What would it change, really?  Maybe if the transaction fees are shared with a block that is 2016 blocks behind it, so that it's in a relative spot in the next difficulty retarget.

This might be better off in a different section, but I'm sure that it's going to go all over the place.

Recently, there has been much discussion in many different threads about how the transaction fees as they exist are a "tragedy of the commons".  Even though they are not such a type of resource commons, those threads seem to have awakened a real future concern about whether or not transaction fees will be enough of a reward for miners once the block reward drops to trivial levels.  The part that really got me wondering is about the lack of "demurrage" in Bitcoin's algorithum.  Many will immediately attack me here as advocating for inflation, but let me say first off that I am not advocating for any change that would actually make Bitcoin inflationary.  However, for those who do not know what demurrage is, it is the intentional introduction of fees into an artificial monetary exchange system intended to replicate the 'storage costs' that a commodity money would have.  For example, when physical gold was the primary medium of exchange between nation-states and silver the primary medium of exchange between private entities; both commodities imposed relatively high transaction fees in the form of transportation costs.  This kind of fee structure Bitcoin replicates well with it's transaction fee schedule.  However commodity money also imposed storage fees upon the long term holder of these mediums of exchange, usually in the form of the costs of building a vault or renting a safety deposit box inside the much larger vault of a bank or other highly secure institution.  It's these storage fees that demurrage is intended to replicate, and for which Bitcoin does not have a corrolary.  I don't know if it could even be done, and still keep everything else straight, but I want to ask for ideas about how demurrage could be introduced into Bitcoin under the following ideal conditions...

1)  Miners should receive the demurrage fees relative to their hashing contributions, as transaction fees and the block reward are now.

2)  Only transactions older than, say 6 months, should be affected by demurrage fees

3)  Demurrage fees should be very small, but should be assessed with each block, or perhaps with each retarget block.

4)  Demurrage fees should favor transactions with large collective amounts, probably the best way to do this is to asses the demurrage fee by each elderly transaction and not by how much it contains.  (a safety deposit box costs the renter the same if there is 100 ounces of gold in it or just one)


The astute observer will immediately notice that this will not likely result in actual demurage fees, but instead in savers periodicly moving their funds to keep them fresh.  This is part of the point, as if it's economicly better for the savers to freshen their funds and potentially pay a transaction fee instead, they still contribute to the security of the blockchain with the side benefit that their old transctions can be pruned from the blockchain once that becomes possible as well as encourage the condensation of many small transaction balances into fewer and smaller transactions.

I'm sure that an exception can be added to the demurrage fee system for the genesis block, so that Satoshi can keep his legacy intact for this heirs.

Any thoughts on how this could be accomplished, or why it shouldn't?  I'm open to being proven wrong about this concern.

Spoken it sounds too much like "qubit" which will eventually be confusing once quantum computers are a reality.

I'm afraid that I can't help you.

You guys worry too much.

What you are describing is a slightly different attack.  This is the double spend attack in a nutshell, and not a denial of service attack.  The DOS requires live participation in the network.

Still, it's not about the longest blockchain, it's about the one with the greatest proof of work.  But yes, hashing a false chain in the dark, so long as you have a least as much power as the remainder of the network, will eventually get you ahead of the true chain.  51% of the network still doesn't cut it, though.  This would only give you 2% more power than the rest of the network, meaning that you would only be able to get one block ahead every 50 blocks or so, and if the rest of the network continues to grow as it has for the past two years, your still a loser in less than a day.

Too many forum members post this, but this is due to a misunderstanding of what the fable of "the tragedy of the commons" represents.  The classic fable involves a town of sheephearders with a common set of grassy fields for their sheep to graze upon.  This is a commons of a depleting resource that users are incentivized to maximize their usage of, regardless of the impact on the resource.  The relationship between transaction fees and blockchain security is a commons, but not this kind of commons.  The users are incentivized to include whatever fee they believe will save them time, but no more.  This kind of commons contributes to the shared resource, in this case difficulty.  There is also a case of diminishing returns for the transaction fee payer, but that is part of the balancing mechanism.

That thing would be awesome in a postcard mailer form factor.  Talk about a real postalnet.

Even if there is some kind of shortcut found in SHA-256, this would simply require that the difficulty increase to compensate.  The only reason that we would need to migrate away from SHA-256 in short order is if a method of reversing the hash were found to be feasible, in which case SHA-256 would be broken.

This might be possible, but I don't see a real gain to doing this.

I would think that a blockchain server would be more useful.  This would allow phone clients to have a local wallet.dat, and query a blockchain service to serve up the blocks necessary to validate a receiving transaction without needing a local copy of the blockchain.  A network drive might be able to do this decently well, but would result in a lot of network traffic for a smartphone.

Only if they can get others to join them.  That is the big if.  Bitcoin was lucky in this way, as there was never any certainty that people would join.  Now they are, and even the users sometimes complain about the 'fairness' of it all.  If any institution were to actually start another blockchain, why would the public favor one set of early adopters over another?

The idea is that by the time the block reward cuts in half in Jan of 2013, the network will be large enough, with enough transactions that pay a small fee of about .001 BTC on average, that the transactions will already be making up for the lost 25 BTC to the miners.  We have already come a long way in just over two years, so I'm betting that this assesment is generally correct.  Time will tell.

Even better would be one of those usb drives in the form factor of a credit card, so that you can actually keep it in your wallet.

I'd by that for a bitcoin.

I wonder if anyone in the GPU industry has actually noticed Bitcoin yet.

Yeah, that will improve things!   

No.  Bitcoin has an economic advantage over fiat currencies by reason of it's cash like attributes while in use online.  Decentralization and anoninimity are central to those cash-like attributes.  I can't see an advantage for a centralized blockchain, since the primary reason that the proof-of-work system exists is so that no single institution (or group of institutions working in conjunction) must be trusted for the value of the currency to remain intact.  Wal-coins might be able to make a credible claim towards anoniminty on technical grounds, but would you take that risk?  Would the Federal Reserve suffer Wal-coins to exist if it were true?  The fact that Wal-coins were centrally supported tells those with a vested interest in the status quo exactly which CEO's office to visit, and which board members need a good IRS audit.  E-gold tried the centralization route, and got hammered for it.  And as a matter of quality online money, a gold backed currency is superior on many economic and historical points.  Bitcoin's decentralization says that there is no headquarters to raid, and anoniminty says that end users are hard to find.  Any credible competitor to Bitcoin needs to have both these attributes, and be able to prove it on technical grounds, to even stand an even chance.  If this could be done and also have a credible claim to being backed by gold, silver or even U235, Bitcoin would fade away and I'd be one of the first to sell my bitcoins for the new chain.  But how could that work?  Even if someone could crack that in the near future, it would also have to be a method that Bitcoin couldn't just adopt itself.

The difficulty cannot change by more than a factor of four, either up nor down, in any one re-targeting.  This is to limit the damage of a possible attack vector that has never been attempted.  The attack involves a major hasher with much more power than the whole of the network coming in, and rather than attack the blockchain as in the double-spend attack, he simply hashes honestly with abandon up until the next retarget and then shuts his cluster off.  The result being that, without the factor-of-four rule, the period of time between blocks could be stretched to an unreasonable interval.  With the Fo4 rule, this attack would require that the attacker be willing to hash through several retargets in a row; otherwise his attack would be limited to stretching the interval to about 40 minutes, which would be inconvient but not detrimental to the system.  The rule is probably not needed anymore, as there isn't likely any single entity left on Earth with the power to outhash the running network by more than 4 times anyway.

I'm saying that, under the premise that the tech is sound and that there are no major flaws left (a large assumption, I admit) that Bitcoin's large first to market advantage will prevent similar competitors from catching up.  An institutional blockchain isn't really comparable to Bitcoin, because (by definition) there is a central institution supporting the value, and any threats to that institution also threaten the trade value of the currency.  That's comparable to Wal-Mart starting a blockchain to use their actual stock price as currency.  That's a possibility, but it doesn't protect Wal-coins from the issues of centralization, and people from Kenya are unlikely to ever have interest in owning Wal-coins.

Bitcoin's first to market advantage protects it from other unbacked and distributed competitors.  But I don't thing there is much threat from institutional blockchains either.  After all, if there was an economic incentive for these institutions to issue their own currencies in direct compatition with the national governments that regulate their charter, they would have already done so.

There is also the possibility that if a major market leading corporation were to set up a chain and start to gain ground on Bitcoin, that corporation's direct compatition is then inclined to do something similar.  Certainly the larger competitors could follow the exact same model, and start their own block chains; but some of the smaller competitors are going to look at the field of choices and chose to simply base their market offering off of the open market choice already in existance, namely Bitcoin.  This effect will all but garrantee that the smaller institutional blockchains are marginalized as many small players in many different industries do the same thing.