I wasn't trying to tie it to the dollar per se, that was just an example for the initial stabilization phase. The coin's price will essentially be tied to the global average electricity cost. So if global electricity suddenly got 10% cheaper (eg. new invention) all coins will lose 10% of their value and be worth, for example, 90 cents each (and vice-versa). I find that a very reasonable drawback though, not to mention unavoidable. But if the fed prints a trillion dollars tomorrow that will make the dollar cheaper, so it'll cost people more cents per Kilowatt worldwide, so the coins remain essentially unchanged.

But who will the merchants pay their money for to acquire bitcoin credit? How will it be decentralized? My suggestion keeps everything in the current design intact except for the number of coins each new block will contain. That's why I believe it requires very simple modification to the current code, plus it will be just as familiar to the existing audience.

What's wrong with you folks? I thought I was a conspiracy nut job till I saw people on this forum. Does a crypto-currency need to be stupidly volatile to be a good crypto-currency? Does anchoring its price to the average global electricity price means we're selling our souls to OPEC or something? Do you see Bitcoin ever going mainstream when one cannot even ensure it'll keep half of its worth by next week?

The premise of bitcoin is:
1- Anonymity
2- Control

My proposed model doesn't even touch these concepts. It's a purely economic suggestion. An unstable medium of exchange is a bad medium of exchange.

And you know what? By insisting on making Bitcoin fail it's probably you who's working for The Manipulator!

Etlase, the EnCoin concept seems very promising! It's what I've been hoping for since I started my infamous thread almost two years ago. You're welcome to read the initial post and kick some skeptic butts if you feel like as I revived it again today after the hacking of Bitcoin7. I believe the instability of prices is making users vulnerable to exchangers as they need to keep their "bitcoiny" wealth in fiat form to avoid price fluctuations, which defies the whole point as puts us back to square one.

I don't address any security issues or drastic changes like you do here though. The whole premise is about the economic necessity and the practical plan to tie bitcoin's price to electricity.

It'd be very sad if you had to go through publicity and advertising from scratch for EnCoin though. I was hoping the Bitcoin's developers would listen to the sound of reason and introduce these changes to the original client instead. If no steps are taken to ensure the coin's price stability it will never go mainstream. It'll be regarded as a very risky investment almost like gambling instead of being a friendly medium of exchange which everybody can use to escape the control of big corporations and big brothers.

Your definition of "a limited subset of goods and services" seems to mean just about every consumer good and service out there, while your definition of "very, very short periods" seem to mean around 5+ years. And that's all nice and dandy till we find that you've got no problem with bitcoins' price shooting up and down several folds within weeks. You're weird, you know?

Drama aside, I pointed out in the initial post that the proposed model will tie the coin's price to the average worldwide electricity costs. That's certainly not 100% stable on the long term, but I can promise you it won't double over a month nor lose half its value over 10 days. Let's just say it's significantly more stable than the current design. Got a better idea? Be my guest.

Crypt_Current, you've just made The Manipulator very, very angry. By exposing His agents you have sealed your fate. Let that be a lesson to all of you. Background music followed by a cut scene

Red, Encoin sounds like a very promising idea. While by no means Etlase2 was the first member to point at the dreaded problems of limited supply as many people have cried out loud against it over the last year and a half, it's the first practical implementation of the concept I've seen. I'll look into it right away (then report back to The Manipulator, of course).

It's nothing personal, but from experience it seems that people with ridiculous number of post counts take it as their personal duty to respond to just about anyone saying anything on the board whether they've got something valuable to add or not. That's why their replies, generally speaking, don't tend to be very useful or well-thought. And I've seen three examples today already.

There's no way to ever verify otherwise but it doesn't really matter. We're discussing abstract ideas not personal motives.

Then you better remain speechless. Because if people are spending $12 billion/day on electricity to produce coins (wtf?) then they deserve $12 billion worth in stable coins per day. At the current price of about $5/coin and the daily 144 blocks*50 coins the daily new supply is worth about $36,000.

There's no point going through the technical details about whether the price will perpetually deflate since the last 20 pages pretty much cover all the for and against arguments on that and they're available for people to read if interested. Rather, it's more constructive if we focus on the main much simpler problem: the instability of the bitcoin's price. I don't think you have any doubts that the current model does not produce a stable currency, do you?

If we agree on that, then I hope we also agree that stability is an important if not an essential feature of a medium of exchange. It would then be established that we have a problem in the current design, and we'll start thinking about how to deal with it.

For the lulz: It's incredibly funny seeing Bittertea and SoH keep posting "This user is currently ignored." I bet they're still yelling about how pointless it is to keep posting in this pointless thread. It's like these retards literally can't stop typing.

Your "argument" against my suggestion wasn't very informative to say the least. I'll try to explain why:

Your thinking, kjj, is hopelessly linear.

The real world is a messy, complicated place.  Many factors come together to interact in complex ways, non-linear ways.  Real understanding of the world is very difficult, often actually impossible.  So we simplify and approximate.  We make models where A causes B, and B causes C.  But these models are wrong, and we poison our thinking when we forget that.

Bitcoin is a system with dozens of variables, and hundreds of relationships.  We know a couple of these exactly.  We know a few more to a decent approximation.  Quite a few more are just vague assumptions.  The vast majority of them are so unknown that we don't even know what we are missing.

In summary, your entire conclusion is based on simple linear extrapolations.  Ponder this:



Did that convince you that you were wrong and I am right? No? Why not? Perhaps because it wasn't very convincing? Or perhaps even because I haven't actually said one single useful sentence?

I'd really like to start hearing arguments against (or for) my proposal just for a change. Preferably from members who aren't trying to increase their post count by replying even when they have nothing to say.

So why can't it be rigged against me then? If I was gonna rig something I'm gonna make sure it appears like I have the support of 2/3rds of the community (hint hint).

But it's not pointless to come to a thread only to say it's pointless to argue with its poster?
I'm really thankful to whomever added this fantastic ignore button. Keep barking boys, you gotta have at least 2k posts before Christmas.

Who cares about what you do? You can burn your money down or invest in pink cats for all I care. The current design has proved incapable of keeping the price reasonably stable for one single month in a row since April. I don't understand how you think it's practical to ask non-adopters to trade their money for a medium of exchange which they potentially won't fully retrieve its value before months or even years, if ever.

Really? So you're saying we can have a perfectly average Joe looking at such a graph and then deciding Hey you know what, I'll remove my cash from the local bank and put it in bitcoin instead? I'm not talking about investors and gamblers here, I'm talking about normal folks who wanna use something like paypal and dwolla. You don't lose half of your dwolla deposits in a couple of weeks do you?

Alternatively you can give me one fucking reason for repeatedly coming back to this thread to only whine and swear. Here's a tip buddy: If you don't like it here you can stay out and leave room for sane people who're actually willing to discuss ideas instead of mindlessly cussing. Oh and I'll help you achieve just that in case you don't know how: I'm ignoring you.

`I detailed in the first post exactly how's this possible. Both systems are fully compatible.

Who said anything about inflation? If you have 100 people and $100 on an island, and then the population increases to 110 people producing 10% more, shouldn't we print 10 more dollars to keep prices constant? If we don't prices will simply decrease to compensate for the increased supply of goods and services relative to money. It's the same situation with bitcoins. Say we originally have 100 users and 100 coins, but then next year we have 102 users, then next year 115 users, then next year 120 users, then the next year 150 users, but the increase in supply is always constant at 10 coins/year. How do you expect speculation and price bubbles not to be rampant? Well under the current system it's even worse because the new supply shrinks each year till it reaches zero!

You're essentially saying that stealing some money from a random person and giving it to another random person isn't a bad thing for society. But it is. Sure, there's a 50% you might be the lucky guy who gets the free lunch, but overall you want to know what to expect to plan ahead properly. That's why most people don't like gambling even if it was at a 50-50 chance. The current bitcoin market condition is only attractive for addictive gamblers.

Historical evidence doesn't indicate this at all. I mean look:


The whole point of the alternative model is kicking speculators out of the game. The result would be having a natural, ever-growing bitcoin economy with a slightly-increasing supply matching it. The price will hardly rise or drop because supply will react to demand changes. It is the current system with its fixed supply and crazy demand (due to speculation) which renders the price stability impossible. And as long as people don't see price stability they won't store their wealth confidently in bitcoins. In other words, they will stay away from it.

Yes it can.

The current design is a failure so why not simply transform it instead?

Read the first post in this thread.

Under normal circumstances (read: flexible supply) the total demand will almost never shrink. That's as unlikely as having a negative GDP growth in a given year. What will occasionally shrink however is the increase rate of total demand.

It'd be random just like the current design. The proposed changes are really very limited.

Thanks to the (stupid) limited supply model which results in perpetual price bubbles and bursts, Bitcoin users have come under the mercy of exchangers. The reason is simple: One cannot trust their very own bitcoin wallet. If you have $100 worth of coins today on your computer, they could be worth $90 tomorrow, and then $80 the day after, which means you need to keep them in the form of fiat currency at the bitcoin exchanger's website or at a service linked to it such as Dwolla or LR to ensure your ability to utilize their full worth as bitcoins later.

Sounds familiar? It should. Because we're back to the good ol' banking system again. These exchangers and services can hold your money hostage till you send them scans of your personal documents where you could then be vulnerable to identity theft or at least a breach of privacy, or the exchangers' databases themselves can get hacked as was the case with MtGox in June and most recently Bitcoin7 yesterday, potentially undermining all your wealth.

Had Bitcoin used a flexible supply model which anchors a single coin's price to the amount of electricity needed to generate it, the community's reliance on such services would've been very limited. We'd only use them to get money in and out of the system, but not for storage over long periods of time where they're vulnerable to all sorts of misfortunes we're seeing now. It's not an exaggeration to say that every (non-speculating) user who lost money to a price burst, a database breach, or draconian security and AML regulations is probably a victim of the limited supply model.

If matters continue this way then the general population, which we were hoping to attract to adopt bitcoin usage, will lose all confidence in the P2P currency. Normal people aren't willing to keep their money in the form of a medium wildly fluctuating up and down by the day, while keeping it in the form of fiat with traditional institutions nullifies the whole purpose of bitcoin. This is an open letter for the project's developers to reconsider the current design in order to save this marvelous idea from an eminent failure.

September 25th new management comes, October 5th site supposedly gets hacked and the money gets stolen. Coincidence?

.. and that they won't bullshit us with well-written formal words that don't actually convey any meaning.

Am I the only one who thinks providing personal information to a relatively unknown company whose whole database was breached 3 months ago was a bad idea?

Dude, what the hell are you doing here as a moderator? They've got job openings at the NSA.
Oh wait you're already working for them, PR department. My bad.

Just like the police always foils a new "terrorist plot" when it's time for elections.

Any exchanges other than Gox?

I've also had a very nasty frozen account issue with MtGox as they dealt with this whole issue very unprofessionally. You don't impose new defacto Terms of Service on your clients unilaterally before letting anyone realize what's going on much less agree to them. I got almost sick because of worrying and lack of sleep (I had a large $um of money with them) and I'm running with my cash and coins forever as soon as I get a chance.

As a sad general observation, I think the Bitcoin economy is quickly transforming into a traditional banking one, and that within a few months it'll be hard to buy or sell coins without handling personal information. Even MtGox which is technically a Japanese company clearly caved in to major banks and/or US government bullying. This could ultimately lead to the project's failure just like e-gold and others failed when the American government cracked on them. A new wave of price dropping has already started.

That's just excellent work. I'm surprised it generated so little buzz and isn't adopted into the official client until now.

On a separate note, Suggester suggests a Redistribute coins button, an option which moves all your funds to a chosen number of new wallets with the desired proportion of your current coins assigned for each. A user would then be able to consolidate his wealth from all his, say, 17 addresses into just 3 new ones, with the first one containing 49% of his coins, the second one 26%, and the third 25% (he will be able to assign those %'s arbitrarily using a simple interface). Similarly, he might want to break up his single wallet into, say, 4 different wallets, using them for 4 different purposes. When the transactions clear after 10 minutes, it'll be harder for anyone to prove that this user still owns the coins previously associated with his identity.

For the suggestion to be practical for anonymity purposes though, I strongly recommend another adjustable option where the user chooses how much time to assign for the whole operation. For example, choosing "63.2 hours" would move random chunks of the coins into their new distribution over that period of time (the client would have to be connected for the whole duration). That would make plausible deniability much stronger because you usually don't have 17 people simultaneously sending all their coins to 3 new addresses! If done correctly, it will be virtually impossible after that for anyone to prove that he still owns the coins. We're essentially simulating a change-of-ownership.

This can all be currently done using windows explorer and separate wallet files, but it'll be a big pain in the butt.

It's a jurisdiction issue here. Why would a Japanese company be "required" to give info to the American government? My guess is that they're ready to sell their clients to avoid a US crackdown (frozen bank accounts, bogus terrorism and money laundry charges, etc).

That was Tibanne's (Mt Gox's owner) CEO, Mark Karpeles speaking. It's part of an article titled Bitcoin exchanges offer anti- money-laundering aid.

Just in case you didn't know, Silk Road is the name of a tor's hidden service that anonymously sells illegal drugs using bitcoins.

Though I never purchased illegal drugs and probably never will, that announcement disappointed me. What's the point of having an anonymous p2p currency if the money trail in and out of the system will be tracked by the intermediaries? They might as well have registered their exchange in Fort Meade instead of Japan.

On the technical side, however, I don't see how's this feasible. The drug dealer can simply send his new funds to another wallet daily and change its address whenever he sells some coins on the exchange. If I understand the system correctly, this will render him indistinguishable from any other normal Mt Gox trader.

Why would they need to spend the transactions of others when they can simply freeze all the payments by always holding the upper hand (read: possessing the longer "magical" blockchain)? Their presumed goal is to ruin the project, not to steal people's coins.

I realize that creighto but it's implicitly understood. We're talking about the US government which owns computers powerful enough to create a greater proof of work than the rest of Bitcoiners combined, not some Russian script kiddy in a basement.

May I ask everyone to reserve their comments regarding crypto attacks on Bitcoin's infrastructure to its thread while reserving this one to the deflation and pricing problem? I know I started it all but I was innocently responding to Bitter's CIA joke.

From Wikipedia: The main chain consists of the longest series of blocks from the genesis block to the current block.
And thank you Bitter for making it quite clear who exactly doesn't know what he's talking about.

Or he's a retired bored old man who's got nothing better to do than insult others whom he disagrees with instead of leaving them in peace and wasting his time on more entertaining activities.

I just LOVE how you keep coming only to say this thread is a waste of time only to come again a couple of hours later to just repeat the same thing. Listen buddy, if you wanna increase your post count why don't you just start a thread all for yourself and keep repeating whatever you want in it while leaving this thread to time-wasting people who want to actually accomplish something? If you really think it's a waste of time then you're better off getting a life without coming for a third time only to repeat the same thing, please.

Thanks for promising not to post here again. Have a great day.