and why would they be able to constantly mess with the exchange rate and create panics?

the first rule of bitcoin: do not question the limited supply

https://bitcointalk.org/index.php?topic=11627.0

Why must the code be read to understand the coin distribution system and possibly whatever "proof-of-excellence" is?

There is nothing in the paper nor the wiki detailing these things. At least nowhere near satisfactorily. 16x cuts the reward in half, so does 8x cut it by 25%? Is this increase permanent, even if difficulty lowers? Does the starting difficulty make sense in this scenario?

You talk about "consumed coin age" in the paper, but why is proof-of-stake even necessary with this mechanic? I've talked about it in several other threads, and really all you're accomplishing is giving an incentive for people with wealth to make transactions and consume their coin age to create a proof-of-stake block. But with consumed coin age as you call it, it already does this. What additional protection does the stake really offer? It seems possible that at certain points no one will be able to create proof-of-stake blocks (or choose not to) if no one can consume enough coin age, so proof-of-work will have to take over or everyone will have to wait a potentially long time before a new block. If PoW is your backup anyway, you may as well just stick with consumed coin age and leave it at that.

https://bitcointalk.org/index.php?topic=91157.0

should probably stay away

RIPEMD-160 has little bearing on the security of the network. It doesn't back up SHA-2 in any way. If something went wrong with RIPEMD-160, everyone could instead use the regular public addresses. If something went wrong with SHA-2, I doubt it would even affect the network unless it was something very major. Sure, maybe you can get a collision with a block, but how will you ever get it to have useful data that somehow advantages you and/or DoSes the network? Maybe there is a way, I dunno.

uhh public record?

http://votesmart.org/candidate/key-votes/26344/

Can you elaborate on how the proof of stake will work? And why is a central checkpoint involved if there is proof of stake?

And personally I wouldn't use the same license as bitcoin as it allows closed source developing. Or at least release the daemon under GPL and the client under MIT if necessary.

Unfortunately for you, I did not make an argument against anything in that sentence, so there is no ad hominem fallacy.

You, however, have twice now used a red herring.


mm hmm, carry on.

I didn't realize that you were a nutjob and pontificating on something that had no relation whatsoever to the discussion.


Right because for some reason I was obscure in my meaning of hard currency so you gave me an irrelevant wikipedia link and went off on a tangent rather than respond to what I had said in that paragraph. Not that it was anything that important.


Where again is this perfect world you speak of? We can make lots of things sound nice when it's a perfect world, but it's not reality.


Based on what evidence? That bankers didn't exist during pre-government gold currencies? Maybe in that perfect world that we don't live in.


This is your response? The point is that the value of those peoples' production does not hinge on currency. Value exists regardless of currency. Currency is only a means to trade value easily. All BoomTowners did was mine gold, and it's worth something because it's rare and they got lucky. They didn't do anything productive to get it except mine, which in the grand scheme of things is rather unproductive.


All these new peasants moved in and we just happen to be richer! Free money! Oh wait, existing money is just worth more it's totally different! You may think deflation is a fairer system, but it is still a system that takes advantage of people. These simplistic arguments that fly in the face of the history of gold and what was done with it should not carry much weight with people who have studied that history. It is not the governments that started this wealth siphoning, it was the bankers. With 50% of all the bitcoins in existing to be mined by the end of this year, loans are going to be a big part of the bitcoin economy if it is to go anywhere. Rather than actually fixing the problem of wealth transfer, bitcoiners would just prefer that they be the receivers rather than the existing bourgeoisie. Maybe a larger part of the economy will benefit, but probably not.

lolwut? It's not theoretical, and you were simply stating what could happen if currency were created that way. You call that "designing a theoretical fiat-currency that is debt-based for citizens but not the government"? Awfully lofty.


Uhh, deflect much? And I was referring to the gold standard, so it seems we are in agreement unless you are of the purist non-FRB gold standard as the only hard money.


Sure buddy.


Well anti-inflationists whine that the bankers get the "new" wealth, but somehow this is absolutely not a problem when existing wealth increases in value even though it is the exact same result.


This is because value is added to the system. New producers are in the economy, and that is what presumably would drive the deflation rate. This, however, exists just the same with any currency. If the government awarded all those new people with 500 gold nuggets too, then the price of everything would remain the same and no one would benefit disproportionately (and some of them would buy cars!). But instead, the people who save get to take advantage of those who are new or who don't save, not because of their own production, but only because of the attributes of the currency. While bitcoin isn't government-managed, neither was gold in the gold smith money lending days. People still did many awful things then revolving around the manipulation of money. There is nothing inherent in deflation that is going to make car sales increase over a stable currency or an inflationary one, it only changes who might be purchasing those cars.

Great post, by the way. You have definitely hit the heart of the matter of both traditional government currencies and bitcoin. Bitcoin isn't the final solution because other cryptocurrencies will crop up in droves (or ramp up in popularity) to solve financial crises. To me that means bitcoin is fundamentally flawed, but many seem to disagree.

Any system using hard currency has to be partially debt-based as well. The US has had mostly a debt-based currency through its history, though there were periods without it (scrip, greenbacks). The Federal Reserve was the "solution" to the problems of a fixed supply, it did not introduce the national debt.


But this is the way it works anyway, so the only difference it probably makes is one has bankers at the helm, the other has large corporations.


Because we witnessed the power of deflation with the great depression. Why this little nugget is so easy for deflationistas to forget is beyond me. Inflation saps purchasing power only because there is a preference to who receives new money first. Deflation doesn't have any shame in saying it is those who have money who benefit.


This doesn't address what I said and is just rhetoric.


One way or the other, "more people can buy cars" is a complete falsehood. Salaries reduce or people get fired. Assuming a healthy economy aware of the deflationary aspects, salaries would have to go down over time just like many now receive a typical 3% cost-of-living raise every year.

Using an account ledger with account numbers in lieu of public keys or pubkey hashes, you can get transactions down to around 100 bytes each which is scalable with visa-like transaction volumes on consumer bandwidth. It will also make life much easier if there is a move to post-QC cryptography with huge public keys and signatures. The sigs will still be tough, but at least the pubkeys are taken care of. Ed25519 also works a lot faster than ECDSA in batch verification.

Governments are the ones that voluntarily signed on to debt-based money. Did they really need to? There are historic examples of somewhat successful government debt-free fiat. With debt-free fiat, governments spend money into existence; with debt fiat banks loan it into existence. In the end, there isn't much difference in the money supply. But in debt-free, producers receive the benefit of inflation; in debt-based, it is the banks.

It's a collaboration between the wealthy and government that has been going on for a long time. Inflation is not the root of the problem, it is a side effect.


If bitcoin became seen as a better currency than some of the typical reserve currencies, people may very well accept FRB, perhaps at a discount. It could be very dangerous not to considering the chunks of bitcoins that currently sit around unused.


Your logic here fails the giggle test. Everything goes down, including your salary in a deflationary economy. Sure, maybe the top 50% saves every month and deflation is a bonus, but these are the same people that lend money in an inflationary economy.

Is gold still a currency? lols

Supply doesn't matter, velocity does. It is possible, and hell probably likely, that hyperinflation will happen with some of the world's biggest currencies, but it hasn't happened yet. So far, as far as absolute, economic catastrophes go, the limited supply currency loses. And really, fiat currencies are only so bad today because of central banks and all of the ills that come along with that and debt-based money.


Whoa you mean volatility is lower from when someone pumped $3 million into a ~$50k market?? Bitcoin's "market cap" is still insanely tiny compared to the world economy. It has to go through one of these volatility periods for every market expansion. Every new market will be at the mercy of the previous markets. "Hey switch over to bitcoin, you only have to give up 20-30% of your revenue to us for the first couple years to get in!" Pumps, dumps, manipulations, bankruptcies--it is all quite accessible in this format. "Bit Street" arguably already exists and will only get smarter.

I've seen this argument before, and it is hilariously awful. The indivisibility of a cent has absolutely nothing to do with the problems of deflation. Ok, theoretically in some bizarro world it could have potentially been a problem, but not in any historic era of deflation. Not even close. The problem of bitcoin's coin distribution is "resolved" by having near infinitely divisible coins.

As far as deflation itself being a weakness, I don't think it will cause the end of the currency or anything, but I think it will hinder its widespread adoption. Volatility may be fun to play, but it's not fun to run a business around.

This is all from the cryptography discipline though. If you were a real crypto geek you'd probably be aware of these things at least in passing. There was a thread questioning the thought behind using the double SHA hash, with I think the best guess being "it made it initially slightly harder" but the difficulty would have taken care of that anyway. However, I believe it is Applied Cryptography that mentions the potential length extension attack on SHA2 and it is eliminated by double hashing. Though the attack doesn't apply to bitcoin, it's possible he did it just in case. As far as ECDSA, it has inherently reduced the problems of large RSA keys; nothing in particular that Satoshi did there.


Cryptography's use as a digital fingerprint is something that has been combined with the idea of contracts since the first digital signature algorithm. As far as the economics just working, that absolutely remains to be seen and is not proven by a bunch of vague phrases. Especially given the evident pyramidal nature of coin distribution.

With that all said, I would not be surprised that several people did work closely on the project.




But an individual or group who was a bank that lent lots of money could, at worst, stop loaning money and cause a very sharp increase in price, buy up lots of stuff, and then start the process all over again.

Smart enough to invent a new currency whose production runs out within the creator's lifetime, but too naive to think that they could ever be worth something? Unlikely.

Oh well it's hard to understand what you mean sometimes. You say a lot of things without understanding what you say, so forgive me for being confused.

For example


So you propose that every account with a satoshi in it gets to sign the block chain, right? Do you have any idea how much bandwidth and data that would take? Do you realize miners will just drop these signatures anyway? Perhaps you should sit on the sidelines and let the big boys talk about these kinds of changes. You should stick to quoting the wiki where someone has spent time actually making up a bullshit argument for you.