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Without being too snarky, we have such an index: it's called the block chain. A full node would send the transaction in which it was spent, the block header that transaction was included in, and the path through the transaction Merkle-tree linking the two.
Now in the far, distant future it might be useful to have an index of block hashes so that the lite node doesn't even have to keep track of that information, but right now the overhead of maintaining that tree vs the storage cost (about ~1.25MB per year) doesn't make sense.
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If given that choice, of course spending bitcoins directly is the rational decision. But it's a false alternative. What if you have freicoins (because your business accepts them, your pay is in them, or whatever)? Then it makes sense to buy in freicoins instead of converting to bitcoins first. If you have fiat, the choice between the two is negligibly different.
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As for the initial distribution problem, newly-generated freicoins will be sent to the miners. The problem won't be “how do you get people buy freicoins?” but rather “how will we give the miners something to buy?” Initial liquidity may be provided by someone like @jtimon investing based on perceived future value, but this would a relatively short-term stopgap measure until the merchant tools are in place and full circles of commerce can be established. Shortly thereafter market forces will stabalize the Freicoin price, and it ceases to be worthwhile investment to hold on to.
@Etlase2, this isn't a competing concept to bitcoin. In fact the two are completely complementary, and gain value from the existence of each other. I don't believe bitcoin will collapse, and I'm not looking to replace it. If successful we will change how people perceive and use bitcoin, but in a positive way.
@jtimon, there isn't a faq per se but there is a series of questions-and-answers at the end of the campaign proposal.
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Are you sure it's outputting errors? Warnings would be expected behavior (but should be fixed--feel free to submit patches), and errors would not result in a completed build..
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Hmm. Perhaps.
I have to think some more to give a full opinion.
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Blockchain values aren't changing.
What you propose would work, but it's more complicated. I'm sorry, but I really don't see the point.
One of us is probably misunderstanding the other.
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Super-big thanks to @jtimon, @galambo, and others who have replied while I was super-busy. Okay, so how is freicoin better for a successful business than dollars, or bitcoins? What profit do they extract from whom by using it? Does it give them more leverage over their employees so that forcing employees to accept rotting/decaying/evaporating money? It is expected they will get more goods from suppliers per man-hour their laborers put in selling stuff for them or building stuff out of what the suppliers supply?
A demurrage currency results in lower interest rates, which benefits entrepreneurs and operators of stable businesses. Compared with other forms of currency it encourages investment in real capital and increases in productivity. It rewards sustainable enterprises and long-term thinking while punishing exploitative endeavors or shortsighted choices. With a demurrage currency cash flow, not immediate return, is king. Perhaps you can add this questions to your FAQ:
When would the demurrage penalty be executed?
Based on this answer, will follow a question about how the penalty will avoid exploits, but it depends on when and how demurrage occurs.
[edit] I found in another thread that it is assessed at the time of transaction based on how long it has been held. What is to stop someone from simply holding it indefinitely as a backing for another currency like for instance, phycical bitcoin? If everyone did that, it would be a nightmare knowing how much a physical coin would be worth.
Thanks for the feedback; I will add a FAQ entry. In the current implementation, all outstanding/unspent outputs decay in value slightly with each added block. For a transaction to be valid, it must include enough inputs to cover the specified outputs after accounting for decay. (Aside: this makes it possible for a transaction to ‘expire’ if it is not added to a block before its inputs have decayed to less than its outputs. We are investigating methods to transparently mitigate the consequences of this.) If someone chose to hold the currency forever as a backing for another system, they would be free to do so. However the value of the coins they held would still decrease--even if that decrease never manifests in the block chain--because the loss would have to be realized should the coins ever be spent. I am guessing that he is not of the/an "Austrian" persuasion?
Gesell doesn't quite fit into either camp; he and his theories stand alone. You want something like 4% to 5% of the market cap per annum to go to securing the network?!?!?! Sheesh, consider merged mining or something, please! Such a percent seems a ridiculously expensive proposition.
Remember: Freicoin is not a store of value. Bitcoin or gold (or whatever) can be used for that purpose. Since freicoins are only kept between transactions and in enough volume to have a cash flow buffer, the actual Freicoin market cap will be rather low. It will consist mainly of the liquid wealth that people use in day-to-day transactions, not savings. So yes, something like 4% to 5% of the market cap per annum will go to securing the network. But the market cap will probably be orders of magnitude less than GDP of the Freicoin economy. Ok so how many coins per block are to be created and will that number ever change if so how much and on what schedule?
Currently there is a Bitcoin-like fixed subsidy that halves in value every four years, to which is added the total loss due to demurrage and transaction fees (if any). This means the generation curve looks exactly the same as Bitcoin, but the block-reward has an uniquely different profile. It'll grow exponentially until all coins are generated, although with the rate halving every four years with sharp discontinuities. Eventually it will reach an equilibrium at about 40% the original subsidy. value. |
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I have two 5850's that I'd sell you for 18 BTC each, plus 0.75 BTC combined shipping. Sorry for the crappy webcam shot, but I'm in a rush to leave for work:  PM me. |
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Taint is a measure of how likely it is that two addresses are related (aka, owned by the same person). That is all. It is only of concern if you are trying to stay (pseudo-)anonymous.
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...even back in ancient times when grain was a currency that was only after granaries had been invented, wasn't it? Actually that's once of the prime examples of a demurrage currency. Some of our earliest examples of writing are actually grain contracts that acted as currency and decreased in value over time, to account for rot. Google "Egypt grain demurrage" for details. Sorry, I want to respond to your post in full, but I'm getting pulled ten different ways today. |
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Until you know which block a transaction gets into, you cannot know how much to subtract from it, and even if you do think you know, a re-org could happen later, changing which block it goes into.
That only means that if you don't include any transaction fee, you risk your transaction to become invalid before getting included in a block. I suggested another possibility that doesn't imply transaction fees here. You'd still need transaction fees, wouldn't you? Otherwise if it didn't make it in the next block the inputs will have decayed to be less than the outputs. |
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It's not a problem, at least not in that context. It will require implementation of receiver-fees, however, so that the receiver can make an transaction claiming the funds with extra fees in case the input value decays below the output value. The exact payment solution would work too, and it's a toss-up as to which one is easier to implement. |
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Well, I'd rather just speak with the people involved and get their consent, as it is, to proceed unmolested.
We'll see...
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Which pool carried out that attack?
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Actually, we chose 4.4% because, it appears, I screwed up a calculation at some point (perhaps rounding error?). The goal was to pick a simple value that when compounded put us within the 4-5% range (I was advocating 4% at the time, jtimon 5%; I was hoping to split the difference). At some point I tried 8e-7 = (1/1250000), and calculated 4.4%. Of course I just did the calculation again and realized it's closer to 4.1%. I'm not sure how I made the error earlier, or if I was operating under different assumptions, or if I just copied down the result incorrectly. Ultimately it's an arbitrary choice.
I also got an email from someone who pointed out that there might be potential for speeding up demurrage calculations if the demurrage rate per block were an exact power of two. 2**-20 results in about 4.9% annually. Of course maybe we should forget about future minor optimizations and simply fix it at 4.5%.
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We discussed extensively about this (and the max supply and final reward, all of them interrelated) in the freicoin forum thread: http://www.freicoin.org/gesell-currency-t8.htmlI think we kind of agreed on using arithmetic progression. But there's lots of possibilities (I know, infinite, I mean appealing possibilities). Please, take a look at that thread. I have read that thread previously, but I don't remember an explanation of why such a system would be better, except that arithmetic progression would supposedly be easier to implement. But both methods are trivially easy (just a few changed lines in the calculation of nSubsidy), and the Bitcoin geometric distribution method has already been proven to work and be a relatively fair compromise. If it ain't broke, why fix it? Why do you dislike the resulting curves of the Bitcoin method? Sorry if I'm asking you to repeat yourself, but it's not very clear from the thread you linked to. |
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Yes, the 5-10% “Freicoin-core” consists of demurrage + merged mining patches applied to Bitcoin-Qt (plus, of course, build servers for doing cross-platform testing and deployment). The 25-35% “Freicoin-extra” is stuff like Armory support, blockchain pruning, mining pools, exchanges, etc. The prototype overlays demurrage on top of the usual Bitcoin subsidies. So the reward for each block in the first 4 years is 50 freicoins + the per-block demurrage rate applied to the existing monetary base. An alternative I'm considering is what your propose: eliminate the stepped Bitcoin subsidy algorithm and instead issue subsidy to miners equal to the demurrage rate applied to the eventual total steady-state monetary base, i.e. constant rewards forever. The downside of this later approach is how long it would take to generate the total monetary base. It would take 15 years to generate half of all freicoins, 30 years for 0.75M, etc. It would take 75 years to generate 96% of the eventual total monetary base. The problem being that it would take decades until the inflation due to the expanding monetary base isn't the dominating factor, and therefore wouldn't be an effective test of a demurrage currency in the wild. I think it's better for everyone's interests to fill the monetary base as quickly as possible, although not so quick as to have large concentrations of wealth among early adopters. Do you agree? That's great! Make sure to at least post an update here once you code it up so people can start testing it out.
It'll be pre-announced, code and binaries available, only the genesis block mined, etc. etc. Just like the litecoin release. Testnet binaries will be available sooner, so we can make sure the final release goes flawlessly. |
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@jtimon, as it stands now we have enough to finish the minimal Freicoin client (based on Bitcoin-Qt, not Armory) and release it without any fan-fare or associated services. And we will, even if donations stop today.
The goal of the Indiegogo campaign is to take it far enough that enough of an ecosystem exists for merchants to start accepting freicoins as-is, and to create marketing materials for people on the ground to use to explain and promote the currency. About 5-10% will be spent on the basic core, another 25-35% on services and features that are necessary for use, and about 40% on the website, video, and promotional material. The rest, unfortunately, goes to Indiegogo fees and taxes :\
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Actually I think a larger quote from Eistenstein may be of value here in explaining the “why”:
It seems like all of the benefits the author perceives from the use of demurrage only come about when there is no interest bearing or neutral alternative, otherwise instead of losing wealth to demurrage, the holder of money will just exchange it to a more suitable store of value. Additionally, it seems like the author forgets that one of the purposes of money as a store of value is that it does not spoil as do most consumable goods. Especially given the ease with which one block chain tokens can be exchanged for another, if Freicoin becomes popular I don't forsee anyone with significant wealth holding on to them for any significant amount of time. That wasn't forgotten--that was explicitly mentioned in the article and by myself in the proposal and this thread. Freicoin is a medium-of-exchange currency only. If you have excess freicoins and you convert those freicoins into bitcoins, fiat, commercial paper, or whatever, that is both expected and inconsequential. Remember that the counter-party to that transaction now has freicoins that they want to get rid of, keeping the money in circulation. |
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Wow, that's a brilliant find. Very succinct and accessible. Yeah, I just wish it wasn't attached to a site about shamanism, astrology, and new-age mumbo-jumbo :\ |
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