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The endgame for Bitcoin is either rise to power or dive into oblivion. The former ensures high enough fees by virtue of its design.
Genius. |
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I'm confident that if the network doesn't double in hash once it matures every year aka grow in accordance to Moore's law, then the network will become insecure and miners will abandon it for other, more miner friendly, PoW currencies.
How do you figure? the network is supposedly already more powerful than the world's top 500 supercomputers combined. If it shrinks a little bit, it's still plenty secure. What do you mean by "miner friendly" What I mean by miner friendly is a cryptocurrency that has more than one revenue source for miners, or an inflationary PoW cryptocurrency. A cryptocurrency with a fixed amount of bitcoins will eventually solely rely on tx fee's to support mining growth. An inflationary currency will rely on tx fee's as well as block reward. The only question is the amount of inflation that is required to balance mining profits and price stability. |
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There are several aspects to consider, but is likely to be profitable forever.
Just two out of many:
- ASIC miner companies price per GH/s is based on BTC market price.( Which is abusive practice IMO ) That's why they sell it to you instead of mining, they decide how much you may profit if anything at all. The actual manufacturing cost is very low in comparison to street price, so there is a big margin to be reduced.
- Difficult should adjust with people giving up.
PoW cryptocurrencies cannot rely on a decrease in hashrate to increase mining profitability because the security of the network is derived from the hashrate. |
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Sweft's Law: The network hashrate of a proof of work cryptocurrency must rise at a rate at least equal to that of Moore's Law to provide minimal network security. Moore's law is about the number of transistors on a processor. Processor speed is generally a byproduct, but hasn't kept up in percentage terms for quite a while now. The security of Bitcoin's network is that it's always more profitable to play by the rules than to break them. I don't know what you mean by it's more profitable to play by the rules than to break them. Who is it more profitable for? This generalization is vague and has hardly any evidence supporting it and even if it was sound it's reasonable to assume that people would sacrifice profit to destroy competition. So the premise is irrelevant. I'm confident that if the network doesn't double in hash once it matures every year aka grow in accordance to Moore's law, then the network will become insecure and miners will abandon it for other, more miner friendly, PoW currencies. |
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This is a well known problem I described back in 2011 and extensively wrote about it. I created a law for all proof of work crypto currencies that is known as Sweft's law. Sweft's Law: The network hashrate of a proof of work cryptocurrency must rise at a rate at least equal to that of Moore's Law to provide minimal network security. The thread is here of anyone wants to read it. https://bitcointalk.org/index.php?topic=12109 |
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I like your idea, except i would make a couple of changes.
1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation. Then have coin inflation adjust to 2%.
1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining. 2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year. But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation  . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time) Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount... That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year). I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin. You know that it takes energy to discover blocks? It's not like printing fiat out of thin air. Those coins support miners who secure the system. Much like gold requires energy to mine. So what you're saying that gold loses value over time because more gold is mined? I have reconsidered your idea and I believe that the two properties that you have proposed may make an adoption or a fork less frictional. The reason being is that the fork will allow current bitcoiners to more easily participate in the network. The second thing that is beneficial is that since you have proposed to change block reward to 200 coins is basically nullifies the existing early adopter advantage and allows for a wider adoption of the future currency. Where we diverge in opinion is in the fact that I believe that there needs to be a point where inflation is controlled at a rate similar to that of Gold inflation, which is 2%. Well, remember that the 200 coin block reward fork will create a inflation starting with 100% the first year. It will take 50 years before it reach 2%. I think we need not worry to much about what happens after that. I understand that and it is a problem. There are ways to make a fork reach the 2% threshold faster, like bitcoin does. |
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I like your idea, except i would make a couple of changes.
1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation. Then have coin inflation adjust to 2%.
1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining. 2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year. But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time) Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount... That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year). I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin. You know that it takes energy to discover blocks? It's not like printing fiat out of thin air. Those coins support miners who secure the system. Much like gold requires energy to mine. So what you're saying that gold loses value over time because more gold is mined? I have reconsidered your idea and I believe that the two properties that you have proposed may make an adoption or a fork less frictional. The reason being is that the fork will allow current bitcoiners to more easily participate in the network. The second thing that is beneficial is that since you have proposed to change block reward to 200 coins is basically nullifies the existing early adopter advantage and allows for a wider adoption of the future currency. Where we diverge in opinion is in the fact that I believe that there needs to be a point where inflation is controlled at a rate similar to that of Gold inflation, which is 2%. |
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Sweft: I think you over estimate the depth of thought of your opposition
If anything, he under estimates it. For the most part, his opposition isn't interested in convincing him of anythin, most who post here are just trolling him. In the long run, not only are we all dead, our grandchildren will receive the benefits of our foresights. If Sweft is correct, and he actually does something about it beyond arguing about it with people on the Internet, then his grandchildren will benefit and they will be thankful for it. If we are correct, our grandchildren will be thankful. In the near term; however, there is no point in us arguing about it, since Bitcoin is presently, and will continue to be for long after my natural life span, a rather inflationary currency. There's no reason you cannot become rich, since you can also mine stablecoins. The only thing i'm trying to create is an economic algorithm that has the fewest number of flaws. |
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The change of the total units added to the total supply or total units provably removed from the supply is irrelevant. There can still be an increase in the base money supply after the block chain award has gotten so small it no longer fits in 8 decimals. And there can be, will be, and are decreases when someone puts coins in an account intending to leave them there for a significant length of time.
That's simply not true because total units added have one channel by which they enter the system, and that's through miners. So, no, total units can never be irrelevant because even if it does not affects units in circulation, it still affects the rational decisions of miners whether or not to mine. This whole discussion has become convoluted and quite frankly idiotic. I may have found a developer. Hopefully, we will see. |
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The change of the total units added to the total supply or total units provably removed from the supply is irrelevant. There can still be an increase in the base money supply after the block chain award has gotten so small it no longer fits in 8 decimals. And there can be, will be, and are decreases when someone puts coins in an account intending to leave them there for a significant length of time. From that. |
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Units in circulation has nothing to do with the supply of money. By any economist's definition, it is the defining factor of the base money supply. You are free to use definitions that are not accepted, but all this does is create a microcosm of bitcoinomics. Nobody outside this sphere of influence is going to know what you're talking about. Unless you're also using unorthodox definition of units in circulation. I responded to this statement you made. The point point is that lost coins will be eclipsed by routine changes in the money supply--units in circulation The claim you seem to be making is that any units lost would be dwarfed by changing the decimal point. What your stating is impossible because changing the units will necessarily also change the units of all coins lost. So if you lose 10 coins and i change one unit to 1000, then i have lost 10,000 coins. So no, changing the units will not be eclipsed by routine changes in the money supply. Your statement is false. If i change the decimal point i don't have a larger supply of bitcoin, i have a revised definition of bitcoin. Changing the unit measurement of a bitcoin will not increase the total units of bitcoin. There's also a reason people don't routinely change units. It's because contracts are written and signed for specific quantities and changing units would be disastrous to debts and contracts. Changing the definition of bitcoin is not equal to increasing the supply of bitcoin. |
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Did you get anyone yet Sweft? I want to implement an interesting coin that can inflate forever and adjust its inflation according to demand. It is different from what you are proposing but it will be a lot more interesting of an experiment than any other alt-coin. I wrote the gist of the concept here. https://bitcointalk.org/index.php?topic=179918.msg1942413#msg1942413If you are interested, a 3 coin bounty might be a fun reason to actually implement it. How will you adjust according to demand? |
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For one thing, you still have not addressed the problems such as the fact there is no such thing as annual since you do not know how many blocks that will be exactly; it varies.
If you try to use a network atomic clock or whatever there are apparently big problems with such ideas, which is why bitcoin has a big fudge factor on any attempts to guess what the actual real time was when a block was made.
Also you have not substantiated any reason for the totally abitrary (it seems) guess at how many percent will actually turn out many years in the future to be the ideal. Thus in effect you are pretty much motivating or calling for up to thousands of similar coins, each with a tiny tiny difference in the exact percentage as their "justification" for why your coin cannot serve the purpose and therefore their coin is justified - it corrects the incorrect percentage you chose way back in 2013 or so, or their crystal ball is better than yours or whatever.
Come some far future time when the inflation rate starts actually approaching the general range would be a much better time to determine what the exact percentage should be in order to actually be ideal by then. YOu have not shown any whitepapers or scholarly researchg etc that indicates 2% is better than, say, 1.99% or 2.01%, or even 1% or 3% or 0% or 5% or any other number.
In the mean time the coin might as well just keep on chugging along at 50 coins per block until the precisely ideal percentage at which to change that has been empirically determined or thoroughly derived mathematically or whatever, not just made up out of thin air.
There will be years to fine tune / measure / determine the exact best percentage, no hurry to plug it in right from the start when we have only seen about two years so far of how just the plain old 50 coins per block forever works out. (Hint: so far it is one of the least popular coins, and that is without it even being old enough yet that not halving the reward at 4 years has even actually hit, as it it not yet four years old.)
If you are correct that changing to doing the 2% thing will make it ideal, then, being a very unpopular coin without that added feature, it should seem very reasonable to add that feature when the time comes.
-MarkM-
Gold has been inflating at a rate of 2% per year since 1850, so it is primarily based on that fact. Secondly, a coin that has a constant block reward will become deflationary and have the same problem as Bitcoin. There is not much difference. I can't find much of a reason anyone would favor it over bitcoin. |
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Etlase2's point is that the exchange market dose not distinguish between lost and hoarded coins, it deals only with circulating coins and the demand for those coins, the supply curve is what is actually offered, not what could theoretically be offered if every coin ever made was in circulation and offered for trade.
If you say hoarded coins can be enticed by high enough prices to come back into circulation then is simply admitting the correctness of Etlase2's point in that only once those coins have become circulating coins do they have an effect on the valuation that we call inflation, so long as they are not circulating they have no effect. To the market a sufficiently ballsy long-term hoarder is indistinguishable from a bozo who lost his private key.
My point is that hoarded coins have an affect on the demand on coins since the hoarders demand is altered by the act of hoarding. Thus, the hoarding is reflected in the supply and demand of coins. The reasoning is sound. |
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For one thing, you still have not addressed the problems such as the fact there is no such thing as annual since you do not know how many blocks that will be exactly; it varies.
If you try to use a network atomic clock or whatever there are apparently big problems with such ideas, which is why bitcoin has a big fudge factor on any attempts to guess what the actual real time was when a block was made.
-MarkM-
If we use (minutes per year / minutes per block) do you know the maximum amount this can vary? If it is within a couple of weeks it shouldn't matter much since anywhere from 2-2.5% inflation is acceptable. |
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Etlase2, it is starting to sound like what is really meant is the guy wants in on the make your own new coin of the day, so even if your coin matched his proposal 100% in every detail all that would mean is he needs to modify a detail...
-MarkM-
I clearly stated in my original post my ideal coin, which is just an inflationary form of Bitcoin. What is so hard to understand? |
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The second point is that lost coins are deflationary as much as taking dollars and burning them is. The point point is that lost coins will be eclipsed by routine changes in the money supply-- units in circulation. You have the wrong definition of money supply, and this is mostly the fault of the group-think and group-propaganda around here. The change of the total units added to the total supply or total units provably removed from the supply is irrelevant. There can still be an increase in the base money supply after the block chain award has gotten so small it no longer fits in 8 decimals. And there can be, will be, and are decreases when someone puts coins in an account intending to leave them there for a significant length of time. And the fractional lending you speak of is only a problem with fiat currency that is easily counterfeited. Yes, with all of the incentives to treat bitcoin like gold--starting FR on digital IOUs or even paper IOUs could never happen.  Units in circulation has nothing to do with the supply of money. You can move the decimal point wherever you want, it doesn't change anything. I can chop a gold coin into 12 pieces, i still have the same quantity of gold. Think of it this way. If i owe you 10 BTC then some fool says 10 BTC is now 100 BTC, do i owe you 10 or 100? It's not that complicated Secondly, you made the point that lost coins are the equivalent of hoarded coins. That is unequivocally false. Hoarded coins, even if nobody knows you have hoarded them except yourself, affects the supply and demand of said coins. |
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When you refer to the money supply regarding inflation and deflation, it is typically taken to mean the units of account in circulation. Meaning, stuffing dollar bills under a mattress takes money out of money supply. So does hoarding bitcoins. Money supply deflation due to lost coins (or lost dollars) is generally irrelevant compared to the changes of the units in circulation.
Bitcoiners like to confuse the money supply vs price inflation/deflation terms for various reasons, mostly because Milton Friedman said that inflation is always a monetary phenomenon. They still don't even get what he meant--hint: it is only partly due to "gubment printing dollerz".
The gist of what Elwar is saying: "bitcoin will be inflationary for 100+ years but what I really mean is that while the total number of units increases at a predictable rate, we will cause massive price inflation for the next round of suckers when we bring large amounts of bitcoins back in circulation--oops look at how high the price is!"
His statement is basically irrelevant because the amount of inflation decreases to a negligible amount. The second point is that lost coins are deflationary as much as taking dollars and burning them is. In all practical terms, you have destroyed money. Someone can buy bitcoins to intentionally destroy them, which is another flaw of a deflationary currency. There's a difference between hoarded coins and lost coins because hoarded coins come into circulation every once in a while, while lost coins will never come into circulation. And the fact that people know whether or not the coins were hoarded or destroyed would have an impact on the supply and demand. Thus the two are not equivalent. The other issue is that claiming lost coins are not lost is like claiming burned money can be recombined at the atomic level. The only way the lost coins can be discovered is through brute force and if those lost coins are discovered the whole bitcoin protocol is rendered useless. And the fractional lending you speak of is only a problem with fiat currency that is easily counterfeited. |
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Bitcoin will be inflationary for the next 100+ years.
I have discussed this at length and it simply isn't true. The problem with #1 is that bicoins can be permanently lost, and there is a hard cap on the amount of bitcoins. That means that there will eventually be more bitcoin lost than are generated by block reward. This should be known as the 'Sweft point' where bitcoin turns into a deflationary currency from an inflationary one. Thus, to believe that transactions will increase as coins are lost, aka deflation, is not a sound proposition.
Please read. https://bitcointalk.org/index.php?topic=12109.0 |
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Yes, but I'm not interested in making your bitclone--sorry--because I have plans of my own. If you really want a stable coin with an unbound monetary base, the link for that and a lot more is in my signature.
Seems fairly complicated. What happens if a double spend occurs right before consensus block? |
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