Bitcoin Forum

4/27/13: PLEASE SEE THIS THREAD: https://bitcointalk.org/index.php?topic=189239.0


Decrits is a continuation of my proposals for Encoin (https://bitcointalk.org/index.php?topic=49683.0), but with many significant new ideas.

ABSTRACT:

•   Decrits will work to keep a relatively stable value over time by having an unbounded coin production that is related to the time, hardware, and energy costs required to produce new currency.
•   During periods of instability due to market expansion or technological leaps, Decrits will create new currency freely based on what is being minted for cost and distribute it to existing account holders and those who transact on the network to quickly bring back stability. This has the beneficial side effect of giving profits to the people that use the currency rather than wasting it on hardware manufacturers and electric companies.
•   Decrits will use a proof-of-share system for network security entirely in lieu of proof-of-work. No energy is required to secure the network other than transaction verification. Proof-of-work is only used to create new currency. Transaction fees are paid to shareholders.
•   Decrits will ensure that transactions are typically secure from double- or bad-spends within seconds. See the Security section.
•   Decrits will use an account ledger rather than a transaction ledger for keeping track of balances. This will result in a standard transaction being about one-third the size of the smallest common Bitcoin transaction, and 5-10x+ less than Bitcoin transactions with many inputs. It also means that the entire history of the network need not be stored or pruned as it is already in a compact format.
•   Decrits will reward early adopters by giving away multiples of minted currency, such as 5x or 10x what would normally be minted. Early adopters will also be in the position to benefit for some time off of early purchase of shares as described in the Security section. While the project is in development, coins may be pre-awarded to people who make large and small contributions to its development.
•   Decrits will incentivize being a transmitting node for the network by paying a small portion of the network transaction fees for the service.

•   If a loaf of bread costs 1 DCR in 2012, then a loaf of broad will cost 1 DCR in 2050, assuming the production costs of bread and money have not changed. If the production costs of money have changed to where a loaf of broad costs 2 DCR in 2050, then 1 DCR saved from 2012 will be about 2 DCR in 2050. See this post (https://bitcointalk.org/index.php?topic=91183.msg1188565#msg1188565) for an explanation.


Please note that all of these ideas are up for discussion and if this ever became a reality I would hope for some heavy debate on how exactly to tweak many of these features to ensure a well-oiled currency.


SECURITY: PROOF OF SHARE + TIME-BASED REPUTATION

Users of the network may opt to buy a network share in return for receiving a portion of network transaction fees. The money used to buy these shares is locked and cannot be used for regular transactions. Each share lasts for a 1 year period that automatically renews unless the shareholder declines to renew within 30 days of that renewal. There is no limit to the amount of shares that may be purchased. Once a new share is purchased, there is a 3 year probationary period where the shareholder's reputation does not increase. After the 3 year probationary period, reputation will increase by up to 3 times the initial amount over an additional 3 year period. Percentages of transaction fees are awarded based on the shareholder's reputation compared to the total network reputation.

The probationary period exists so that long-standing shareholders are rewarded for continuing service to the network. It also makes one-shot monopolistic takeover attempts take much more time and be much less profitable in the interim. (And probably a futile endeavor to begin with, see the voting system section.)

Anyone owning shares will be selected based on predetermined orders that change every so often to put together a list of transactions over a 10 second period. Since only the specific share owner is allowed to create a transaction block for a specific time period, any transaction seen in these blocks can be considered double-spend proof as long as the network is ordered properly up to that point. e.g. the blocks are in order and are all available.

Advantages over bitcoin: No energy is required to secure the system other than transaction verification. Any shareholder attempting to approve a bad spend or create more than one block per time window will lose their share. Even if an evil entity owns 99% of the shares, they cannot approve a bad spend or have the same shareholder attempt to recreate an older block as this can all be proven and honest shareholders will destroy their shares and prove to the clients which network is honest.
Disadvantages: It is a much more complex system. However, not requiring energy or investment in expensive hardware is a significant advancement. Share holders will have to remain online at all times.


MONEY CREATION

The money creation system is still a very tentative idea. Money creation starts with a big block of coins available to be minted based on the amount transaction fees over the last year (with a large minimum amount), divided by 12 to get a base line. Each minter creates coins individually. To begin minting coins, minters must put their name into the coin minting queue which must include a proof of work equal to 10% of the standard coin award's value (e.g. if each user is assigned to mint 2 coins, he must give a solution equal to 0.2 coins to join the queue). Once enough minters have joined the queue, minting can begin (this formula will be based on the total number of coins available to be minted for this block). When minting begins, the cost of the solution to join the queue will drop to 7.5%, and after a significant portion of the coins have been mined (25% or so), the cost to join will drop to 5%.

When the block begins, only 50% of the queued users will be selected to create coins. While each minter creates coins individually, they are assigned together with a group of 39 other minters with which they compete. The first 10 users in each group will receive a slight bonus to their award, and once the 10th solution is given, all 10 users will be assigned to new groups to create more coins. This process continues for each set of 10 except that the 3rd and the 4th set of 10 are only added back to the queue and not immediately given a new group.

Overall, this system encourages minters to be just slightly better than average. Go too fast, and you wait for the other 9 members to find solutions. Go too slow, and you can be penalized. You can of course join the queue multiple times with a fast system, but you may be selected more times than your system can currently handle. Go really slow (over 3 standard deviations or whatever testing seems fair) and you will be booted out of the queue and lose your 0.2 coin investment.

Coins will not be deposited into the minting accounts until after the entire block of coins has been minted and they will be awarded over time based on the days that the coins were mined (e.g. if it took 10 days to finish a coin block, coins minted on the 1st day will be deposited on the 11th day, 2nd on the 12th, and so on). This is for two reasons: difficulty adjustment and the coin multiplier. The difficulty will be adjusted after each block and given a weighted adjustment based on the last 10(?) difficulty changes. Difficulty only goes up, never down. The difficulty will be adjusted by dropping the top and bottom 25 percentiles and comparing the change of the middle 50% to the last block. Once this is calculated, the value of the awards will be reduced accordingly. E.g. a 10% increase in difficulty means that a 2.0 coin award would be reduced to about 1.818 coins (100/110% * 2.0). This prevents a serious upset to the money supply if, for example, someone discovers a way to double the speed of the hashing algorithm.

After the bootstrapping period is over, by default each coin block will be multiplied by 5x to all existing accounts and by 5x as a lottery to transactions that happened during the minting period. Existing accounts will earn interest based on their proportion of coins to the existing total with the smallest 0.5-1% of accounts being dropped to avoid excessive tiny calculations and transactions will be randomly selected to award either the sender or receiver with free money (this will occur in a way that can't be gamed--if the payout for a tx with a 0.01 tx fee is selected to receive 1 coin, the odds of it being selected will be 1/101). What this does is reduce the actual amount of energy spent in creating new money so that the people using the money profit instead of the electric company. Additionally, as more efficient hardware arises over time, existing users will see their account balances increase as the value of an individual coin may reduce in value over time.

There is no limit or timeframe to the number of coin blocks that can be created. When one is finished, a new one can begin as soon as there is the minimum required minters. The block is a starting and stopping point to adjust difficulty and begin awards and so on.

Because only a small amount of currency is created via minting and there is a large startup cost (the 0.2 fee times however many it takes to begin a block), investing in specific technologies like ASICs will be unlikely to bear fruit; rather, commonplace, sunk equipment costs such as GPUs will win the day. Massive amounts of money do not need to be wasted on always one upping someone else to get a larger share of the same sized pie. If it is generally profitable to create coins, people will mint; if not, they won't.

CAVEATS: There are some significant caveats to this system that would probably be solved quite efficiently in the future. There may be large periods of time where the minting computer is inactive but must be monitoring the network. This is wasteful. However, this is mostly countered by being a CloudNet member described in the next section. Additionally, if 1 coin approximates about 50 computer hours, it will be a fairly common event for the average computer to take 150 hours or more to find a solution, or almost a week. This is not ideal. However, it would be possible for some very complex pool designs to efficiently smooth out this process--but joining a pool will only be a matter of convenience, not necessity. Also, having each user create their own blocks will be data intensive, but it will most likely be equal to or greater than typical bitcoin efficiency when P2Pool becomes the dominant form of mining (which I think there is no doubt).


PAYING FOR THE NETWORK

With each coin slated to be on the order of about $1 USD/EUR/GBP to produce (based on semi-wild ass guess), the initial transaction fee is set at 0.01 DCR or 0.01% of the transaction, whichever is greater. The receiver pays the fee in the same vein as paypal or credit cards. The percentage fee is necessary to account for the potential reduction in value of an individual coin while keeping transaction fees in line as well as keeping Decrits banks of the future from settling up accounts between each other for 0.01 DCR at the end of the day and removing the incentive to be a shareholder. Shareholders split all transaction fees in accordance with their shares, with 5% of the transaction fees going to the CloudNet, or the group of users that send and receive transactions for the network.

CloudNet members sign into a queue similar to the coin minters. To join this queue, a small, refundable deposit will be required. This allows any CN member who attempts to be deceptive to be punished. Anyone wishing to send a transaction or simply just receive a copy of network traffic can connect to a CloudNet peer based on the available list. To send a tx, a client will add a 3 byte CN peer code to their transaction so that that peer will receive credit for the transaction. They may send it to several peers and whichever has it included in the transaction block will receive credit. At the end of the day, the top 50% of CN peers based on number of transactions confirmed will receive evenly the 5% of transaction fees. Since the fees are spread evenly, there is less incentive to game the system.

Several other services will be available on the network that will have fees and these fees will be distributed in the same manner.

CN members will sign (or offer to sign) communications. This holds them accountable to losing their deposit for being malicious. It may also help prevent malicious software from compromising a share holder (maybe). It will make man-in-the-middle attacks on merchants nearly impossible.


VOTING SYSTEM

The voting system is a bit sketchy at this point, but essentially there will be several, non-network breaking things that may be changed by shareholder vote such as adding a new signature algorithm. These votes will require a 75% majority to pass. A vote that changes significant portions of the network operation will require a 90% majority to pass. There are a lot more details on my ideas for this on the notes page. Some sort of code-neutral system will have to eventually be organized by the community to ensure that each future client can be properly prepared and so on for a code change.

It is my opinion that the network must have some ability to quickly coordinate and properly organize a network protocol change in the face of a serious problem without direct developer intervention. Additionally, if some malicious entity does gain control of a large portion of the network reputation and attempts to do something malicious, even a small percentage of shareholders will be able to divorce from the network via the vote. If this happens, all existing accounts will be unable to receive transactions until they either declare an allegiance or create new accounts specific to one side or the other. Existing accounts will be able to send money to the new accounts or declared accounts normally for a period of 30 (?) days until the divorce becomes final. Any undeclared accounts will remain on the unchanged side of the network. Shareholder money and reputation on each side will be destroyed if it has voted the other way. The fact that this option for the network to peacefully divorce may prevent any attack of this type from ever forming, and divorcing will only be used when there is a real point of contention, such as if a large majority of the shareholders decide to raise transaction fees unnecessarily.


BOOTSTRAPPING

There will not be a coin multiplier until after the first bootstrap period (there would likely be several stages). Initially there might be a 5x coin award to minters for the first 3 years. These coins will be awarded immediately, not after the entire coin block is finished. This is to keep any momentum in the currency from stalling when it is still taking baby steps. But before even that, I would hope to have an extensive beta testing period and use the message boards to award people future coins for finding bugs or suggesting good ideas and so on and actually have a community based project instead of one that was produced behind closed doors and released with zero public discussion on any of its properties.

Consciousness stream: http://pastebin.com/33uYZ1MS  I apologize for the terrible ordering and the fact that ideas are all over the place, but I've noticed from going back to my old notes that I was able to regurgitate old ideas into new ones that I had long dropped as a bad idea. Please note that this forum post should be considered my preferred ideas if there are any clashes with the consciousness stream.

A backup of the Encoin wiki is available here: http://justinbporter.com/encoin/doku.php but this is not my site and I can't guarantee that it will remain available.


TECH STUFF:

This stuff was all mostly fine-tuned from designing the encoin proposals. Peers of the network will all use a superhash of everything called the Consensus Block (CB) to maintain network consensus on the ordering of events. Connecting each CB together are about 8,700 transaction blocks which are created approximately every 10 seconds by share holders in a semi-predetermined order. NTP pool is used to keep reasonable time synchronization across the network, and clients include a timestamp in the transaction. Shareholders will use this estimate their approximate latency based on when they receive them, and will wait that much time (to a point) before sending its block for the 10 second time period. Transactions won't get duplicated in nearby blocks since each shareholder will only include transactions in the proper time window (with exceptions if transactions have been obviously missed and so on). This encourages people creating transactions to be honest about time for quickest inclusion into the chain. After each assigned shareholder creates a transaction block, other share holders will have been predetermined to sign that block plus any transactions that were missed. The next block will ack these signatures and the extra transactions. The more share holders there are, the more that will sign each block to keep network consensus times down. The extra signatures should be dwarfed by the overall transaction activity of a healthy network.

Account ledger uses a 5 byte number for 256*4.3B maximum accounts. The address space is infinite as any number of DSAs can be used. All transactions refer to account numbers (where possible) rather than addresses to save a gigantic amount of data. Clients do not need to maintain much history other than the state of the shareholders from the last time it connected. Then it can download the share holder history portion of the CB, and download enough current data (along with shareholder signatures) to convince it that this is the correct network. How much shareholders and cloudnet peers need to hold is up for debate, perhaps 1 years worth, perhaps less. Full copies can't be forged and it will be available somewhere.

Reminds me of timekoin https://bitcointalk.org/index.php?topic=88467.40

+1 sounds very similar. Perhaps you could just join the dev team there.

From the timekoin proposal, section 3: "This makes it non-feasible to join as many peers to the network as possible for currency creation because the amounts created are smaller than the expense it would take to maintain all the peer computers to create it." It sounds to me like the system is very similar to bitcoin's: the more people that make money, the harder it becomes. I don't know what underlying process is used for the mining though since there isn't any detail.

With encoin/decrits it has always been about the more people that want to mine, the more coins will be created. Thus avoiding potential currency cartels and manipulation. So I don't really see any similarities. Plus he wants to use 1,536 bit RSA which means bandwidth usage will be ridiculous, while with encoin I have repeatedly come up with ideas to make transactions and overall data usage as miniscule as possible to allow the system to scale much easier for the future.

Update: clarified a few extra things and added the overall goals section.

Is no one really at all interested in something that doesn't sound like just-another-scamcoin?

Just do it. If it's good, people will use it.

Only if you're on dialup  ;D

If people would just make using the coin cause the network to be protected, then there is no need to pay someone for this service? 

As with bitcoin, someone needs to determine the correct sequence of events or there will be complete chaos. To avoid repeated and easy denial of service attempts, there must be a cost in attempting to do so. With bitcoin it is proof of wasted energy; with decrits it is putting money on the line. A potential solution to the cost is to duplicate the fee as if it were paid instead of actually taking it and creating new money every time there is a new transaction. However, then you have to come up with some seriously complex anti-spam measures (and then more complex fixes for the loopholes, and still having an efficacy worse than email spam filters), or suffer another denial of service. Beyond that, shareholders may just spam just to give themselves more money.

There is no miraculous way to make a distributed consensus DoS- and byzantine-tolerant on hopes and wishes. There have to be consequences to actions that are detrimental to the network so that they can not be easily repeated.

Or, like me, live in a country with slow internet and quotas on bandwidth.

Regarding the share system: If my node does something bad, I'd lose my share(s). How exactly does this work, step by step? Who determines I did something bad, where is the database of shares kept, and how can I be sure noone sabotages me so I lose my shares?

As far as sabotage goes, shareholders use their signatures to sign their communications. As long as their private key is secure and the DSA is secure, they are secure from sabotage.


As far determining you did something bad, there are only a few possibilities:

1) approving a transaction for an account that has an insufficient balance to make the tx (bad spend): Every cloudnet peer and every shareholder will be able to immediately spot this. What will happen is that anyone honest seeing this transaction block will either see an alert attached to it or add an alert to it if it's missing. Assuming all of the rest of the shareholders are honest, they will continue the transaction block chain as normal but everyone will mark those shares as bad and remove them from the total reputation and all of the other details that go along with cleaning the situation up. It can be continually monitored that everyone agrees on all data by using a hash of the up-to-date consensus block (described in encoin threads).

2) creating two or more transaction blocks for the same 10 second period (double spend): while this one is a little trickier, it still should be no problem. If a man-in-the-middle or similar attack is executed against a merchant to be scammed, a shareholder will have to coordinate and feed them a false transaction block. Considering there are likely to eventually be tens of thousands of shareholders this will already be a daunting task. Not only will they have to use their 10 second window exactly to pay the merchant, the thieves must be able to get away within a few short minutes (seconds?) before the merchant notices that he is not getting a proper tx block chain including this block. When CN peers see a duplicate-but-different block, they will transmit it as normal and shareholders will include the evidence in the tx block chain. This means double spends are theoretically possible, but merchant software could easily identify risk factors (e.g. tx value is greater than this shareholders share) and wait for another confirmation.

3) and excluding perfectly valid transactions: this is a complicated one that I don't have a solution for yet, though I do have some ideas.

All of these factors above assume a mostly honest combination of shareholders and CN peers. If shareholders become mostly dishonest, CN peers must be mostly dishonest as well too. Whenever a portion of the network decides to break away, the honest members of the CN will transmit enough information to prove that the other portion of the network is bad to anyone who will listen. Any shareholder that has been responsible and kept track of all data could never be fooled into signing a tx block on the wrong portion of the network. Regular old clients that do not keep up with the network continuously can retrieve a small amount of data (parts of the consensus block) and compare it to previously known history before sending a tx or believing a confirmed tx to ensure that nothing seems awry.


And as far as "database of shares" this information is kept in the consensus block as described in the encoin thread. It is a local store of all of the information that should agree with what everybody else has. I think I did put some mention of fail-safes and penalties when a shareholder does not create a tx block during the time-frame required in the consciousness stream. It will create some fork-like symptoms that are temporary and merchants will be aware of, but again it comes down to just waiting a few extra seconds for an extra confirm if the tx is of value.

TL;DR this for me - is Decrits the pure Proof of Stake (https://en.bitcoin.it/wiki/Proof_of_Stake) coin? (If so, I suggest renaming it StakeCoin).

This could work if it had both demurrage *and* proof-of-stake as well as a third system. If it could be immune from both a 51% attack *and* a stake monopoly, then you will have a Bitcoin killer.  If a stake monopoly expires and block rewards distribute randomly with the hashrate, then you have the best of both worlds.  You would be able to bootstrap adoption with just a few people and more can always join with some hope of getting block rewards through demurrage to create their own stake.

When a proof-of-stake expires through demurrage, it can be replaced with a reputation based system I like to call proof-of-merit. It allows you to maintain your stake for purposes of difficulty as long as your block additions remain consistent with the blocks created by other proof-of-stake and proof-of-work miners.

This creates a sort of rock-scissors-paper game of block verification. OTOH, simple is usually better. I'll put my money on Bitcoin.

+1

This seems exceptionally complex to me and the benefits are unclear. Not good keep it simple.
It also incorporates some strange ideas (e.g. Incumbents are inherently more trustworthy than new entrants) Really? In most discussions of governance, provisions protecting incumbents are viewed as weaking governance. Doesn't stop megalomaniac founders from adding them though. If you are right, guess we should tell the founding fathers and get that term limit / regular elction crap ripped up so we can get more trustworthy, permanent  leaders.

The complexity argument is one I can't argue against, though in reality it is more about many small ideas adding up to a bigger whole rather than something insanely more complex than say, for example, bitcoin.

Be more specific about which part's beneficence is unclear and I will be happy to explain. I can't do it all in one post because the issues I sought to resolve in bitcoin were discussed across many emails and many threads on these message boards, and I know no one will read a book on a message board.

As far as "strange ideas" there are no incumbents so your analogy is flawed. There is no limit to the amount of people who may purchase shares (it is the third sentence of that section). But, during periods of network expansion, it will be profitable for more people to purchase shares to the detriment of those who already own shares. The reputation system rewards the existing shareholders temporarily with a larger piece of the profit. Anyone interested in the currency's future should be happy to stick around and eventually reap the same reward. Additionally, an "evil entity" trying to weed out existing shareholders by reducing their profitability would have a much easier time of it if there were no probationary period. Unlike bitcoin's reward system, there is no need to be there first or before someone else, only to stay in for the long haul. It encourages the sustainability of the currency, not a pyramidal shape to the currency.

Oh really?



FTFY

Provisions allowing for probationary periods, vesting periods, unequal voting power, unequal returns relative to share ownership, etc. are generally believed to weaken corporate governance (i.e. encourage mismanagement).

However, you feel like these provisions are a good idea. Probably because you believe incumbents are more trustworthy and that the evil entities are new guys.

I think you are wrong about this and instead that incumbents and entrants are equally prone to dishonesty. If so, then your complex provisions will facilitate dishonest behavior.

Cunicula, there is no point in acting aggressive and making unsubstantiated statements. I am not going to get in a flame war with you because you think you've solved proof of stake in cryptocurrencies or something. If you want to actually argue something, argue it instead of beating around the bush and leaving me with nothing to actually respond to. I would be absolutely happy to, and it is the reason for posting these ideas.

edit: Since you edited your post give me a moment to respond without looking silly.



This is an appeal fallacy, though to which I am not sure. Appeal to common belief? I suppose.

Anyways, as far as transactional security goes, each share is essentially as powerful as any other. As far as voting power goes, as I mentioned in the voting section, the 75% majority is only for "pre-approved" voting options such as adding specific types of functionality to the network (new signature algorithms, new hashing algorithms for storing scripts, etc.), or changing non-essential functionality from a pre-determined list of options (like, if the value of the coins go down and a 2 coin award causes too much spam from the minting network, it could be increased to 4 coins--but this may end up being automatic anyway).

The 90% majority is required to actually change the code. Now, while changing the code is significant, it also requires that clients accept the change. It requires that the CloudNet accepts the change as well. Since what would be considered a standard bitcoin network peer will actually get paid for their services under this model (and the data storage and bandwidth requirements compared to bitcoin will be significantly less), I expect there to be a lot of network peers. You can't fool all of the people all of the time, and if a change is not universally regarded as a good thing, the network can peaceably split. Or perhaps we should just rely on a dozen or so pools to decide what's best for us? Or people endowed with power from the earliest adoption phases to be benevolent in their decision-making in the case of proof-of-stake?


No, because there are provisions against what you call incumbents from accruing any type of real power over the network. "The probationary period exists so that long-standing shareholders are rewarded for continuing service to the network."


If they are equally prone, then the provisions do not facilitate anything more than greater profitability for the "incumbents" as is designed.

Okay, I'll leave your thread alone.

The initial post is too big to read it.

You also start with something


that is probably hidden somewhere in the overall goals but it does not seem to be a primary goal.


It would be easier for newbies to understand the proposal if it has an abstract with a table where You have a structure like this:
1. what problem of BTC You want to solve
2. how You want to solve it
... preferably ordered by decreasing priority

some other comments

this is probably not a driving force to start a new currency [to low priority to be on the top of the list
here, there are two goals right ? ... reduce work AND give coins freely [the second may scare people so it has to be explained]
how does this relate to BTC?
cool, it makes paying at a physical store easier.
are price shocks (high fluctuations) expected?
coin multiplier sounds scary again :-(
BTC can exist with only very few nodes up, right?
Are so many transmitting nodes needed?

Ignore my post if I ask to many stupid questions. An abstract would help also other though.

You are right, and the reason why it isn't here is because I went over and over this stuff with the Encoin proposals. That's not an excuse, but I got tired of repeating myself and get into the habit of feeling that bitcoin's major problems are self-evident. ;D

The "how" is explained under the money creation section, though some of the "whys" are probably not that clear.

BTC's only mechanism for changing the protocol is in the hands of relatively few mining pool operators. Google the BIP16/BIP17 fiasco if you're curious. Plus many changes will take a year or more to be realized, while this system can quickly resolve protocol issues.

No, contrary to bitcoin. But if someone does attempt to manipulate the currency, or if banks decide to stop lending to cause a credit crisis (which gives them the opportunity to buy up durable goods at highly deflated prices--see the ongoing mortgage crisis), the people can create new currency and effectively diminish the power of the banks or manipulators. This is a powerful, powerful idea that is absolutely necessary, imo, to get rid of the business cycle and the constant siphoning of wealth and productivity from the people to the banks.

It serves several aspects: 1) you don't need to mine to get new money, so any monopoly over mining is powerless; 2) if the market expands rapidly, the price will be much less volatile as 10x the currency is created for every 1x mined--this is great for new business opportunities and will entice entrepreneurs rather than scare them off; 3) existing accounts receive new money and people who transact receive new money--incentives for saving and spending (and receiving!) in a growing economy, not massively hoarding. Instead of just increasing the value of the coin, more coins are created instead. But people who have faith in the currency should be and are rewarded, just like bitcoin. But bitcoin only rewards those who hold many coins. There is little incentive for new adopters (except to hope that there are more adopters after them) and there is little incentive to actually transact. This changes that.

Yes, but it puts the power in the hands of a few people; hardly decentralized. Because of the bandwidth and storage costs, it even makes sense for this to happen with bitcoin which is why reducing storage and bandwidth dramatically was a big part of the encoin proposals. So that the everyman can be a part of the network. In Decrits, you will actually get paid just for being a transmitting node too!

The more the network can support the better. It makes it harder to attempt a denial of service, it makes it harder for "evil entities" to destroy the network, etc. Because decrits is based on shareholders rather than proof of work, a potential but costly attack on the network would be to try to take control of the majority of the network reputation and start dropping valid transactions or ignoring honest shareholders transaction blocks in an attempt to get them removed. The transmitting nodes will be the defense against that. You can't fool all the people all the time, but if there's only a few people to fool...

There are no stupid questions. I posted this so people could question and comment. Like I said though, I have a habit of leaving stuff out because of so much discussion that has gone into this proposal prior to this thread. There is a lot of stuff. I have literally spent hundreds of hours coming to this point where I think I have done a seriously solid job of proposing what could be a very successful alternative currency to bitcoin. I'll work on an abstract.

You did not criticize me for ignoring the point on disk space :-) maybe contrary to my previous comment this is a driving force for changes. I managed to install bitcoin on debian only after some parameter changes in the database. I also have a problem explaining others why they have to wait 2 days for the client to be up to date :-) If You go for the mobile market a leaner currency system is better.
Also if You put an effort on network health maybe in addition to financial transactions You could use the system to fight e-mail spam by implementing a proof-of-work header in emails. Maybe after some time email clients will notice and verify such headers and You would have a potential market to start the currency.
In any case the coin can only be launched if it has features that attract people "exponentially". A btc fork is probably easier to implement.

I would expect a slow adoption of the currency and it doesn't bother me. Why? Because bitcoin is doomed to fail. The idea is absolutely ingenious; the execution fatally flawed. Businesses are not interested in bitcoin as is anyway. It boils down to a speculative digital pet rock, nothing more.

And a complete waste of time in the grand scheme of things. Too many things need to change; why just build another stepping stone instead of going for it all?

BTC solved some important problems.
1) very small international transaction fees [not sufficient to survive / evolve]
2) anonymous accounts good for drug deals, black mail etc [yes(!) this is innovative and made the success possible]
3) it is easy to creating "home banking" with this, it is open source, it is not controlled by authorities ... [yes, I like all this, but the (2) point was probably more important]

to launch a new currency You have to solve an important NEW problem that has not been solved. You can also rely on BTC breaking because after 2 years nobody can keep track of all BTC transactions any more, but there, You will have competition :-) ... and You have to develop the code for the currency.

BTC will defend itself. It will adopt changes if it starts taking competition seriously. If it is possible to solve some of the problems You mentions with small modifications in the BTC code then You risk a lot :-) ... You risk because people who start with the new currency invest their time in it and they don't want to fail after 2 years.

I forgot ... I think an additional problem is that bitcoins are stolen to easily :-) this is also a problem that should be addressed in the new currency.

The new problem that has not been solved is simple: bitcoin is a commodity, decrits will be a currency.


This is a big, unaddressed issue. I can code, but I'm no professional. I think I'm going to start coding portions of it to get people interested and see if I can get a few more on board. Unfortunately network protocol programming is way beyond my abilities, so I will definitely need help with that.


The money supply of BTC is set in stone, so the problems that arise from that will never be fixed.


In the consciousness stream linked in the OP I talk about an account restrictions block where people could put restrictions on what an account can do without the master key or whatever. Early stage of ideas, but it will happen and no one should be foolhardy enough to trust a site that won't identify its cold wallet and the restrictions on it.

You have me, but this is not enough :-)

Tytus, I revised the OP per your suggestion. I also changed the title as I think I was unconsciously trolling by calling it inflationary. We'll see how this one goes. ;D

I have seen similar ideas posted by you for a long time now but I do not think I have yet seen any specification of it precise enough to permit actually coding it. Is there an implementation-specifics details document yet or is this all just pie in the sky handwaving?

-MarkM-

It is an iterative process. Especially since when I began ideating this project I had only a small understanding of cryptography and what would be feasible for a p2p protocol. Some of the original ideas look absolutely atrocious to me now. But I am extremely confident at this point that the guts of everything I've proposed is feasible and there are numerous blueprints in my head. I would not have wanted to begin coding until I felt that way. Some things may eventually not work exactly as described, but that will come out in testing, and something that doesn't work as intended is just an opportunity to make it work better than intended, imo.

I post this stuff here though so people can give me new ideas or better ideas or whatever though. Red was insanely, extremely helpful in that regard. It's a shame he didn't stick around.

When will I start coding some portions? Soon™

Shit :-) I spend half an hour to write a post and then it just disappeared :-) I will try to do it again but shorter (if it happens again I will reply with 6 posts instead of one)

The text with the abstract is much better than without it.

=> ignore all my points :-) You need comments from many more people to optimize the proposal

- who is your target ? probably early adopters. write something that catches their attention.
- I am not your primary target. I am interested in a secure, more theft-protected currency, not in making profits with it, so I see the proposal from a different angel. But you can use me as an example of a reader.

for me the title could be just "solution for stable crypto-currency" , it is shorter and tells me what i want to find.

- btc is "related to the time, hardware, and energy costs required to produce new currency" (miners stop mining if the value is too low)
- it suggests fixing the value of decrits to costs of energy etc. but You don't want to do this.
- you scare people by forseeing instability ... but you don't really expect instability.
- you want to fight instability with giving away decrits for free ... this is at least confusing
- no proof-of-work but in the last sentence you use proof-of-work
- here you say "no relation to energy"
- how ? need 3 words explanation
- you probably need to keep a short transaction history in the client
- you probably need some nodes to keep the history for accounting / security / analysis reasons
... you did not mention that this solves a problem : 1) client on mobile devices 2) installing the client faster than in 2 days
- developers will not fix bugs ? who will ?
- you need to attract early adopters so you probably must avoid words like "may be". the benefits must be clear and simple.
- you probably need a section that tells early adopters what are the benefits, a section like this is not easy to locate

=> i did not find a clear answer how you introduce stability. I would now scan the rest for the text to find a paragraph on that ... you have the word in the title. In fact the offer of stability is extremely complected to achieve :-) You have to define how you understand stability.

the proposal has a target. Try to think like the person that you want to attract and make it easy for him to find answers.

1) what are the advantages over btc
- stability (how)
- less energy consumption (how)
- less disk space (... this you have)
- other benefits?
2) what are the benefits for adopters
- i would make the benefits based on distribution of transactions fees but this maybe not sufficient to start the currency
... the benefits are a crucial part of your 'business plan' , this requires probably an additional post :-)

How about I just ignore this one? ;D


I more specifically addressed the early adopter thing in response to this post (https://bitcointalk.org/index.php?topic=108886.msg1184811#msg1184811) claiming I was anti-free market. Not everyone thinks the same as you and I, and they need a motive better than "improving humanity as a whole."


Well I can write a book for an abstract or I can try to keep it abstract. I suppose the key difference between it and bitcoin is the word "unbounded." There is a reason why I created a wiki for encoin, there is too much information to put into a single post, and a wiki is much more easy and natural to navigate for people looking for specific information. Unfortunately I just don't have time to do that again at the moment.


:sigh:


Proof of work is not required for network security, it is still required to make coins. I think that was clear enough. In a steady state, no energy is required to secure the network from attack, whereas bitcoin requires 51% of the computing power in the universe.


This one I can work on.


These are details that are beyond the scope of the OP let alone the abstract. I think I mentioned at the bottom in the tech details that the transaction log would be kept for 90 days or so. Important information such as voting records and shareholder activity history would likely be kept for 10 years as that is not very data heavy.


Noted.


I should probably just leave this out of the abstract.


I haven't decided at all on how this should work, and this boils down to the "needs to be publicly discussed" section after the abstract.


BUT IT'S SELF-EVIDENT! :P I think I will make a separate section on how I believe it will work.

:-) you have many options to define stability:
= average of other major currencies [they have inflation but this would be quite a success to achieve this]
= gold [as a reference ... not a good choice of course]
= value of 1h of work of a person in USA ? [you don't have the hated inflation then :-)]

... this is absolutely not trivial.

quoting myself :-) actually cost of energy is a relatively good choice. the currency would be deflationary [would help to acquire early adopters] but would not be as extremely deflationary as BTC. But it would have to be really related to energy with no cheating options [ASICs :-)].

Pegging currency value to energy cost sounds nice on the surface, but if you are losing value against Bitcoin capital would like to flow to Bitcoin. Assuming the benefit would be that merchants don't need to reprice products daily but market has been developing solutions to this by having computers automatically adjust price based on exchange rate, so the advantage there would be rather limited.

Not to mention properly pegging value is a daunting task without some form of centralization, demonstrated by the attempt of solidcoin. It's likely going to end up still with fairly volatile exchange rate.

It is not pegged to the cost of energy, more like derived from it as well as hardware costs and time costs. I hesitated to even bring it up again because it was non-stop in the encoin threads about how this wasn't possible, "you can't force the market", blah blah. But it's important to get a sense of how the value of a coin could be derived. With encoin I came up with a tongue-in-cheek phrase that "1 enc costs about 1 enc to produce." Meaning that, long-term, whatever the coin is worth is about what it will cost you to make one.

This can vary when demand outstrips supply in the case of a network expansion, or supply outstrips demand in the case of panic selling or loss of confidence or what have you. But when demand outstrips supply, as the currency production is unbounded, the people can quickly create new currency to return it to the equilibrium level. If supply outstrips demand, an opportunity for arbitrage arises. So, long term, the price should simply oscillate around a common cost to produce.

But this does not directly take into account the many factors that go into this such as the general price of world electricity changing and efficiency gains in hardware, but that is where the ingenuity of the encoin and decrits proposals come in. This (http://justinbporter.com/encoin/doku.php?id=koomey_s_law) was an important, though slightly flawed, step to bringing the possibility of a stable value currency to reality based only on competition between miners.


But it was not ideal for several reasons that do not apply to Decrits and I don't want to go off on that tangent.


SO, I will go point by point through the money creation section to explain why everything is the way I proposed it.

• Money creation starts with a big block of coins available to be minted based on the amount transaction fees over the last year (with a large minimum amount), divided by 12 to get a base line.

This is so that network GDP plays a factor in how difficult it is to begin a new mint block and how much must be mined before the coins are awarded. Because transaction fees are a percentage, this will scale smoothly as the network activity increases.

• To begin minting coins, minters must put their name into the coin minting queue which must include a proof of work equal to 10% of the standard coin award's value (e.g. if each user is assigned to mint 2 coins, he must give a solution equal to 0.2 coins to join the queue).

This reduces spam to join the mint queue, gives proof that you are capable of finding solutions, gives proof to the network that a lot of hashing power is ready to create coins, and involves a slight risk. It is possible, though unlikely, that you may never get to mint coins for this block. (Bought a fancy ASIC? whoops!)

• Once enough minters have joined the queue, minting can begin (this formula will be based on the total number of coins available to be minted for this block).

This will likely be when there are enough minters in queue to be assigned 20% of the total coins in the block.

• When minting begins, the cost of the solution to join the queue will drop to 7.5%, and after a significant portion of the coins have been mined (25% or so), the cost to join will drop to 5%.

This adds to the risk of being among the first to join the queue. It also makes less powerful systems able to join more easily and slow down the production of hyper-efficient minters.

• When the block begins, only 50% of the queued users will be selected to create coins.

Adds to the risk. The other 50% essentially lost the a battle of luck because now everyone can join for 7.5% instead of 10%.

• While each minter creates coins individually, they are assigned together with a group of 39 other minters with which they compete. The first 10 users in each group will receive a slight bonus to their award,

The bonus is to encourage increasing the difficulty when it makes sense. If your rig is very efficient, reap the rewards of running at a mh/s that is 10% greater than the network average or so.

• and once the 10th solution is given, all 10 users will be assigned to new groups to create more coins.

This mitigates risk to the network. You can buy that fancy 1GH/s ASIC, but if you only get ten coins from each block, it is so insanely ridiculously not worth it. In the mean time you spend a lot of time waiting around doing nothing.

• This process continues for each set of 10 except that the 3rd and the 4th set of 10 are only added back to the queue and not immediately given a new group.

Again encourages increasing the difficulty via competition when it makes sense.

• Go really slow (over 3 standard deviations or whatever testing seems fair) and you will be booted out of the queue and lose your 0.2 coin investment.

This means an investment like FPGA will have to be large to keep up with the "average" system of GPUs. 1 FPGA won't be enough to keep up, you'll need 10, for example. High startup, zero other utility, encourages using standard PCs and status quo hardware and only upgrading when it is for standard computer upgrading reasons. This reduces the hardware tax on the economy significantly.

• Coins will not be deposited into the minting accounts until after the entire block of coins has been minted and they will be awarded over time based on the days that the coins were mined

Mitigates risk to the network.

• The difficulty will be adjusted after each block and given a weighted adjustment based on the last 10(?) difficulty changes.

Mitigates risk by making it very difficult to maliciously increase the difficulty. After 1 mint block of much higher than normal difficulty, everyone will be aware that the difficulty is being manipulated and can join the next queue to de-manipulate it before permanent damage is done. This is because of the next sentence: "Difficulty only goes up, never down."

• E.g. a 10% increase in difficulty means that a 2.0 coin award would be reduced to about 1.818 coins (100/110% * 2.0)

Mitigates risk, immediately prices in some portion of new hardware efficiency gains, meaning it is less profitable to upgrade hardware for the sole purpose of being better at creating money--reducing/removing the hardware tax again. It is worth discussing whether or not the coin multipliers in the next two sections are reduced by the same amount, meet in the middle, or equal the original coin awards (I like meet in the middle).

• After the bootstrapping period is over, by default each coin block will be multiplied by 5x to all existing accounts

Mitigates risk in holding currency. Even if new hardware comes out that is 500% more efficient and super cheap etc etc but has the same MH/s output as GPUs, existing holders of currency do not have to run out and buy this hardware just to compensate for the reducing value of their holdings. A new value of the currency will be established (stable long term but chaotic because of unforeseen present conditions), but no one will lose actual value because the more new currency created, the more existing currency is rewarded. It is a balance and it is another hardware tax--you don't get the new coin pie all to yourself. Additionally, it is possible to mitigate the value change of the currency by forcing an increased difficulty after so many mint blocks are created in a row with low difficulty increases and not much prior increase in transaction activity. If, for example, coins were worth about $3 and the new hardware can produce them for $1, rather than tripling everyone's coins over time until a new level was reached, the difficulty could be forced upwards so that maybe it only drops to $2.50 and everyone only gets a 20% increase in coins or so. It would be a form of disinflation I suppose. Something worth discussing, but it does have the potential to be abused. This scenario is also pretty unlikely.

Either way, while this would temporarily upset the economy, once it is accounted for it won't have any lasting effects, and a situation like this should be quite rare.

• and by 5x as a lottery to transactions

Encourages trade, gets more money in circulation when demand is high

• What this does is reduce the actual amount of energy spent in creating new money so that the people using the money profit instead of the electric company.

This is significant. Instead of it costing X energy and hardware to create Y amount of currency, it costs X/10 to create the same value in Y currency. This allows for a very quick, very cheap expansion of the money supply to coincide with an expansion in demand for money. It seriously reduces the energy and hardware tax on the network.


I can't type anymore at the moment. I said good day!

How do you prevent a super-machine (ASIC, whatever, something extra-powerful) from presenting itself to the network as a whole bunch of normal consumer grade machines in appearance?

Seems like one could get a bunch of IP addresses and share your hashing power out over them to appear to be many individual users, maybe even an entire mining-group of forty users for example?

-MarkM-

IP addresses are not needed or used for minting under the Decrits proposal. I dropped the "supplynet group" concept of Encoin that worked similarly to p2pool because I felt it would be an avenue for a denial of service attack against creating new money. Part of that idea reduced the effectiveness of things like ASICs because the payouts would not be proportional to hashing power (see: http://justinbporter.com/encoin/doku.php?id=mint_blocks). However, it is possible that idea could be re-discussed down the road as it is less data-intensive than the Decrits proposal which is nice (but requires direct communication between group peers, which is not so elegant), but I think in general the 10x coin multiplier obviates the need for non-proportional payouts. Plus it feels like socialism.

Anyways, there is nothing preventing an ASIC from presenting itself as many consumer grade machines. I even mentioned in the OP that one user could join the queue multiple times, but it is risky because they may be selected more than once at the same time and they may lose their initial solution investments if they cannot find solutions within the allotted time frame. Obviously this is not very risky for an ASIC.

There are two avenues for using an ASIC on the network:

1) Playing nice and blending in with an individual queue hash rate along the lines with the rest of the network. Depending on the size and circumstances of the network, this will only be effective as long as it is profitable for the community at large to mine because of the large initial mint block start up cost. One of the risks that I failed to mention in the money creation section was that queued solutions will only be valid for so long and will eventually expire unless a mint block begins within a certain time frame. So if they play nice and whatever, they will make a much better profit than everyone else, but because of the 10x coin multiplier and restrictions on timing and such, the profit is very unlikely to be significant compared to the unsunk costs of purchasing and/or developing the ASIC. Once supply and demand meet, everyone else will drop out and the ASIC will not have enough power to maintain the entire minting process on its own.

Unless the ASIC is an order of magnitude more powerful, which has apparently been proved-in-concept by BFL with a 1TH/s miner. If the network's GDP is large and healthy, even a miner with an order of magnitude more power should still pale in comparison to the amount of work needed to begin a mint block. If the network is small, with the 10x coin multiplier and such it is unlikely to ever see a return on investment, so that brings me to...

2) the possibility that it could be used as an attack on the network to intentionally increase the difficulty, bring up the cost of creating coins and cut out everyone else from being able mine (though probably including itself). I came up with a solution for this though that I recently added to my consciousness stream notes:


Additionally, ASICs are stupid machines. There are tens or hundreds of ways that the hashing algorithm could be slightly modified to render all ASIC designs moot while causing only a slight hiccup to GPU mining. Because of the voting protocol, this could happen transparently and publicly, and the fact that this option exists may simply deter anyone from even trying. I am also thinking of doing a three-way algorithm between SHA2, SHA3, and scrypt, XORed together or something. (this has the additional bonus of completely nullifying any future vulnerability in one of the algorithms.) With the addition of scrypt, from what I understand this will significantly increase the cost of producing ASICs as they will require onboard memory or will have severe hashing penalties.

PS - the groups of forty will be determined at random

Is Decrits meant to be a decentralized solution?

How is the coin minting queue managed? E.g. you say "Once enough minters have joined the queue..."  :  what if there is disagreement about which miners are in the queue or if there are "enough"?

Absolutely. Though I would not be surprised to hear an argument that money = power is more centralized than mining pools and hashing power.


Well the "enough" question is simple because that is part of the protocol. As far as disagreeing, whatever the shareholder says for each transaction block goes. You can think of it like geistgeld if you are familiar where I believe the block target time was around 10 seconds, but there is no competition for creating transaction blocks--only 1 shareholder is allowed to create a block for each specific 10 second window and that's it. I haven't gone much into what happens if a shareholder misses their transaction block because that's a bit hand-wavy at this point.

Like, for example, a node sees blocks 100, 101, then 103 and it enters some kind of safe mode because 102 is missing and transactions can't be guaranteed bad-spend proof (spending more than available in the account balance) until the missing block is resolved (how this will work exactly is the hand-wavy part). It won't particularly affect minters because they don't care about transaction security. And they could start minting at any time or do whatever they want, but a hash of a relatively current transaction block will be part of the data that needs to be hashed, so if they come up with a solution before there are enough minters in the queue, the solution will be invalid and the effort wasted.

Etlase2, I agree with markm
You offer a very complicated production process to achieve improvement over BTC generation, but what improvement do You want to achieve? If You give additional befits to miners just for being a miner, then why not just give a coin [or coin fraction] to every miner and that's it. Whatever You propose it must be simple to comprehend. You have only a minute to attract an adopter. You can explain BTC generation in one sentence [with few additional sentences that go into details if this is required].

"BTC is rewarded for solving a mathematical equation that takes substantial amount of computing power to produce". That's it. This explains everything (even if it is not 100% correct).

Now You have a crazy addition ... after some period You get half of the reward ... A confusing, surprising and definitely not necessary addition [but it helps getting early adopters].
You must be able to present the money generation process in such a short way.

BTC uses a solution of a hashing problem to proof value (work) only because the program can not read and validate an electricity bill and convert it into BTC. There was no other simple way to proof value to a computer program so electricity providers profit most from the BTC community :-) There are other ways to proof value. You could monetize traffic on web pages. => You proof traffic and get rewarded in "BTC-traffic". The network can than take advantage of this and sell the space you have buy providing it to advertisers that have to burn (destroy) "BTC-traffic" coins to display adds there. After 1-2 years You can compete with google and the network would be worth more than google :-) but this is just another example to proof value.

I think You want to award coins to members just for being a member and doings something small. There must be simpler ways to do the awarding so that it can be explained in 1-2 sentences.

The ability to create and unbounded amount of currency without causing general price inflation (or slightly more accurately without any loss of real value due to possible price inflation caused by currency creation).


It also explains everything in the same sense ("not really explained" ;)) in Decrits. There is obviously a lot more going on under the hood in both situations.


I'm not sure what you mean here or to which part you are referring.


I must also be able to give solid logic and thorough explanations to the people here who will be very critical of anything that isn't directly related to the mostly proven idea of bitcoin's currency creation. This proposal is not here to attract early adopters, it is here to attract scrutiny and discussion and potential for new and better ideas. I will work on dumbing the ideas down to a digestible fashion when people can download and run the software.


This is not a decentralized solution.

BTC reward halving ("You"=BTC).

Why not :-) a client checks if the advertisement space is really available and confirms the block. Any client can do this.
You then buy advertisement space anywhere with a client by providing the content and destroying BTC.

Alternatively You could generate blocks by actually displaying the content if You can proof views.

anyway ... this was just an alternative (not well crafted idea of an) option to proof value. You can consider other solutions of values that can be proven to a software program. If You define what is the value in decrits it will be easier to comprehend.

But you can't. Part of the smart property of bitcoin's coin creation is that it is very hard to produce and very easy to verify. How can anyone prove views? You are relying on someone to say "yeah there were views." There is no decentralized, easy to verify proof.


There are a hundred ways to realize the value of a cryptocurrency. Significantly reduced transaction costs; no government or central bank manipulation; difficult to trace transactions; ease of international trade; and so on. As with everything of value, it is given value by those that ascribe value to it. I believe the ability to democratically* and organically control the currency's creation is of significant value. Thus democratic credits. :P Bitcoin proponents may not agree.

* social equality, not a reference to the voting system

The person who paid can be trusted because he paid :-)

1. the advertiser pays 50btc to display 10000 ads
2. he puts code on the displaying web pages that gives him confirmation where (ip) the add was clicked and who (ip) clicked
3. he sends the confirmations back to the network

=> this can be decentralized with some cheat protection
- You can reward the web pages that displayed the add with 50% of income the network with the rest [all owners of coins]
- You can limit the reward for each web page ip so that the advertiser can not cheat by crediting everything to his web page ...

The generation of a currency will be just a byproduct of this business. You can then use the existing hashing system without any block reward just by paying with transaction fees for hashers.

If Your proof of value is based on computation it will be related to computing costs [energy + depreciation of equipment]. If You add rewards for just being part of the network You have an additional problem of fake members [multiple ips] ... the same problem that I would have with proving views / clicks :-)

This could result in never-ending inflation that doesn't care about price levels. It would be easy to spam these proofs to yourself and flood the network or what have you. It is not very elegant, unfortunately.


Using external information puts the integrity of the system at risk. I don't want to go off on this tangent, so I'll just leave it as "not a good idea." Sorry. :-*


I see now that you misunderstood the point that markm was making. There is no added reward for using multiple IPs. As I told him, IP addresses don't even come into the equation with creating new money. There is no benefit for joining the queue multiple times unless you can back it up with multiples of hashing power. It is in fact risky because you could see zero return on your 0.2 coin investment if you take too long to provide proofs of work.

:-) Of course I can back it up with multiples of hashing power. My client will calculate how many spots in the queue I should take and take the optimum amount.
=> if it is not related to IP [number of network members] the reward system becomes reduced to the cost of energy [+ hardware depreciation] as value.

Exactly.


Plus (computer) time, plus a profit margin. Though those margins will probably be diminished because of the coin multiplier. However, this means people mint when the value of currency is too high--the intended design. This is a good thing for something that tries to achieve a stable value, don't you think?

Absolutely. But it is also essentially the same as BTC without block halving.

To gain stability [resistance against speculative changes] the currency must be just large [total value of all coins]. BTC will also converge to stability with time, when the value of all bitcoins becomes large. If You want to speed up this process You must generate value [burn energy] faster. This can be achieved by keeping a larger profit margin [incentive to burn energy :-)].

Never has a more rage-inducing sentence been written. ;) Block rewards that don't halve would be an example of disinflation (http://en.wikipedia.org/wiki/Disinflation), which will almost certainly still lead to price deflation or general instability in price levels.


This is not historically correct. If we want to take gold, for example:

http://upload.wikimedia.org/wikipedia/commons/thumb/9/9c/Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg/800px-Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg.png

There are many more factors at play than just having a large total value. And that is just speculative change--that doesn't address actual, economic change. Like, for example, the business cycle (http://en.wikipedia.org/wiki/Business_cycle). Something that is oft-argued by bitcoin proponents to be something that bitcoin will address, which I wholeheartedly disagree with. I've used the term "BitStreet" to describe the manipulation that I think will absolutely occur has already occurred with a limited commodity currency. Without the ability to create new currency as needed, banks will hold disproportionate power over the economy. Power = Wealth² rather than simply Power = Wealth. Wealth, value, and productivity will once again trickle up the chain and there will be nothing that the people can do about it (except ditch bitcoin in bitcoin's case). Begin economic depression, wealth buys up durable goods, middle and poor lose years of productivity; rinse repeat same scenario as modern fiat.


The process doesn't need to be sped up, the process needs to react to economic activity in a sane manner. Drastic currency appreciation is not a sane route because it incentivizes manipulation and runaway deflation until powerful actors decide they can't pass up the opportunity to flood the market either via lending (rinse, repeat) or via fiat exchange; either way causing currency depreciation. A cycle, if you will, rather than anything close to an orderly expansion. And this cycle will happen every time the bitcoin market expands--there isn't even the potential for a gold rush as that possibility has come and gone and increasing production towards currency creation bears no fruit other than increasing currency appreciation even more.

The Decrits proposal, economically, is not anything remotely close to the same thing as BTC without the award halve.

And this was probably a reply to Your post number 1000? What a moron ... [sorry :-)]

The total value of gold is US$10.1 trillion [http://en.wikipedia.org/wiki/Gold_reserve]
The total value of cash dollars is US$800 billion [http://en.wikipedia.org/wiki/Gold_reserve] (maybe there is more ... but I can not find a good source of info on that)

Now You probably wanted to show that gold is prone to large value fluctuations. Maybe it is not gold, maybe it is the dollar :-)

This was my question about stability. How do You define it ... what is the reference standard. Only after this we can check if the system you propose will deliver the expected stability.

You wanted relation to energy costs [energy as reference]. Don't You have this in BTC ? The halving will now change the exchange rate BTC~Energy by 100%.


You get these stupid posts only because Your model is too complicated and average people can not follow :-)

Of course the value of BTC would follow energy costs better if there would be no network wide difficulty changes and miners would just mine faster to meet the demand.
The improvement in hardware would cause inflation as you get more hashes / joule. To keep the value more or less constant the hardware effect would have to be be evaluated / compensated, but I could imagine an inflation rate that corresponds to hash/joule. there would be little hoarding but the currency would be still a valuable transaction medium.

This is a semi-valid argument. The top and bottom lines on the gold graph are inflation-adjusted values though. The problem with "inflation-adjusted" is that this is based on the consumer price index (CPI) which many people will argue is a flawed way to measure the inflation rate, but it's really the only thing we've got, and it is accurate enough.


The example I used with the encoin proposals is was something along the lines of "If a loaf of bread costs 1 encoin in 2012, then a loaf of bread will cost 1 encoin in 2050, assuming the production costs of bread have not changed." But such a thing is insanely hard to accomplish, and a more accurate description for Decrits would add something like, "unless the cost of currency production has changed, in which case if a loaf of bread costs 2 decrits in 2050, a coin saved from 2012 will now be 2 about coins (because of the coin multiplier)." Many of the risks (and incentives) added to creating coins is intended to make such a situation as unlikely as possible, but I can't guarantee it, so instead I guarantee you "free money" to make up for it. I suppose I should add something like this to the abstract.


BTC does not have this because the cost of creating currency generally follows what the currency is valued at. If demand for BTC is high and the value increases, demand for creating currency by mining is increased as well, and anyone who mines receives less currency for their mining efforts. Energy/hardware costs increase to meet the value of BTC whereas the value of decrits would decrease to meet the energy/hardware costs, resulting in much more stable price levels, and the inability for the wealthy/banks to manipulate the supply in order to make themselves even more wealthy.


I also spent much more time on technical details rather than economic details with the Decrits proposal, mostly because few believed what I said could be possible for Encoin, so I set to prove them wrong.



This leads to the currency being a poor store of value. I want Decrits to be both a fantastic transaction medium as well as a great store of value. Bitcoin is a great store of value, but not such a great transaction medium.

The reasons for gold value fluctuations are in the instability of other currencies though. If You have a stable currency than You risk destabilization because people will trade other unstable currencies against You. You would have to have a total value much bigger than gold to be resistant.
Remember the problem of Switzerland ? :-)
http://www.theweek.co.uk/business/2433/swiss-national-bank-pegs-franc-euro [just a top hit from ggle]

Some instability can not be avoided. Also pegging to energy transfers the effort of the community to energy suppliers [and increases energy consumption, imagine green peace demonstrations against BTC-like currencies :-)]. You wrote, You want to avoid this ... I have to read about this (scary) multiplier concept :-)

The instability of other currencies did not cause the gold spike in the late 70s, speculation of the instability of other currencies did. As it turned out, the sky was not falling.


This is exactly the situation that Decrits can handle so easily though. "Decrits is so stable while all this other crap sucks! BUY ALL THE DECRITS!" And then currency production ramps up and keeps the price/value relatively stable, at least over time. What would eventually happen is that Decrits would become worth more vs. fiat currencies because nobody wants fiat anymore, but this would not affect the price of a loaf of bread in Decrits.


Many people make the argument that bitcoin is not energy-inefficient because of all the energy wasted storing, transferring, securing fiat. I don't really buy it, but the same argument applies here but divided by 10 for creating currency, and divided by almost zero in securing the currency. I think Friedman estimated that gold production at one point was around 0.5% of the US's GDP. If the world economy can ever reach a steady state (which might be a lot more likely with a stable currency), then very little energy is needed. Efficiency gains in old products can cause natural deflation while new products soak up the difference and allow everyone to be wealthier.

In my consciousness stream notes I mention a special transaction that destroys currency so this can be used as proof to transfer it to a new currency. The new currency could accept Decrits destruction for some time, but then eventually sever ties. This new currency could be without any form of money creation at all.

burned decrits did belong to somebody. Somebody would have to pay for burning it. Defending the currency against inflation [or collapse of credibility] is more difficult than against deflation.

You would have to implement ways to add value to the currency by giving away something for burning decrits.

Take for example my ad idea :-) If somebody wants to display an ad on all bitcoin clients during the next block he has to pay (burn!) 1BTC [or some value based on the best bidder]. The display can be implemented easily in the client and you get an appreciation of the value by selling the attention of all bitcoin enthusiasts :-). You can easily extend this idea to bitcoin browsers ... but we left this tangent :-)

The burning is trivial to implement. Either You define a transaction that gives always false or You send it to the account 11111..... [or some other fancy value] and than you have an interesting race to discover the private key to this address :-)

Until someone forks the client and removes those ads...

to get the inflation back :-)

The point was to move value to another currency if one so desired--there is no actual destruction of value. Bitcoin can accomplish the same thing with an address like 1111 or whatever like you said, but this was just a way to sanction it as well as remove the record of that currency from existence instead of leaving it sitting around in an inaccessible account.


In earlier versions of the Encoin proposals such a thing existed--destroying unrefunded transaction fees. However, Red originally brought up the idea of arbitrage, killerstorm mentioned it in this thread (https://bitcointalk.org/index.php?topic=106443.0), and I think it makes sense. If the trade value of the currency is typically below its cost to produce, it presents an opportunity for arbitrage. People will want the currency simply because they know it would cost more to create it than they can buy it for. This is something bitcoin cannot defend against, because there is no mechanism for finding the true cost to create currency. In effect, I am willing to wager that bitcoin is more likely to experience extended periods of gross inflation than decrits. Like say, 1600% in a few months.

Now if there is a collapse of credibility, that is a different story and one that cannot be solved by destroying currency or whatever else. Every currency can suffer from this problem. Every single one. There isn't much you can do to fix it except hope that it rarely happens (or isn't permanent) by making the foundation for the currency solid. If the cryptography behind bitcoin or decrits is broken, that's it, game over. Destroying currency won't help.

Who would do this? This sound like exchanging it against USD.
The central bank must buy back money to get it out of circulation. No private person would do it just because of patriotism [ok, some, but this is not Your model].

To transfer it to a future, better cryptocurrency, if such a thing could possibly exist. :o ;D The only reason I brought that up was because of the issue you had with the energy waste. A future cryptocurrency could use essentially zero energy by not allowing currency creation and only bringing in currency over from destroyed Decrits currency. That is if the economy ever got to a reasonable steady state. I think it still would bring back the issue of manipulation, but perhaps at that point we'll have a Star Trekkian utopia. I don't really want to go off on a tangent about it. Yes energy gets used, the same is true for every currency and everything in production. It can't be avoided without introducing some kind of central authority that distributes the currency--and of course even then you go back to security, etc. ad nauseum. The argument compared to bitcoin and traditional fiat is moot. Decrits will be far more energy efficient.

http://www.indiegogo.com/freicoin
Ok, it is time to raise money for development :-)

What is the least uptime allowed? 99%? 95%? Noone can remain online 100% of time.

Just in a general sense. Depending on how the final consensus mechanism ends up working, they may actually only need to be online for very short periods of time when they have to create a transaction block or sign someone else's transaction block. But the best that will do is be something like "you must be monitoring the network at 6am GMT" etc., so it will usually just be more convenient to remain online, though not strictly necessary.

Shareholders will also be allowed to sign off of the network for extended periods, but this can't be an instant process as the rest of the network needs to come to a consensus on it. The total network reputation that is online cannot be allowed to go too low though, so there have to be limits on this. Some of this is detailed in the consciousness stream linked in the OP. There will be a system of penalty points that, when accrued, prevent you from gaining your share of the tx fee profits for a certain amount of time (like 1 point = 1 day that you must be signed into the network and perform your duties for the point to disappear). There will also be a kind of "three strike rule" where if you miss your required duties too many times or stay signed out of the network for too long within a 1 year period, you will be kicked out of the shareholders, lose your reputation, and be refunded only 75% of your share value (the rest will be destroyed).

These mechanics also tie in to what happens if there is a network split.

I'm replying here from the deflation thread since we were not talking about deflation at all.


It wasn't a post about my goals. I don't know why people would be interested in a post about my goals, being pseudonymously here. I think particular, concrete issues are more interesting for most people to contribute their thoughts and ideas.

In an earlier post you said nobody thought about a system like bitcoin before bitcoin, and I showed you how actually a number of people had very clear ideas about it. They just didn't put all the elements in place in a sensible system like Satoshi did. So yeah, implementation is a big, BIG part of the deal. Which is why, while I'm willing to listen to everybody, it will take some convincing to get me working in a system several times more complex than bitcoin. Bitcoin itself is far from "solved" (we still struggle to improve blockchain storage, checkpoint sync, etc and we still find new pros and cons and possible attacks to this day).


By counter-productive I meant in this particular instance that it would hinder adoption. That's the general impression I get. I've thought of similar schemes but these will need to be thoroughly tested.


I have no way to know whether you are capable or not of devising these attacks. If security is not provided by proof of work in some sense (doesn't need to be SHA cracking) you'd have to tell me what and how does the system stop someone from faking a big number of early users of varying characteristics. If you come up with a good answer to this I'd be a lot more interested. Note that bootstrapping the system is a very delicate part of the process, if you tell me that I need to pay someone in US$ to enter the network then I can only assume that it will fail miserably. Not going to happen. The alternative is basically proof of work of some sort.


I can only devote so much time to reading and debating other people's ideas instead of working in my own stuff.

Well, I don't really see why you would get a more thought-provoking discussion by using minor modifications to bitcoin as a discussion point.


B-money did not solve the consensus problem even though he had written about using a system like bitcoin's money creation system to create money, he did not link the two together. It's a big black hole of a problem in his design where Satoshi filled the void.


Well perhaps you'll be happy to know that Decrits, at least, solves block chain storage and checkpoint sync. ;)


The share system is for securing the network. The money creation system is a separate entity. Both systems can easily provide for an early adoption benefit, though it would be nowhere near on the same order as bitcoin's. But there's no point in pretending that bitcoin's characteristics will ever work again--we've already got that currency.


Proof of work is provided by the currency you need to create via minting in order to buy a share. Do something detrimental to the network and you will either instantly or eventually lose your share depending on the transgression. Anyone who doesn't agree on these protocol transgressions will also lose their share in the eyes of the clients, the honest cloudnet, and the honest shareholders. There is no 51% attack against this system, there is really even no 99% attack. The worst anyone can do without losing their stake is delay some transactions, and I'm working on making sure this is penalized as well. It's a bit delicate though and these are some of the deepest intricacies that I am trying to make rock-solid even though their impact is small unless a very big portion of the shareholders are intent on causing disruption. But the disruption they are able to cause is far less damaging than a 51% attack on bitcoin.


The shareholder system does have a big caveat that shareholders will need to exist at the start of the system, but this I plan to resolve by having a community effort in designing and creating the software and awarding shares to people that have an interest in seeing the system succeed. This poses no adoption benefit over early adopters, just a bit of free money. I also plan on requiring that these free shares require at least 6 years of service before being able to be cashed out. Anyone else is free to create money (at the accelerated early adoption rate) and buy a share as well (at the reduced early adoption rate). The system could start out by using proof of work to reach consensus and wait until a minimum number of people have purchased shares before starting the shareholder system, but it will be a lot of extra code for something that isn't strictly necessary. I would never take real money from people for shares, I only used USD as an equivalent value par exemple.


Well hey maybe I can convince you that I'm pretty far along in the ideating process and that you should make these ideas part of your own. :)

Oh, so there IS someone who thought this well before me  :D

The topic is really of actuality right now... any news?

I think this sounds great. Please don't let skeptics keep you from giving it a shot.