Howdy, I downloaded the list of users on the forum today, page-by-page, and sorted according to the join date.  Surprise, surprise, the number of members on the forum is growing exponentially, doubling every 52 days or so, and has been doing so since the start of 2010, with a couple of faster growth periods.  See the attached graph.

At that rate the forum will reach a million people in just under a year.  Can SMF handle that load?  Can bitcoin's servers?  We can presume that the number of people running the client is *at least* equal to the number of people on the forum.  Can the BTC P2P protocol handle a million clients?

Oh, the "upload folder" is still full.  Can an admin please look into that.  You can find the graph at http://ubitio.us/file/download/391   It just shows an exponential growth in users.

It's not a socialist system.  If you think capitalism is honest, then this is honest.

Answer this please: the richest person alive has $74 billion to his name ( http://www.walletpop.com/2011/03/09/forbes-the-richest-people-in-the-world-2011/ ).  Are you ok with that?  Not quite 1.8%, probably more like 0.1% if you consider the *global* M3 supply (roughly $60 trillion - see graph http://goldseek.com/news/2009/1-12mh/11.png from http://news.goldseek.com/GoldSeek/1231778551.php), but if he were to liquidate everything into cash, he'd hold about 1.5% of the global M0 supply (roughly $5 trillion, same graph).  Are you still ok with that?

What's on your mind?

Hmm.  What if your investment in BTC raises the price enough to attract commerce.  Is that not indirectly providing jobs?

Your proposal misses a big sore point.  If it passes, then the value of *your* bitcoins will seriously diminish.  The guy who mined already got his profit, so the loser would be *you*, and all the other people who are buying old coins now.  You might not worry so much, but I expect that just about anybody who has invested in bitcoins will not cooperate with your proposal, i.e. everyone on this forum.  Therefore, you'd be much better off taking your proposal elsewhere and begin a whole different project, based on bitcoin, with just the btc convertability you suggest, but appealing to a whole new audience, not to those who have already invested in btc.

Another point, what about bitcoin mixers?  If I send 100 bitcoins to a mixer, then eventually I get 100 bitcoins back, but they could be newer, older, or a mix of newer and older coins.  There'd be no way to tell who got what.  The 'penalty' to early adopters would be completely random.

In the long run, I'd say you'd be simply better off starting a new block-chain, in which old bitcoinsPlus, in every transaction, are converted to new bitcoinsPlus, in proportion to the difficulty now and the difficulty when generated.  Of course, then there'd be no incentive to mine now, since you get the same reward if you mine tomorrow, or next year, so I'm not entirely certain that it would take off.  Perhaps it would be more popular amongst socialist idealists.

As for the crux of the problem, perhaps we can hope that, eventually, older bitcoins will gradually enter the market as the early adopters spend/retire.  Not unlike the gold rush of the 1800s I suppose - fortunes were made there too, and all they mined was a useless soft yellow metal.

And even worse, very often the 10% which is supposedly "real assets" can often consist of very shaky assets - the kind of mish-mash securitized sub-prime mortgage bundles that get artificially high ratings and so can count fully to a bank's reserves, when in fact, they were worth ~10¢ on the dollar when the reckoning came.

You know, it would probably be far more convenient to work in units of bitcoin-blocks, instead of bitcoin-days.  So if B is the current block number, and the total number of bitcoins is 50B~6 million, then every new block adds another 50B bitcoin-blocks.

Then you can trivially see if a block's net effect is to add bitcoin-blocks to the total, or subtract.

I agree.  Paypal are all very happy about letting you add money to your account there, but when you try to withdraw it, then they cause problems.  They limited my account and I can't get my funds out for 180 days.

Isn't this more or less what the global bitcoin stock exchange does?  glbse.com

It's not entirely mistaken.  darre should use a one-way equals sign, or an "implies sign".

Higher difficulty =/> higher price   (=/>  is "does not imply")
Higher price => higher difficulty   (=>  is "implies")

If the price goes up, it becomes more profitable to mine, so more people mine and the difficulty rises.  This does not change bitcoin supply because the (appx. constant) quantity of new bitcoins is much smaller than the quantity traded (new btc=7,200/day, traded at MtGox only > 30,000/day).

If the difficulty goes up, mining is less profitable BUT it is still economically rational for a miner who has already bought a rig to continue mining (up to a certain point which depends on each individual's opinion of future BTC value).

But if the difficulty spontaneously goes up, implying that more people are mining, there is still no change in supply.  I'm still trying to understand why more people should spontaneously start mining though.  Perhaps, as word spreads, people see what a fantastic idea or investment bitcoins are, and erroneously conclude that mining is uniquely the best strategy.  However, if that's the case, then there should be other newcomers who erroneously conclude that *buying* is uniquely the best strategy, and so the price should *also* rise.

Hah, so, maybe as difficulty rises, more newcomers will see the folly of mining and tend to favour buying, so the current exponential rise in difficulty should gradually transfer over to an exponential rise in price.

How about we *don't* turn bitcoin into a ponzi scheme.  Pleeeeeeease?

Tell me about investors who invest in this social lending pool.  Suppose I deposit BTC100 in your lending pool. Do you then issue me with a credit note (i.e. bitcoin notes, "promises-to-pay") saying I have the right to recover BTC 100 from the pool?  Do you then lend my BTC100 to someone else?  Well, now I have 100 "virtual" bitcoins, and someone else, the borrower, has 100 "real" bitcoins.  That's 200 bitcoins.  Where before there were only 100.

If you want this to work, without your investors being really pissed off, then their deposits can be recovered only on condition the loans get repaid.  That way there's never extra bitcoins "created".  Good luck finding investors under those conditions.

The difficulty has been increasing more-or-less exponentially since the first increase 30/Dec/09, see http://forum.bitcoin.org/index.php?topic=43.0

http://forum.bitcoin.org/index.php?topic=1918 In this thread I calculated the expected number of blocks you can ever generate, assuming an exponentially increasing difficulty.  I've refined the calculation a bit - the original didn't take into account the fact that the time between difficulty increases was not 14 days, but shorter, depending on how fast the 2016 blocks between increases are generated.

I won't go into the details, but the equations are:

E = Ch/((a-1)D)
P₀ = exp(-E)
h_0.5 = -(a-1)D ln(0.5)/C

Where:
C = 0.0002818  is a constant
h is your hashes-per-sec:  1Ghps = 1x10⁹
a is the difficulty increase factor, i.e. if difficulty goes from 20 to 30, then a=1.5
D is the current difficulty
P₀ is the probability that you will never (never ever ever) generate another block. See note 4 for the meaning of "never".
h_0.5 is the hashes-per-sec that you would need to have a 50/50 probability of generating just one block.
E is the total number of blocks you can expect to ever generate, ever.  See noe 4 for the meaning of "ever".

Current values are:
D = 244139
a = 1.3435 (see note 1)

Therefore, with 1Ghps:
E = 3.36 blocks
P₀ = 0.0347
h_0.5 = 206 Mhps

So, if you do buy the rig, you have a 3.5% chance of never ever generating another block.  You can expect to create 3.36 blocks = 168 BTC = $1092 at current exchange rates.  To have a 50/50 chance of creating a block, you'd need to have 206Mhps (this has nothing to do with you and your rig, it just gives an idea of what the entry-level Mhps is - a top CPU now would generate at most, I expect, 10-12 Mhps).

On the other hand, if you buy $700 of bitcoins now, then you'll have 100 bitcoins right now.  That's about 2/3 of what you can expect to get spending on a rig and generating.  All depends on whether you think the price is gonna go up or down.  Good luck.

Notes:
1. Difficulty is assumed to rise exponentially forever.  This is incorrect, but it's holding up much better than I would have expected - see attached graph.  The inset to the graph shows the difficulty increase factor.  If we average this value over all blocks since the first actual increase in difficulty, we obtain the value a=1.3435
2. Eventually the reward for a block will halve, then halve again and so on.  You can expect 3.36 blocks, but if they happen to be generated after the reward halves, then you'll get less than 168BTC.
3. If you mine solo, then you won't get 3.36 blocks, it'll obviously be either 2,3,4,5 or whatever.  If you mine in a pool, then you can expect a reward equivalent to 3.36 blocks, less the pool's fee.
4. You will receive these bitcoins slowly.  When I say "all you'll ever expect to generate", I really mean "ever" - from now until the sun goes nova and swallows the earth. However, I expect that the exponential increase will stop before then, for one reason or another. Likewise "never".
5. You'll have to add in electricity costs.
6. These values for E, P0, h0.5, assume you start mining *now*, if it takes you a month to get started, then adjust for the difficulty at the moment you start.

If this post saves you money: 15BHRM52yuzjNyvkrdu8dcWFnfpK6eWsXm

I tried to upload a graph, but a message says the upload folder is full, please contact an admin.  Any admins listening?  In the meantime, I've put it on ubitious: http://ubitio.us/file/download/328   I can't help that you have to pay for the file (BTC 0.02), but as soon as I can, I'll attach it here.

EDIT: the graph is simple really, it's just a graph of difficulty Vs time, with an exponential fit, and also another curve showing the difficulty increase factor.  All info for it was taken from blockexplorer.com.

Wise man once say - man who thinks everything ok, doesn't understand anything.

While personally I think that the buyer should pay the fees, your policy here disagrees with paypal's policy - according to paypal, the *seller* pays fees.  It complicated, but in a paypal-to-paypal trasnfer, the seller pays the fees.  If you pay with credit card on paypal, then the buyer pays.

So, just make sure someone doesn't receive less than the agreed bitcoins then initiate a chargeback on paypal.  I'll bet paypal would side with the seller.

Thanks for the SEPA transfer option!  For other reasons, paypal went sour on me, and I now have to wait 180 days to extract my funds :-(

Once upon a time there was also rubberhose and phonebookfs.  They were well designed for plausible deniability.  See http://en.wikipedia.org/wiki/Deniable_encryption#Software  Sadly never reached release state and long since discontinued.

I must be missing something here - shouldn't you sign something with the *private* key?  The public key is, after all, public, and anyone can obtain a copy and sign anything.

The verification then uses the public key to verify that the content was signed with that appropriate private key.

As for the known-hash-reveal-private-key attack, couldn't the signing procedure just add a random salt to the plaintext prior to hashing?  And the time & date maybe?

Hey, this is interesting, we could also have a contracts or messaging blockchain.  Just treat the contract or message like a bitcoin transaction (i.e. Alice encrypts the message with Bob's public key, and signs with her private key) and now we have an indelible record of which private key said encrypted-what.  You could also make indelible public statements by not encrypting to anyone.  This is not bad - this is how the first bitland-newspaper should work, like when you go to the library to look at microfiche from 100 years ago.  Or maybe we should call it the newsbits, since there are only bits involved not paper.

I think I've never understood this fractional reserve banking 'cos I've seen obviously informed people make statements like this.  My understanding is that our current banking system is about 5% reserve - a bank can load out $100*0.95=$95 of every $100 it receives.  When the $95 is redeposited, then another $95*0.95=$90.25 can be loaned, then $90.25*0.95=$85.73 and so on.  Creating vast amounts of "non-existent" credit based money, from a minimal initial investment.

What noagendamarket is describing here, that is, a bank that loans the coins it has on deposit (I implicitly understood "can loan *all* the coins it has on deposit"), is NOT a 100% reserve bank, it is a 0% reserve bank - it is *way* worse than a 5% fractional reserve because an initial $100 deposit can turn into an infinite amount of credit.

An actual fully reserved bank, i.e. a 100% reserve bank, could not make any loans at all.  That's the only way to ensure that all deposits are backed 100% by reserves.

Shoot me down.

I would just add to encrypt it with a good but easily memorized passphrase, print out the ascii text and store it on your bookshelf.  Take a photo of those pages, and upload to your flickr account. etc.  I would recommend against storing a valuable unencrypted wallet.dat anywhere.

How about:
1 = bit
0.01 = 10^-2 = nit
10^-4 = mit
10^-6 = dit
10^-8 = pit

or substitute for your favorite 1st letters.

Actually, maybe nit and mit might sound too similar, e.g. over the phone, "WHAT, you're selling your car for 99 nits? That's a hundred times more than I expected,... ahh, mits, mits, now I understand. Haha, I thought you said nits, haha."

A car for 99 mits... hmm, that'd be about $200,000 per bit, depending on your definition of car.  Guess it'll take a while to get that high, though if it went up a factor of 10 every month, like last month, then we've only to wait until 2012 at the latest.

Now, I just had another thought that maybe deserves its own post.

Why not create code that allows bitcoin to create a new address (not from the pool), then send some specified number of coins to that address, then dump the private key to screen, and then delete all trace of that private key from the computer - no saving it to disk at any time, not even permitting the OS to swap it out to disk.

Users would then have to take adequate steps to ensure they doesn't lose that key.

Obviously, there would have to be flashing black and yellow warning screens, telling the user that if they don't securely save the key that's now on screen, they'll lose their coins.

Thoughts?