Bitcoin Forum

Lets conduct a scifi thought experiment, and talk about Bitcoin at a requirement level assuming some magical quantum scifi tech that can make it real sometime during the next 100 years: using the really high level definition that Bitcoin is a global process of converting electricity into some physical coin via transmogrification/energy to physical object or sufficiently advanced scifi to look like magic today, and its called a bitcoin and it can be easily inspected to see how many Joules it took to make (and the time at which it was made); and where all of these bitcoins are produced globally such that the process somehow magically knows (via non-local quantum communication?) the number of bitcoins created globally and the Joules/bitcoin consumed and which then adjusts the Joules/proof required to produce bitcoins over time to hold production interval on target at 10mins every 2016 blocks, starting with 50 bitcoins from its earlier incarnation before a few upgrades, origination back in 2009, and then halving every 4 years and currently running ag 11.921bits/per block.  Its all a bit scifi but maybe the coin contains a globally unique proof of work, its somehow magically turing universal and cryptographic AI and it doesnt matter what algorithm is used for the proof and any will be accepted, just the mining is an optimally efficient process, and what counts is the amount of electricity used, and the verifier can understand and easily verify any proof (and obviously the AI is going to see through any short-cuts).

When you look at it like that, the 2015 bitcoin cant quite do that global non-local communication, universal cryptographic AI nor electricity to matter transmogrification, but thats really just an implementation limitation, that maybe we can fix with quantum sci-fi in the next 100 years future, and the current bitcoin is a pretty close facsimile.

One day a fellow named Bob had an idea, he could stamp an F on the bitcoins and call them foocoins and persuade people they were better!  He choose some different interval of parameters and split the bitcoins into different sizes and stamped F on top them and talked up a good spiel so that others started playing too.

However they were still fractions of actual bitcoins because the proof is universal due to the cryptographic AI, there was nothing Bob could do that could change that fact, no supply parameter changes, hash function used, software feature, not even a retro pacman game (loaded into the FHE processor in the coins), branding etc would change that because the universal cryptographic AI was measuring Joules expended, and unlike humans was not easily swayed by marketing and logos: a proof of joules mined is a proof joules mined, whatever letter or logo you stamp on the coin!  

Because it started at difficulty 1 and ideal quantum processors are fast, foocoin difficulty adapted really fast (2016 blocks were over in a femtosecond), but as few found Bobs ruse plausible difficulty stabilised and by some creative marketing Bob found he could sell smaller and smaller fragments of bitcoins with F stamped on them and exchange them for whole bitcoin.  As this was profitable Bob and his friends ramped up production and used the proceeds to go on a marketing drive!

One day some people started complaining that these coins were F crazy because they were the same material as bitcoin, in fact they were bitcoin, but Bob was selling them above par and they started demanding their money back.  Naturally Bob had spent a lot of the money on marketing and flashy objects.  The price crashed to true value, which unfortunately for the holders was really close to zero.  Bob made some money, but unfortunately he didnt hide his identity very well and he was convicted and given some community service and had to make reparations (it seems pyramid scams and stock pump & dump scams and currency skimming/debasement are still illegal in the 22nd century.)

We have that same problem in current times.  The universal AI is called common sense: changing hash functions does not change the joules expended per coin, a hash with half the gate count results in a difficulty twice as high but the same Joules/coin.  A hash with a lower power density (say because it uses more RAM) can be run at a higher clock rate within thermal limits, and still use the same Joules/coin.  Changing the supply function to 2x as many coins doesnt change the value it halves the price expressed in 1/2 bitcoins.  Having a shorter halving schedule just makes the price change to 4x as many coins at price expressed in 1/4 bitcoin after the earlier halving etc.  The pacman game doesnt change things either because if it was useful to play pacman on bitcoin, someone would fork the code and add it; an arms race of cutting and pasting each others code doesnt create value.  Chances are the reason bitcoin doesnt have a pacman game is it isnt that useful or you dont need bitcoin to play pacman.  The 2015 Bitcoin doesnt yet know about users mining coins stamped with creative logos is because it lacks quantum non-local communication, we'll fix that one day, but in the mean time humans can convert one supply function to another with simple math and measure average electrical efficiency and when measured this way people are paying way over par, no rational entity would put money into marked coins, never mind a cryptographic universal AI.

A bitcoin is a proof of Joules spent, no matter what branding or features you market with a bitcoin its still a bitcoin, and can no more change than a clump of gold atoms will cease to be gold atoms and start a floating price against gold if stamped with a letter F (assuming free instant assay like bitcoin has).

Adam

Yes. Bitcoin is the energy backed currency many have been looking for. We only need to make circuits that work at near 100% efficiency in converting electricity to heat and then harness that heat for more useful work.

Bitcoin could be an energy backed currency, but it's not backed by energy now (or you have a perverted understanding what "backed" is).

I think what you meant to say is "It depends upon what the meaning of the word 'is' is."

Still a 0-sum game. You harness the heat, your costs for mining effectively go down, difficulty goes up, and you're back where you started.

Coins cost money according to their usefulness no matter what. That market-defined measure of "usefulness" can always be measured in some fixed joules/coin for a given level of usefulness.

I think you assume that all Coins are directly tied to Bitcoin when you don't need to be. If you are pegged against a more fungible asset than Bitcoin, it invalidates your argument because the two exist as separate entities.

Thats valid but if something is pegged against an external value (USD, shares, property) held as a custodian or owned by the issuer its not really a bitcoin, its an issued asset with ownership tracked by the blockchain.  The limitation is the user has to trust the issuer, and the blockchain narrow AI cant value the asset (Bob in his garage may go nuts one day and issue a bazillion shares in Bob's F coin stamping scam).

Those are valid things but they are not bitcoins (cryptocurrency units).

Adam

I have just noticed "researching decentralization" in your forum signature. If we consider Bitcoin as the first step to decentralization then creation of millions small "Bitcoins" (let's call them altcoins) seems to be the second step in the same direction. But for an unknown reason you keep promoting only Bitcoin and trying to construct other systems on top of it. It would be great to know why...

He's saying that no matter what altcoins claim, they are no better than Bitcoin and are only used to scam value out of actual original Bitcoins. The reason is that they all use the same amount of energy to reach value.

The question is not related to this thread only but to all recent work done by Adam Back. If you don't mind I'll wait for his reply.

He explained it in his OP. Perhaps if you ask more specific questions he might not have to simply repeat himself.

The question is not related to this thread only but to all recent work done by Adam Back. If you don't mind I'll wait for his reply.

There's a difference between decentralisation and fragmentation.  You can have a system that is decentralised, but if you have many mini-systems they wont be very decentralised, nor secure by definition; and much utility value comes from the network-effect of the larger system also.

It depends what you view bitcoin is, but I've come to view it as a generalised unit of proof of work measured in normalised electricity x time.  And from that point of view it doesnt seem possible to make a new unit, only to improve the unit (if its still an electronic proof of use of electricity at a given time, its always a bitcoin definitionally as it is the word to describe that thing).  As in the parable marking a bitcoin (a standardised electricity-time unit by definition) with a logo or brand and trying to sell it for above par with branding isnt creating decentralisation nor value.

Btw its really hard to improve bitcoin algorithmically or protocol.  The implementation has some known things left to improve, and they have a pretty comprehensive wishlist.  If people  want to work on improving bitcoin there is a github, developer mailing list, etc.  They're always looking for quality assurance, code security review, documentation writers, and protocol & code review.

Adam

Hmm, we might be approaching The Singularity sooner than we think:
https://www.youtube.com/watch?v=dHVtUw5wToA

Hopefully, a little bit of humor allows our brains to cool down and start thinking better :)

You start writing like a bolshevik: http://en.wikipedia.org/wiki/Democratic_centralism . I'm pointing this just to make sure you are aware. I still enjoy your writing and read most of it.

I fail to see the point of this rant.... nothing useful or particularly insightful...

Satoshi invented a new element called bitcoinium, and all alt-coins are made of it too; if you pay above par for bitcoinium you're getting ripped off.

Adam

You actually sum up a bunch of facts which were already running through my head in random order.
Thanks for confirming the thought.


I'm dreaming about electric cooking plates running miners underneath.
Or those store heaters they always have at the entrance blowing warm air.

Electric heating is finally able to become efficient thanks to bitcoin.

Unfortunatelly, tech progress moves in a direction that leads to non-heating bitcoin mining rigs - http://en.wikipedia.org/wiki/Adiabatic_circuit.

Interesting read.
However, this technique will make mining more efficient but cannot make efficiency 100% so there will always be some heat dissipation although much less than current values.

Not sure what to make of that analogy. It sounds homeopathic.

Shift of dissipation to radio spectrum (caused by current going through wires) won't help you much, unless you take part in radioelectronic warfare and want to disrupt enemy's communications.

A current through a wire is never without resistance unless chilled to super conductivity temperatures, close to zero Kelvin.
Whenever there is resistance there is heat.

Besides, a clever mofo could possibly make a microwave oven from the EM radiation

I'm talking about wires behaving as antennas.

Antennas also become warm.
A microwave oven is one high powered antenna, although there is only gibberish being sent to the product.

This led me to a thought... When Bitcoin mining rigs become very efficient (heat-wise) they will still radiate energy that can be "caught" and used for other things. An obvious countermeasure is to place other mining rigs powered solely by EM radiation around the main rig. This will lead to concentration of mining equipment in the same location, which is not very decentralization-friendly...

You just invented a perpetimum mobile.
;D lol

No. :)
Even if 100.0% of radiated energy was caught then it still wouldn't violate laws of physics.

PS: http://en.wikipedia.org/wiki/Wireless_power

It does, when you want to transform the energy into something else.
You cannot mine radiation so you have to convert it first to something useful.
In this process you always have losses, whether mechanical wear, EM radiation, IR radiation or whatever.

Ah, so http://www.wirelesspowersupply.net is scam!  :D

No, I don't say wireless radiation (edit. lol. wireless and radiation is pretty the same) is impossible.
I only say that you always have losses if you transform one energy state for another.
And when this occures, there is almost always some heat involved.

I see, it's off-topic so let's don't derail this thread.

Who was scammed by Litecoin and how?

Watch the price?

Don't forget GPU proof for the miners that bought expensive cpu systems.

The same is applicable to Bitcoin.

Well that those things are producible for a tiny fraction of par is the very problem bitcoin solves, in electronic form that gold solves in physical form.


Yes you are.  In small parts via inflation.


I dont think branding of digital artefacts that can be cheaply copied matters.  Bitcoin is FOSS software, if someone comes up with something useful, it can and will be copied.  That was what the pacman game analogy was about.



I argue it does exist, and bitcoinium is bitcoinium.  You're just missing a property of bitcoinium which is the electricity that went into it must have no other use, and that the use must be cryptographically verifiable in a decentralised way, and behave like a statistical poisson process (people around the world trying to do it and on average one mining a block of coins every 10mins).

Heating your cup of tea with a resistive heating element satisfies none of those properties.  (Yes you could heat your tea on top of a stack of ASICs, and maybe someday people will do that; but the extent to which you extract use from the waste heat causes the average cost of production to fall and hence difficulty to rise to compensate).


Its a bit more than a Joule though.  Its a time-adjusted Joule that you can cryptographically prove and that has no side-uses.  That really is bitcoinium and that has amazing implications.

Adam

...which would be more amazing if bitcoinium was mined via useful PoW (like protein folding). And if it is then mining of bitcoinium may become more profitable than bitcoinium itself, which in turn will drive value of bitcoinium to zero (we don't value by-products much).

Adam's thought experiment depends on an omniscient AI. It's a common fallacy.

If its useful like sellable as a service, then that acts just like Adam Chirilluc cup of tea:


an oversupply of the service will cause its price to fall also, and we'll still have the exact same Joules spent on bitcoin mining (minus the revenue from providing the service).  Bitcoin price is set by people investing in it and utility demand.  Production cost follows that, not the reverse, otherwise we wouldnt have difficulty falls as we saw last month.

There's an economic principle that if a commodity is producible at below par, people will expend more effort (ie the difficulty will go up).  Paul Sztorc explains the economic theory better in this blog article: http://www.truthcoin.info/blog/pow-and-mining/

Adam

The sci-fi version tracks proof of work in alt-coins using any algorithm (via non-local communication and a cryptographic AI etc) but even the current bitcoin the only reason people are mining alts is because they hope to sell above par, humans can evaluate the factors, as I said "The universal AI is called common sense:"


I'm finding the analogy holding up surprisingly well, though it does depend on where you focus on the value lying, like gold: people discovered gold, it had useful properties, so then they invested in it and a network effect built up around it, and because of that they developed a keen interest in assaying gold, being 100% sure they have the real thing.

You could argue bitcoinium (aka bitcoin) is the real thing, and imitations composed of proof of work, that are being sold above par (far above proof of work production cost) are the equivalent of gold plated lead.

Adam

I'm starting to see your analogy, but the human elements leave me questions. I believe some people are trying to improve Bitcoin rather than steal its thunder. But most are scams, indeed.

Humans put great value in the extrinsic properties of Bitcoin's design besides the intrinsic properties of its function. It's not just about how many zeros were solved for. Then, how sure can the universal AI be that historical difficulty isn't forged fraudulently by humans in altcoins? Bitcoin's history is well documented.

Well indeed.  Hence sidechains, if they are trying to improve bitcoin, they can do that: improve it (on a sidechain, or timelock, multisig etc).


Well I think its maybe like gold, the extrinsic properties grew out of the intrinsic properties and network effect of people using it as a commodity money.


(I assuming you're talking about knowing the historic difficulty so you can compare it to the right epoch of bitcoin as a benchmark).

I think maybe comparing the current difficulties and prices would be enough.  (Plus discounting for a steeper supply inflation and known premine % or other parameters that are worse).

Setting things up to detect that, it appears limited enforcebility and requires cooperation of the alt?
You could look at the blockchain of an alt and see how much work there was total, and look at its parameters, however that doesnt prove they didnt fake the whole thing to one side over the course of a month or something and give it years of fake history, some parts of which look good relative to bitcoin.  Of course unless its merge mined its total hashrate is going to typically be quite small, so that if someone had a good incentive they could've recreated it later. 

That tends to suggest that minimally you would need the blocks to be periodically timestamped in bitcoin otherwise if no one was paying attention the entire thing could've been forged more recently as hashrate is faster now than in the past.

(There's a graph somewhere I cant find right now that shows the number of days it would take to recreate bitcoin.  During the hashrate spike last year, it got as low as 50days, but in the bitcoin context its stilly really hard for that to be an attack, because bitcoin security is from there only existing one distributed supercomputer than can run at that pace, nothing else can catchup.)

Adam

Then why bother with Side Chains at all? If an altcoin has enough bitcoin timestamps, then its value is proportionate to Bitcoin's, adjusted for hashrate.

I guess, a deeper meaning that OP is trying to convey, is that differences not only between alt-coins, but also between various life forms, is just an illusion as all are made of the same primordial source energy - the universal AI.

In other words, we are all God's sock puppets, congratulations! :)
On the other hand, one might argue that only differences actually exist.

There's another feature missing from current day bitcoin that the universal AI provides: PoW convertibility and non-local communication: ie the ability to recast F coin bitcoinium into bitcoin.  Without that unlike gold you cant do the analog of melting down a Spanish Doubloon coin and recast it as an American Gold Eagle coin.

While we can estimate it as I described its still a bit subjective.  Also and partly because of that, there is lower network effect, less liquidity, plus the risk that it would end as a floating exchange rate due to human factors (alt-coins are not currently valued in this way, and even if that became de rigueur it might slip in event of a system shock eg like people getting out of F coin).

So in the meantime the reason to bother with sidechains is they give a way to opt-in to the recastability without needing universal AI, and thereby avoid getting trapped in an alt that is losing favor.

Adam

No because USD and EUR are fiat and cost a fraction of face value to produce.


That is perhaps not impossible, but the chances of it happening are far higher if people ignore cost fundamentals in their pricing.   I'd say its a definitionally bad thing if an alt overtook bitcoin because then what assurance do people have that it wont happen again: that seems like a recipe for cryptocurrency to lose store of value potential.  As it already doesnt have unit of account property that may make cryptocurrencies fail.


It depends on what you think came first gold or network effect.  Do you think gold should be valued significantly differently if its stamped with F instead of B?  The fact that it can be melted down and recast puts a clear limitation on how far that to happen.

The universal AI in they hypothetical bitcoinium makes it behave like gold for recasting purposes between all altcoins, as they are made of bitcoinium.  While todays bitcoin does not know about work costs in other chains, the humans speculating on them do and can do this calculation.

Adam

Emphasis mine.

It's unlikely that Bitcoin gets that much traction before the distribution of coins is mostly complete, at which point the expenses on mining will be reflecting the amount of disagreeing on how to manage the universal global money system. UN/gov are made of people and their biases, mining provides neutral rules for dispute resolution.

The money system is currently centralized which will make it impossible for 'the people' to run the system in their best interest.
Bitcoin is a decentralized money system which finally makes it possible for people to choose with their money without an authority can change the rules (like printing and stuff).
So we have something better to continue, we only have to chose.

I also say "money system" because money and currencies are two different things.

In my perspective, money equals (stored)energy.

I like this metaphor and the idea that the value of a bitcoin can be defined by the energy "put inside" in order to secure the network.

It raises an interesting question about the economic consequences of merged mining as a way to secure sidechains.
Merged-mining allows to claim the rewards of several chains with the same level of consumed energy. But as stated in a previous post: "the electricity that went into [bitcoinium] must have no other use" which means that the value injected by a miner into the whole system (bitcoin + MM sidechains) stays the same if it finds a solution for a single chain or for several chains.

Therefore, it raises the interesting point about how sidechains reward the miners:
- they create new sidecoins => there is less bitcoinium in each coin (bitcoin or sidecoins)
- they use fees or demurrage (but don't create new coins) => we have the same quantity of bitcoinium in each coin, whatever the number of MM sidechains.

In the former, there's an inflation controlled by the miners which decide to merge-mine (or not) new sidechains. In a sense, it doesn't seem different from current situation with bitcoin & altchains. In the latter, we keep the deflationary model of bitcoin.

Did I miss something ?

I think this is giving altcoins too much credit, because it implies that one should actually pay "par" for an altcoin if given the choice. If I knew for certain that 10 units of energy went into creating a stash of bitcoins and 12 units of energy went into creating a stash of litecoins, I wouldn't necessarily trade my bitcoin stash for the litecoin stash. It may be theoretically possible to come up with a measurement of value based on the amount of work put into a coin, but that's far from how people value coins today. Note that in the AI world, bitcoins aren't fungible because ones created at different times have different amounts of energy put into them.

This reminds me of Marx's labor theory of value. Sure, we can calculate how many hours of labor it took various people to produce various goods, and call this their "value", but that bears little resemblance to how real people value things based on supply and demand.

When I decide on my demand for a coin, it has less to do with how much work was put into creating it in the past, and more to do with if I think it'll be more useful than alternatives in the future, and how confident I am that the future supply will be appropriately limited.

The property of "energy went into bitcoinium having no other use" is compatible with neutrality of money system and, I believe, is essential for its universality: https://bitcointalk.org/index.php?topic=855520.0

However, it being "cryptographically verifiable in a decentralised way" is where many questions arise. The measure of decentralization is a tricky one. If an entity creates an alt-coin and runs a single node mining it - is it decentralized? If there are two or five nodes? How many nodes is decentralized enough? In the end it boils down to adoption curves and network effects, which contribute a great portion of the value: https://bitcointalk.org/index.php?topic=873102.msg9656213#msg9656213

But I agree, that the universal cryptographic AI with non-local communication would be able to erase the boundaries between different alt-coins and their network effects, essentially melting them all into the same one bitcoinium. The question remains - what boundaries will still be left? Can brain activity be thought of as cryptographic and therefore be transfused to bitcoinium as well? Can matter be turned into energy and then bitcoinium? Following that path we might all end up in the same one room where it all started, where differences didn't exist.

Maybe we should seek sameness-in-difference instead, maybe that's what bitcoinium is for.