size should possibly be increased.

The original implementation in cryptonote coins was clearly broken in at least few ways though (in fact not even fully implemented). On that we all agree.

However, I agree with his argument for why the draw idea won't work. Miners are better off just not including transactions at all if they stand to get a reward instead of the fee.

This is the main idea I was trying to get across earlier in the thread. Demurrage differs from inflation because inflation in PoW crypto is more complicated in that each coin has other value properties in addition to being simply a percentage of total value. If the total supply increases by 1%, that doesn't mean the value of each coin decreases by 1%. FreiCoin's demurrage does mean that because a percentage of coins are actually disappearing. This means a 1% demurrage is much more costly than a 1% inflation (in PoW crypto, that is).

I actually think that transaction fees will be enough to support the miners without subsidy, because the miners will only process transactions with the highest fees. This will turn transactions into bidding wars, and it will become extremely expensive to get a transaction included in a block.

This is why I don't think a fixed block reward system will be sustainable long term, because as inflation trends to zero, miners will be less satisfied with the reward and become more picky with tx fees. We need a proportional (percentage based) inflation. However, I'm not sure how much would be suitable.

With the same concerns in mind, there should be a reasonable cap on transaction fees (perhaps as a percentage of block reward). Transactors shouldn't be able to pay a higher fee, as this encourages the issue.

This only works if mining is monopolized, with miners unable to compete with each other.

Otherwise, if Miner A will only accept a transaction if it carries an extremely high fee, then miner B will accept the transaction with a slightly lower but still high fee, and in turn miner C will process the transaction with an even lower (perhaps only moderately high) fee, and so on. The resulting bidding war will drive transactions fees back down to near marginal cost.

If you accept that mining is monopolized, then you don't have a decentralized system at all. But in that case, yes, you can indeed just charge transaction fees.

I don't believe a decentralized (non-monopolized) PoW system can be supported with transaction fees.

Sir, you are not making any sense.

I largely agree with this. Proof-of-work has information value, showing that it is indeed not possible to obtain the coin (or gold or whatever) without incurring the corresponding cost doing work. Otherwise, you can never be sure what the cost would be. If gold mining were banned for a prolonged period of time, the price of gold would likely go down, because people would be unsure about how much it might cost to dig more gold out of the ground.

I'm not sure how you have a sound freicoin-style demurrage coin without also having PoW (since I don't accept alternatives such as PoS as having been shown to be sound), so I'm not sure the two can really be viewed as alternatives.

Also, a finite money supply (this includes a fixed reward system) will only encourage banks to use the coin as lending leverage. This "fiatization" would not be difficult, as banks can simply loan out MoneroNotes(tm) at ultra low interest rates, that have the "Legal Tender" stamp of approval.

I'd rather have such debasement baked into the currency, so at least the new coins actually go back to the miners.

 :D :D Don't waste your money on chicks!


Thats a great explanation which I 100% agree with.

Would you accept MoneroNotes from a bank ?

Right. I'm assuming PoW is present in both scenarios.

If it's "legal tender for all debts, public and private", and the interest rate is low enough, who wouldn't?

I probably wouldn't. It is a no win scenario. At best the notes are worth the same as the underlying coin, at worst the bank goes bust and you are holding the bag. Why not just prefer the coin itself?

Gold certificates make some sense because they are more portable than gold, can be made more easily in convenient denominations, can be transferred via book entry, etc. I see no real advantage to a MoneroNote, only disadvantage.

Which part doesn't make sense? I'm comparing the difference between a direct tax and the increased supply of a valuable resource. The value cost is not identical in PoW crypto (though it might be in fiat as new money is created ex nihilo).

The point is, will the general public know the difference (or care)? In an adoption race the banks will win because people and businesses need credit, and the vast majority of the barrowers are not crypto anarchists trying to uproot the system.

I don't know about the general public, but big money does know the difference. Counterparty risk is a widely-recognized concept.

Already (even before Bitcoin has entered a real financial adoption phase), there notable people in the finance world describing it as an asset without counterparty risk, and therefore interesting and potentially valuable.

I see bank notes having a hard time getting real traction when the notes have no real advantage over the coin.

My fear is they won't need an advantage if the easy credit/convenience factor is high enough. I already see this becoming a problem with visa/mastercard processing off-chain bitcoin transactions. The public will embrace the middle-men we originally sought to eliminate.

I don't actually see anything wrong with off-blockchain, as long as you end up holding the actual coin at the end of the day.

Obviously people will get goxed and goxed and goxed again, but eventually they will learn, and tools (hardware wallets, etc.) will improve along the way.

Astute and echos some of my throughts. :)

The next post by Johnny after the above quoted one was spot on.

I had relevant economic discussion (https://bitcointalk.org/index.php?topic=583449.msg7884343#msg7884343) in the other Monero thread.

Again, this is another technical consideration that grandma is not likely to understand. Who's the authority? Blockchain.info? or JP Morgan Chase? There is always the possibility that the masses will embrace the wrong authority and the blockchain becomes irrelevant (back to fiat we go).

There are lost coins at least. Without new coins the money supply will definitely shrink forever.

You are assuming the masses hold most of the wealth, that is likely false. Yeah grandma may do the wrong thing. George Soros probably won't. For that matter, her grandkids (or theirs) probably won't either. It's a bit like getting scammed on the internet today. Grandma is a far higher risk than the grandkid.

The demand for liquidity has presumably also increased proportionally, so I don't think your postulate is correct?


That may not be the case if the masses are mining with electricity costs that are a multiple of the income from mining. The fat cats would then have to mine at-scale at huge losses. So instead they must buy at market prices which drives the prices higher thus supporting my claim that price scales to mining demand.

OTOH, even if I am correct that price will scale to mining demand (https://bitcointalk.org/index.php?topic=583449.msg7884773#msg7884773) and if this caused mining to always be profitable for masses (which I don't think follows, because in economics we have the very important concept of marginal vs. average price), the balance of distribution shifts towards masses due to second order effects (velocity not just position).


Capital will chase adoption because price yield scales to demand.


All monetary history disagrees with you.


Debunked above?

No, what it means is, people abandon the coin, stop using it, and move to a coin that has a fixed, non-zero subsidy of most likely 1-2%.  In other words, Bitcoin itself will either have to dwarf every other coin in market cap and liquidity, by exponential magnitude forever to avoid this, or even BTC itself will die if they refuse to fork to non-zero block reward.

Finally someone gets it.  8)

I figured that out a year ago but most everyone was looking at me cross-eyed.

I am still having difficulty agreeing that human population growth + productivity has only averaged 2%.

The currently low birth rates in the west are an artifact of the massive bankrupt socialism, so this will end.

You are conflating the debasement of the dollar with the artifacts of the power vacuum of democracy (https://bitcointalk.org/index.php?topic=557732.msg6864750#msg6864750).

The repeating cycles of failure of the collective is not due to debasement. Debasement is absolutely required because growth of the population and productivity is exponential (percentage, not fixed nominal amount)-- hard money tards would rather savings eat productivity because it means capital can grow in purchasing power merely by sitting in hole and not being productive. Even the Bible admits this when it says in numerous versus about money "it will grow wings and fly away" and the punishment given to the tard who buried his hoard in a hole (to "keep it safe") in the Parable of the Talents was all his hoard was taken from him and given to the one who put it to productive use earning a compounded interest.

The centralized control over debasement is one of the levers afforded to the power vacuum, but it does not logically follow that decentralized debasement is.

Hyperinflation never happens to the reserve or empire currency. It only happens to fringe and revolutionary governments. Martin Armstrong explains this in great detail on his blog.


You can join Kurzweil in his vacuous nonsense (http://unheresy.com/Information%20Is%20Alive.html#Algorithm_!=_Entropy).

The human economy has always been and always will be using inflationary currencies, your selfish hardtardmoney delusion aside.


You think the target market of crypto-currency are investors. No that wouldn't be a currency. The target market are spenders and users of the facilities (network effects) it brings.

The key to beating Bitcoin is making a currency that is more popular TO USE, not just to invest in.

Think for example social media.


I couldn't disagree more.

You've got to create uses for the coin. And the best way to do that is put the coin in the hands of as many spenders as possible so as to stimulate the demand for such facilities and network effects. The whales will be buying the spent coin and the virtuous spiral (spenders mine -> spend -> investors accumulate) spirals upward.


Please do fixed nominal debasement or some tiny % such as 1%.

That will leave the door open for a coin to do it correctly. Thank you very much.

The breakthrough of Bitcoin was the creation of a protocol for the network to reach consensus on how the next block was created. But this is for deciding transactions (and yes it just so happens that block rewards are also given at that time too) but what if there was another protocol created so the network can reach consensus on how much reward is created?

So there are camps of people that like the current setup with Bitcoin having a hard cap, and then there are proposals for a fixed constant block reward (e.g. 1 coin per block) or even block rewards based on a fixed exponential growth (e.g.. 0.5%-1% per year), but what if the block reward is instead reached by network consensus?

So in that case, it may be possible that the network can go 100 year without ever raising ANY reward, so you get absolute hard cap on supply. But if the network decides that there needs to be some new coins released, it does that and the effect may be tiny growth, maybe even on the order of 0.0001% or even as large as 2% depending on how much coins have been lost, or how expensive it is to process transactions. In this case, no hard limit is set on the amount of new coins created, (i.e. some people are very against say 2% growth), the amount is flexible (may even be 0%), and entirely decided by the network (i.e. it is "fair").

Do you think such mechanism is possible?

I hope you understand that all voting (consensus by stake) mechanisms are centralizing (https://bitcointalk.org/index.php?topic=600436.msg7883273#msg7883273).  ::) (don't tell me you are surprised that for example the Bitcoin Foundation ended up as centralized and corrupt)

And so now you have my answer why I don't contribute to the development of Monero. Because design-by-commitee (or worse, design-by-the-mob consensus) is proven to be an abject failure. All great open source projects have a Benevolent Dictator (For Life) (http://en.wikipedia.org/wiki/Benevolent_dictator_for_life), who makes these key decisions correctly after fielding all input from the community. I don't see strong enough leadership (I believe there isn't even one leader, i.e. it appears to be leaderless organization (http://www.starfishandspider.com/preview/index.html)) nor do I see agreement with the concepts I want implemented in an altcoin.

If you look at what works (and what the Apaches actually did) is many leaders each leading their own competing projects (families or clan). The competition is what ends up forming the overall outcome of leaderless (resilient) organization but optimally because each competing entity is not leaderless.

in general i like the idea.

BUT: i think a possible unlimited inflationary money supply would fear many investors away

does your idea mean that miners only get rewarded by transaction fees or do they get nothing?

i'd like to see an working example with miners working only on fees! that sounds intersting...but more as an experiment.

the next problem is how to reach consensus in the second chain. in btc side-chains or merged mine chains are possible so i'd say it could be implemented...) the tough questions are: how to vote: pos like with your current stake (by submitting it to a pow proofed sidechain) or by burning some of your coins?

edit: imagine a very big exchange gets robbed. it could bribe holders with fiat to vote for a bigger supply to make it possible to recover that loss. i am unsure if i like that. need to think more about it

Ah, but you are contributing, by posting on these threads. If you feel that is not a good use of your time, you know what to do.

Even just bumping the threads is contributing in a useful way, and we thank you for that. Relevant on-topic content that provides insightful input to the development process is a bonus.

I have an incentive to contribute in that way, because we all benefit from hashing out the ideas.

I meant those who have implored me publicly and privately to contribute actual programming effort. So now they have my answer.

Is it possible for consensus to be between miners and stakeholder, so it's not just stakeholders that get a vote? I mean after all it's the miners doing the work.

Also, is it possible for any other mechanism other than stake to reach consensus?

Again, I'm no expert so I have no idea what I'm talking about but just an idea.

P.S. on the subject of how to best run a cryptocurrency, if given the power, how exactly would you dictate your perfect cryptocurrency? What decisions are best left outside the control of the masses?






It actually refers to after all the coins have been emitted and the question of if transaction fees are enough to sustain mining. If tx fees are, then there is no block reward, but if it isn't then some new coins are created, but how many coins is to be decided by the network.

My hypothesis (https://bitcointalk.org/index.php?topic=600436.msg7883273#msg7883273) is that all consensus built via stake (voting) is centralizing.


Satoshi's longest chain rule via Proof-of-work. And we are contemplating improvements (https://bitcointalk.org/index.php?topic=600436.msg7884092#msg7884092) to it.


The way open source appears to work best is all discussion is open, but when it comes right down to it, the leader keeps the direction focused. Watch Linus Torvalds explain it (http://www.youtube.com/watch?v=-ZRvHbHxr-k) (also explains why people get annoyed with my posts).

After Satoshi left, Bitcoin was leaderless and no significant innovation was achieved after that.

The conclusion I was leading to is the same as yours. If bitcoin doesn't remedy the issue it will be abandoned long before such a situation manifests.  I was kicking this horse when bitMonero was still just an idea, and the community's anti-inflation paranoia gets in the way of implementing a solution that can really work.

First you must choose the long-term debasement rate category:

a) declining nominal rate of debasement, i.e. asymptotically nominally 0 a la Bitcoin
b) slight demurrage, i.e. shrinking money supply if you send it to the ether (forgot how Freicoin handles demurrage)
c) fixed nominal rate of debasement, i.e. asymptotically 0%
d) fixed % rate of debasement, a la Inflatacoin (which failed? Was it 10%? Did it exist?)


If you choose d (which apparently quite a few of us think is correct, but we may not be the majority?), then you have to decide the %.

So what determines the ideal %?

I suggested the long-term rate of debasement should mirror the population + productivity growth.

http://www.globalchange.umich.edu/globalchange2/current/lectures/human_pop/human_pop.html


http://www.nber.org/papers/w15834


So that is a range between 1.3 + 1.7 = 3% to 2.1 + 2.05 = 4.2%, i.e. 3 - 4%.

---

Another way of framing this question is to consider my theory that if the mining is won by the home miner (who doesn't care about the electrical cost thus crowds out the investment miner) this increases the number of spenders, which due to Metcalf's law, increases the network effects (growth in use) by the square of the increase in spenders.


Thus the ratio in network effects growth between a 0.5% and 1% rate of debasement is ≈ 1 x 1 / 0.5 x 0.5 = 400%.

Thus the ratio in network effects growth between a 0.5% and 3% rate of debasement is ≈ 3 x 3 / 0.5 x 0.5 = 2700%.

Thus the ratio in network effects growth between a 1% and 3% rate of debasement is ≈ 3 x 3 / 1 x 1 = 900%.

The ratio in network effects growth between a 3% and 5% rate of debasement is ≈ 5 x 5 / 3 x 3 = 278%.

The ratio in network effects growth between a 3% and 4% rate of debasement is ≈ 4 x 4 / 3 x 3 = 178%.

The math shows that going to higher percentages diminishes the potential gain in network effects growth for the same difference, e.g. 3 - 1 = 2 and 5 - 3 = 2, but the former is 900% and the latter is 278%.

---

One counter argument to the benefits of getting more coin into spenders hands is they spend putting a downward pressure on the price. But this liquidity means the price seen on the exchanges is more realistically the marginal price you will pay. Whereas I had pointed out (https://bitcointalk.org/index.php?topic=583449.msg7828380#msg7828380) that when liquidity is low, the market price is meaningless.

Q: What is 3% annual debasement to a layman?

A: $25 per month for $10,000 in savings.

Q: What is 1% annual debasement to a layman?

A: $8.33 per month for $10,000 in savings.

But if the demand increases faster than the supply of the coin (i.e. the population rises) and or the production of the economy rises (i.e. productivity rises), it could eliminate those costs above because in the former case the price of the coin rises and in the latter case the purchasing power of each coin rises.

No way to make it variable. Who would decide? I answered that (https://bitcointalk.org/index.php?topic=597878.msg7887875#msg7887875).


If population and productivity growth both diminish globally then we will be in a Dark Age, but some where the productivity will be increasing radically (e.g. Eastern Rome as Western Rome imploded), thus the debasing currency would be applicable where it is most useful.

In the Mad Max imploded economies (e.g. Western Rome, where population fell in Rome from 1.3 million to 30,000), they will be fighting and hoarding gold and so it is impossible to help them with a currency (they wouldn't use it any way and instead will bury their money in the ground thus imploding their economy).

If I understand the main thrust of your economic argument - it is that the inflation of monetary supply must keep pace with growth and economic expansion.

I wonder do you accept that the future (perhaps even the present) consists of multiple competing and complimentary cryptocurrencies?

Thus, as new successful cryptocurrencies are introduced, these are a de-facto expansion of the money supply. The money supply is thus determined by the market's rate of acceptance of new cryptocurrencies.

In short, money supply means something different in a world of multiple competing currencies.

I was thinking about this lately. It is just one of the self adaptation mechanisms of the cryptocurrency network. There are so many layers of such mechanisms and different aspects. It will be quite interesting to see how those develop in practice.

The point is to have a currency that is both good for hoarding (investing) - liquid - and beneficial for the network to be secure.

What if we use an formula that connects tx fees and a % inflation with the network diff

If total supply = A

Tx fees = X

Block Reward = Y

Network Diff = Z

so we rule out lost coins with something like 0.7% but txfees ( more with wide use ) gets subtracted from the 0.7% in compount interest style and we also add something to the Network diff equation if/when there is spikes in the network.

Im not a mathematician nor a big enough brain to do the exact formula

But I think it might help in a way to have both the lost coin issues solved aswell as miners being happy to secure the network without causing deflation with the inflation %.

Some have murmured against the distribution, but nobody has offered any alternative parameters!

- Should I make a more top-heavy one with a smaller number of holders in the lower rungs? Or less top-heavy?
- Should it be wider so that there are more holders in both extremes and less in the middle? Or the opposite?
- Are there 100,000+ holders that I don't know of? (power law = yes)

I would be surprised if there were so many as 100k.  The more I think about it the more I would guess your total is probably good, though I would also guess it will be multiplied shortly if the current trend continues.

What will be multiplied? The number of holders? If that's the case, the dilution must happen from somewhere --- ahh.. it doesn't - that's why the daily 1% inflation is good, it lets everyone keep their coins and still accommodates new holders!

Is 1% inflation THAT big ?

Why people are so scared ? 1% seems really small when you look at the current block distribution.

We are talking about the present inflation rate, which is about 1.1% per DAY. But it seems to achieve the goals smoothly - ownership is increasing, without the need to coerce the coins from existing holders (which leads to pump, dump and abandon).

Right sorry I missed a part of the discussion. You guys go so fast.
Yes the inflation is absorbed pretty well until now.

It is also the rule : if you buy it, you agree with the distribution. Therefore, the inflation is right.

Anyway we'll see how it goes but I'm not worrying too much.

FreeTrade, competing currencies also means if a parameter of your coin is too messed up (e.g. Bitcoin's debasement will decline asymptotically to 0[1]), users could leave for another coin. And there is a research paper that predicts declining debasement is one factor that might cause miners to leave Dogecoin[2].

Rpietila has shown that 5400% annual Debasement (1.1% per DAY) is working to distribute the coin via the normal expected power law distribution of money[3].

Decentralized debasement is the way we efficiently distribute crypto-currency.

Distribution is very important, because Metcalf's Law tells us that usage scales as the square of the number of users. Peter R had even shown that the Bitcoin price is scaling by Metcalf's Law. This is observed fact not just theory.

Dogecoin showed that more liberal distribution works (the community was working very hard to donate and get coins into as many hands as possible). Note there is a research paper that predicts Dogecoin's death due to declining rate of debasement[2].

It is true that most people just spend what ever you give them, e.g. Rpietila often cited the land given to Russians after the fall of Communism then most just sold it and the ownership ended up concentrated again. But this spending process creates the network effects that are the square of the number of spenders. Any one here who understands a little math, understands that something that is scaling by NxN instead N, is scaling (growing) much faster.

I'd prefer to go even higher than 3% to something like 5%, but it seems to turn off myopic investors who don't want to maximize distribution. And the difference between 3% and 5% is only 278% of Metcalf squaring. Whereas the difference between 1% and 3% is 900% network effects growth factor. So seems to me that 3% is the best choice. It also matches the level of population + productivity growth, so if ever it became the dominant currency then it would be well matched for the long-term.

P.S. Using the term 'inflation' where you should be using 'debasement' is an error. Inflation has to do with the price level in the economy, not the money supply and the relationship between the two is complex given by the 4 variables in the Quantity Theory of Money.

[1] Strictly speaking I believe the minimum is 1 Satoshi thus it does concretely reach 0, not asymptotically.

[2] https://bitcointalk.org/index.php?topic=600436.0

[3] A. Dragulescu and V. Yakovenko. Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States.

P.P.S. Xanis perhaps you need some Xanax (http://www.drugs.com/xanax.html) and then watch this (http://www.youtube.com/watch?v=-ZRvHbHxr-k).

Part of the reason it is working is the fact we all understand the emission rate is currently as high as it EVER will be and drops off in an exponential-like curve.

1.1% per day... works for TODAY.  If it were going to be that forever no one would touch this with a 10 foot pole.

And investors accept it because they understand distribution is necessary to gain adoption and make it worth something via Metcalf's Law.

Coins that stop distribution die (Bitcoin will either die or be morphed with debasement when the G20 government coordination takes it over via the 1 or 2 pools that control it). Gold with its very low rate of distribution has never been used a currency (without additional debasement), not even in Byzantine.

The reason is very simple and due to the power law distribution of money[1]. Investors don't redistribute to spenders because they only spend a small fraction of their net worth. Thus government must step in and redistribute it. Crypto-currency offers the option of decentralized redistribution (that can't be gamed by the power vacuum of democracy). That is the reason I would prefer to go to 5% than 3%, but the investors here are ignorant. That is why I am teaching now.

Naive investors don't understand that there is a symbiosis between investing and spending, you can't have one without the other. Warren Buffet understands this.

Btw, Monero appears to have a very serious fatal flaw (another reason I didn't bother to develop for it, nor buy it). With the distribution rate being so high, it is impossible to bring it down without causing the miners to leave for another coin[2]. If I designed a currency, never would I make the initial distribution so much higher than the long-term. (do you really believe the core developers are so unselfish as they try to paint themselves, of course not!...why did they set the initial debasement rate so high...to get more coins!)

[1] A. Dragulescu and V. Yakovenko. Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States.

[2] https://bitcointalk.org/index.php?topic=600436.0

If the currency starts from zero, there has to be a high initial daily inflation to get it going.

If it does not start from zero, it is called "premine" and I don't buy it and it will die.

That is true but what is the second 6 months debasement for Monero? I will be happy to mea culpa if it is not that high?

Or more specifically is the nominal block reward declining?


You not buying a coin does not mean a coin will die.

Yes, nominal is declining. And percentage is rapidly declining. After 12 months the percentage is something like 0.2% per day instead of 1.1% as it is now.


Seriously   :o

http://www.monero.cc/index.html#specifications

As you see the block reward is declining. This is the hallmark of dying pump & dump coin like Bitcoin.

You never fail to make my day  :P

I think we should test this theory.  :P

Bitcoin is dying. Look the mining is centralized in 1 or 2 pools. And the funding for mining will die (tx fees being a Tragedy of the Commons). That is a no brainer.

Meanwhile as we fiddle around (which is pissing me off all the infighting and lack of focus), the global gridlock and thus the collapse of monetary velocity is accelerating.

http://armstrongeconomics.com/2014/07/17/russia-threatens-to-collapse-of-the-u-s-financial-system/

http://www.silverdoctors.com/wp-content/uploads/2014/04/Willie1.jpg

Bitcoins been pumped and dumped for 4 years. With each pump giving it a new low, not to mention the record # of companies/websites starting to accept Bitcoin and all this happened in just the last year.. Yup, it's definitely dying...  ::) I'm really starting to think Anonymint has some sort of Agenda, especially against cryptocurrencies.

It would be much preferrable to have a small premine (say 1% of 10 year coin supply) used to fund development of the coin than to have say 50% of the 10 year coin supply allocated to what is effectively a premine for the early miners at the expense of the funding and adoption of the coin for the latter years.

Much better to get a smaller premine into the hands of the core developers, than using a scattershot approach to get those coins into their hands as Monero does. The problem with donations is they are subject to politics and design by mob consensus, i.e. leaderless and unfocused.

You are fooled as most humans are by confusing nominal growth with rate of growth (http://www.youtube.com/watch?v=F-QA2rkpBSY). Thus you can't see when something is slowing down and dying.

As Bitcoin has become more centralized, they will strangle it, which we can see happening if we look at any metrics that measure the rate of growth, e.g. the market cap rate of growth has slowed which is what I showed that it is log-logistic not logistic (https://bitcointalk.org/index.php?topic=557732.15) as should be normal for technology adoption. (note Risto doesn't accept or agree with my curve fit, so we will have to wait to see if it was correct or not)

It is so tiring (and wasting my time which takes away from doing real work that could help us) to respond to slander by ignorant posters due to their ignorance.

I can tell from the present publicly viewable donations and whatever else hasn't yet been accounted for, there is not less than .5% of the current supply that has been donated for bounties and development (this includes 3.685 BTC I've priced at .00477 - which would be much more if priced by their actual day of contribution).

This would be a good number to track (roughly of course), and initiatives like the community HoF (https://bitcointalk.org/index.php?topic=697438.0) can help bring to light an approximation of what has been donated.

There are donations that are privately given as well, which I've no way to attest to exact amount (save to say that it would bring that number closer to the 1% ideal mark we seem to agree on). Disclosure has been requested for the funds in the donation address.

The flaw you point out (scattershot approach), while potentially true, hasn't necessarily been fatal as of yet.

To date, I've not seen much in the way of politics emerge with respect to organization. It would be misleading to say political movements are not budding; however, the pull is not strong yet. For a comparison, take a look at the politically motivated attacks Moolah is under with regards to Dogecoin: http://www.theverge.com/2014/7/7/5877131/moolah-currency-exchange-tearing-dogecoin-apart-report

Towards the mob consensus -- I would propose that even with a leader/BDFL, the consensus is governed by a mob (albeit possibly to a lesser extent). If such a leadership were to come about in this situation, it would inevitably be an emergent leadership. Though this 'mob' has already rejected one assigned leader in its recent past -- as such I would say that it will take time for one to replace that, if it were going to happen. Who would jump on top of a horse that just bucked it's last rider? You would want to give it time to cool down -- though the horse is in no way deemed unworthy of being ridden in the future.

Of course, there's no guarantee that this will happen -- but it would be illogical to say it will never happen. My conclusion in this is that the community would likely follow an emergent leader over an assigned one, due to the way in which Monero was introduced to the world (though I have to admit this is just my personal stance - someone please make a comment if you actively want no leadership at all). Logically, I cannot see any other scenarios in which this could have played out.

In this case, you say that it's unfocused. I'd make the comment here that there's really no way to be unfocused right now .. even without an assigned leader. There are quite a few large thorns that tend to stand out amongst the rest of the needed advancements. Considering if one (leader) were in place right now, I would think that the top priorities are already being addressed. Number one priority to me seems to be tackling the database, so the software continues to run on computers that people already use. Apart from that, there are factions that branched out and started looking for GPU miners, gambling sites, and other initiatives like raising awareness. The results of which are brought to the main community, and are accepted or dropped.

Do you have a time-frame in which you see this project becoming unfocused? Do you also have a target date in the future when the 'scattershot' approach will lose all benefit it has so far provided? I recognize this seems far from ideal to you, but I'm trying to see how far from ideal you think it is. Personally, I think it's kept on track pretty well .. but that's only a viewpoint encompassing the last 9 months.

kbm, ty for confirming a 1% number. Is that 1% of the current supply or of the 10 year supply target?

Sometimes spending more doesn't get more in return, and in other cases it does. I guess it depends a lot on who is involved. I think if you have someone like Satoshi, then you want him well vested and hyper-motivated. But you don't want him to own 10% of the world, as it would be ridiculous to put that much control in one person's (or a few core devs) hands, because no one is that omniscient and indispensable (relative to the world of possibilities, not just considering the coin's future). Then again, maybe no coin can ever be adopted by the whole world any way.

On the issue of Bitcoin dying, it is a long way from being used by most people in the world and looks like (to me) it won't get there. Logistic technology adoption (e.g. cell phones, personal computers) is not like that. Can another coin do what Bitcoin apparently can't? I don't know. The unknown and the possibility makes competition exciting. I don't think the goal should be to #2 to Bitcoin, nor even to equal Bitcoin, rather I think it should be to accomplish what (I am postulating that) Bitcoin can't (because it became centralized, has tx Tragedy of Commons, the current version of the longest chain rule can't scale, etc, etc, etc).

Many people say they are annoyed by my posts. Well it is mutual. I am annoyed by people who have no clue how far we are from having a coin that could really scale.

As for the current development effort for Monero, I am not really tracking it too closely. But I am referring to the overall vision and sometimes how paradigm shifts invalidate a lot of work. I think the only way to really compare this sort of thing is to compare real coins in the market. We could waste a lot of time talking theory. Practice is better.

confirming no less than .5%, with an agreed on reasonable goal of 1% of the current supply. Scale that by .1178 for the total supply (.059% of the total supply), with 6.25% of the time in which 80% of the coins will exist already passed. My statement about it tracking closely holds, as the donations are tracking the emission here yielding a possible .944% developer fund, when compared to 80% of the supply.

Nothing less than wild speculation makes me say that it's probably closer to being above .7%, approaching .8% in actuality .. but I can only say for sure that .5% is the absolute lowest.

And your implied point is the % of bounties may continue at that rate as the money supply increases, since it was not taken as a premine then we don't have to compare it to the long-term money supply rather as an ongoing percentage.

My 'scattershot' criticism is about the declining nominal block reward, as this shifts more of the debasement earlier than a constant nominal, which has two theoretical disadvantages:

1. The faster the mining reward declines, the more pressure to mine and pump another coin[2].

2. Distribution is declining faster.

If you took the money for development in a premine, then you don't need to 'scattershot' the money supply in order to get enough coins into the core developers pockets (early on) to make the coin a reality.

There are counter arguments of course, but none that I've found compelling. If anyone can't counter, please do.

---

Here comes the censorship...

This was predicted by that research paper I footnoted in a prior post[2].

When the nominal debasement rate declines too rapidly (http://bitcoin.stackexchange.com/a/19870), then the miners look for another coin to pump up.

These political fights are probably just an artifact of that "Programmed Design" driven economic decline.


Edit: the next block reward halving for Bitcoin is 2016. That could be the straw that breaks the camel's back in terms of making its death rattle more apparent to all.

1. This seems to be true with regard to  darkcoin (http://bitinfocharts.com/comparison/difficulty-drk.html), which is showing signs of a declining hashrate for the last few weeks. They hit 5 DRK/block, the low limit (i believe in May sometime). But back in march, there were still around 15-20 DRK/block IIRC. The point I'd try to make is that the value reward takes precedence over the actual number reward, and is showing to be independent of the total coins in circulation/to be in circulation. This falls back on keeping the value of the coin closely tracking the value of the/added by the demographic. The value seems rooted heavily in core development, known competition and apparently a slight bit of speculation (there's more - I believe aminorex addressed fundamental valuation far upthread). Two of three of these points are weighted by external forces to the currency(speculation can be driven by proposals like this: http://www.dfs.ny.gov/about/press2014/pr1407171-vc.pdf), which can lead to an increased value reward from mining.

Furthering the point, the value reward is something that is going to fluctuate based on many things outside the proposed emission and core development - and your point that competition becomes present is one of them. My point is that there will be more than just other competition to worry about (and you've stated it many times as well), and in these cases the value reward can positively correlate to legislation. Whether that will be a driving factor for adoption for a currency(specifically Monero) I think remains to be seen. If these currencies were outlawed in the coming months, adoption may decline (temporarily or permanently) but value reward might just become exponential depending on what is available. I don't think this is entirely compelling, but if a high emission were to be coupled with an event that would require the currency to be capable of handling (and mostly sustaining) a massive influx of both value and adoption in a short period of time, then the two events may be a suitable match. A worst-case scenario type currency. I would consider that a large percentage of the world is on the brink of adopting cryptocurrencies, even if they are unaware of it yet; however, this point does not address debasement (nor do I believe beyond doubt that it's going to happen, only strong belief to this date).

2. Again breaking this down. I'd have to look at many different points of distribution. Value distribution, % held by person relative to total supply distribution, comparisons to other failed distributions. While I would feel uncomfortable with even one person having control over 1.84 million of these, I would feel even more uncomfortable with 1% of the users in control of 18255600 XMR. I'm currently in a position where I can say that that is not happening yet (in that 1% of the people here do not own 2151021 XMR), as I feel confident that there are much more than 21727.5 XMR collectively in the hands of 99% of the people here. This is only taking into view the current distribution compared to the current world distribution of value.

Even if that 1% (in control of the vast majority of wealth) of the world were to currently purchase and hold every Monero from here on until 4-10 years from now, then they would still collectively have less than 90% of all Monero (provided everyone else held). This is currently a favorable outlook to me, even though it may lead to the cycle repeating (In which case I would consider the effectiveness of having a cryptocurrency in the first place nullified .. no matter how far ahead or behind I ended up -- as I would have potentially defined as being in a 1%). I do agree that a high rate of emission will correlate to distribution declining faster -- to which I'd say that 100% penetration (or at least ideal penetration) would likely be impossible, but the extent of distribution still has yet to be completed (and even then, does it yield a 1% in control of 99% of value scenario?). Anything that does not lead to that scenario, has the possibility to serve as a useful method of exchange until something better comes along. I would think the worst case scenario here would be that the cycle repeats for a length of time that can be correlated to how concentrated the value is, until it's done right. My participation will be given to the extent that I can provide in the meantime.

As I stated before in a private message on this subject, I do not think the majority of people are collectively ready (on so many different levels) to deal with an ideal cryptocurrency (outside of a very small minority). I also don't know if I am. We can't even get New York to say that they don't want the entire world to see the exact amount of money inside of everyone's wallets, along with every transaction that was ever made. I don't think they will be ready for an ideal one within at least my lifetime, as the only way I can see an ideal one taking root and achieving full penetration is with a revolutionary force (can't even get most of them to adopt a non-ideal one without bribery - 'hodl this for me now, it'll be worth a lot some day'). If that does not manifest, then it will be one that is evolutionary.

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Here comes the censorship...


If only we could guarantee the moderation was intended to be used to deter abuse, rather than actively ever using it to abuse, or prevent abuse .. without alerting the abuser in suit.

I hadn't considered that as a motivator, it makes sense; however, they did continue to fund both a nascar and a bobsled after the first halving (where the value did not increase, nor were there political explosions). Why weren't there major political blowups then? I made the point that there would have been less blowups if, instead, they had funded core development (this is the major focus of Monero currently) here: http://www.reddit.com/r/Monero/comments/2akwwx/i_was_having_a_chat_with_moolah_support_when_this/cixfq8k . Perhaps, both the decreasing block reward and lack of core innovation lead to a negative political blowup?

But again, this would lead to the previous points about having an unfocused community. Did they have any type of leadership? I'll have to look that up I guess.

edit: Maybe it's because there was a lack of leadership, and the pull for someone to fill that role became too big? I really don't want to dig all over Dogecoin posts to see if they had leadership, but I'll be doing that now.

another edit: using only Dogecoin as an example (and accepting that decreased block reward (possible value reward) under a leaderless scheme will correlate to catastrophy), we'd expect to have a 'vacuum effect' at least established by the first 'halving' (Monero - April 2016 I think, somewhere around 8.8/block) and then total political failure after the second 'halving' (Monero - April 2017 I think, somewhere around 4.4/block) if the role is not fulfilled.

Your log-logistic fit would have been perfect in late 2012, showing the slowing of growth and maturation of the technology. So having this analysis, you would have sold all your bitcoins at $13 or at least never bought any. Right?

So one of us now holds bitcoins at $623, because his model was correct and already has an astounding 94.5% Rsq-coefficient (far higher than any log-logistic fit to the bitcoin 5-year price data).

Bad models have real world consequences to those who choose to follow them. The weakness of yours is that it is obvious that the saturation point of bitcoin is in 100s of millions or billions of users, and you are interpreting random noise to mean a secular slowing of trend at the point when the actual slowing of the adoption rate is still 3 orders of magnitude away!

I agree that distribution is of key importance. One method of debasement of aggregate cryptocurrency, is to create new one with an innovative distribution, as you pointed out happened with Dogecoin. Yet you still speak of a 'dominant cryptocurrency' - I feel this is the source of our different understanding, you think the world will become fixated on a single cryptocurrency. I think the current power-law distribution of crypto will be up-ended.

Some of us read them with great interest.  Especially when you write something with which I disagree.  Often however I agree, but not always.

Constructive criticism, by someone who is well meaning in that you really want to make the crypto currency project work, is difficult to hear for many reasons. 
People may disagree because they disagree with an assumption, or a conclusion, or because they have a vested interest in the conclusion being wrong.  In any of these, we have the opportunity to learn something.  In a disagreement, typically at least one side is wrong and can get corrected.  The other side, the side that was right, also gets to learn something as they have the opportunity to refine the message and delivery and also have the opportunity to have that discussion in public where the elements of the arguments are made plain.

At a certain point, we run out of time explaining, and need to move past the [problem identification and discussion] and into [problem solution].

To the extent that a single crypto-currency (one set of features) can't meet the needs of all the people, then there will be fragmentation. But people prefer to have a winner take all, because they like simplicity and the assurance they are with the rest of the herd.

Ideally we would have many competing crypto-currencies, because that in theory could provide the most decentralized scaling. But one would assume that the implementation and feature set quality would be power law distributed, because it requires investment.

We may go through a period of proliferation of experiments, before settling in on the winner. The winner might already be Bitcoin, which in my opinion is not sufficient to scale to the global population (where it is now with a couple of big pools, exchanges, and merchant service providers, it can only scale with the centralization of Peter Thiel which means it can't outscale fiat, because he is a fiat slave[1] and the fiat world is headed for a collapse and global consolidation).

My intuition is the market is hungry for an altcoin with serious quality of implementation and feature set that bests Bitcoin and that is structured to remain decentralized. I believe such an altcoin will quickly dominate.

I don't have a lot of analytical sources to back up my intuition at this point (don't have time to go off on that tangent right now, e.g. could begin reading Moldbug's "there can only be one").

P.S. Thiel is the angel investor of Facebook too, so I assume they can do a social media rollout for their bastardized Bitcoin services integrated with that other app they recently purchased (the name escapes my memory...WhatsApp?). But it is not decentralized, thus it can't scale exponentially as fast as a network (Metcalf's law). As soon as you put a centralized node in the process, the scaling of Metcalf's law is reduced.

[1] Ever tried using Paypal and have absurdly stupid shit happen to you because they are slaves to KYC, AML, and other edicts? Happened to me numerous times. Also his (with Elon Musk) Tesla Motors only made it because of government subsidies.

How do you calculate that my fit predicted that in 2012? Here is the crude fit graph I did (notably after 2012). It seems that even if I did that fit before the run-up in 2013, it would be impossible to fit it such that it wouldn't have shown the price was far too low before the run-up in price in 2013. This is because of that spike up in the price in the early stage (which is characteristic of log-logistic).

I didn't try to make the data to fit my model. I was trying to find a math model that fit that data. Logistic doesn't fit, go compare to SlipperySlope's graphs.

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Please show me the math you claim, because I am lazy (lacking time) to go figure it out myself?


Bitcoin might indeed reach a few 100 million (but only via some Thiel service such as Bitpay, Coinbase, Facebook WhatsApp, etc), but that doesn't mean its adoption rate wouldn't slow on the way there. You seem to be assuming the adoption rate wouldn't slow until that point, and then suddenly so. Continuous curves can't do that. Either you have S logistic curve or you don't.

The global population is 6+ billion and will be 7 - 8 billion by 2020. So Bitcoin scaling to 1/10 or 1/50 of the global population is not the same penetration as cell phones, computers, and internet which will likely reach 80% (8/10) of the population.

Please realize that WhatsApp is more important to most users (http://www.forbes.com/sites/parmyolson/2014/03/04/inside-the-facebook-whatsapp-megadeal-the-courtship-the-secret-meetings-the-19-billion-poker-game/) than Bitcoin. Thiel can do a money transfer service in WhatsApp to address most of Bitcoin's thrust for most users (who don't need some crazy volatile technological thing). He is merely pulling Bitcoin into the fold of his overall control over money transfer globally with his also Paypal in his stable.

If Bitcoin is programmed by design to fall away, it is no big skin off Thiel's back:


I view Bitcoin as a Trojan Horse planted to keep us geeks preoccupied while the powers-that-be consolidate the global financial system. In any case, Satoshi out smarted them. He revealed to use the Longest Chain Rule solution to the Byzantine General's problem. And hackers don't need to stand by and let that innovation go to waste.

Trying to curve-fit "adoption" is really silly at this point. It's probably silly for most tech phenomena as they all have very different, often unpredictable, dynamics that are never going to follow any nice curve, so the fit is really just an exercise in self-indulgence. Furthermore, the playing field is always changing, metrics are very fuzzy, and statistical significance likely goes out the window.

Essentially, if you could run this earth sim a thousand times and drop bitcoin into the world and see what happens, you'd probably get pretty different graphs. Likely the similar t=large end-state most of the time, but the path is tumultuous, *especially* in the beginning (which this likely still is (either that or the end, of course)).

Now I will slam-dunk my point.


How do you explain away the following then?

http://en.wikipedia.org/wiki/Technology_life_cycle


Notice that all those that were decentralized have an S-curve (logistic) and those that were not decentralized are more log-logistic. The airplane isn't even log-logistic because it is so investment controlled and thus top-down centralized (regulations, etc), although its curve could be the very early portion of logistic (see the one end of the S at the beginning) which would predicts perhaps that decentralization of aviation is coming, see my blog essay on flying cars (http://unheresy.com/Flying%20Cars.html).

http://3.bp.blogspot.com/-O9Z4Um4K018/TiHL5GwzHfI/AAAAAAAAAkU/9TsE6Q98AbE/s1600/Upward+Technological+Trends.jpg

Those are quite interesting graphs.

As with all squiggly lines, you can attach a variety of narratives.

One thing that jumps out at me is a division of technologies between those that are adopted in subgeneration time scales (internet, cell phone, etc.), those that are adopted on generational timescales (TV, microwave, etc.) and those that are slower than generational (phones, cars, maybe electricity).

Also, the starting points seem arbitrary to me. The internet was not in 30% of households within 5 years of its invention. I doubt the starting year for PCs as well. I think someone chose some arbitrary starting years to tell a story.

Yeah, I've seen that image quite a bit, thanks. Surprise surprise, it's like a bunch of random noise blew differently through all those curves (which, yes, are generated by some sort of similar underlying human phenomena). And yet what you're basically doing is zooming in on the early part of one of them, where there's likely to be especially big noise, trying to fit a nice elegant little curve anyways, and then making investment decisions based upon that. Sometimes what gives the elegance-seeking part of our intellect great satisfaction just doesn't matter. This particular domain is one where qualitative fundamentals analysis actually seems better than quantitative attempts.

I added to my post that decentralization seems to be the unifying demarcation for those requiring significant capital infrastructure (whereas the internet leveraged the pre-existing phone and cable TV networks, and wireless towers are subleased from smaller entities).

Also note that the internet and cell phone cost nearly nothing relative to our income levels now, as compared to TV and microwave were luxury items for a long time. Also the utility of the microwave is not agreed upon by all people. There are many people today who prefer not to use a microwave, e.g. myself recently on a Paleo diet.

If we plot some metric for adoption such as price as I did (which Peter R showed is scaling at square of adoption via Metcalf's law), then we need a log scale vertical access to see the early portion of S shape.

On these percentage charts we should see for logistic a ramp up early, then a flattening to linear by 50% adoption, then a ramp down. Whereas for logistic, we should see a ramp down from the start.

The decentralized ones are clearly logistic and the ones that are heavily regulated are not. For example, the auto started logistic, but them failed to remain so (clearly as government regulation set in, because they require government roads).

The clothes washer is decentalized but not logistic. I suspect it is an issue with replacement goods. The laundrymat replaces that damn thing you can't carry around with you as you move.

Here is another one appears to show 30% internet adoption at about 8+ years. Shows the computer reaching 50+% adoption over 50+ years.

The reason consumption spreads faster today is because of human productivity is exponential and thus goods are becoming a smaller percentage of our income. Remember upthread I pointed out that Iron was a precious metal in the past.

Now we are moving past the physical industrial age (physical goods will become almost free to produce) and towards the knowledge age where we compete on increasing productivity in the intangible realm of knowledge (designs, software, etc).

http://andrewgelman.com/wp-content/uploads/2012/04/history-of-products.gif

Anonymint, you post a lot, do you mind if I try to get my head around your argument?

Essentially, you believe that the world needs a decentralized CryptoCurrency that can scale for billions of users without third party services and is fully anonymous, is this correct? (Let's call this endcoin for now, the final coin.)

At the moment you are analysing the current technology and trying to determine if these coins will either become endcoin, or will lead the development of technologies that will be apart of endcoin?

In addition, you believe that Bitcoin will fail and something else will emerge as endcoin?

All these posts swing wildly around the place, earlier there was an entire page of posts dedicated to the Monero donation amount, hence, I am not following very well.

The unifying S curve shape is undeniable for decentralized adoption of technology. There are outliers, e.g. the clothes washer apparently got replaced by the laundrymat along the way and the initial wildwest of autos in the USA got replaced by well regulated government roads and licensing, but that isn't noise it is centralization.

Setting aside whether all the outliers on the graph are explained by centralization (I don't believe they are), I don't see what this has to do with Bitcoin or more importantly Monero.

Both are very much in the innovator phase. Most people have barely heard of Bitcoin and if they have, can't clearly explain what it is or what it does. I don't see curve fitting as being useful on the very first part of the cycle where all of these inventions are close to zero.

If bitcoin gets to say 30-50% then perhaps you can argue that it fits better with the adoption cycle of some of these inventions over others, since they do indeed differ at that point. At the very early near-0% stages, I don't buy it.


EDIT: changed relevant range from 20-30% to 30-50% since the latter is where we see serious deviations from the S-curve model on some inventions such as washing machines, automobiles, etc.

Yes.

I don't think billions in the third world know they need anonymity. They do need to be set free from the centralized fiat control that enslaves them in poverty. But the problem is that without anonymity I believe we can't scale past KYC, AML and the leverage it gives Peter Thiel et al to take control of it and suffocate it. To get over this hump, in my opinion we need anonymity. But we also need other aspects for decentralized scaling too. Not just anonymity.


I don't know if I can lead because of my illness (meaning I am not the same coder I was before when I am feeling sick from peripheral neuropathy and other autoimmunity due to HPV infection in 2006). We will have to see as I am experimenting with treatments, e.g. AHCC, Paleo diet, Iodine, vitamin D3, etc. Yes I do look to see if there is an another effort that meets the objectives. There are many talented people in this world.


Depends what you mean by "fail". It is already failing to be decentralized. I do think it can succeed to be a reasonably popular feature within Thiel's overall set of businesses that deal with money transfer and social networking. I believe he is correct that social networking and the mobile phone are the focus point.

Note that this is my interpretation of events. Others are extremely annoyed or in disagreement with my view. So don't take it given as fact. It is my thesis, not an accepted fact.


Yes we have changed and or intermixed topics of discussion.

I do want to post less because posting means not coding and doing research. But I do also want people to understand my views. So I try to find a balance.

Thanks for your reply Anonymint.

If Monero achieves its objective of being anonymous and we can overcome the IP address association issue, then the last hurdle is scaling isn't it?

drawingthesun, probably I agree (reserving the right to think of something else later) but note scaling involves a lot of things, e.g. not only technical limitations removed but also marketing such as the quality of the mining client.

smooth, it does appear on that chart that the earliest deviation from logistic was the clothes washer at 25%. But what if the plot we are interested in is not Bitcoin but crypto-currency in general. Then we could see many competitors rise and fall, perhaps log-logistically, before reaching 20% adoption for the future of crypto-currency in general. I would need to go find charts of competitors for TVs or automobiles, and or we can consider the different cars and brands that preceded Ford's Model T as a prime example.

So the importance of the curve fit for Bitcoin is showing that its price (and thus square of adoption) is not logistic. In my interpretation, there is no way it is, it already failed and shifted to ramping down shape. In my interpretation, there is no way to go back unless something fundamentally changed with the way Bitcoin is being centralized.

And the importance for Monero is the lesson about how important decentralization is for scaling.

I am curious why you think the demarcation is not decentralization vs. centralization (you don't share my interpretation of the importance of decentralization to scaling)? If you want to share.

Edit: add that I think most (or at least 30%!) of the people who would be interested in Bitcoin in the decentralized form where you needed to download a client and be technical, have already heard of it. In my opinion, the problem is the distribution of Bitcoin was only designed for technical people. And the only way to distribute beyond that was to go through exchanges, KYC, AML and thus ultimately Peter Thiel.

Thus I think Bitcoin reached market saturation for the target market which was to Trojan Horse the techies and keep them preoccupied so they wouldn't interfere with what is coming in terms of fascism and global consolidation of fiat...

Now they can morph Bitcoin with Coinbase and Bitpay and pull in another few 100 million perhaps while also offering other services, such as Paypal, etc..

My opinion is the powers-that-be are pulling in all the various demographics and venues into the digital currency fiat master plan.

There is another potential explanation for the clothes washer— WW2 when the women went to work in factories. So perhaps clothes washing in households was temporarily usurped. Ditto autos being a luxury item and the Great Depression.

I don't see a clear distinction in the data, and I also think your definition of centralized is somewhat strained. For example, I don't think laundromats are centralized for the most part, at least not the same way as electricity. And yet, electricity shows only a modest deviation from the S-curve. Telephones are about as centralized as electricity, and in fact influenced by network-effects, yet show a more extreme deviation. Again, you can fit almost whatever narrative you want to this data.


I think this is extremely wrong. Napster grew to 20-30 million users with people downloading a client and being somewhat technical (using an MP3 player or burning a CD was not a particularly user-friendly process at the time).  Bitcoin does not have anywhere near 30 million users, and the corresponding market (people globally with access to the internet) is far larger than it was in 2001, likely an order of magnitude, or possibly two orders. Bitcoin has perhaps 1 million users, probably fewer if one excludes coinbase-style services (see below), which is approximately 0%.

Whether it ever grows beyond 0% of the real market remains to be seen, but right now you are curve fitting on something that isn't really much of a curve.

I agree that coinbase-style services are more of a competitor than actual adoption of bitcoin.

Yes I agree. And the discontinuity in the rate of air conditioning adoption was likely tied to the energy crisis in the 1970s. These examples and others are why I don't accept that the outliers are necessarily due to centralization, in general.

Something similar may be going on with bitcoin, for that matter, but lacking the perspective of history, we can't see it yet.

Just before you posted, I posted an alternative reasoning on clothes washers and autos.

Notice how much faster the radio and refrigerator scaled despite the Great Depression, as compared to electricity, telephone, and auto. Stoves and clothes washers we can explain as having replacement options, but radio and refrigerator have no replacements and they are decentralized. Radio is highly decentralized (I built one with my Radio Shack kit) and I suppose highly sought for informational advantage.

Centralization appears to radically slow down the exponent on the logistic curve, or perhaps in some cases (e.g. autos) totally disrupt it. But again my log-logistic point for Bitcoin can also be explained by competitors within a technology adoption.


I downloaded it (or some Gnutella thing, I forget). It was easy to use. And I got instant gratification for that hassle, in I immediately recovered lost songs (from CDs I had owned in the past) that I hadn't been able to locate in retail.

So my point is that recovering music from youth is a very popular fad activity for the baby boomers and X-gens who were still energetic 13 years ago.

Now it is even easier with beemp3.com or one of the free online tools to convert youtubes to mp3 audio files. And that is for a pppular mainstream activity and motivation.

This is quite different from convincing me to download a Bitcoin client (which is totally useless now with my CPU) to perform some obscure activity of limited utility to me. I have never done this. The most I've done is acquired some BTC on localbitcoins as efficiently as I could to solve some need to be pseudo-anonymous or receive donations. There was no way I was going to waste my time downloading a Bitcoin client and also place and wait for an order for an ASIC miner to arrive.


Everyone who comes in now will come in only through an exchange. No one will be mining.

That is why I say the key driver will be the hunt for 1% which will drive everyone who earns $100,000 (https://bitcointalk.org/index.php?topic=365141.msg7917072#msg7917072) to find a safe haven. Then mining will be very important as it is will be easiest way to obtain coin anonymously.

The other big potential demand driver I see is decentralized payments over social networking. Thiel sees this too, which why he busy to try to co-opt with WhatsApp. The issue here could be taxes and KYC paperwork, at least in the west. I suppose he will try to work within exclusions under certain thresholds. With anonymity and decentralized, we could potentially middle finger that.

So if you are going to bring that Napster size market into your crypto-currency, you are going to need your wallet client integrated into social networking. ;)

Radio and internet scaled at roughly the same rate attaining 50% adoption within 8 years. Thus consumerately as Bitcoin is approaching 6 years. As a decentralized communication protocol, it should have reached 20 - 25% adoption by now.

Plonk.

We can see that Bitcoin was growing much faster until the crash from $30. Then the log-logistic slowdown became apparent. Why? Well logistic 100% adoption looks log-logistic when you zoom out. I posit the peak at $30 is where it hit saturation of adoption with those techies who thought it could scale to the world (or were just enamored with the geekiness of it). After that we entered the reality that I explained in the prior post in that it just isn't useful for most people in its decentralized ideal and now it is some sort of basterdized Paypal for speculation where you can buy and sell via an exchange.

No, people will come in through commerce. If you sell an item on ebay or some ebay-competitor, you may prefer to accept payment in bitcoins rather than deal with paypal. Or you may perform services on fiverr or some similar site, and again accept payment in bitcoin. Craigslist posts often call for payment in bitcoin (of course, many craiglist posts seem to be scams, but you get the point).

Or socially, as you say. Most of my friends who have ever touched a bitcoin have received it from me, either as payment for some transaction ("If you download Multibit or Electrum, I can send you bitcoins for that $20 I owe you." "OK, cool, I'll try that."), or as a small gift.

Exchanges have a high barrier to entry (paperwork, etc.) It is actually hard to see what is useful enough about bitcoin for people to want to ever deal directly with an exchange.

As pertains to use of bitcoin (as opposed to speculation in bitcoin -- where certainly people will deal with exchanges), you have this exactly backwards.  

EDIT: As far as mining goes, I think you are overly obsessed with it. Even in the idea of a fully decentralized mining economy, mining will still be competitive which means $100 worth of electricity will be bring you approximately $100 worth of bitcoins. That's not enough to be of particular interest to anyone, at least not anyone in developed countries. Most people will never build mining farms of any kind, whether that involves CPUs, CPUs, ASICs, or anything else. Mining is a narrow subspecialty of interest to approximately no one. My preferred version of mining is simply for a client to turn mining on by default (or with a simple check box once at installation) the way BitTorrent clients upload by default. That alone should be enough to get many millions mining, and provide a very decentralized network, but they won't making a lot (if anything) from it. (Ideally they'd be making nothing, since there would then be no incentive for commercial miners.)

smooth, excellent point. I agree entirely. KYC, AML, and taxes is the wrench in the gears (that gives Thiel the upper hand, he also has his hands in ebay too).

Thus we see that Bitcoin is mature already at 20% of its adoption (but digital currency adoption is still in the innovator phase). Something else is going to have to carry forward to the billions. Thiel is offering his option which is a basterdized Bitcoin + Paypal + what ever he will do with WhatsApp.

Now what are we going to offer?

This is largely contradictory. If it is still in the innovator phase, then it very likely is not at 20% adoption. I argue it is at approximately 0% adoption. But as you point out many technologies do fail at the innovator stage. We can't curve fit only to the survivors.

No contradiction. You failed to read or digest what I wrote about the Ford Model T upthread?

Try reading again please.

The point is that the early experiments yielded to the Model T well before large adoption. It was Henry Ford who figured out how to scale the adoption with mass production and paying the workers high salaries so they could buy his cars to jumpstart the economic process.

No I agree with that. But my point is that without knowing the shape of the curve, you can't estimate a percentage of adoption. You have a chart up there of all successful technologies, and they have very different adoption curves even (or perhaps especially) at the early part of the curve. Electricity, automobiles, and dishwashers all have very different early adoption curves. We don't even have graphs for unsuccessful technologies (and it is likely infeasible to ever create one), so we don't even know what failures look like.

Bitcoin is in an extreme early adoption phase where it may look like one of several different successful early adoption curves, or it may look like one of the unseen failure curves, or it may be somewhat unique. I don't think we know.

Not necessarily. Home miners don't count minute changes to their electricity bill. Their computer is on always any way for social networking.


You forgot my point that the G20 will hunt down the 1% which means everyone with an income of $100,000.

It is difficult to source coin anonymously except by mining. How do I convert my money locked up by capital controls into coin otherwise?


Correct. They will participate in terms of commerce. Especially social networking. Find my post in the main Monero thread where i linked to that interview for the Coinbase of the Philippines. You can learn much from listening to him.


Exactly. We have the same vision.

Bitcoin is a virtual communications protocol, thus it should scale very fast like Radio and Internet (which are nearly identical), and not like tangible, big capital items.

We know. And we also know because everyone who was going to mine Bitcoin, has already done it. Rate of new miners coming has probably passed the 50% threshold. All future growth will come from Peter Thiel who has both exchanges and commerce locked up (the sources of further growth). I showed some data in my other thread how he was measurably taking over Bitcoin at an exponential rate of growth for Bitpay.

We see another confirmation in the price fit being log-logistic.

Edit: without AML and KYC Bitcoin would have continued scaling decentralized commerce. When China weighed down on it, that was when log-logistic was confirmed.

Maybe you don't. You head off to the new frontier with just the clothes on your back as many of our ancestors did.

Ok so now we basically agree and it is matter of correct design and implementation. So I will signout of this if there is no further major points that need to be addressed?

Thanks for the discussion.

BTC already has the QuickCoin, which can send your bitcoins to anyone of your FB friends without them needing to do anything in advance.

Which is, of course, the polar opposite of anonymity.

If we use a file sharing analogy we should flesh it out a little more, though it cannot be a perfect analogy.

Bitcoin is most like Napster --> iTunes&Spotify
We are talking about technology which is eventually sanctioned, regulated, and used in the open.  Though it had shaky beginnings and was tied to illegal uses it evolves to become more mainstream.  It has many connections with the social network, and will always be preferred by masses who do not need the value of less convenient methods which offer better privacy (buy a CD with cash and convert to MP3 for use on a non connected device), and are glad to avoid the appearance of shady dealings.

Monero is more like Gnutella -> Bittorrent.
This is ethics neutral and legally agnostic technology.  It evolved to evade the costs to privacy incurred by the other technology and to further avoid centralization.  It may never be as widespread in use as the more open connected technology above,  but the astute user, or professional user might find value in this more private decentralized solution.  Of course crime uses also gravitate to this technology as they find clear benefits in privacy.  But it is CERTAINLY not only crime that will find an interest (linuxtracker.org for example).  There are few connections to the social network.

So a question is this (for AnonyMint really), why would Monero need a facebook app?  Not that it wont get one, but the use cases for Monero span a slightly different set than that of more "mainstream" crypto imo.

I suppose the obvious answer is Monero will be used for private cash like transactions on social networks...  But my point is the other uses will pave the way for this.  We don't need that functionality first.

My point is simple. To top out at significant share of global population for adoption, need to make it something that the majority of people need and want to use. And adoption should be extremely easy or decentralized. See how fast Viber took off.

I have a specific idea in this realm and in my personal opinion QuickCoin isn't it because afaik it doesn't drive a major need nor a major market.

If I am correct to interpret that Bitcoin adoption should have a similar S curve slope as the internet, radio, and cell phone, Bitcoin is looking to top out in the realm of 10 - 50 million users as currently structured given it was launched 5 years ago and current estimates of usership are in the couple of million range.

Whereas, crypto-currency may be more like the computer that took 50 years to develop adoption, because it was too expensive and lacking sufficient computational power, etc.. Bitcoin was the first rough attempt at doing crypto-currency and (in my opinion) has numerous flaws.

I want to see Facebook replaced with something faster growing and hopefully more protective our privacy and not a honeypot for the NSA (not just make something eaten by Facebook, e.g. WhatsApp), not embrace it (I own a domain appropriate for this, coolpage.com). Facebook was launched 10 years ago, thus according the technology adoption curves (https://bitcointalk.org/index.php?topic=597878.msg7918323#msg7918323) for decentralized virtual technologies, Facebook is well past 50% adoption already. Given it is as popular as the VCR, it may already be past 80% adoption and on the rapidly declining end of its S growth curve.

Isn't FB's active usage actually in the decline already? Remember reading a post concering the matter..

I think this is true although with facebook I imagine their demographic shifts quite a bit as people gain access to and then begin to use the service.

Hello guys. I have some thoughts on the Ethereum IPO (https://bitcointalk.org/index.php?topic=557732.msg7994843#msg7994843) (and applicable to Monero in terms of the economics of premine, supply curve, and valuation). I am interested to read your thoughts here or at that thread or a link to where you've commented elsewhere on it?

Research and do some homework before buying. Ask question such as what competitive advantage this coin give vs the current batch of coins. How usable is the coin? Is the blockchain practical in term of confirmation time when it grows as large as bitcoin.

Remember this, investors who didn't do enough research and homework before investing deserve what they get.

Indeed those are serious concerns. But Google and the NSA don't have spare capacity. They would stop rendering existing services to use that CPU power for attacking a coin. Much more of a concern is if the NSA is serving national security letters to specialized or closed source ASIC manufacturers (e.g. any ASIC for Monero is going to be a very specialized likely closed source design, because it is so complex (https://bitcointalk.org/index.php?topic=583449.msg7973519#msg7973519)) and requiring them to sell xx% of their production to them (much more realistic for the NSA to lock up some % of control that way than redeploy their huge infrastructure which is already dedicated to other tasks). Also assuming the $3 - 5 trillion black budget is correct, the NSA has unlimited funds and so we need to very concerned about ASICs that could be (covertly) locked up by them, unlike generalized CPU power that can't be.

Note I made the point that botnets pull from the supply of computers as legitimate mining, thus if mining demand is high enough, the price of botnets need to rise asymptotically to approach the cost of renting the same hardware, so botnets are not an extreme threat at the asymptote where most people in the world mine.

This is why I would want any ASIC to be very modular for generalized use (e.g. SHA2 or the AES round circuit) and easy to reproduce by a wide array of vendors. Ideally you want that any specialized ASIC can't best the modular ASIC by an order-of-magnitude, and it would be really sweet if not more than doubling of performance from the highly specialized ASIC. Amdahl's Law applies but is not sufficient by itself for complete characterization of the solution space.

And the most CPU power in the world resides with the users. They just aren't organized...

I'll point out the fact that high end CPU computing power (thru cloud based technology) is moving computing power AWAY from the end user.  It doesn't matter if I'm on a tablet or a high end $2,000 gaming desktop - more and more of my work is crunched by cloud computing.  Corporate servers are moving to AWS, Microsoft SQL Server is moving to Azure.  Email moving from exchange to gmail.  It's being centralized from both end users AND corporate levels to global centralized computing power.

The computing power may still be held by the masses but we are shifting to low computing power devices (iPhone's, iPad's, etc) while the computing power is shifting to more and more centralized places.  I see tons of white trash who've never owned a computer using tablets now.  

High end CPU's are more of a consumer niche than they are consumer mainstream.  More so now than 5 years ago.  Mainstream will belong to power sipping low powered processors for tablets, phones, cheap laptops, etc

Astute point. Thanks for making it.

We are discussing a related topic (https://bitcointalk.org/index.php?topic=624223.msg8010959#msg8010959) at rpietila's altcoin thread.

The blog post below makes it clear that it boils down to whether mining ASICs will be shipped by default on users' motherboards:

https://blog.ethereum.org/2014/06/19/mining/


Users can't farm out encryption to the cloud. It has to happen before the data leaves the user's system.