I will have very limited availability between May 20, 2012 and June 17, 2012. I have arranged for coupons to continue to be paid on schedule (there could be some delays on weekends, especially the one on May 27); but I may not be able to offer support or handle any unexpected situations. Those will be sorted out when I get back.

I have continued the proposal.

I'm using "dishonest" in a somewhat broad sense, maybe it's not the best term. Anyway, I applied it to an either/or situation - either one thinks this creates an improvement in a rational market (in which case I believe he is wrong), or he is using it to create an illusion of improvement, in which case he is dishonest.


Anyway, just in case my arguments for "it doesn't matter" are still unconvincing, think instead of a separation between buyer and seller fee, as compared to symmetric fees. Will an increased seller fee encourage more people to buy? No, it will only mean that sellers increase their offered listed price to compensate, so the trades and prices paid remain the same.

There are several wrong things with the chart. One of them is the the form of the graph makes it look like areas correspond to volume, when instead it's height. So if there are many trades with similar prices, they will look like a small total volume. The other is what you mentioned. bitcoincharts does this right - one bar chart with heights, one area graph of the cumulative volume, both of them showing only the relevant price range.

I didn't say the video is evil. I answered the joint's question.

mollison argued that, under a given interpretation of the video creators' intentions, promoting the video could be construed as unethical, and there was a question about the implications of such a conclusion.

Yes. If you're using evil methods to achieve your goals - even if the goal is to promote a supposedly good cause - it means your moral compass is too screwed up to be trusted to decide what is good and what is evil. Sooner or later you'll use the evil methods you have perfected for evil goals, making the victory Pyrrhic.

Achieving your goals honestly is tougher, but any success is genuine and indicative of truly making the world more good.

The words "instead of" are very important, hence they were bolded. You can invoke emotions while still respecting your audience's intelligence, it's all about how you do it.

Edit: Ironically, one could argue that using bolded words was a form of appeal to emotion...

Can you explain?

They will do it when the transaction fees become significant, which won't be very soon.

The transaction fees have been determined by the time the block header to be hashed is composed. When mining in a pool, in theory the pool doesn't need to disclose this information to the miners. But a fair pool rewards miners based on the current transaction fees at the time they submitted a share, so to be accountable for this they need to include this information in the getwork request, perhaps complete with the relevant Merkle branch. So whoever does the hashing will know at any point what are the current transaction fees.

Well, there's nothing wrong with destroying bitcoins, but I still think it should be avoided if at all possible. And I think that overall, given the challenges we'll face in the future with regards to incentivizing miners to secure the network, increasing the mining subsidy for future generations is a bigger boost to network health than diminishing the supply thus appreciating everyone's holdings.

Maybe. I'm open to any argument as long as it is done in a civil way. I hope this will be implemented one day, but I don't expect it to be any time soon.

Transaction fees serve two purposes. They pay for the marginal cost of verifying, propagating and storing the transaction, and they pay for the amortized cost of hashing to secure it and all the other transactions. In this post I will focus on the former purpose.

Normally, a transaction's fee is paid once, but its cost in the requirement of every network node to download it and store it accrues forever, or at least until it is pruned. If it's of low value, it could stay unpruned forever, causing blockchain bloat. (It's also true that transaction fees are paid only to miners, while the cost is carried by all nodes; this can probably be solved by propagation incentivization schemes as in the Red Balloons paper, and will not be addressed here).

I'm of the opinion that bandwidth and storage are commodities, and there is no problem with "blockchain bloat" as long as the person who wishes his transaction to be recorded pays for the resources consumed. However, the resources required depend on the amount of time the transaction remains unpruned, and the current fee model does not take account of that.

There is a simple way to change this. I'll assume for simplicity that transaction A has a single output, and the transaction can be pruned some time after the output is spent. When spending the output as the input of a future transaction B, it does not add its entire value to the the amount that can be sent in the outputs of B; rather, a "storage fee" is deducted, determined by the storage size of transaction A and the time that has elapsed since transaction A, and added to a long-term fee pool (similar to the one discussed here, but with a much more gradual decay) which will be paid to future miners.

If the transaction is so low-value and old that the deduction is more than the value, it can be pruned and its value be added to the long-term fee pool. This prevents worthless transactions from being a burden forever.

There is some awkwardness in that the fee for storage is paid out not to those who stored it but rather future miners, but this is not as important as the fact that whoever consumed the storage resources pays for them for the benefit on the Bitcoin network at large.

Note that this is different from other proposals that depreciate or invalidate outputs, such as demurrage and coin recycling. The amount deducted is not proportional to the value of the output. Those who have a sizable life savings are not going to have it taken away from them - they can get it whenever they want, minus the appropriate storage fee. On the other hand, those who insist on keeping almost worthless outputs floating around will eventually see them discarded due to lack of interest. Because of this, I do not consider this an economic change of the kind that must never be done in Bitcoin. But if others disagree, this idea can still be used in an alt.

The actual fee paid will probably not be very large, since the commodities involved are fairly cheap. The exact proportionality constant can be either hardcoded (and changed once every few years to account for hardware advances and Bitcoin price appreciation), or adjusted with a dynamic system. There can also be a "grace period" of a year or so in which the fee doesn't accrue, so only exceptional cases of persistent outputs will be affected.

Transaction fees serve two purposes. They pay for the marginal cost of verifying, propagating and storing the transaction, and they pay for the amortized cost of hashing to secure it and all the other transactions. In this post I will focus on the latter purpose.

The service of securing the transaction is done by the miner finding the block in which it is included, and by the miners finding the next few blocks. However, what the user pays for this service is collected by the first miner alone. This is both a conceptually perverse incentive structure, and can create real problems in some specific circumstances. Suppose someone makes an important transaction, and pays a hefty fee to make sure it is confirmed by several blocks as quickly as possible. It will be included in a block quickly enough; but suppose after that there is a quiet time with very few fee-paying transactions. Miners could be switching their hardware off or to other tasks, delaying the confirmations, even if the sender was willing to single-handedly sponsor them. (There are workarounds, e.g. sending dummy fee-paying transactions. But the fact that a workaround is necessary suggests something is amiss).

I suggest that instead of the transaction fee going just to the miner including the transaction, it will be distributed among him and all subsequent miners. Most generally, some function f will be chosen, and a total transaction fee of T will pay out T*f(n) to the nth miner (the sum of all f values is 1).

If f is an exponentially decaying function, we are relieved of the need to keep track of payment of all past transactions for every block. Some decay rate r (for example 20%) is chosen. Every transaction included will add its fee to a fee pool. Every block, a portion of r of the current fee pool is given to the miner of the block, and the rest carries over to the next block. So a transaction with fee T will pay out 0.2T to the first miner, 0.16T to the second miner, 0.128T to the third miner, and so on.

This can also work in a continuous way suitable for dynamic block times. A decay rate r is chosen; if the fee pool in a block (after putting in the fees of the included transactions) is P, then after the block the remaining pool will be P*e^(-w*r) where w is the weight of the block, and the rest is the miner's fee. More generally, some function f which integrates to 1 is chosen, and the fee paid to the miner which found a block of weight w after W weight units will be T times the integral from W to W+w of f.

Most users who send transactions are incentivized to keep r as high as possible, so they probably cannot be trusted to choose r themselves. It will either need to be hardcoded, or there should be a properly incentivized dynamic adjustment system.

The deal wouldn't have happened if he hadn't borrowed, since he wouldn't have had the funds to purchase the widget. Without borrowing he would have stayed at 0, with borrowing he gained $40. He profited $40 from the borrowing.

Same for the retail customers - without the borrowing they wouldn't have a widget, with the borrowing they have a widget, they paid $150 but it's worth more than that to them.

Again, the whole concept of commerce relies on the possibility of two parties to enter a mutually beneficial agreement where none of them loses. In our example both the lending and the retail sale are such agreements.

I have no problem with marketing to a specific audience in the way you deem the most effective. I just worry about the damage done if people will "Promote it on Facebook, Twitter, Digg, everywhere you can!!!" and it will be exposed to a wider audience, creating negative publicity.

Also, it's not just about the content. The voice, the tone, the choice of words, a lot of things raise red flags for me.

The economy isn't a zero sum game. Value can be created. Even if someone pays Pirate and "loses" bitcoins, he presumably gets in return something of value to him (which could be a product, a service, money imported from the fiat economy, etc.).

-1. If I had seen this video when I was first introduced to Bitcoin (and hadn't been already familiar with the concept of cryptocurrency), I'd run for my life and wouldn't come back for a year or so. It only alienates normal, non-anarchist people.

I agree though that making your audience believe they already agree with you, rather than trying to convince them of anything, is a sound Demagogy technique.

I'm very impressed and agree with the essay on the site.

I agree with BTC_Bear's objection - by requiring registration, you are reinstating most of the friction you took away by avoiding credit cards.

But I have a different solution - use the same model as https://www.coindl.com/. Click a button, get an address, pay, play. This would work even better with a Bitcoin URI where you just click it and your client fills in the address, label and amount.

When you start mining in a DGM pool you get less bitcoins at first. But you don't start from scratch if you disconnect and reconnect, your score is preserved and takes a while to decay. You will still receive payouts for your existing score while you're disconnected. If you disconnect for an hour you lose an hour's worth of mining, that's all.

Sounds about right.

I'll try another way to explain it.

Let us define for every standing order two values: Maker execution price (MEP) and taker execution price(TEP).

The MEP is how much the person who placed the order pays (net, after deducting any fees) if it gets executed (this is positive for a bid, negative for an ask); The TEP is how much the person who executed the order pays (net. This is positive for an ask, negative for a bid).

Do you agree that the MEP and TEP are all that is to know about the order? It tells us exactly what will happen if the order is executed - how much the maker gets/pays, how much the taker gets/pays, and how much fee the exchange collects (their sum).

Now, the maker can choose the price. Whatever price he chooses, the MEP and TEP will be derived from it based on the specific fee structure used. Put another way, the maker can choose the MEP and TEP, with a constraint - their ratio is determined by the total fee collected by the exchange. It doesn't matter if the fee is 0.5% for both makers and takers, or 1% just from takers - the maker can choose any MEP and TEP as long their ratio is 101% (neglecting second order terms. More precisely, the fees are added multiplicatively and can be slightly different for bids and asks).

Now, once the MEP and TEP are determined, the number which the maker put in as the order price - and the number displayed in the order book - is completely irrelevant. The MEP and TEP contain all the information about what happens if the order is executed.

Now, a person coming to the exchange has two choices - execute an existing order with its MEP and TEP, or place an order of his own with MEP and TEP of his choice, with a constraint on the ratio. His choice does not at all depend on the internal workings of how the MEP and TEP are derived from the listed price - it all depends on how attractive is the current TEP, how much he wants it now, and how much he is willing to try getting instead a better MEP of his own, knowing that the probability of success depends on how attractive is the resulting TEP to future traders which will face the same choice, and his competition with the TEP of other orders.

The conclusion is that the fee structure doesn't matter. If everyone is rational, and the total fee is fixed, orders with the same MEP and TEP will be placed and executed.

In this language, when there is a maker/taker separation, the spread between the listed prices of lowest ask and highest bid will be small. But what really matters is the spread between the TEPs of the lowest ask and highest bid (since those are the prices people can actually execute), and these won't change.

So if it's all equivalent, what is the problem? It is mainly for traders who know how much they want to pay/get. Instead of just writing the amount, they will need to first figure out if there is already a matching order, and price it accordingly, since making will do a different translation to the price they actually get from taking. This again causes no functional difference - a software adapter could do the translation - but it just adds confusion.

I've proven the claim, and you did not point out any problem with the proof.

Everything has a reason, it's just not always a good reason.

No, it does not. If the effective price of the ask (adjusting for fees) works for the buyer, he executes it. If not, he places a bid which will be at the same effective price no matter what is the fee structure.

This would all have been great if this fee structure actually encouraged placing standing orders. It does not. It's completely equivalent, it just changes the numbers displayed without changing what people actually pay.

Now you're just being insulting. Of course I'm not talking about changing the total fee, and I'm pretty sure in all my examples I kept the total fee invariant. In my last example, 1% taker fee + 0% maker fee = 0.5% trade fee + 0.5% trade fee.


Here's an exercise for you. Let's say the exchange starts with no orders. Make up rational players and describe what they want in life, and at what time. Describe what orders they place and execute, in either fee structure, like I did for John and Beth. Your challenge: Make it so the trades being executed (determined by how much people actually get and pay) is different in the two scenarios. I claim that you will not find such a scenario.

This is wrong, where did you hear this?

The system isn't going to do any magic. Too frequent blocks will cause excessive forking, so some things will just have to be done with layers on top of Bitcoin.

@DaT: Continued in the thread which I think is more relevant.