Death, you have a misunderstanding of fractional reserve.

If I deposit 1 million BTC in a bank, and they have a 10% reserve, they can loan out 900k of that BTC. I still have 1 million BTC. 1.9 million BTC now exists from that 1 million.
This is the exact same thing that happens with fiat.

Since there can be no FDIC in bitcoin, people will probably not want to bank with a bank that only keeps a 10% reserve because if there is a bank run, they are forked. But 10% reserve banks will have the highest interest (or however it works in a deflationary economy), so you will have greedy people that will use them. But hey, that's their problem if they can't get paid when the bank goes bankrupt.

Well, I suppose it all depends on how the demurrage is applied. Obviously neater tricks can be done with a virtual currency. But yeah I'll concede the point that it doesn't raise the cost of borrowing.


I'm only trying to say that the effects of demurrage are not simple to predict. Especially using real-world scenarios. In a virtual currency with a fixed supply, it is somewhat easier, but still not obvious.


I am not here to argue about expocoin. That's why I said stop bringing it up. I don't know who these people are that say Freicoin is similar to expocoin, I am not one of them.


Then fight it by having a sane distribution of the currency too then. Not one like bitcoin's. I can't comment on how good or bad it might be until I know exactly what you guys are doing. But if it's the same as bitcoin's, then I wouldn't support it.


I need to make a wiki or something so that it is easier to follow. The network would manage smaller, "pool"-like groups of people. The more pools, the more currency is created. But there are two ways the difficulty is raised: based on the changes in the average speed of currency creation, and based on temporarily reducing the supply to encourage competition among more efficient machines to set a new difficulty for when the supply is no longer reduced. People who hoard/save money are encouraged to trade it when demand is high (velocity is low) because otherwise more money will be created and the value of their money is reduced. I am always looking to tend to a stable purchasing power.

Since the amount of people creating money is variable, I have come up with a whole different system to secure the network that is not based on hashing power.


The labor of processing cycles. Ah yes, merged mining. The wet dream of a secondhand currency creator. I'm glad your intentions are honest, maaku did everything to sound just like a bitcoin pyramid supporter in my eyes.


Most of the economic summary is in section 4. Everything else revolves around how the network works completely differently from bitcoin. But yes, I'm aware the proposal is not written well, but I'm on the fourth major revision but this is the first one where I believe the concept is solid from beginning to end. The next major revision will be a clear whitepaper.

others' not other's

time to make 3.0 to fix it, or can he rewrite that far back

it also makes absolutely no sense that there isn't a set ticket price, so you could buy 1 ticket for 1 btc or 1000000 tickets for 1 btc, and he'll be perfectly happy to take your money either way

Not to sound like a broken record in this thread, but check my sig

Stop wasting your breath, Spike. He can't see the forest for the trees because there's a pile of bitcoins in front of him that he has a vested interest to protect. Pyramids don't work if you can't trap more suckers, and bitcoin wasn't all that discerning about who was allowed to be in level 2.

No, you are not asking a donk question at all.

Bitcoin's price is based on supply and demand. As a limited number of bitcoins are produced per day, they are scarce. Scarcity is one of the properties that gives a currency value.

However, since demand is based only on how many people are willing to buy what is for sale and the bitcoin market is currently very small and easily manipulated, the price is very volatile. It was over $30 USD per BTC in June, primarily because those with a lot of coins chose not to sell any.

Actually, I'm going to have to think more on this, but I think a blind signature/voting protocol (such as: http://ethesis.nitrkl.ac.in/1683/1/Thesis_evoting.pdf ) could possibly be tweaked to work with transactions. The only trouble is it requires the list of unclaimed transactions to be maintained between consensus blocks. With some of the other designs I have in my head for reducing bandwidth and storage requirements, I'm thinking this might not be a big deal though even if there are a ton of unclaimed transactions.

Encoin, if programmed, does not need pools. Users are placed in small groups based on a random function. Individual mining isn't allowed because it is unnecessary extra bandwidth and it is harder to foster the competition that the proposal talks about.

I've always imagined that a website would be available where one could check the entire history if one so desired. I believe it will be somewhat necessary for people to have faith in it and that the earliest group of people didn't do anything shady. There's really nothing that can be done to prevent someone from checking up on you, so may as well make it available to all. This is why I wanted blind signatures to be part of the protocol. I really don't believe that it is anyone's business what you do with your money. It is a very visible thing though, and it might draw some undue attention to the money laundering capability. With bitcoin it is obviously possible (although not as secure as you generally have to trust a third party), but it isn't handled by the protocol.

I think I said previously that I wondered if merchants would have a problem with how visible transactions are. Arguably most merchants would be fairly visible in bitcoin anyway even if they used a different wallet for each transaction or customer. At some point they are going to have to move this money, and it will link the accounts. So it just takes longer. But with Encoin they are essentially required to always use the same account so that they can refund the most possible transaction fees.

If the benefits of using Encoin outweigh the cons for merchants, then we may enter a new era of accountability. Banks would certainly not be able to manipulate the money like they can in the real world, and businesses would not be able to cook the books, at least the books based on encoin anyway. It is interesting to think about, but very unpredictable at this point. I worry that it would lead to merchants using a bank-like intermediary to receive funds, which perhaps isn't that big of a deal.


I've briefly thought about it, but I can't come up with anything even close.


You're not the first to make the argument that the system is too complex. I, predictably, disagree. While there are many rules that govern how the network operates, independently all the rules are quite simple and it is easy to come to a consensus by following the transaction block chain.

It took me several weeks to comprehend bitcoin, and I still learn new things about it all the time. It is nowhere near a simple system, but it sometimes gives off that vibe because it has worked almost flawlessly to date. I really doubt you could have convinced even 1% of the people that post on this board that what bitcoin has achieved was possible and that it would work before the implementation was proven in front of their eyes.

And the sick part of it all is that no one can even be sure IF someone holds a large portion of the economy in their back pocket, so many will join up without realizing it. What a sick, sick way to pull off potentially the greatest pyramid scheme in history.

By raising the price, I thought that was obvious.


I haven't kept up to date, but last I saw he wanted to have demurrage at 1% for the first 4 or 5 years or whatever as well. I'll get back to this later in my reply.


Yes, you've told me and you ask me to prove you wrong. How can I possibly prove you wrong? I am either supposed to assume that you are smarter than every financial mind that has ever existed and have finally found a solution to the ills of the world's currencies, or I am supposed to pretend I am smarter than every financial mind that has ever existed and can prove you wrong. I don't really have a way out here.


I don't think expocoin is equivalent, but I think it is better in one way over how fiat works because of how the money is distributed. However, it has no way of adjusting to economic conditions, so that will ultimately lead it to many of the same problems as fiat.


It would be better than bitcoin, but it's still a transfer of wealth and it still doesn't solve the speculative bubble that will happen when a small number of people grab a large portion of the supply before it has a chance to distribute. It will undoubtedly ease the bubble though. And perhaps with people that are not brainwashed by what satoshi has said about how a currency must work (lol @ the advertisements in the middle of threads quoting satoshi's feelings on the central bank and such--very third reich-esque), they will voluntarily make an effort to have a stable currency before manipulating it for profit. I won't bet on it though, especially if maaku is at the head. 1% demurrage to encourage early adoption is the same line of thinking that encourages hoarding and speculative bubbles.


If you can separate yourself from thinking a fixed supply of money is the only way, you should read the newest version of my proposal. I believe I am quite close to achieving a stable exchange rate. It is light years ahead of the last version. And it is based purely on the economy and market forces, not a strict set of rules.


It's a pyramid if the early adopters spent comparatively nothing while the later adopters do all the labor for a pittance. If Freicoin has a similar distribution to bitcoin, it is going to be a pyramid. Being able to use Freedom money should not entail forking over your life savings and waiting for the next batch of suckers to come along to prop you up.

Again, see my proposal for technically feasible solution that solves a myriad of other problems with using the block chain to secure transactions.

Almost everything I would have a problem with in GEM is a problem I have with Bitcoin.

Two GEM-specific things I can think of:

1) The koomey's law adjustment is a constant. Hard constants are bad for something should be able to adapt to future circumstance without intervention. It is possible that with further thought it could work similarly to the latest encoin proposal.
If the computer hardware cycle fell outside of koomey's law (and, like Moore's, it always does to some degree and is only a measure of history, not predictive of the future), the value of GEMs would be less stable than ENC.
2) It centralizes trust. It would be very complicated to use the block chain to keep track of this trust (or reputation), so Red's idea was to have peers use well-known merchants/exchanges as the basis for trust. I'm sure it would end up being more complex and more secure than just that, but his implementation ideas are still at the early stages; I've had a bit of a head start. But since the bitcoin block chain does not scale well at all, it is likely always going to revolve around a small number of entities.

I believe Encoin is capable of scaling to the point where anyone with a reasonable internet connection and CPU will always be able to fully participate in the network if they so choose (the "cloudnet" per the proposal). This adds immense amounts of security against DoS attacks, hacking, un/intentional network splits, and other undesirable outcomes when any part of the network is centralized.

Here's a horrifically biased idea: start promoting encoin! It solves pretty much every problem with bitcoin and any of its alternates. It is far from being software yet, but by raising awareness and interest, the likelihood of that happening increases. And more encoin posts means solidcoin threads get off the first page quicker.

It appears someone had Encoin in mind when proofing this: http://nslab.kaist.ac.kr/courses/2009/cs712/paperlist/2-12.pdf (red you would be very interested in this as you mentioned low-power wireless network groups)

Adding signatures together can be used to prove that those signatures were added together based on adding the public keys together. Cryptography really is amazing.

One signature verification can validate an unlimited number of signatures. This would reduce the CPU and bandwidth load of approving transaction blocks infinitely. It was essentially the last thing I needed.

I believe this absolutely can work. I have always had doubts prior to this version of the proposal, but I am getting very confident. The pieces are falling into place.

And Red, thanks for being more eloquent at explaining things than I am.

Whenever the borrower spends that money, the receiver is going to look at it and see "oh the payment is due tomorrow, the cost of my product must take this into account." I'm talking about a real-world scenario here, I don't know how Freicoin will do it. (and apparently you don't either... where's the release?)


That there are financial systems in place (or would eventually be in place in a cryptocurrency) and you can't use an example of 2 fish and 2 Freicoins to prove a point as to how demurrage will affect an economy.


Well, I am biased by common sense and have little investment in BTC, but of course it will be better.

However, the two major problems I see with Freicoin are:

1) Unless you use a different manner for distributing the initial coins, mountains of wealth will still be placed in the hands of early adopters. See: speculative bubble, ad nauseum.
2) If you use a different manner of distributing coins (such as ease-in, ease-out described in some other threads), you have little hope of having it adopted now that bitcoin is already here.

This community has already been convinced that a pyramid is the only proper way to start a cryptocurrency. This is quite evidenced by my thread on your forums.

This is such bullshit. Why would the future world economy trade their government-controlled currency for a coinhunter-controlled currency? It is the same, narrow-minded view that Satoshi thinks will work for him and his BTC millions. What happened to the libertarian ideals behind these currencies? Are they really pseudo-libertarian ideals just like the wallets are pseudo-anonymous? Now SC has its band of early adopters who will spout the benefits of their currency to high heaven to encourage the gullible to scrounge for coppers that make the earlier coins worth gold.

God damn so many of you are self-serving greedy sons of bitches.

At some point, somewhere, somebody is paying demurrage. You can only pass the hot potato so many times before the buzzer goes off. No one is going to take your demurrage currency at face value today when the payment is due tomorrow.


Limiting the scope of your thinking is asking for economic failure.


Where is the inflation coming from in your equation? I'm only using what you used.


How is this any different from a 2% yield (or whatever inflation is supposed to be) safe investment in an inflationary economy? There's no difference, just like I've said.


You argue about expocoin and link a bunch of threads to timecoin. I was just pointing out (again) that nobody has seriously suggested expocoin, and it's a deceptive argument to use to support Freicoin as being better.

Demurrage is not the same as deflation, you seem to be conflating the two points and arguing for whatever economic outcome suits supporting Freicoin depending on which way you look.

Demurrage + fixed supply of money may very well be better than standard fiat currency. But most of the properties you argue already come from a fixed supply of money. Demurrage merely spreads the wealth back around in the same way inflation does in a non-fixed supply (except for the fact that governments give money out to preferred borrowers first, but this is a property of governments, not cryptocurrencies).

The solutions your miner sends are "shares", or proof that you're doing some work.

If (simplified) you need to hit 0x0000CCCC to win the block, and you send in 0x000FFFFF the pool has a pretty good idea that you are working to solve the block. I don't know what exact measure counts as a share though, it must be some minimum amount compared to the target value.

There isn't a new block every second because the target value adjusts over time to account for how much hashing power is in the network based on how quickly blocks were found over the last 2016 blocks. If the target is 0x0000CCCC, that is what it takes for 10THash/s to find a block every 10 minutes, on average.

You guys need to get over this. Seriously. If you want to transact with real world cash, you are going to have to follow real world rules. And one of the main points of Bitcoin is not total privacy, it is pseudo-anonymity. There is a difference, and it's fairly big.

Mt.Gox may have been far from perfect in handling this situation, but it is a growing pain of a totally new economy. It will become easier to convert BTC/USD/other in the future if Bitcoin increases in popularity. You gotta roll with the punches for now and allow Mt.Gox to work better at streamlining this process so other people in the future can benefit from those growing pains.