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961  Alternate cryptocurrencies / Altcoin Discussion / Re: Scrypt is dying in preparation for incoming ASICs on: May 23, 2014, 06:12:00 AM
That isn't true.  

There was ixcoin, I consider LTC the first true alternative because of different algo

It wasn't even the first with that.

IXC, IOC, SC, NMC, TBX, GG, and FBX came first.  2011 and I remember at the time thinking man this is stupid so many worthless coins launching all at once.  I mean there were like 9 in a single year.
962  Alternate cryptocurrencies / Altcoin Discussion / Re: Founder of Ripple is announcing he is dumping his XRP. Ripple crashes 35% and st on: May 23, 2014, 06:09:54 AM
I was always wondering how they come up with 400B ripple at eh first place. Still confused.


It is 100B and they just decided that is how many there would be, wrote the code to given them that much, and that is how many there was.   And a couple years later 93%+ of it is held by three guys and a for profit corporation. 
963  Alternate cryptocurrencies / Altcoin Discussion / Re: Scrypt is dying in preparation for incoming ASICs on: May 23, 2014, 05:08:44 AM
LTC had a distinct advamtage; being first.

That isn't true. 
964  Alternate cryptocurrencies / Altcoin Discussion / Re: Scrypt is dying in preparation for incoming ASICs on: May 23, 2014, 05:05:26 AM
Drawing a trend from a bunch of coins valued in the tens (or single) millions is dubious.   I have never been a fan of Litecoin but it does have the distinction of being the only crypto currency other than Bitcoin to have a money supply measured in hundreds of millions of dollars.
965  Bitcoin / Bitcoin Discussion / Re: 1,000,000 bits = 1 bitcoin. Future-proofing Bitcoin for common usage? VOTE on: May 23, 2014, 04:54:13 AM
I have never used "bits" as divisible unit of value. I find the first example the most confusing of those listed: though have heard it in popular culture.

"Shave and a haircut, two bits".  A bit was a unit of currency worth an eighth of a dollar (12.5 cents).
https://en.wikipedia.org/wiki/Bit_(money)
966  Bitcoin / Bitcoin Discussion / Re: 1,000,000 bits = 1 bitcoin. Future-proofing Bitcoin for common usage? VOTE on: May 23, 2014, 04:15:33 AM
I genuinely find it confusing. Bits to me are an indivisible unit of information storage.

A shave and a haircut, two indivisible units of information storage?
I will be there in a indivisible unit of information storage?
That movie was a indivisible unit of information storage boring?
He is infected, he got indivisible unit of information storage by that zombie?
Drilling titanium, pretty sure you will need a diamond carbide tipped indivisible unit of information storage?
967  Economy / Service Discussion / Re: Why is Blockchain.info always down? on: May 23, 2014, 02:16:46 AM
I came across wrong there, should the transaction fees not cover it, surely the network doesn't need donations?!?

blockchain.info has nothing to do with the network or transaction fees.
968  Other / Beginners & Help / Re: Fee on: May 22, 2014, 11:35:05 PM
I was completely unaware of that. Wouldn't it be more efficient to just organize based on fee paid, such that 5 satoshi would be above 1 satoshi, rather than treating them as equals?

It could however then it would almost guarantee that free tx would never be included in blocks.  Instead miners devote a set amount of space to high priority txs (relayable without a fee) and a set amount of space for paying txs and a min fee.   

This might be 50KB, 350KB, and 0.1 mBTC as an example.
So transactions they are ranked by priority (fees if any are ignored) and the top 50KB worth are included in the fee portion of the block.
The transactions are then ranked by fee (per KB) and the top 350KB that are over 0.1 mBTC are included in the block.

You might say "what prevents a miner from just setting the min fee to 1 satoshi per KB?" the answer is nothing however miners rely on other nodes to relay transactions and a low priority tx with a fee below 0.1mBTC (0.01 mBTC for v0.9+) will just be dropped.  The miner will never even learn about it.  Without modification the tx would be dropped by the miners own node as well.   So there is no reason for a miner to set their fee requirement below the min required to relay.



969  Alternate cryptocurrencies / Altcoin Discussion / Re: Founder of Ripple is announcing he is dumping his XRP. Ripple crashes 35% and st on: May 22, 2014, 11:26:25 PM
It's stupid that I am the first to bring that up but here it is.

JED probably cares enough about his own money that he won't exhaust the order-book with his sales but essentially do it automated based on liquidity. Essentially, in his case prolonging the process of cashing out over his whole expected lifetime.

If he cared solely about his own money, the way to make the most would be to not tell people in advance. Smiley

Yes, exactly.  There is more going on here than we are privy to. 

And, no, this isn't FUD to get the price to drop to buy "cheap coins."  Approximately 80% of the coins are owned by Ripple Labs, and another 9% or so by Jed.  The entire premise that XRPs were a store of value was flawed, even if you believe the ripple concept is useful as a global hawala network. 

Of course there are things like this:
https://bitcointalk.org/index.php?topic=174854.msg2352658#msg2352658

Yes the ledger (equivalent of the blockchain) and all transaction history is unknown prior to ledger 32,570.
970  Other / Beginners & Help / Re: Fee on: May 22, 2014, 11:06:43 PM
Does it matter if I define a fee of 0.00005 or 0.00001? Would both transactions be treated as "no fee" transactions? 

The fee (I forgot what the lowest is, but I know it was changed) would be present, so no, it wouldn't be a no-fee one. It would just be less of a fee.

No fee would literally be 0. For example,  you are sending 1 BTC, that's all. Not 1.0000001, but 1.0.

Fees below the min for relaying are treated by default nodes as no different than zero.  For v0.8x that is 0.1 mBTC and for v0.9x that is 0.01 mBTC.  Paying a fee greater than zero but less than the min to relay is pointless.
971  Alternate cryptocurrencies / Altcoin Discussion / Re: Founder of Ripple is announcing he is dumping his XRP. Ripple crashes 35% and st on: May 22, 2014, 10:55:06 PM
It's stupid that I am the first to bring that up but here it is.

JED probably cares enough about his own money that he won't exhaust the order-book with his sales but essentially do it automated based on liquidity. Essentially, in his case prolonging the process of cashing out over his whole expected lifetime.

If he cared solely about his own money, the way to make the most would be to not tell people in advance. Smiley
972  Alternate cryptocurrencies / Altcoin Discussion / Re: Founder of Ripple is announcing he is dumping his XRP. Ripple crashes 35% and st on: May 22, 2014, 10:47:01 PM
If Ripple Labs holds 80% of the XRP off market, are those still valid tokens?  I mean, since Jed could likely single-handedly destroy the entire bid side of the order books, could Ripple Labs pre-emptively start dumping their mega-hoard before it's all over?  

Also, isn't this scenario fairly likely to eventually play out in all pre-mined/insta-mined coins?

They are valid XRPs.  There are ~8B openly traded,  RL has ~72B left, Jed has ~9B (minus unknown amount donated), the other two founders have 11B combined.  They could sell them at any time but don't worry they promise not to and what is better than a decentralized currency based around absolute trust that a for profit entity won't do anything bad.  I don't think RL will sell because they drink their own kool-aid.
973  Alternate cryptocurrencies / Altcoin Discussion / Re: Founder of Ripple is announcing he is dumping his XRP. Ripple crashes 35% and st on: May 22, 2014, 10:10:56 PM
So it certainly looks like it is real.  He announced he would send 1 XRP to a member of the forum and then a tx was made from an address which contains 1.9 billion XRP.   I have nothing at stake so do your own research but certainly seems more plausible.
974  Alternate cryptocurrencies / Altcoin Discussion / Re: Founder of Ripple is announcing he is dumping his XRP. Ripple crashes 35% and st on: May 22, 2014, 10:02:36 PM
If true then that is just insane.  Ripple is so heavily "premined" that the 9B XRP he controls is more than the entire float combined.   It would be like suddenly someone has an extra 13M BTC to sell.
975  Economy / Economics / Re: Why controlling BTC supply is possible on: May 22, 2014, 08:52:34 PM
Quote
If you have a coinbase account and you pay a merchant who has a coinbase account guess what?  The tx is off blockchain.  Now imagine Coinbase and Circle setup a mutual line of credit for 10,000 BTC.  You could pay a Circle merchant from your coinbase account and it still wouldn't be on the blockchain.   Now imagine one of those companies lent out 1 BTC.  Tada that is fractional reserve banking.    

I'm sorry DeathandTaxes, you actually brought up a really good point with coinbase and circle. I'm sure a LOT of people are going to use these services for convenience and the prevalence of fractional reserve banking may actually take a good hold in the bitcoin marketplace too. I was really thinking that most of the advantages of an electronic money would make less people rely on bankers. At least if we hold our own BTC we won't have to worry about these companies imploding, but I suppose the increase in effective money would devalue our actual btc holdings...

Woo hoo we understand each other now.  Well I got to balance the bad with the good.  The good news is that in my opinion any such devaluation should be small (at least compared to fiat currencies).  Here is why

PurchasingPower = 1/ EffectiveMoneySupply
EffectiveMoneySupply = MonetaryBase * MoneyMultiplier
MoneyMultiplier = (%FundsOnDeposit / %ReserveRequirement) + %FundsOffDeposit

So looking first at the monetary base.  With Bitcoin it is growing fast (11% monetary inflation)  but eventually will slow down and it is capped at 21M BTC.  So with 12M BTC outstanding we know that even if you live for a hundred years the monetary base can't even double.   That puts a limit on the upper bound of the effective money supply (much like a gold standard did) and unlike a fiat system where independent of the affiliate banks the central bank can expand the monetary base at will.
Lets compare this to the federal reserve. http://research.stlouisfed.org/fred2/series/BASE/

1985:  $182B
2014:  $3,984B

So growth of the monetary base will be slower and capped that already means even if bitcoin banks were equal to fiat banks the money supply would grow much slower.  The money multiplier is harder to quantity.  A lot will depend on how popular bitcoin "banks" are.  What is the demand for bitcoin debt?  How much of a reserve will these banks hold?  Lets look first at the US fiat system.  The reserve requirement is 10% and the % of funds are on deposit is very high probably more than 90%+ .  Cash not on deposit is a small portion of the overall money supply.  So the max money multiplier is ~10x.  In reality bank tend to be more conservative.  Right now the M2 money multiplier currently is ~3x.  The fed no longer tracks the M3 some estimates put it at 50% higher than the M2 making the money multiplier more like 5x.
http://research.stlouisfed.org/fred2/series/M2

Will Bitcoin banks be able to sustain a money multiplier of 5x, I can't see that being plausible.  How much of a multiplier is possible.  My guess would be <2x and probably something like 1.1x or 1.2x.  The first reason is that unlike the fiat world a larger portion of the money will not be involved in a fractional reserve scheme.  "Real BTC" is much easier to use than cash.  It is easier to prove the reserve level of exchanges (should be 100%) and even banks (will need to be much higher due to the increased risk).  When you add factors like no central bank or FDIC, and possibly not much demand for borrowing BTC I can't see a multiplier of more than 1.2x.  That combined with a fixed based means that monetary expansion will be far more constrained if it does happen (which it may not).








976  Economy / Economics / Re: Why controlling BTC supply is possible on: May 22, 2014, 08:13:49 PM
This is 100% impossible on the blockchain. This is why I'm saying as long as the BTC transfers are on the chain you could never loan more than you have.

If all transactions are done in cash then fiat fractional reserve banking is equally impossible.

Quote
My argument is that you could never loan more coins than you actually have. This has to be in the context of bitcoins and thus of course on the blockchain.

Then likewise banks can never lend out in cash more than they have in deposits.   You are simply using one context for fiat and another for bitcoin where no such distinction exists.

Fiat FRB
If all transactions involve cash = impossible.
If some transactions involve interbank agreements = possible.

Bitcoin FRB
If all transactions involve cash = impossible.
If some transactions involve interbank agreements = possible.

Saying it is impossible if everything is on the blockchain =/= it is impossible.  Today not all transactions ARE on the blockchain.  If you have a coinbase account and you pay a merchant who has a coinbase account guess what?  The tx is off blockchain.  Now imagine Coinbase and Circle setup a mutual line of credit for 10,000 BTC.  You could pay a Circle merchant from your coinbase account and it still wouldn't be on the blockchain.   Now imagine one of those companies lent out 1 BTC.  Tada that is fractional reserve banking.    

There is no requirement that all transactions be on the blockchain.  Likewise if everyone took their funds out of fiat banks and conducted all transactions in cash (the fiat equivalent of on blockchain transactions) then fiat based FRB would also be impossible.
977  Economy / Economics / Re: Why controlling BTC supply is possible on: May 22, 2014, 08:01:05 PM
They wouldn't loan more coins than they actually have or they can't?

No different than a fiat based bank. Fiat based banks don't issue more loans than they have in deposits.  They do have interbank agrements (line of credit) so if you include those then yes they more debt than they have in deposits.

So do you want to include interbank lines of credit?
Yes = then both fiat and bitcoin banks would "lend" more than they have in deposits.
No = then neither fiat or bitcoin based banks "lend" more than they have in deposits.

In either case if depositors attempt to withdraw funds in excess of the reserve then the bank will fail (in the absence of a lender of last resort).

In your example
Quote
Fiat banks DO loan out more money than they have. If they only have 1 depositor, for $10 total lets say. They loan out $9, now they have $1. Your account has $10 in it and you can go spend it. Your bank now owes the other institution $10 of money that it doesn't have (actually the 10-1).

In your example you say "go out and spend it" that is different than withdrawing it.   Withdrawing = cash = blockchain.  If the depositor tries to spend it by withdrawing his $10 in cash to pay a merchant in cash the bank will very much fail.   The illusion on works if the depositor "spends" it by using some non-withdraw mechanism that uses the interbank line of credit.   You can replace $ with BTC and the example still works as long as the depositor spends it via some interbank agreement.


978  Economy / Economics / Re: Why controlling BTC supply is possible on: May 22, 2014, 07:45:34 PM
You usually have good responses and I consider you to be a smart guy. But please read my post again. How could anyone, ever loan more coins out (actual bitcoin transfers in the block chain) than they actually have? Irregardless if they are a fractional reserve or not (which would actually just lower their coin amount by even more and make it even more impossible) Think about that for a few minutes and then respond.

They wouldn't and if there is only one fractional reserve bank then the effective money supply wouldn't expand.  However if there is one there will always be more.  You could say the same thing about fiat banks.  How can a fiat bank lend more cash than it actually has.  The answer is that it doesn't, it never does but it will acts a multiplier on the monetary base.   Fractional reserve banking predate fiat currencies by more than a century.  It was used in gold banks (and still could be today).  

Monetary Base * Money Multiplier = Effective Money Supply.

In a fiat currency the monetary base is created from nothing by the central bank.  The money multiplier is based on the compounding effect of fractional reserves.  In the Bitcoin world the monetary base is fixed (or can only grow based on the minting algorithm).  The effective money supply is then the monetary base times the money multiplier.  That being said I expect fractional reserve banks (lacking FDIC and a lender of last resort) to be both unpopular, prone to failure, and limited by large reserve requirements.  That means the money multiplier will probably be very low but it isn't guaranteed to be 1 as fractional reserve banking is still possible.

Quote
Edit: Fiat banks DO loan out more money than they have. If they only have 1 depositor, for $10 total lets say. They loan out $9, now they have $1. Your account has $10 in it and you can go spend it. Your bank now owes the other institution $10 of money that it doesn't have (actually the 10-1). In America this would be backed by the FDIC as you stated, which also "insures" more money that it holds.

Ok very simple example which is exactly the same as your example.

Two bitcoin banks exist.  Bank A and Bank B.  Bank A & Bank B have a mutual line of credit for 10 BTC.

Bank A has 10 BTC in deposits with 1 depositor.
Bank A lends out 9 BTC.
It has 1 BTC is reserve.

The one depositor spends his 10 BTC with a merchant who uses Bank B as a processor.
Bank A has now 10 BTC (owed to Bank B) in debt with 1 BTC in reserves (and 9 BTC is assets = the loan).

You seem to draw a difference where none exists.  It is the exact same scenario as your fiat bank.   Fractional reserve banking predate fiats currencies.  You can replace your dollar example with Bitcoins or gold or salt and it still applies.

Quote
You know that all money comes out of nowhere from the federal reserve banks right? People are being loaned money that doesn't exist. Thanks to unlimited printing and digital accounts.

That is the monetary base.  The monetary base can't be raised but the effective money supply is the monetary base * the money multiplier.   You can have a money multiplier larger than one even with a fixed monetary base.  The rise of fiat currencies is a relatively new invention and the rise of central banks even newer.  Fractional reserve banking existed long before that. 


NOTE: Before I get a called a fiat promoter or some other nonsense.  I don't think BTC based banks will be either popular or successful.  I do think they will implode just about as often as the wildcat banks did without a central bank acting as a lender of last resort.  These will ensure the money multiplier remains very low (and may at times collapse back to exactly 1).   That doesn't mean fractional reserve banking is impossible.   Impossible means impossible.  It is very possible.  Fractional reserve banking was possible with precious metals as well.
979  Alternate cryptocurrencies / Announcements (Altcoins) / Re: Coin2.0 [C2.0] - The forward thinking POS (FPS GAME DEV. UNDER WAY). on: May 22, 2014, 07:35:21 PM
Don't forget that your coins are stored in the blockchain and not in your wallet. The wallet is only a software allowing users to access or to move their coins.

Not true. The blockchain doesn't store your private keys, your wallet.dat does. You need the privkeys to retrieve funds.
I wrote that coins are stored in the blockchain, not the private key. Smiley

Well there are no coins at all. Smiley  Only unspent outputs of variable size encumbered by a set of conditions specified in a script.  Still your abstraction is closer to reality.
980  Economy / Economics / Re: Why controlling BTC supply is possible on: May 22, 2014, 07:26:56 PM
What I'm saying is that you or a bank can never send me more bitcoins than they actually own. This is completely different than the current debt lending that goes on in banks. Banks take a deposit for 10, they lend out 9 dollars and yet your account still shows $10 of spendable money because that "money" is just written into the computer, it was created from nothing.

A fiat bank can never send you more cash than they have either*.  Your fiat bank example works just fine until everyone tries to withdraw at once and then you have a bank run.  The bank can't pay everyone, other banks aren't going to accept lines of credit from the sick bank and the bank implodes.  This is avoided in modern fiat systems by the combination of FDIC and a central bank (who can print as many quadrillions of dollars necessary to make sure the banks don't fail).  See my post above.   It is very possible to have a bitcoin bank but when it fails it will fail hard with no federal reserve printing the value of the coins into oblivion to prevent that failure.  The risks of using bitcoins banks will be extreme and hopefully that will mean people don't use them but if they do eventually the banks will fail and depositors will be wiped out.


* I used cash because it makes for an easy example, but wires and ach/sepa transfers require the receiving bank to trust the sending bank.  Banks have interbank lines of credit and when a bank gets sick the other banks tend to pull those lines of credit.  They won't credit wires received from the sick bank because they are unsure the sick bank can cover that debt.  This is normally where the central bank and national deposit insurance (i.e. FDIC) step in.  That won't happen in the Bitcoin banking world and when a Bitcoin bank falls on hard times it will fail.
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