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1581  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: November 04, 2011, 02:02:37 AM
Sounds good. Please let me know when it launches so I can get in early and pump and dump. Thank you !

My point : how will you prevent pump and dump and early adopters getting loaded ?

By not subscribing to the bitcoin formula of coin distribution.


Thanks to SgtSpike of www.bitcoinforums.net, there is now an EnCoin Wiki here: http://encoin.bitcoinforums.net/doku.php?id=start
Hopefully this will make the proposal easier to digest. Please let me know where improvements can be made or if there are any broken links.
1582  Bitcoin / Bitcoin Discussion / Re: Doublespend Protection Insurance on: November 03, 2011, 09:06:15 PM
Maybe that's because they are _much_ harder to pull off?

Besides, if any such "agency" would really want to bring down Bitcoin, they could do so much more easily by influencing legislation, attacking the exchanges, spreading more FUD,...

I find it funny to assume that anyone with the power to quickly build a 30.000 GPU cluster just for the purpose of messing with Bitcoin, doesn't have any better, cheaper and slightly more subtle means of severely harming Bitcoin.

They aren't _much_ harder to pull off with pools being the way they are. Double spends aren't exactly easy as cake to pull off, and they will generally only affect a small number of people. Making an insurance company to reduce the threat is laughable. Merchants could merely add a small fee to their products to cover any potential loss.

Legislation is very expensive, probably more expensive than designing a big computer to compute SHA2 hashes. Not to mention there is no one-world government yet. Attacking the exchanges doesn't stop the network, especially if it's ubiquitous.
1583  Bitcoin / Bitcoin Discussion / Re: Doublespend Protection Insurance on: November 03, 2011, 08:15:00 PM
Worrying about double spending is such a waste of time. Ooh someone might be able to pull it off once every 10 minutes assuming they're lucky enough to get a block. The odds of this realistically being attempted go down as the network hash power goes up. So if bitcoin is popular, it isn't much of an issue. But if bitcoin is popular, it might garner the interest of malicious agencies who can:

* Prevent some or all transactions from gaining any confirmations
* Prevent some or all other miners from mining any valid blocks

No one is going to double spend on a coffee or to buy a coke from a vending machine. Even if they do, it isn't as if it is a constant threat. Any larger purchases can always wait until 6 confirmations or whatever seems prudent. The much bigger issue is being able to mess with EVERYBODY as in the above two scenarios which are often not brought up in discussion around here.
1584  Bitcoin / Bitcoin Discussion / Re: A Professional Video about Fiat Money on: November 03, 2011, 08:02:17 PM
From the YouTube description:

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Despite every effort by governments, the gap between rich and poor continues to grow. It is now the biggest it has even been in history. All sorts of reasons for this have been proffered, but few, however, seem to realise that is a simple, inevitable consequence of our system of money and credit. This video, a shorter version of which appears in the film The Four Horsemen, explains ...

http://www.youtube.com/watch?v=hx16a72j__8

Watching it reminded me of the 'What is Bitcoin?' video. I would like to see more videos like these made about Bitcoin and the Bitcoin economic experiment.

speculative bubbles, pyramids, people profiting for doing nothing...
1585  Other / Beginners & Help / Re: All these new BitCoin clones? Your opinions? on: November 01, 2011, 03:40:12 PM
Hmm... I can´t see the problem because there are 13.5mio. bitcoins are for mining.

Yes, 13.5m bitcoins that are currently 2,000x harder to produce, and are likely only to be harder to get as the award drops and if bitcoin increases in popularity.

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And yes the market iss too small for speculation and manipulation but I can´t see a advantage in for example EnCoin because the result would be similar because the Encoin will started as a unknown new currency and the first buyers would buy a lot of Encoins to profit in later time when a lot of buyers come into the market and want new Encoins.

Encoin wouldn't distribute currency like bitcoin. It is inflation that is controlled by market forces (not enough coins, prices rise, make more coins based on their cost to produce).

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To resolve this problem you must regulate the Encoin market and the Encoin becomes more and more to fiat money.

Big difference is the people control the supply, not a government mandate.

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The character of unregulated free currency would be destroyed and I don´t believe that such bitcoin-clone will be successful with this tactic.

Unfixed supply of money does not equal regulated.

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I mean that the speculation is good for the bitcoin because the bitcoin would be discussed very often on web and other media and it seduced a lot of new speculatores and investors to buy bitcoins for profit.
We must see that the application and acceptance of bitcoin will increase when the value of bitcoin will increase.

Yes this is fantastic for early(-ier) adopters, but it does nothing for a currency. A currency should strive to have a stable purchasing power, not strive to be an increasingly valued commodity.

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Look for gold or silver today it will accepted much more than 10 years ago because the value of the metals are increased. And the speculations in gold or silver make it to a important theme in the media like TV ;-)

The value of the metals are not increased, the demand for the metals is increased. Using these metals to back currency was a large contributing factor to a little-known thing called the Great Depression.

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So I don´t see a problem in the early adopters of bitcoin because they can sell bitcoins and make a lot of profit only one time and more and more new bitcoins will decrease their influence ;-)

This is not true. As the value of BTC gets higher and higher, only a small number of coins need to be sold to make a very large profit. This "trickle in" philosophy allows the early adopters to support generation after generation of descendants while doing zilch for the economy.

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And look to mtGox on a good day the volume is higher than 100.000 BTC ;-)

And this is a relatively meaningless statistic. Most of the volume is speculation, ergo most of the volume is trading back and forth. This isn't economic activity (drugs) which caused the price to rise to USD 30.
1586  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: November 01, 2011, 03:19:00 PM
To join the tradenet and partake in securing the network, 30 reputation points are required.
This initial 30 points can be gained in two ways: making at least 2 mint blocks per day in a supplynet group to gain 0.25 permanent points (120 days assuming each node is powerful enough to meet the minimum requirement), or having an account balance of 1,000 ENC to get 30 current points. The balance can't go below 1,000 ENC until you get 30 permanent points or the current points will be removed. So the money can't just be transferred around.

Once 30 points are reached, the only way to gain more permanent points is by receiving transactions and making a transaction block (being randomly selected out of 8,730 possibilities per day) that is later confirmed by the rest of the network reputation. 30 points is the starting reputation required for confirming transactions, so the signature weight that it has is worth 0. Since the transaction selection is random and there will be some checks for honest behavior (e.g. not getting transactions only after producing a transaction block), if all of those nodes had 1,000 enc, they would all have to be receiving transactions and associated fees as well before they would start gaining real reputation.

So, say there are 100k merchants and 100k botnets join. First they need 100 million ENC or they need to spend 15 hours or so a day working on mint blocks for 120 days, or roughly $21.6 million in electricity ($0.12/kwh assumed).

Say the average reputation of the existing 100k merchants is 60. To gain reputation between 30-60, a minimum of 5 ENC is required in tx fees to gain 0.25 reputation per day, and it is only gained if they produce a valid transaction block. Since 25% will be refunded of that 5 ENC, it costs 3.75 ENC per node per day for a possible 2,182.5 reputation per day, but they are only getting half of that because the 100k honest nodes are getting the other half of transaction blocks. So 3.75x100k = 375,000 ENC to gain 1,091.25 reputation per day. Since 100k x 30 (60-30 for the signature weight) = 3 million, 3 million / 1,091.25 = 2,749 days to equal the amount of reputation currently in the network, assuming it never increases among honest nodes. So a cost of 1.031 billion (375kx2749) ENC to equal the reputation and be able to fork the network.

And all they can do is fork. They can't reverse transactions because the honest nodes will not approve it and the cloudnet peers will only transfer honest data. They could take over the cloudnet as well, but there is no 50% in the cloudnet, if there are honest nodes honest data will eventually get around. If they do fork the network, the client will see that only around half of the total reputation signed the last consensus block so they are easily aware that something has gone awry. They can't change any of the underlying network structure (such as awards or whatever) because the clients know that this data is invalid. They could change account balances, but when the client sees that a fork has happened via reputation, they can ask for the transaction log and see that one side of the fork doesn't add up.

The only thing that can really be accomplished is the delaying of transactions. There will be backups to backups to backups of who is supposed to create a transaction block so that too much time doesn't pass.

Anyone who doesn't make a valid transaction block will lose a lot of reputation, or if they make an invalid block they will go very negative and their account balance will be either inaccessible or simply destroyed/redistributed.

TD-3, TD-5, TD-6, ATK-2, and ATK-3 covers these details in the proposal.

In essence, unless you work on creating a large chunk of the coins in existence, you won't be able to subvert the reputation.
1587  Other / Beginners & Help / Re: All these new BitCoin clones? Your opinions? on: November 01, 2011, 01:22:59 AM
Not true. Those with a lot of money did a pump and dump (not sure if it was intentional) and it attracted those that want to get rich quick.
This can only be countered in a free market by more savy Bitcoin investors that don't fall for it. Those that dump a lot of dough will be the ones that loose down the road.

I really hate discussing this issue on this board. It is impossible for me to know if you are just ignorant, or just pretending to be ignorant for the sake of bitcoin. And I'm not saying ignorant as a disparaging word, just by its dictionary definition.

It is highly unlikely that anyone "pump and dumped" bitcoin. If you care to look at the block explorer, the first 32,000 blocks (1.6 million coins) were mined at a difficulty of 1 (it is 1.5millionish today). One. This is somewhere in the range of 4-10 CPUs depending on who you ask. No matter what, the cost to produce these coins was far less than even a tenth of a cent. And those are currently over 20% of the total coins ever produced. It was closer to 30% at the price height.

IF those coins had been reasonably distributed (as in, sold) during bitcoin's popularity upswing, the price would have never gotten anywhere near 30 USD. But it did. So the reality is there was a hoard and dump. And the reality is the market is so small that it took somewhere around 100-200k coins to bring the price from $30 to $3. $150 million didn't just disappear, after all, it never existed in market depth.

So if you follow reality, a great majority of these coins are still being hoarded. There is little actual commerce being done with bitcoin, and a whole hell of a lot of market manipulation as evidenced by threads on the speculation board.

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Through influence and education. Most do not have the patience for that, but the only alternatives are tyranny and force.

I suggest you educate yourself before attempting to educate others. Bitcoin is a zero sum game where the small number of early adopters win massive amounts, and the massive amounts of losers lose small amounts.
1588  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: November 01, 2011, 01:06:06 AM
Risk is relative to investment.  If you don't think the risk of failure in a new crypto-currency isn't high then you are just delusional.  It doesn't matter if someone invests $10K in hardware or $100 in hardware the risk on that capital is similar and the reward should be relative to the risk.  If not then why not just wait.  Just wait for someone else to take the risk and when the economy magically springs up you can make just as much as the early adopter with substantially less risk...... except the economy will never spring up.

Merged mining does cover most of the risk. This is a few posts up. And the risk is a few dollars of electricity from an average computer. Just like the initial bitcoin adopters. You just won't see 3 million % ROIs. 300%? Well within reason. And that is on top of being awarded bitcoins as well. The one who takes the real risk is the one who designs the software and potentially wastes hundreds of hours of coding time. Let's not blow a few dollars of electricity out of proportion.
1589  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: November 01, 2011, 12:50:43 AM
How do you know who is the most efficient miner, what their efficiency is, and what their electrical costs are?

Why would an early adopter take the massive risk of ending up with worthless alt-coin for no reward?  Or no reward that provides appropriate compensation for the risk taken?  Had Satoshi done that likely we wouldn't even have Bitcoin (as flawed as it may be) right now.  At some point a project need to get to the point where rubber meets the road and risk needs to be compensated.

Give me a chance to respond, bro. See the other post, obviously, but to touch on bitcoin, yes bitcoin probably wouldn't be as popular without the built-in pyramid. However, the advantages of a cryptocurrency exist regardless of that pyramid, and I believe with time, people will see that these advantages are very real. And encoin will attract a different group, one that really wants separation from government-controlled fiat to a monetary system that is controlled by the people. Encoin does not need to grow to maintain value. It can grow as slowly or as quickly as necessary.

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I was mildly interested in the idea but the more I learn the more it seems to be some socialist fantasy land where people take risk for no reward and nobody is able to undercut competitors or profit too much. 

Sorry but this is the bitcoin mentality. There will be a profit for those who want to mint coins, but it's not going to be huge. It's not going to be in the thousands of percent returns. This is highly unrealistic for turning on a computer and making it do stuff. And it will have a huge advantage over fiat by being immune to government inflation. And it will have a huge advantage over bitcoin by having a stable value. If you don't want or don't like a stable value and would rather play a speculative game with an imaginary commodity, by all means continue with bitcoin. If you want a currency based on a stable medium that is backed by a relatively constant cost to produce, then perhaps you would be interested in encoin. There will still be ways to make a profit on the currency itself, it just won't be like it is with bitcoin, it will be like a more traditional currency. Except that you earn interest on transaction fees in the network, and you earn interest by being immune to fiat inflation.

So it is nothing different than Bitcoin.   If efficiency is based on the network average than those who can undercut the network can reap massive rewards.  For example even at $3  Bitcoin is massively profitable (compared to conventional businesses) if you can find a location that has say $0.04 per kWh or less.  

"Massive rewards" being the tune of a couple dollars per month. I can't control the price of electricity. But hashing power still costs a very significant amount of money. If you want to build that server farm, you have to plunk down the cash for those GPUs or whatever hardware you use. It will take months or years to begin to see returns. That's why I want the everyday GPU to set the bar. Something that is already a sunk cost in a computer. When people buy or upgrade their computers, they are generally not doing it so that they can mint coins faster. They are using it for its intended purpose of having a better computer. Someone who builds a rig or operation intending to profit on the coins must first pay off the costs associated with that operation. This could take many, many years, and in the mean time those upgrading their computers for fun will set the bar higher, lowering the profit margin of existing operations.
1590  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: November 01, 2011, 12:33:04 AM
Wait

1) Not rewarding early adopters is the stupidest thing I ever heard.  Think Intel would have took the massive risk in making first personal computer microprocessor had it not been for at least the potential to be rewarded for the massive risk they were taking.

Actually, early adopters will be rewarded. How, exactly, is up for debate, but I do have a discussion point on it.

DP-4) Encouraging Early Adopting
With ENC being difficult to create from the start (compared to Bitcoin), several options exist to encourage people to join the Network:

•   Low Initial Difficulty: By setting the initial difficulty on the low side, users who join within the first 10 CCPs will be rewarded with more coins while the difficulty catches up with standard hardware. The effect of these early coins will be continually reduced as more people join the Network.
•   Donations: Because of the low initial difficulty, it is hoped that users will choose to donate to services such as a “faucet” similar to Bitcoin, as well as for bounties to encourage people to develop products necessary for the advanced functioning of the Network. All donations will be voluntary.
•   Beta Testing Payment: As the Network is quite complex, many areas will have to be beta tested prior to official release. Since there is no block chain to build from, initial accounts can be given a strict, set amount as payment for beta testing the software.
•   Merged Mining with Bitcoin: Assuming the SHA2(SHA2()) hash function is used for creating coins, users of the Network could be paid in both ENC and BTC for the same work. If the Network begins this way, it will be intended from the start to eventually break away from merged mining to let the Network stand on its own. But in the beginning, this could absolve almost all risk in switching to ENC.


Merged mining is certainly the biggest boon. And low initial difficulty is not like the low initial difficulty of bitcoin, it will be nowhere near the same order of magnitude. It will be a starting point where the network will work to get to a stable cost to produce. I can't predict what type of hardware or how efficient that hardware will be from the start anyway.

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2) How exactly are you going to know electrical cost and efficiency of every miner?  

I don't need to know it. The market will figure it out. The network will do its best based on a lot of rules to encourage honest competition, and from there supply/demand/etc. takes over.

This was covered in one of the other threads, but if the entire coin-producing part of the network decided to collude to lower their output in an attempt to keep difficulty down, all it takes is one person to click over to the calculator section of the software to determine that they can mint coins at a huge profit based on their average GPU. You can't hide the efficiency of the network. It doesn't matter what an individual miner can or can't do, it matters what the network as a whole does.

This was difficult for me to understand because you mixed intrinsic inflation (variances from Koomey's law) from extrinsic inflation (variances in demand).

Can you explain the basics?

Actually, I was referring to koomey's and moore's laws. Most of the "kilowatt" coins only cover moore's law.

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You care more about leveling the playing field than I do. Perhaps you should explain why you do. And how you compensate against efficiency.

Because some of the rules governing difficulty and awards are based on the assumption that an average peer is one person with an average computer. I don't want botnets or supercomputers to be able to monopolize the supply or increase the difficulty for everybody else. In fact, I want to make it unprofitable for them to do so. I can't guarantee that, but I can make it a lot more difficult with design decisions. I believe it is better for the adoption of the currency if anyone can "get into the game" and make a few coins if they want to. It shouldn't be a constant competition of who can spend more money to make a faster rig to take coins away from you like it is with bitcoin. I don't want there to be a $1000 start up cost just to be competitive. That is my opinion, and it is reflected in those design decisions.
1591  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: November 01, 2011, 12:04:11 AM
Or large enterprise setting up massive farm in an ultra low energy cost country?
What about the effects of falling energy prices?  
Say a breakthrough in solar power bringing cost below current grid parity?

Remember that peers are randomly assigned to SNGs:

TD-9) Mint Block Awards
A Mint Block is awarded to a SNG when a peer finds a hash value that beats a target hash value for a given problem. Peers are then paid out based on how close they were to the winning value.

To encourage SupplyNet peers to use “honest” hardware (everyday GPUs), there are five restrictions to a Mint Block Award:

1.   To be paid in a MB, a peer must have found a minimum target value (TBD – probably 1/3rd or 1/4th of the target value). This prevents very efficient, low-output machines such as FPGAs or ASICs from making it in to most blocks.
2.   A minimum of 20 peers must be paid out. A supercomputer/botnet/4x GPU system will have to wait for other peers before submitting a block. It will also be subsidizing those other peers as the payout structure is fixed.
3.   The payout structure is one where 65% is awarded to the top 50%, 35% is awarded to the bottom 50%. Individual payout structures within those halves is TBD, but 1st place will receive a bonus to incentivize competition.
4.   A minimum amount of time must pass before a SNG may submit a winning MB (likely 1/3rd of the average time to create a block based on the last 10 CCPs – see TD-1). This prevents a supercomputer from being able to adjust the difficulty too much (see ATK-1). It also allows more peers time to find a minimum target value.
5.   If a maximum amount of time (in coin-hours, likely 3 times the average) has passed before submitting a block, the coin award will be reduced.


Farms will have a massive set-up cost that will take many, many years to break even. Maintenance, etc. means it may never be insanely profitable. Regular GPUs will keep upping the difficulty over time, so this server farm will have to keep upgrading to keep up. SupplyNet members need to take part in the network as well, so if a server farm is split among 100 SNGs, it must send/receive 100x the data. Perhaps this will never be a big concern, but it might be.

When the award is dropped as I described in TD-2 on the last page, more efficient miners can realize a greater profit by increasing their output. They can "game" the system by not raising their output, but then they are reducing their potential profit. And everyone has to agree to game the system this way, or the difficulty will still rise.

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With electrical costs varying from free/stolen/unmetered to as low as $0.01 per kWh up to $0.48 per kWh any price point selected results in massive profit for some and non-viability for others.

At least existing systems allow alternatives to compete.  For example Venezuala has ultra low energy costs (subsidized) but highly developed countries like Finland have high standards of living meaning that FPGA are more viable alternative. 

*shrug* This is really no different from bitcoin. If demand is too high for cheap electric economies to keep up with, then the opportunity opens for those who pay more for electricity. It really is not intended to be a profiting venture, it is meant to pay minters for their services and allow those who want to store wealth without worrying about the machinations of fiat the ability to do so. As well as being a nifty way to send money wherever you want.
1592  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: October 31, 2011, 11:48:45 PM
but from what little I read, you seem to think production cost has anything to do with price? BTC price doesnt adjust to mining cost, its the opposite.

Are you referring to my post just above? because this "The more people that want bitcoins, the more they cost to create." was like the 4th sentence.

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Whatever scheme you come up with that regulates the production cost will have no effect on the value,

This is based on a bitcoin-centric view. When demand increases, prices will rise, this is obvious and I think we can agree here. However, with encoin, more people will mint coins to meet that demand so that the price will level back off to being near its cost to produce plus a return on investment in the computer-hours it takes to produce coins.

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the only thing that will remain stable is hash power for a given electricity cost.

Hash power per cost in electricity is most definitely not stable, and that's why there are two different ways encoin will compensate for it.

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That makes no sense at all, if there is one thing you dont need or even want to be stable its hashing power. You want it to grow with the value of the block chain.

Hashing does not secure the block chain. There is no block chain. Security is achieved through consensus based on reputation.

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And if you regulate neither supply nor demand in, there is nothing to prevent the exact same excessive speculation that is causing btc volatility.

A regulated and difficult cost to produce makes supply inherently difficult. No one will be able to monopolize supply without putting in a lot of real-world value. And even then, the monopoly is highly temporary as the price will rise and encourage more people to make coins. Any speculation would be in the form of currency arbitration which is a common practice among real-world currencies, and in fact helps currencies stay stable relative to each other.

What about those that have free electricity or steal coins or steal electricity ( broken power meter BS ) etc. How will EnCoin sort that aspect out ?

Free electricity is never free. Someone is always paying for it and that is all that really matters. Effort was made to produce the coins. And encoin discourages high-end rigs by using a payout structure. No matter how awesome your 8x gpu rig is, you still have a maximum award per block and a few other rules that basically means you want to be only as efficient as necessary. Being too far above everyone else just means you're wasting electricity. You could divide up your rig into multiple peers on the network, but you still have to account for the high initial costs of these rigs when the profit per month will be quite low. You are no longer competing for a fixed amount of money, a thousand other people could join the supplynet when the price is high and take all of your hopeful profit right out from under you.
1593  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: October 31, 2011, 11:10:13 PM
No it isnt. Its quite clear, accurate and a key point. Short term fluctuations are irrelevant and averaged out. If your point is that difficulty adjustments are too slow, I might even agree, but that issue is more easily addressed by.. you know, a minor tweak in the algorithm. But there are also arguments to be made for a slow difficulty adjustment, as it allows miner to plan at least a little bit ahead. Fact is on average, 1BTC will cost around 1BTC to produce. That for a week or so it might be more or less expensive is a non issue.

I'm sorry, but you are wrong. It has nothing to do with short term fluctuations, it has to do with long-term growth. There is a very limited supply of money, and a large percentage of it has already been produced for less than what later coins will be produced for. The more people that want bitcoins, the more they cost to create. This does not mean 1 BTC costs 1 BTC to produce on average. If 7.5 million BTC cost $2 to produce on average and bitcoin doubled in popularity and the award halved, and a BTC now costs $8 to produce on average between 7.5 and 15 million, that means the average cost to produce was $4 but currently costs $8 to produce. That value goes to those who mined or bought coins when they were $2 to produce. This can be brought out to extreme examples. It is meant to be deflationary, it is meant that later coins will cost more to produce assuming a growing economy. It definitely does not mean that 1 BTC will cost, on average, around 1 BTC.

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What are you blabbering? Instability of what? This has nothing to do with BTC valuation, it only affects the hash rate which, for short periods of time, might be comparatively high or low compared to the exchange value of the block chain. So what?

Instability in the value of BTC. The halving of the hash rate because of the price halving does not suddenly refund those who didn't sell their BTC when the hash rate and value was double. I want a system where people can actually confidently store their wealth rather than having it be an investment vehicle that is, as far as anyone can tell, just as likely to go up or down. And it is much more likely that early adopters are the market force rather than any combined thinking of the people. This is power removed from the people in a manner very similar to government-backed currency. I do not believe that bitcoin is an improvement at all in this respect.

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I havent fully read your proposal, as Im still waiting for an executive summary outlining the basic underlying principles, rather than just the goals and long pages descibing what certainly appears like an overly complicated scheme. It should not be hard to describe the main principles in a few paragraphs. Price is the meeting of supply and demand. Am I correct guessing you intend to vary money supply to match demand, using aggregate hash power (a proxy for electricity cost) as a measure of demand?

Rather than pooling resources together in large groups like bitcoin, small groups of peers are randomly assigned together to create coins (supplynet groups). There is no limit on the amount of groups there can be. Each group only competes within itself to grab a share of the mint block award which is proposed as either 4.5 or 6 coins. Based on the mint block rules described in TD-9, it is very un-advantageous to use a botnet or a super computer or even a 4x GPU rig to try to mint coins. It encourages everyday GPUs which means less overhead in creating coins; just electricity, not a huge investment in hardware.

Based on how quickly coins have recently been created, difficulty increases in a manner similar to bitcoin, except the difficulty is on a per-coin basis. However, after a certain time period has passed, the award will drop to 4.5 coins. This means more efficient machines can run at full power and still be profitable while less efficient machines will now make less money. This again increases the difficulty to account for improvements in electrical efficiency. When the award is raised again to 6, the difficulty will multiply back up now taking in to account this efficiency increase.

So it is not just based on hashing power = coins, it takes into account the improvements in hashing power over time plus the improvements in hashing power based on a restricted supply.

The example from TD-2 (assumes no improvement in hashing power based on hardware upgrades):

EXAMPLE:
1.   The current difficulty for creating coins is a value of 100 which causes the average coin to be produced in 50 coin-hours.
2.   The Network originally had 100% of computers producing coins using 150W of electricity to produce a coin in 50 coin-hours, 50 * 150W or 7.5kWh per coin.
3.   50% of the computers producing coins now use 125W of electricity while 50% continue to use 150W, while both produce coins at the same rate.
4.   The cost to produce a coin in 50 coin-hours is now 50 * 137.5W or 6.875kWh.
5.   When the Mint Block award drops to 4.5 coins, the difficulty drops to 75 as well and the client scales back computer output to 75% so that 125W computers are using 95W and 150W are using 115W.
6.   By using the client calculator, those using 95W can easily see that they will make more coins at a profit by increasing their output to 115W (17%). Those using 150W computers cannot profitably increase their output because they are only getting 4.5 coins where they were once getting 6. The client can even be used to automatically increase this power output based on the market price supplied by the user (or by having the client contact a site in lieu of this).
7.   Now the original 125W computers are producing coins at a 17% faster rate than their 150W competitors. This will cause the difficulty to increase by 8.5%.
8.   When the block award returns to 6 coins, the difficulty will be 108.5, or 54.25 coin-hours to make the same coin as before. 54.25 * 137.5W ~ 7.5kWh.

kWh is only used as an example, but the cost per kWh is important as well, and this still works. Even if fusion comes around, it still works. People can pour more electricity in in times of short supply to make money. It's all market-based. The coin won't have a set kWh value, it will have a market value and it is up to the minter if they can profitably make coins.

The variable money supply allows the supply to grow as the economy grows, something bitcoin is designed not to do because "printing money is bad." Well this money is actually backed by its difficulty to produce; *always*. Not easy to produce from the start and progressively more difficult to produce, in more ways than one, as it gets more popular and time passes. And the difficulty to produce will remain relatively constant over time.

This is possible because hashing power is not required to secure the network, but describing that is the bulk of the proposal. In a few, quick points:

* Every transaction has a mandatory fee of 0.25% (min 0.05 max 10).
* Merchants are encouraged to secure the network by joining the tradenet, in which transaction fees will be refunded beginning at 25% on a tiered scale based on their reputation.
* Reputation is gained by receiving transactions and producing a confirmed transaction block containing transactions in a 10 second window. It is harder to gain reputation (more tx fees and txs are required) as your reputation increases.
* Reputation is awarded only once a day, so all merchants compete for these transaction blocks (that are randomly assigned based on previously confirmed transaction blocks). As more merchants compete, it will be tougher and tougher and cost more and more (in tx fees) for an agency to subvert this reputation.
* Merchants are required to hold a certain amount of ENC to reach the higher fee refund tiers (and reputation), which both creates demand for the currency and a real cost for anyone trying to subvert the reputation. When a node subverts the reputation intentionally by confirming a bad transaction, they will lose the money in the account (somewhat up for debate, but if it is a hacked account they are going to lose the money anyway).
* If they subvert reputation by splitting the network, all they can accomplish is delay transactions until reputation reaches a minimum of 50% of the total reputation ever seen in a day (see ATK-3 for more info). Assuming they are trying to make their own network, the "cloudnet" will be able to send transactions between both networks, and both networks will kill the others' reputation. Average users will be able to see which network has your Amazons and Neweggs and such while the other has a bunch of unknown and shady "merchants." They can't change even basic network operations because even end-users won't use the network then because the consensus block will not be valid in the client. This, I believe, is a better option than having developers intervene and having to release a new client in the case of a >50% hash power take over. Even then, someone with >50% of the hash will always be able to reverse transactions to some degree in bitcoin. Once a transaction is level 2 confirmed in Encoin, it is not reversible. This could take as little as 20 seconds. And no hashing power is necessary.
1594  Economy / Speculation / Re: Denial on: October 31, 2011, 09:10:19 PM
Words are cheap. Where can I download Encoin?

Rome wasn't built in a day. Tongue I am not confident in my abilities as a programmer to write everything I would need. So I'm looking for help. Unless I try to raise interest, help isn't going to come. But at least I have started the process of putting my money where my mouth is.
1595  Alternate cryptocurrencies / Altcoin Discussion / Re: EnCoin Proposal v4.0 - scads of technical details - interest payments - more on: October 31, 2011, 09:04:22 PM
BTW, your proposal is illegible to me. If you can make an executive summary I might (likely waste) some time reading it, but Im not going to wade through the entire document when it appears you arent grasping the basics of even bitcoin. News flash, 1BTC will cost on average 1BTC to produce. Is that the big flaw you guys are addressing?

That "on average" is quite misleading. When the price of BTC was $30 USD, the average cost to produce was around a dollar or so. And it doesn't change the fact that millions of coins will have always been produced for pennies. Yes, the effect of this will be lessened over time assuming those coins make it in to circulation, but it happens in the manner of transferring wealth. Whether or not they deserved it or whatever, I don't really care, because no matter what it leads to instability. This is bad for the future prospect of bitcoin.

If the price of ENC rises vs. fiat because of hoarding, either the hoarders need to sell to get coins in circulation or more people are going to take up minting coins. Hoarders can win by selling, or they can lose by waiting. In bitcoin, hoarders win by selling and win by waiting. In winning by waiting, other people are forced to pay more than what the coins really should be worth, and eventually the price will correct itself when a hoarder decides that the fiat value is too great to keep hoarding. Then with the potential rush of selling because the impending doom cries, these same people can buy their coins back for half or less of what they sold them for and retain their power. This is not the basis of a healthy currency.

ENC still allows for a profit margin based on what people are willing to pay for the convenience to have someone else spend 50 computer-hours or whatever it takes to create each coin. There may well be a 100% margin, who knows. But it will be determined by the market and the market alone, not someone(s) who hoards the lion's share of the currency. Isn't putting the power back in the hands of the people supposed to be what bitcoin is all about?

Beyond this, there are many other flaws addressed, such as no need for hashing to secure the network at all. I'm sure coming from a background in bitcoin this concept may be hard to grasp, but I do believe it is possible and I believe it will be better for the future of the network. I do need to make the proposal into a wiki though so that it's easier to follow. I'm trying to explain a lot of concepts that work very differently from bitcoin, and doing it in a 20+ page paper is not the easiest thing to digest. I'm gonna start working on that.

By the way, if you have something specific that you don't think will work, please point it out. Generalizations and ad hominems do not legitimately help. I do want discussion after all, and the previous threads have helped me come to this proposal which I think is very close to being the stable medium of exchange that a lot of people do want.
1596  Bitcoin / Bitcoin Discussion / Re: Why are so many people Anti-Bitcoin? on: October 31, 2011, 08:24:29 PM
I think even some of the haters believe but just try to drive down the price while they secretly invest.

For the other haters, they are just ignorant/sociopathic trolls disrupting innovation.

And then there the anti-shills/false flag types sent here to disrupt the evolution and propagation of the Bitcoin movement.

LOL so instead of the most obvious reason that people have a problem with other people being suckered into a pyramid scheme, it must be one of these conspiracy-theory options. Screw occam's razor.

And, of course, there is absolutely no chance that the large majority of the people making posts like this have nothing to gain in doing so. It's all so innocent, just buy and tell your friends.
1597  Other / Beginners & Help / Re: All these new BitCoin clones? Your opinions? on: October 31, 2011, 08:05:35 PM
But I don't ever see any of them making such a huge stride in decentralized crypto currency development to steal any of Bitcoin's market share.

Eliminating the need for hashing power to secure the network might be one way.

Quote
Each flavor is spawned from someone's greed, fear, curiosity, pride and list of other emotions.

My idea is spawned from detesting the moral ambiguity of bitcoin. (see sig)

Quote
The majority of the people that invest time and money into someone else's crypto-currency shceme are usually in lottery mode.

That's because each of the "successful" forks are based on the same, pyramid-like system.

Quote
The more people that become a part of this project that realize currency is a tool not a "get rich scheme" the more successful it will be.

The problem is that it was designed this way to attract those who think they will get rich. How are you going to change it?
1598  Economy / Speculation / Re: Denial on: October 31, 2011, 04:37:08 PM
Maybe Satoshi really planned Bitcoin as some sort of pyramid. So what? What matters is what Bitcoin is NOW.

What bitcoin is now is a tiny market that is manipulated by the drop of a hat. And may forever be so easily manipulated. As (if) bitcoin increases in popularity, it will become more and more well-known that a small number of people control a huge portion of the supply. I don't see a good long-term outlook on the health of that kind of economy. For all we know, satoshi or the early group of adopters have been manipulating the price the whole way. Sell and make a big profit, scare others, wait for the price to drop like it has, buy up with only a portion of the money gained from selling, wait for the price to rise again (and wait for the cries of "stability!" and "they probably sold through, it's safe now!") only to start the process all over. We can't know, and they sure as hell aren't saying.

This is a pipe dream as far as I'm concerned. For you and me both. I've heard people talk about alternative block chains since the dawn of the peak. All they do is talk... this and that. Smart people too, but no action. What I would give for a successful alternative block chain that steals money from the pockets of the investors. I would hope they have their own forums as well, which is why I continue to pray.

A day will come when the chain of your dreams is a reality. Everything is possible.

Steal money from the pockets of investors? Like bitcoin? I don't really get what you're saying there. If what you meant was to steal money from the pockets of people trying to manipulate the supply, then my proposal for encoin does address that by allowing the market to mint more coins as they are demanded. Any supply manipulation will be very short-lived, and will, in fact, cost them money. It is based much more around being a currency rather than a speculative or investment vehicle. Regardless of what you may think of me, the proposal could use more discussion and fleshing out, and interest so that I would be confident in moving forward. If everyone is perfectly happy with an easily manipulated coin, why would I waste more time than I already have in an alternative?

The talk needs to be talked before progress can be made. At least progress beyond a one or two line hackjob on the bitcoin source.
1599  Economy / Economics / Re: What would be the most effective way to stabilize BTC price? on: October 31, 2011, 03:22:57 PM
That's why the relaying nodes get a veto: they drop dishonest blocks.  Miners don't want their blocks to be orphaned, so they have incentive to mine blocks that get the best propagation possible.  In fact, getting price quotes from several sources and averaging them will lower their orphaned block rate by reducing the chance that a relay node using a different quote source will drop their block.

It's possible the relay network could be subverted by a large number of colluding relay nodes.  Thus there's a second check:  future miners refuse to include dishonest blocks in newly mined blocks.  If you want your generated coins to mature, your blocks have to be legitimate.

To prevent a 51% collusion attack, a third safety is possible: create a "decentral bank".  This would be a second mining system where people perform proofs-of-work solely to manage monetary policy, which means authenticating price quotes and the inflation rate.

The fourth safety is the strongest: anyone can verify that the price quotes in the block chain are correct, and the inflation rate responds very slowly and smoothly.   If it becomes apparent that the system is being gamed, we'll have time to figure out why and how before coins start being generated excessively. We then release a new version that adjusts whatever is necessary to close the loophole.  In the worst case, we revert to 50BTC per block.

While these kinds of ideas are interesting, they are rather forced. The system I proposed for EnCoin encourages the people using the system to do whatever is best for the system. Separate mining from trading so that mining does not secure the network. Use a merchant-based system of reputation that is increased only via economic activity in the form of losing money to a transaction fee that is refunded based on increased levels of reputation. As more and more merchants want their transaction fees refunded, the limited pool of reputation awarded per day becomes more and more difficult to obtain, thus making it harder and harder for a malicious group from gaining >50% of the reputation. This reputation is used to secure transactions and mining blocks rather than hashing power. Even if an agency gains 50% of the reputation, the "cloudnet" or average peer nodes (who, with the reduced bandwidth at high transaction volumes vs bitcoin should be available to anyone with a decent internet connection) will reject any bad transaction blocks or modifications to the network. Even non-cloudnet peers can detect malicious modifications and will not transact on the bad half of a network split (something that is possible because of a tiny consensus block in lieu of a gigantic block chain).

The goal is a stable price based on encouraging mining only when it is profitable since it doesn't secure the network. There is no limit on the amount of coins per hour or day, but the system will keep track of how quickly the coins were produced to increase difficulty, as well as fostering competition among more efficient machines by occasionally lowering the award so that improvements in energy usage (or even reductions in the price of energy) can be accounted for in the difficulty, then the award increases again with a new difficulty.

The money supply can grow as the economy grows. If the economy outgrows the supply, hoarders/savers are encouraged to sell for the immediate profit because otherwise many will take to mining and bring the price back in line with its cost to produce. Any unrefunded transaction fees are spread out to all holders of coins so that in the rare case of an economic contraction, those who saved had earned interest previously and will continue to earn interest off of those new to the system who do not care that the value may not be what it once was and will still transact. On top of this, merchants are required to hold a certain amount of coins to become reputable members of the tradenet, so that creates demand and a high cost for an agency wishing to subvert the reputation.

I think it is a system that merits more discussion, especially if you are looking to fork bitcoin to solve its many issues. A stable price is key to getting merchants on board, and merchants are the key to a successful economy.
1600  Bitcoin / Bitcoin Discussion / Re: The Bitcoin deflation annoyance on: October 27, 2011, 04:51:11 PM
Right, I was just pointing out the first step in the chain.
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