this is what I used:

(this was september '11)
15 THash/s divided by 250Mhash/s means approximately 60,000 miners. Multiplied by 150Wh, you get 9MWh of electricity. If we assume an average of 12 US cents per kWh, that means it costs $1,080 USD for 300 BTC, or $3.60 to produce 1 BTC


complain about my assumptions if you want, but 150Wh is probably really low considering that only takes the GPU into account and nothing else


edit: and again, there is no cost included for hardware purchased specifically to mine bitcoins

But the thing is, those advantage are not bygones. I can't think of where the chart is off the top of my head, but someone posted a nice flash chart or whatever that let's you see how many bitcoins have been spent over time vs. when they were created. Nearly all of the first 2-3 million coins have *never been used once*. Look at the speculation forum to see various threads on the manipulator who is using around 50k btc (how many people have this much? several dozen probably) to continuously manipulate the price. Small market and all that jazz, but the thing is, the amount of coins available for sale will probably remain roughly constant from here on out--we're about to start awarding only 25 btc per block afterall. The satoshi group with its million+ will have the ability to crash the market at will essentially forever. Down the road this could be used as a coercive threat, who knows. Satoshi, who took so many pains to stay completely anonymous (what the hell for?) has disappeared without any indication as what he/they plan to do with these coins. Early successful bitcoin businesses like pool operators and mt gox especially will also have such a huge amount of power.

I'm not against the early adopters making a good chunk of change which is why I proposed coin reward multipliers, but I am vehemently opposed to the kind of unlimited earning potential and power over the economy that bitcoin (and real world government/banking) allows for.


I don't want to take away wealth or capitalism. I want to make it so that the wealthy cannot manipulate the money supply to suit their own ends though (getting more wealth). The wealthy still stand to benefit from all of the upsides of a cryptocurrency, and if the people choose encoin as their currency of choice, they are just going to have to deal with not being able to manipulate it.


yeah I'll bump the thread with my latest thoughts later today. I believe I've made a great compromise between anonymity of businesses and security of the network in the tradenet, and I think I've improved on the stability of coin creation on the supplynet side too. Not quite enough for a major revision, but enough to where I think just about every aspect is rock-solid.

Ouch. I could sit here and write a book on all the thought processes I've had going into this project. I came up with the idea in like june last year, and since then it (encoin) went through 4 major, completely changed revisions. The reason why I wanted to come up with a stable value currency was because I ran the numbers and figured that the first 1 million or so bitcoins cost about 0.00016 US cents each. At their peak around that time, bitcoins were costing around $3.60 each without hardware costs included. About a 3 million % return on the original BTC at today's prices, and something like 20 million % at $30. The people paying $3.60 per coin in cost to produce were continuously enriching the earlier adopters. Pyramid, whatever.

I wanted to have all the great features of bitcoin like anonymity, unregulated, easy to send payments, etc. without all this crap. I also wanted to fix the scalability issues and waste of energy issues and the 51% attack problem.


It's understandable that you have a bitcoin-biased view of a cryptocurrency's value. Yes, the currency I design will not inherently be worth what it cost to produce plus a profit margin. People must demand it. Since it has all of the same benefits as bitcoin, it is possible that it could achieve the same level of demand. The whole point of this exercise though is that if people are not selling (as in the case of BTC's run up to $30) or demand has jumped, it becomes more and more profitable to mine for new coins. This in turn brings the price back in line near the cost to produce.

The whole free coin aspect which you seemingly take issue with is not some Marxist plot to redistribute wealth. If the demand of the economy requires, for example, 1,000 coins to bring the trading value of the currency back in line with its cost to produce, then either 1,000 coins can be mined at a cost of $X electricity, or 500 coins can be mined, 500 given away at a cost of $X/2 electricity. The people using the network win rather than the electric company. But the point is we do know that coins are demanded because people are using electricity to make them. I don't think I posted this in the encoin thread although I had hinted that I was working on ideas with this, but I think the best way to give those free coins away would be to people who send transactions (and hey maybe people will spend instead of hoard!). Random lucky draw gets 10 or 20 coins for making a transaction, etc.


The value is always determined on the open market. The system design doesn't query people and ask them how much it cost to create coins or how much profit they'd like to make. The proposal in THIS thread has to manipulate difficulty and supply because of the problems inherent to the bitcoin block chain design. With the encoin proposal, this is not a concern. This thread was more of just musings to make it work on the bitcoin codebase because no one had stepped up to help with encoin, and I knew I couldn't do encoin on my own.

The point is, the currency should not be some speculative, profit-driven machine. If the price is rising, demand is up, so new coins can be profitably made. It is that simple. Keep money creation constricted like bitcoin or gold-backed currencies, and you will have recessions galore. The wealth will get more and more concentrated to the top. Nowadays it's done in a different way with excessive inflation, but there is no downside (cost) for government to create debt-based money as they can just further inflate the currency down the road. The banks and the government win, the people lose.

edit: I later realized you may have been referring to Marx's labor theory of value because I use cost to produce as a baseline for the sell price of the currency. I've already been in a 5 page discussion on this topic so I don't really want to rehash it again. Simply, Marx did not come up with the LTV and it was the accepted economic theory for a long time prior to Marx's version.

Please note this summation of the prior theory from wikipedia:

The Smith theory of value was very similar to the later utility theories in that Smith proclaimed that a commodity was worth whatever labor it would command in others (value in trade) or whatever labor it would "save" the self (value in use), or both. But this "value" is subject to supply and demand at a particular time.


This is really not that different from the modern economic theory of marginal utility, except one has more neat expressions to go with it. The encoin design allows supply to meet demand in a very efficient way, nothing more, nothing less. It is to avoid the commodity-like currency (or currency-like commodity more aptly) problems of gold:



and bitcoin:

Well my goal is a stable value currency, either in the money itself or via the changing account balances. If I were to add the ledger and just award 50 coins per block to infinity, this is not a stable value, it will still almost always be deflationary (in the price level sense) unless it loses faith, and you still get the problems of people with lots of wealth being able to manipulate the currency--IMO the primary problem of currencies today, one that bitcoin does not solve, it only takes the government part of the equation out of it. The wealthy will still have out-sized power over the currency by being able to withhold it and cause deflation and buy up cheap goods before the value resettles. On top of that, the competition for new coins will always be fierce causing people to spend excessive amounts of money on electricity (wasted value) or GPUs/FPGAs (wasted value). I want to make the people rich, not the Edisons and the ATIs. Perhaps you may call this a "political agenda" but the agenda is taking the power out of the hands of the wealthy/government and giving it to the people, and to do this the currency needs to be unmanipulatable.

I didn't set out to fix one problem with bitcoin and currencies in general, I set out to solve them all.
The tax and transaction fees are simply incentives to keep mining going as it needs to happen to secure the network. Again, if there is enough currency in circulation to fit the economy's needs, then no one needs to mine. Likely people will step in and fill the role out of necessity, but then the currency will devalue over time.
The coin bonus is there to create free money (where it does not need to be paid for to the electric company) when there is demand for more money. Why force the electricity usage when it isn't necessary? Also, it protects against the CPU->GPU type issues that will undoubtedly happen again in the future. If the block award is set, then this isn't as big of an issue, but then you've already given up on a stable value anyway.

And note that the values in the OP were just early musings. Transaction fees and the flat tax can be lower and there are other things I have thought of to go with it.

However, if we did do something together I'm leaning back towards the encoin design again. I've come up with a minor epiphany that solidifies my idea for the TradeNet side of things with a balance between anonymity and security. I am still working on perfecting the SupplyNet side, but I don't know that there is a perfect solution there to keep the value of 1 ENC always the same or thereabouts. But I'm willing to settle on a bit of a hybrid between this thread and encoin that I think will work well. All in all, I think the effort is absolutely worth attempting.

The balance would be kept separately and available on request. There's no need to repeat the same data over and over again in each block. The hash can't be faked, so the client knows if the balance block is correct or not. Instead of needing to download the entire history of all transactions, a new client will just download the balance sheet and block headers.

Well can you at least give me an idea? It would make it much easier for me to point out the several fatal flaws I think exist in this system. 

soylent green is bitcoin

I think I am still confused about this formula. I assumed the max function would take the higher of the two values, but what the values are is still unclear. Maybe this was described later in the other thread, I don't know. An example would be nice, but I'll put one here and you can tell me if this is right.

Let's say difficulty = 1 million, p = 0.8, coin-confirmations = 500*100 blocks (if the coins are younger than 100 blocks, is the value exactly 100 or is it coins*100?)

(1 mil ^ 5 = 1 x 10^30)
/
(50,000 ^ 4 = 6.25 x 10^18)
=
160 million ?

if instead

1 mil ^ (5 / 6.25 x 10^18)
=
1.000000000000000000...

math isn't my strongest suit so please point me to where this is going wrong

edit: shit added an extra zero on 50*100 but whatever, assume it's 500*100 then

Can you clear up your formula bro?

(Aggregate difficulty)^{1/((1-p)}

an error right off the bat, and it is unclear if the rest of the formula is all in the power or if there are two halves that are divided, although on running 1,000 coins*100 confirms both come up with asinine difficulties

There doesn't need to be any extra transactions. Instead, when the wallet is used in a transaction, the balance will be brought up to date. This is slightly complicated as a cache of coins created in each block and how many coins existed in each block will have to be maintained, but after that it is just math operations. However, I'd rather use a balance sheet or ledger of accounts or whatever you want to call it anyway. Each block has a hash of the balance of all accounts, and transactions can simply refer to the balance sheet instead of previous transactions. Slight anonymity boost, no need to download a gigantic block chain (but headers would still be easy), and so on.

As far as the effect of inflation, look at it this way: instead of people mining for 2x the coins, 1x the coins are mined and 1x are given away. Less electricity and energy need to be put into the system to reach price equilibrium. No more coins will be created than necessary. Additionally, this does keep account value up in the event that coins become much easier to mine because of a leap in hashing power. The trading value of the coins go down, but everyone has more of them. If there were no protection for this, the situation is as I described in the third post between 1mil/4mil coins could happen. The goal is to keep a steady account value, not balance.

Huh? I am proposing an alternative to both PoW and PoS. I believe I gave what is probably the best solution possible to the 51% attack. I almost held back from even mentioning it in one of these threads because frankly I don't like bitcoin very much. But to have so much effort wasted on designing PoS when I think there is a much better, much simpler way, the altruistic part of me couldn't remain silent.


This is tangential to the discussion. Increasing fees or making it harder to get your transactions into blocks isn't the answer. Encouraging more and more electricity and hardware resources devoted to securing the network isn't a very good answer either. Why should value be wasted on electric companies when it isn't necessary? Why should the possibility of a sustained 51% attack be left open?

The simplest and most non-disruptive way to handle this is to have two chains: bitcoinEarth and bitcoinMars. Transactions can be sent between the two but they will have serious delays--this can be handled by contracts though, I believe, and should not generally be disruptive as until we're at class 3 post-warp society, it will take longer for you to get to mars than your bitcoins. When class 3 happens, surely a warp vehicle will be stationed in space purely for the facilitation of warp-speed bitcoin transfer.

Well, I specifically referred to your proposal. It was you, after all, that gave me lip for not following each of the 8 or so threads on this topic.


I do care about the answers because I have for a long time worked on alternative solutions to all of bitcoins problems. I spent several hundred hours thought-processing the ideas behind encoin.
To be honest, I wasn't aware that your proposal would help the rich get richer. I was not able to understand it enough to get to that point. And certainly I would object if the end result is that the rich get richer. However, if the system was rock-solid and I could not think of a better way, I would approve because I think the complete DoS that the 51% attack provides is absolutely paramount in its need to be fixed. I think the wiki is atrocious in its description of this DoS being "not much power."


You realize you're begging someone to say, "why would you, you're an early adopter?" regardless of the balance of your BTC account.


Why not even try digesting what I posted? I have no need to lie in saying the answer to this problem came to me rather quickly when I tried to design a stable currency idea around the bitcoin code. It would be far less disruptive and in fact could be done without changing the protocol itself, only how clients react--although it will still create a fork so that point is rather moot (but perhaps only temporarily? not sure).


Well, forgive me for looking too far to the future, but this opens up the possibility of things like white-listing accounts. Haven't registered your bitcoin address with the Bitcoin Regulatory Commission? Then this monopoly is not approving your transaction. So not only is decentralization gone, but so is pseudonymity. You claim there is no credible mechanism, but the only basis I see for that is because you haven't thought one up. If you want to attack my idea, have at it. I haven't gone far in fleshing it out, but it certainly is a lot simpler than proof-of-stake so problems should be easier to bring to light.

what do you suppose that means?

It amazes me how this forum in general will attack one detracting statement and ignore the rest and act as if the rest do not exist. Then give a holier-than-thou attitude on top of it.

So, in reading your thread, I can come up with about 20 things that seemed to be unaddressed:

One wallet signs a block, what does this mean?
When does a merchant know that this block is now somehow irreversible?
How many wallets/coins do you think it would take to be reasonably sure that the block is approved? Is this going to take more than 6 confirmations?
You say "one additional txn" but I totally fail to see how. Maybe I'm just stupid. Could you explain this further?
You also seem to interchange user/wallet/miner throughout your thread and I am unclear of who is actually doing the signing. If the miners are signing, how is this any different from them mining?
You propose additional proof-of-work to make a timer. How is this not wasteful? How do you plan on judging 5 minutes? Is it best signed mini-proof-of-work wins?
c/X doesn't take into account how old the coins are, only that they are older than a specific amount. What is to prevent someone malicious from waiting to grief the network over and over? Is MtGox going to have to wait eons before allowing any trades on fresh deposits? If c/X ends up being something like "bitcoin days destroyed" in what way does this system offer *any* advantage over the one I mentioned?
Assuming two c/X's are the same and sign two different blocks, how are the miners supposed to decide which chain to build from? Randomness? While the random approach might solve a complete take over, it still does nothing for double spend protection.
Wouldn't all reasonable c/X's be included for extra protection? If so, when do we start denying small amounts? When do we just say "let mtgox sign the blocks that it chooses, that is decentralized"? Where again does this boil down to 1 extra txn per block?
Does your proposal boil down to this: the only people that can mine are those that already have a lot of coins? I'm honestly not sure. Is this some kind of proposed system that would be switched to only after the actual mining reward is minimal?
Rather than worrying about taking down the network, most people around here worry more that the power of mining would be abused to double spend. I think the latter is far less important than the former, but what does your system accomplish in regards to double spend attempts? With the assumed relative low difficulty of the future, what is to prevent someone with a lot of old coins being paid off to reverse a lot of recent transactions? Is it check-pointed? If so, again how many coins/signatures/whatever do we need to be assured that history will not be changed? Half the coin base? You even mention "majority of signatures" in a later post. Please explain to me what you mean by this.

So what you're saying is, you want every new alt coin to be attacked by luke-jr?


Are you actually intending to do this, or is this just for example?

Yes we've established that proof of stake does nothing but trade one form of power for another. It still doesn't solve much in the way of keeping the currency decentralized. And proof of stake adds a ton of overhead. Have bitcoin proponents just given up on the whole decentralized aspect?

I don't like the idea of proof of stake because it puts the power into the hands of a few individuals. My approach is still completely decentralized and allows for much less mining power needed to secure the network. Plus proof of stake requires actual intervention by these powers that be. And, at least as it is now, there are few accounts that have a significant amount of money, yet there are many individuals that have a significant amount of money spread across many accounts. Each one of those accounts would be required to sign a block for that individual's stake to be measured. That is a lot of excessive data, not to mention CPU time in verifying all these signatures.

Well we want to stop 51% attacks, right? As it is now, all this requires is computing hardware. With the approach I described, anyone can throw as much power in the universe at the blockchain, and all they will accomplish is spamming their local nodes who will ignore blocks that have less weight (number of transactions, number of old coins used, so on) than other blocks they have received. It basically means that the blocks with the most activity will win. Unless a malicious entity controls the majority of the hashing power, a large amount of coins, and a large amount of coins that have not been used recently, they can not affect the network. Even if they control those three factors, once they spend the coins to give weight to their block, the age counters on those coins are reset so they are no longer useful to attack the network. No 51% attack can be sustained because they would quickly burn through their old coins. They might delay transactions for a time, but that is far less damaging than being able to deny transactions and miners indefinitely. Rewriting history, as unlikely as an attack as that would be, would be impossible as the check-point would basically be built-in to the block chain, not a hack on the software.

This does allow for permanent forks if the network were actually physically split, but I think this is a pretty unlikely scenario. In that case, the user should be notified of competing blockchains instead of just assuming the longest chain wins. Most of the time it should be obvious where the problem is such as if an entire country was cut off from the external internet by government.

This adds importance to the actual transaction history, not just computing power. Sending a transaction is (essentially) free, and in this way it actually helps secure the network.

No offense, but this is a pretty silly hack to fix the problem. Make it more centralized and concentrate even more power to the bitrich?

https://bitcointalk.org/index.php?topic=64637.0

Here I describe the early musings of a "heuristic" approach, although tied to an idea for a stable currency. Revalin brought up a good point that the bitcoin days destroyed concept would fit well. Essentially coins that have not been used recently will have a greater weight in which chain will prevail. There then needs to be a timer such as an hour ahead of each block where it may be replaced and anything ahead of it would be removed. Some balance between length of time to replace and block weight would have to be done so that a block with one more transaction can't come along 50 minutes later and replace a block from 50 minutes ago and such. But it allows for much less mining power necessary to secure the network. Theoretically, none at all is really required although that would certainly make for a lot of collisions. Instead of # of confirmations, time would simply be the indicator for how secure a historic transaction is.

But using bitcoin days destroyed, any potential attack would only be able to be carried out if the person had a lot of old coins and mining power, and once carried out, their power is removed for at least a very significant amount of time. No centralization of power, no signatures required, still requires a fork although this would be a much more acceptable compromise I think. It needs to be fleshed out more, but I think it solves the problem much more elegantly than proof of stake.