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I think the inflation people have a trouble with is fiat fractional reserve lending.
Why?
Because if you fractionally lend money, that original money that was lent should in theory be distinguished from debt by having some essence. The issue is with fiat the original money and the debt become indistinguishable when they monetize the debt by printing money.
If you lend based on gold, that original loan is still owed to you, so by default every loan that was fractionally created from gold is still the very same original gold. Therefore the money is distinguished from the debt because it must be returned to the lender since you cannot counterfeit it (print).
The same applies with bitcoin fractional lending as does with gold. Pre-programmed inflation in bitcoin should behave nothing like fiat inflation, because the debt cannot be monetized. The debt must be returned to the lender.
And if you notice throughout history gold has inflated and will continue to inflate, but since gold mining requires energy, as bitcoin mining does, the inflation is beneficial to its value because it allows for a larger adoption base and solves the first adopter problem.
Inflation is not the enemy of bitcoin.
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I don't think people will like the idea of a changing cryptocurrency. That's why they support bitcoin, and the devs have stated all economic protocols will not be subject to change. It.is better to make a currency and present your case why it is superior to bitcoin.
I think people don't like the idea of a changing cryptocurrency because bitcoin is a pyramid currency and changing it threatens the bitcoin elite. Plus hard forks are a bitch. Are you a dev? |
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There really is absolutely no benefit for this type of a cryptocurrency not to be inflationary.
Then why are you still using it? Why aren't you using one of the inflationary altcoins? More to the point, why are you still bugging us about it? This is a discussion about the ramifications of inflation and deflation and I'm sure many people have benefited in their understanding of cryptocurrency economics from my theories. How am i bugging you? There isn't an inflationary coin with the properties that i like. |
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I don't get it... bitcon network hashrate could just increase forever. what's the problem with that?
Of course anything can happen. But that isn't a rational argument in favor of a deflationary cryptocurrency. The whole point of this thread is to argue in favor of an inflationary cryptocurrency. The less inflationary the cryptocurrency becomes, the more it depends on tx fees for revenue rather than block reward. Why do you remove a stream of revenue from the the profits of miners when it is their job to create a secure network? I'm not sure you even read anything in this thread. As I explained above: The network must increase hash at a rate of total cost of network hash / 2 every 2 years. If the network must double in present size of hashrate, then the cost of doubling the hashrate in 2 years will be the value of half the network hashrate in the present. For example. If the network is valued at 30b in the future (30b is a minor barrier to entry, which i don't think will be enough, perhaps 300b), but let us use 30. In 2 years the cost of that hash will be 15b. Thus every two years, for the network to grow at the rate of Moore's rate, the network must invest 15b for the cost to replicate network hash not to decrease. Otherwise, if the network does not invest half of its cost every two years, the barrier to replicate the original hash will decrease to 0 over time. As I explained previously. Given 1% inflation, the value of the cryptocurrency must be at least 25x the cost of network hash for miners to profit + electricity costs. Given 2% inflation, the value of the cryptocurrency must be at least 12.5x the cost of network hash for miners to profit + electricity costs. Given 3% inflation, the value of the cryptocurrency must be at least 8.3x the cost of network hash for miners to profit + electricity costs. Given 0% inflation, for us to mimic 2% inflation: If tx fees is 1%, then velocity of bitcoins has 2. If tx fees is .5%, then the velocity of bitcoins has be to 4. That the total bitcoins sent every year must be equivalent to 4 times the amount of bitcoins in circulation. if tx fees is 0%, then there is no mining profit and we have a problem where it's possible that mining cartels are actively undermining the system. This is not possible with an inflationary cryptocurrency. But transaction fees cannot mimic inflation for revenue because inflation will naturally also have the same revenue stream of tx fees. There really is absolutely no benefit for this type of a cryptocurrency not to be inflationary. |
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This is a good point. Block reward is fixed, tx fees are not. Thus, someone can solve blocks at negative cost and bankrupt all other miners, since he can reduce his tx fee to 0.
This is a nonsense statement. It's impossible for any entity to bankrupt all other miners, no matter his transaction fees. Not only would any such miner have to aquire the capital investment in order to build his network to beyond 51%, an uphill battle considering the vast majority of the current running network (now or at any other time) is a sunk cost already paid for; he would also have to compete with the hobbyist miners who benefit from co-generation of waste heat. I have a GPU based mining rig that I choose not to use, that I can use for space heating in my garage at will. No miner can bankrupt me. Therefore your "law" is invalid. That has nothing to do with my Law. That specific vulnerability was something that someone else posted, not me. If you believe you can use your mining to convert electricity into heat, i hope you live in a very cold climate. |
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Network hash must grow at least at the rate of Moore's Law. This is also known as Sweft's Law. If Bitcoin fails to satisfy this condition, then it will be prone to attack.
Why wouldn't hashrate grow according to Moore's law. If hardware performance increases in hashrate per $, everything else being equal, why wouldn't the bitcoin network hashrate increase accordingly and Sweft's Law be satisfied? There will always be new miners entering the game with new up-to-date hardware (or existing miners upgrading) and old rigs will drop out, keeping bitcoin hashing equipment up-to-speed with moore's law. An explanation of Sweft's Law for those having trouble understanding it. Moore's Law states that the number of transistors doubles every two years. This means two years from now, the cost of the network (hash / ($ / hash)), given equivalent hash, will be half. And half in another two years. And half in another 4 years. That means in 6 years it will take 1/8th the amount of capital to replicate the original hash. Thus, the network must grow at the rate of Moore's Law to sustain the value of its hash so that the value to replicate the original hash does not decrease. That means that the network must double its hash every two years. Every two years there has to be a capital investment equivalent to the cost of network hash / 2 to double the hash in accordance with Sweft's Law. But then we also have to calculate electricity costs, which i will do later. |
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http://www.marketoracle.co.uk/Article39704.htmlThe author of this article posted it here in this forum for discussion: https://bitcointalk.org/index.php?topic=160612.051% attack can also exist as a "benevolent" mining monopoly or cartel that doesn't necessarily wreck the blockchain or ruin the value of the cryptocurrency, but simply controls the majority of transaction processing. It then controls the flow of money, who gets charged transaction fees, who doesn't, who even gets their transactions processed. They choose what makes it into the blockchain and what doesn't. They could freeze accounts or move coins to other accounts at will, behind the scenes, benevolently of course, to keep us safe or some shit like that, or without the majority of people knowing (or caring probably) that they can do this, as a matter of their policy. As soon as the block rewards dry up, this cannot help but become a reality. It is a mathematical, economic inevitibilty, because joe shmoe miner can't afford to prevent it without block rewards. He will go out of business, and that is who we depend on to keep the network honest. We need joe shmoe to be at least 51%, not the walmart-amazon-google network hash cartel to be 51%. Don't let joe shmoe go broke mining! This cartel will be comprised of corporations or entities who can subsidize their own mining operations, as in pay their electric bill out of their own pocket, buy their hardware, etc without needing block rewards or transaction fees. The joe shmoe public mining pools whose members depend on these compensations to operate would dry up, thus surrendering the 51% of network hash and more to fewer and fewer entities, which will then start acting like a cartel or monopoly and dictate their policies with the clout of essentially holding as hostage the blockchain. Whoever doesn't think this will happen when the incentive to mine is gone is a fool or is too lazy to think into the future. The economics of deflation (and inflation) is harmful to participants in an economy anyway in my opinion but that is for another thread. That's more of a general opinion on a complex issue, but the sweft law thing is not an opinion, it is bombproof math and economic reality. This is a good point. Block reward is fixed, tx fees are not. Thus, someone can solve blocks at negative cost and bankrupt all other miners, since he can reduce his tx fee to 0. Inflation also solves this problem because a mining cartel cannot remove all of the income from the solving blocks. |
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From my own perspectives, the block chain split was of zero consequence. If it were not for the activity on this forum at the time, and my interaction with this forum, I (personally) wouldn't have even noticed. The same would have been true for most users who either don't spend bitcoins on a daily basis or don't fret over the time to confirm. Once users are competing for blockspace, a 24 hour long time to confirm will become more commonplace for much more mundane reasons. I think the fact that someone had a transaction with six confirmation that was then undone was extremely significant. Well, you have a point there. And the price crash wasn't even the worst crash that I've seen since I've been here. On a percentage basis, dropping from about $250 to about $50 over the course of a week or two isn't as bad as dropping from $32 to $2 in 2011 (2012?), although it happened much faster. True, but it happened at a time when Bitcoin's rise was big news and there was a high rate of influx of new users. These are the conditions under which you would never expect such a drop. And it happened due to a failure at a choke point whose significant was not, I think, generally recognized. Those are exactly the conditions that I would expect a big drop, due to the eventual popping of a bubble. And that is largely what happened. Honestly, I expected it weeks before it happened, and lost a small fortune short selling with a stop-loss limit at $72. It never eeven got back down to where I thought it made fundamental sense, so I would have lost it anyway. But I agree with your point. You can see these events as Earth shattering or meaningless. The important thing is that bad things happened and Bitcoin barely noticed. So if you're worried about bad things happening, the evidence suggests that Bitcoin will survive.
It's much like the point about violence and terrorrism; terror attacks make big news but not really big body counts, as a nominally "free" US citizen is 9 times more likely to die by the unwarrented actions of a police officer than a terrorist. Really, the perception of risks are out of prooportion with the reality of those same risks. The issue isn't any one single double spend attack. The issue is a long-term, ongoing double spend attack where the attacker holds a significant amount of hash. |
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I like your idea, except i would make a couple of changes.
1) Don't make it a fork of bitcoin, make it a new crypto.
2) Keep coin creation at 100, until the coin creation is less than an annual 2% inflation. Then have coin inflation adjust to 2%.
1. The reason to make it as a fork is that it would automatically include the bitconers and the bitcoin economy, which is something that I believe would increase chances to get acceptance. It also open the possibility the possibility for merged mining. 2. The rate of 200 per block is related to point 1 above: It means 10.5 millions new coins/year - the existing coins which are extremely concentrated on few hand will be reduced tp 50% of total volume after one year. But anyway, the idea is still in the shaping, and I am not holding to absolutes. I want others to contribute. And yes, I actually have been thinking that coin production rate could be increasing as you suggest, maintaining some inflation. But as you know, people around here goes crazy over the word inflation  . You may also check this link: https://bitcointalk.org/index.php?topic=179961.0 (I plan to make a updated version some time) Instead of increasing your block reward, decrease it... and speed up block creation by the correct amount... That being said, I think the only hope you'd have of making such an idea work would be as a merged-minable altcoin - I really doubt anyone is going to devote profitable hashing to something that's designed to lose value over time... (much less half it's value per year). I can assure you that bitcoin will lose purchasing power far sooner than an 2% inflationary alt coin. You know that it takes energy to discover blocks? It's not like printing fiat out of thin air. Those coins support miners who secure the system. Much like gold requires energy to mine. So what you're saying that gold loses value over time because more gold is mined? |
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Can someone develop this?
3 coins isn't really pocket change. I'd be willing to use a trusted forum member as an escrow for the transaction.
Bump It sounds like what you are proposing, in essence or in effect, is that in some far future year when the 50 coins per block that GRouPcoin constantly mints happens to work out to be 2% of the number of coins generated up until that moment (up until that block, in practice), the time will have arrived for GRouPcoin to adjust its rate of coin-minting if, by that far future time, your theories as to what would be the perfect mining curve still seem to be as valid as they seem today and the benefits are actually worthwhile enough to actually bother to change the number of coins per block. Thus I suggest that the coin you want is already up and running, has been for years, and still has years to go before it will need a tiny tweak to make its generation rate stick at 2% (or whatever percent has been determined, by that future point in time, to actually be the exact precise perfect percent rather than just some guess made by you years in advance of the actual coming into effect of such a rate change). So we might as well just keep chugging along using GRouPcoin and simply add to our over the coming years concerns the concern that possibly it might prove beneficial, at some future date, to cause the generation rate to stick at some percentage of the total coins minted, so that over those coming years we can make observations and track statistics and so on that will enable us to know, come that far future, what exact percentage is in fact ideal. (If it does turn out to be 2%, how many decimals of accuracy is that? 2.0%? 2.00%? 2.000%? To what number of decimals has it been determined that "zeroes all the way down" is in fact the ideal?) Basically though, there are years yet to work out the exact best percentage, in the meantime the 50 coins per block has been chugging happily along and will continue until the exact details of the later stage are worked out / negotiated. Please note also that your concept of "annually" can be a whole can of worms, because nodes are not synchronised in time, their synchronisation is by block number. So we also will not even know how many blocks any given year will actually consist of until we know how much up and down see-saw of hashing power will be happening during that year... (For example the advent of ASICs is likely to make a "blocks counted year" much shorter than a "calendar year" this year for bitcoin...) -MarkM- I don't think people will like the idea of a changing cryptocurrency. That's why they support bitcoin, and the devs have stated all economic protocols will not be subject to change. It.is better to make a currency and present your case why it is superior to bitcoin. |
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Can someone develop this?
3 coins isn't really pocket change. I'd be willing to use a trusted forum member as an escrow for the transaction.
Bump |
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Can someone develop this?
3 coins isn't really pocket change. I'd be willing to use a trusted forum member as an escrow for the transaction.
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why 2%? that is too low. I think inflationary should be about 5% to 8%
but, good idea
2% inflation requires the crypto market cap / mining hardware cost to be approximately 12.5 3% inflation requires the crypto market cap / mining hardware cost to be approximately 8 8% inflation requires the crypto market cap / mining hardware cost to be approximately 3.15 8% inflation seems excessive. 2% preserves value and also benefits miners while having a 12.5x multiplier which is not outrageously high. |
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I'm not concerned with active or inactive coins, only how many coins have been generated.
It has no sense. Inactive and dead coins simply doesn't exist for market. You can't predict destruction or inactivation rate in the future, so you can't use fixed emission rate to keep constant coins value. It's something like the nuclear reactor control by using a sledge hammer. One small mistake and... BAAM You need adaptive algorithm, which will be based on active coins volume. You cannot judge if a coin is inactive because it can either be stored in a vault or lost forever. You cannot know. Thus, it is not necessary to differentiate between inactive or active coins. It also creates a problem because an rogue agents can buy coins and destroyed them, lowering the inflation rate and making the crypto that is designed for inflation, actually deflationary. Thus, destroying the whole purpose of your inflationary coin. I do not want to judge between active and inactive coins. It is a benefit of the protocol that the inflationary rate should be based on all coins mined rather than coins in circulation, active or inactive. |
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I don't think that it's possible without serious protocol modifications. Just because available coins volume is unknown, we are able to see only sum of available and destroyed coins. The actual inflation rate should depend on active coins volume.
My proposal is not possible why? I'm not concerned with active or inactive coins, only how many coins have been generated. If you base the inflation rate on active coins it creates all sorts of problems. |
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-nSubsidy >>= (nHeight / 210000);
+nSubsidy <<= (nHeight / 210000); My work is done here.  Can you create the fork with the specifications i listed? |
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Yes, i don't find the protocol particularly attractive. In any case, while there's a maximum block size, bitcoin can survive on fees. It is unclear if it could survive only on fees without a block limit. But many core devs think so and I find their arguments convincing enough. But since you're concerned with this, Freicoin will have perpetual reward and is certain that you will not have to worry about this problem you discuss in the other thread. I have a problem with Freicoin in that 1) Since it is not compounding the 5% surcharge will always have the same mining profit unless the price of the coins increases. An inflationary crypto, mining profit increases if price remains static. 2) the 5% surcharge makes it easier for a miner to accumulate a share of all coins proportional to his share of mining hash in a period of ~30 years. |
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Yes, i don't find the protocol particularly attractive. It is possible that Freicoin runs into the same problem as bitcoin because the mining reward is not compounding. |
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