As I explained, the tight spread is illusory. A 0 spread with 1% taker fee is equivalent to 1% spread (0.5% each way) with 0.5% trade fee.

It's possible that there's something about the details of their structure that makes this sensible. And it's also possible they're trying to trick people who are looking at some arbitrary metrics rather than how much they are actually paying. Either way, it doesn't belong here.

As long as you mention min tick rules, I think it would be great to have them - about 0.1% difference between allowed trade prices.

Look, we're not going to get anywhere if you keep misinterpreting what I say. Of course how a CPU physically does a bit shift is completely different from how it does integer division. That's why I said it's faster. But the mathematical operation being performed is the same. Do you really find "block reward starts at 5 billion satoshis, and halves every 4 years" less intuitive than "block rewards starts at 5 billion satoshis, and is shifted by 1 bit to the right every 4 years"?

It seems to me we're speaking completely different languages - you as a programmer (I presume?) are passionate about implementation details (and you interpret everything I say as an implementation specification which must be rigorous), for me as a mathematician the concepts come first, the implementation can be worried about later - especially in those cases when it is clear that how we choose to implement it is not going to matter.

As I said, I agree with this, but I don't see how what I'm talking about is any less simple or exact. The claim that bit-shift is somehow more exact than integer division is ludicrous.

The users, who are the second half of the equation, would need to have influence over the incentive structure of the miners. I still need to iron out a few things with this.

The maker/taker fee model is broken (at least this variation of it; I don't know if the idea is applicable in other contexts. Also, it's possible I'm wrong, but I'll need a very convincing case for it). Under assumption of rationality, it does not incentivize being a maker, and it does not improve liquidity. Of course, people aren't rational so it may have all sorts of effects in practice, but it's dishonest to do anything that capitalizes on people's naivety.

I've commented about this here, and the ensuing discussion may be of some interest. I'll repeat my main point here.

Case 1: The fee is a symmetric 0.25%.

John wants to sell 10 shares, as long as he gets at least 0.9975 BTC for each. He puts a sell order @ 1 BTC.
Beth wants to buy 10 shares, as long as she pays at most 1.0025 BTC for each.
John's order is just right for her - if it was any higher she wouldn't take it.
Beth executes this order, paying 1 BTC per share plus 0.25% fee.
John gets 9.975 BTC, Beth pays 10.025 BTC, GLBSE gets 0.05 BTC.

Case 2: The maker pays 0%, the taker pays 0.5%.

John wants to sell 10 shares, as long as he gets at least 0.9975 BTC for each. He puts a sell order @ 0.9975 BTC.
Beth wants to buy 10 shares, as long as she pays at most 1.0025 BTC for each.
John's order is just right for her - if it was any higher she wouldn't take it.
Beth executes this order, paying 0.9975 BTC per share plus 0.5% fee.
John gets 9.975 BTC, Beth pays 10.025 BTC, GLBSE gets 0.05 BTC.
(I have ignored second-order terms, 0.5% of 0.9975 BTC is really 0.0049875 BTC.)

Functional difference between the two cases: None.

It doesn't really matter if the taker just wants to buy/sell at whatever the current market price is. The maker is in competition with other makers; If makers have less fees, this will push all of them to lower the price (or increase when buying), so this will not effect what they actually gain from the trade. And it has no effect on what the taker eventually pays. Thus the maker/taker split doesn't increase making profits, and doesn't incentivize making. And the lower spread that is obtained is illusory, since the extra fee that will be paid by whoever wants to trade at the listed price negates it.

What it does do is create confusion and chaos. With symmetric fee, if I want to sell and get 0.9975 BTC per share, I just put an order at 1 BTC and am done with it. If there happens to be an existing order against which it can be executed, great. But with a maker/taker fee, I can't do that. I need to first look whether there already is an order to buy at 1.0025 BTC. If so, I need to sell at 1.0025 BTC to execute it, and I end up with 0.9975 BTC after the taker fee. If not, I need to sell at 0.9975 BTC, and this is what I'll get if the order is executed. If I mistakenly sell at 0.9975 BTC even when there is an existing buy order, we end up with two people who want to trade with each other but can't because of the artificial maker gap.


PS: A fee structure that might improve liquidity is volume discounts, like Mtgox. Market makers are likely to have large volumes, so this could help incentivize them.

I see there's now a thread for this, I'll continue there.

We begged you not to do this. It's broken and doesn't do anything other than create confusion. Please do a symmetric fee of say 0.5% from each side.


PS I think the fees should be increased. GLBSE's profits are nowhere near the value it creates.

Generally the deposits are payable on demand, up to a few days.

Sorry, but no, I didn't get anything wrong. I failed to communicate an idea clearly, which I would have spent more effort avoiding if it referred to anything important.

I don't understand. Bit-shift may take less CPU time but it's much more difficult conceptually. The actual operation being done is division by 2 and rounding down, bit-shift is the specific code used to do it.

No.

It's all about the incentive structure. If we can find a system that allows the people for whom the value actually matters to vote with their feet, we should come up with something good.

Some magic numbers are more important than others. 21M total bitcoins is unimportant, 100M units per bitcoin is unimportant. 2 weeks is somewhat important. 4 years and 10 minutes are quite important. We can't change 4 years for Bitcoin itself, but maybe we can change 10 minutes.

I agree completely that it is hard to deduce that one value is better than another, but I don't think it's as hard to show that a certain system has the incentives to find an optimal value properly aligned.

Also, even if the dynamic system can't be trusted to be robust, the proposal gives a framework for changing the static block time, if there is ever a consensus that it should be changed.

We can discuss it further. Some of the discussion is better deferred until I write about some related ideas. I'm not saying I have all the answers, but I think it's possible to make a useful system out of this.

The current block reward calculation isn't any more exact than what I propose - when the block reward is halved, the amount of satoshis is rounded down.

It's hard for you to make a case about simplicity taking as an example a minute detail about one of the simpler aspects. If multiplying two numbers gives us troubles, I worry.

Clearly the proposal adds complexity. But the whole integer arithmetic thing is not it.

I think it's possible to parameterize it so that this will be rare.

Not really. If I were able to predict what the market would do I'd be rich. I just want it to have the tools to find what's most efficient for it, and that's easier to demonstrate.

Are we really arguing semantics now? When I said "round to nearest" I meant "round to the nearest integer smaller than the value or equal to it", and I thought it was clear that I'm referring to normal integer division (which rounds down). I'm not as precise in my language in conversation as in formal proposals.

And, with any other rounding method, there's still very little to game. I said it's "immaterial" which implies I couldn't care less how it's rounded, or how people would interpret how I say it's rounded. Energies are better saved for important things.

As I said, honest miners will build on the longest (most difficult) branch they know. This is a Nash equilibrium - a miner will want to build on the longest branch, as that improves the chances that their own block will be accepted. Increasing the weight decreases the probability that their block will be rejected in a conflict.

Options 1 and 2 aren't that far off. But seriously, hypothesizing what the equilibrium will be is hard enough when the system is fully specified, trying to deduce it based on guesses on what I want to propose is just silly. I would appreciate the benefit of the doubt that what I want to propose is not totally idiotic and broken.

Cool, I know this was a view you no longer hold, but it just seemed that maybe you still hadn't shaken all of the flaws with it.

It is obvious to me that by the time the generation reward is significantly reduced, satoshis will be split so what is now known as 1 bitcoin will be more than 100,000,000 atomic units. Even in the highly unlikely case that a satoshi will be significant, since the value is rounded down, this will only create a preference to weights which result in an integer, which causes no harm.

Once again, implementation should follow design, and the "2.1E+15 atomic units" detail can be changed.

Did I say it will create less forks? I predict that the equilibrium found will be less than 10 minutes, which means more forks.

I doubt it will be "on nearly every block". As I explained, if it comes to that, miners will choose a larger weight which decreases their invalid rate.

I didn't talk yet about how to handle transaction fees, so you may want to defer judgement until then. Hint: You won't be able to get the entire fee of all floating transactions by creating a very light block.

And this is relevant how? Multiply the integer block reward by the integer network target, divide by the specific target. The reward will be rounded to the nearest satoshi but that's immaterial.

Implementation details should serve the design, not the other way around.

I was searching for how late in the post the word "bank" is first mentioned, and realized it doesn't appear in it at all. The post is about lending.

I'd say it's a problem with the other aspects of the system, rather than the lending itself.

Anyway, the main thing I took issue with is the implication that the US treasury rates are somehow the "true" interest rates. Even without risk there are many things that go into pricing. e.g., the banks borrow funds at some rate, but they also need to pay for marketing, clerks etc., so they will need to lend out at a higher rate to make a profit - even if there is no default risk.

Lending is like any other product or service, and the interest is the payment for it. It's not unethical to charge what the market will pay.

Why must it be the rich that lend to the poor? Rich people borrow funds all the time for their ventures, which ultimately come from the public.

Also, even if the rich do lend to the poor, the net effect needn't be that money flows from the poor to the rich. Rich person lends to poor(er) person; poor person starts a business; business makes product; rich person buys product, moving funds from the rich to the poor, possibly more than the interest paid.

Why would it be evil? For whatever reason, the borrower values X now more than X+e later. He willingly enters an agreement where he gets X now and gives X+e later. Both the borrower and the lender benefit from this. When borrowing for a business, presumably the borrower makes a net positive monetary gain from the loan.

It is only evil if the lender works to create harmful conditions for the borrower which cause him to need the loan, or deceive him into thinking he needs the loan. The same as any other business.

Logic fail, assuming you mean by "validated" anything more than very weak evidence.

What do you mean by this? All the big lenders in this forum are fractional reserve, they take deposits, keep a small fraction in reserve, and lend out the rest to create a return on investment.

Fractional reserve banking, where people deposit funds for reasons other than receiving interest, and the bank does not keep it in full reserve, is obviously also possible with Bitcoin. It's just less likely to be common, because with Bitcoin there's not much need for a bank anyway.

You're confusing brute-forcing a private key, which is impossible, with breaking ECDSA and being able to find private keys (or to create signatures) without brute-forcing, which may be possible and not all that unlikely.

But contrary to Raphy's comment, this is a software problem, not a hardware problem.

I'm not an expert on financial instruments.

But based on my understanding of sources such as Wikipedia, a bond is pretty much just a publicly traded loan. I think you're using a very narrow definition of what a bond is, and I don't see anything that makes things like TYGRR-BANK not a bond.

@Maged - if I understand your objections correctly, they are solvable by imposing a lower bound in addition to the upper bound, and tightening it. For example, the weight of a block needs to be between 0.9 to 1.1 times the mean weight of the 500 most recent blocks. This way the attacker can't get much advantage by using a block weight significantly different than the rest of the network; but if the current time span is suboptimal, the network will slowly but surely drift towards a better value.

It's also not true that pools don't care about variance. Good PPS pools charge 5% fee to compensate for their risk, and threads of normal pools are littered with discussions of good and bad luck, and complaints about maturity time. The big pools become bigger because they have less variance.

P2Pool basically emulates a blockchain with a smaller timespan, and I agree it removes some of the need for an actually shorter span. I still believe it would be better for the timespan itself to be more optimal.

Your description of a B-type company is problematic, and is much more suitable for a mining bond than for a company. In a company, the issuer will begin with some stake as the entrepreneur above and beyond the funds he put in. This means that the total value of all shares is higher than the cost of the hardware purchased. When new shares are issued, the money raised is equal to the additional money available to purchase new hardware, which means that the ratio of hardware per share must increase (or that shares will be split if we want to keep a round number for the ratio). A successful new issue will thus result in a valuation increase for existing shareholders.

Other than that, the two types are fundamentally equivalent, up to some granularity. Investors in a B-type company can, if they so wish, reinvest their dividends in more shares to increase the worth of their stake in the company (and equivalently, A-type investors can sell some shares to maintain a given stake worth).

There's also a middle ground between the two extremes. A company can keep some of the profits for incremental growth, while issuing new shares when it's time for a significant change.

It ultimately boils down to personal preference of both the issuer and investors.