2nd generation cryptocurrency: Trustcoin

[laurencefass]

Hello I am a C/C++/C#/PHP software engineer. I've been following the evolution of bitcoin since its initial release, and I would like to open a discussion of ethics and propose a possible stepwise evolution in its development.

For the sake of this discussion I am going categorise bitcoin as a first generation cryptocurrency. I realise there are other "bitcoins" cryptocurrencies emerging, all are mined in a similar fashion, and all claim to be better than bitcoin, etc. etc. for some unique property or feature, but they are all essentially created in the same way - in an inhuman environment "mined" by machines solving complex mathematical problems. I think this will alienate a lot of people seeking a more humanistic alternative to our present fiat system who dont necessarily understand just what gives a currency its properties. As far as I understand, Bitcoin's value is based almost entirely on its digital properties, and the ethical arguments of mining and power consumption will continue as long as mining continues.

IMO mining is a bad analogy because it is essentially a destructive process. I would like to make a draft proposal for the second generation cryptocurrencies. This is a proposal not a definition. Here goes...

Rather than mining currency with the present "fastest machine wins" philosophy, and its potential for capital monopolies I propose a cryptocurrency that is farmed by community "currency collectives" where currency is harvested from the activities in networks of mutual currency exchanges. The general idea is to replace GPU/CPU/machine cycles with metrics derived from human collaboration and cooperation recorded through a network of mutual currency systems. In simple terms: the circulation of local currencies becomes the engine for solving hash algorithms, which offer the same anti-inflationary. Would it be possible to plug these nodes in to the existing network so that communities who do not have their own GPU warehouse could participate through community activity. Such an approach could combine all the benefits of mutual currencies and cryptocurrencies and seems (to me) to be the next logical step toward the evolution of a genuine, universal alternative to fiat currency or precious metals as a store of wealth.

I believe this proposition is a more humanistic and inclusive system that would not only promote cryptocurrencies in much wider circles than at present (a lot of people simply don't "get it" based on its properties as a currency), but will also rekindle interest and enthusiam in the vast networks of mutual credit systems that exist today. Communities could start "farming" digital commodities with all of the properties, algorithms, and properties of bitcoin, but with the shift of VALUE moved over to CREATING the coin.

I propose the following working title for further discussions: Trustcoin. Communities creating their own trust, encapsulated in a digital unit of currency.

I look forwards to hearing your views and opinions

Laurence

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[DeathAndTaxes]

Yeah none of that made any sense.

1) The purpose of mining isn't to create coins.  The purpose of mining is to protect the network.  It prevents double spends.  Without mining all the coins are worthless because they can't retain any value.  Currently miners are compensated for this work with a subsidy.  The subsidy declines over time and will be replaced by tx fees. 

The subsidy serves two important purposes:
a) it bootstraps the network making it robust and secure before tx volume and thus tx fee are able to support it.
b) it provides the INITIAL distribution of coins.  However miners trade those coins for other currencies and goods/services.  Miners also lose them in scams and thefts and the current distribution is very dissimilar to the initial distribution.

If you remove mining then how will you ensure transactions are "fair"?  If transactions aren't fair then the coin has no value.

2) Nobody has to have warehouses of GPUs.  You can acquire coins by trade.  Given the number of coins is is finite and the subsidy halves every 4 years, as time goes on mining will be less important to the distribution of coins.  Those with good business operations will accumulate "coin wealth" just as they accumulate other forms of wealth.

3) Your post contained a massive amount of buzz words and feel good concepts without any actual substance.

"I propose a cryptocurrency that is farmed by community "currency collectives" where currency is harvested from the activities in networks of mutual currency exchanges."

How?

" In simple terms: the circulation of local currencies becomes the engine for solving hash algorithms, which offer the same anti-inflationary. "

How? How exactly does local fiat currency "circulating" solve hash algorithms?

"but with the shift of VALUE moved over to CREATING the coin"
There is no value in creating a coin.  Here I just created 80 quadrillion D&T coins how many do you want to buy?  There is value in coins being transferred and exchanged for goods & services securely, quickly, and digitally.  Creating a coin is trivial, getting someone to accept it and trade something of value (either fiat currencies, or goods/services) for it is the challenge.

[Etlase2]

Your idea sounds like it's in its infancy stages, so it is hard to comment on the feasibility of anything. But feel free to see the link in my sig for a proposal I spent a lot of time on that would significantly diverge from bitcoin.

[Gabi]

+1 what DeathAndTaxes said

[Stephen Gornick]

I look forwards to hearing your views and opinions

Already exists:

 - http://occcu.com
 - http://occcu.com/faq.php

[herzmeister]

@OP sounds like Ripple.

Such monetary systems that are backed by "social capital" are fine, but also have drawbacks. For example, they are trust- and reputation-based and thus can't offer privacy.

Bitcoin is exactly modeled to not depend on any trust. Bitcoin just is what it is, a digital currency modeled after a scarce and valuable commodity. Yes it is speculative, but its independence on identities has made it instantly available and usable globally.

After all it's true, money is just information, that's all it is, who owes what to whom, but it's hard to translate this into the real world. Every approach to a monetary system has advantages and disadvantages. People can learn them and use different systems in parallel in the future.

[chriswen]

Yeah, ripple is cool.  But, quite useless for people who want to make money. (sorta off track)


And the new sites like prosper and social lending is really cool.

Peer 2 Peer lending for cheap.  And you can sorta make a good return.  5-20+% interest a year, LOL.  That's just a few weeks of pirate pass through.

[organofcorti]

Yeah none of that made any sense.

Thank god. I thought I was missing an important point there.

[finkleshnorts]

Trollcoin?

[laurencefass]

@DeathAndTaxes

Thanks for your reply. You are right that I am not proposing any substance whatsoever. More specifically - I do not have any bare metal implementation for this. That's why I'm in these forums.

I would like to clarify a few things further if I may.

Firstly, it appears I have grossly misunderstood mining. I thought it was something like this I picked up from a forum a couple of years back "...you run a program which does a bunch of calculations, and once it's done enough calculations you get bitcoins. You can then sell your bitcoins if you want".

The currency you are describing, and what I see bitcoin to be, is a currency with properties but no (human) values. Its creation is completely detached from human affairs. I appreciate and understand the properties of bitcoin, but I cant see it has any instrinsic value. Its not really that different to valueless fiat currencies in this respect. Bitcoin seems to be an in-humanistic currency created from inhumane processes.

Extract from an intro on mining coins. "The first thing you need is an ATI/AMD graphics card. With current difficulty it is near impossible to generate Bitcoins with a CPU or an Nvidia GPU. CPUs and Nvidia GPUs simply don’t hash well. The best you can expect from them is around 20Mhash per second and that will get you about a bitcent per day if you’re lucky. On top of that, you will max out power usage. So using either of those 2 options will cost you a lot more then what you make unless you have free electricity".

The world's population doesn't know what a GPU is, let along how to "mine" from one. I proposing a cryptocurrency created from "people cycles" not GPU cycles. Surely thats simple enugh to understand. There are 7 billion of us on the planet right now... Sure GPUs will probably be employed if there is enough collective effort in the network, but the point is that EVERYONE CREATES THEIR CURRENCY: not through trade, but through participation.

I said: "I propose a cryptocurrency that is farmed by community "currency collectives" where currency is harvested from the activities in networks of mutual currency exchanges."

In answer to your question: how?... keep the system exactly as it is (it appears to work and create something that resembles money), but correlate activity to the total output of a network of community based activity. In other words enable community exchange to become the "fuel" of the system and the creator of wealth. If community activity ceases, so does new currency. Need more currency in the system? Share more.

As someone here has rightly stated this idea is in its infancy. What I am proposing is as much a movement as a currency. Of course its early days for crypto-currencies. They wont look anything like they do today 10 years from now. That's the nature of technological evolution and innovation. The internet didn't stop evolving at the terminal command line.

Sorry if this is still not making sense. Nor did the radio.

Regards,

Laurence

[Bitcoin Oz]

@DeathAndTaxes

Thanks for your reply. You are right that I am not proposing any substance whatsoever. More specifically - I do not have any bare metal implementation for this. That's why I'm in these forums.

I would like to clarify a few things further if I may.

Firstly, it appears I have grossly misunderstood mining. I thought it was something like this I picked up from a forum a couple of years back "...you run a program which does a bunch of calculations, and once it's done enough calculations you get bitcoins. You can then sell your bitcoins if you want".

The currency you are describing, and what I see bitcoin to be, is a currency with properties but no (human) values. Its creation is completely detached from human affairs. I appreciate and understand the properties of bitcoin, but I cant see it has any instrinsic value. Its not really that different to valueless fiat currencies in this respect. Bitcoin seems to be an in-humanistic currency created from inhumane processes.

Extract from an intro on mining coins. "The first thing you need is an ATI/AMD graphics card. With current difficulty it is near impossible to generate Bitcoins with a CPU or an Nvidia GPU. CPUs and Nvidia GPUs simply don’t hash well. The best you can expect from them is around 20Mhash per second and that will get you about a bitcent per day if you’re lucky. On top of that, you will max out power usage. So using either of those 2 options will cost you a lot more then what you make unless you have free electricity".

The world's population doesn't know what a GPU is, let along how to "mine" from one. I proposing a cryptocurrency created from "people cycles" not GPU cycles. Surely thats simple enugh to understand. There are 7 billion of us on the planet right now... Sure GPUs will probably be employed if there is enough collective effort in the network, but the point is that EVERYONE CREATES THEIR CURRENCY: not through trade, but through participation.

I said: "I propose a cryptocurrency that is farmed by community "currency collectives" where currency is harvested from the activities in networks of mutual currency exchanges."

In answer to your question: how?... keep the system exactly as it is (it appears to work and create something that resembles money), but correlate activity to the total output of a network of community based activity. In other words enable community exchange to become the "fuel" of the system and the creator of wealth. If community activity ceases, so does new currency. Need more currency in the system? Share more.

As someone here has rightly stated this idea is in its infancy. What I am proposing is as much a movement as a currency. Of course its early days for crypto-currencies. They wont look anything like they do today 10 years from now. That's the nature of technological evolution and innovation. The internet didn't stop evolving at the terminal command line.

Sorry if this is still not making sense. Nor did the radio.

Regards,

Laurence

You are describing community currencies like the Ithaca Hours but thats not a cryptocurrency its a Local exchange trading system. http://en.wikipedia.org/wiki/Local_exchange_trading_system

[laurencefass]

no its not a local exchange trading system. it derives its value from the same source. please read my post before replying. thanks.

[herzmeister]

@laurencefass - In a way, you could say Bitcoin *is* backed by labor.

Miners do verify and sign transactions, this is much like what bank workers do. They're rewarded by transaction fees (and coincidentally today also with newly minted coins, but this won't go on forever).

Would you say bank workers don't do anything meaningful? They'd even be rewarded somehow in a (more complex) LETS.

Now that the value of this labor is determined by the market, and not by the actual amount of spent effort, is something Marx struggled too with his labor theory of value. But it turns out he was wrong.

Much of the work miners do is automated though. But that's the information age. 

[Bitcoin Oz]

no its not a local exchange trading system. it derives its value from the same source. please read my post before replying. thanks.

Bitcoin works because it solves the double spending problem and you dont need to trust humans who are easily corrupted.

[Frizz23]

Currently miners are compensated for this work with a subsidy.  The subsidy declines over time and will be replaced by tx fees. 

Once all blocks are found - what happens to offline wallets (paper wallets)? E.g. today one can use to private key to fund his account (e.g. MtGox). But there are no tx fees in this process.

So will the funds in offline/paper wallets then be lost (because: inaccessible).

[SaintFlow]

I understand that you wish to see a humanitarian bias in the currency you would like people to use.

Computing hardware seems to me a neutral tool that can also achieve this.

Your cryptocurrency that is farmed by community "currency collectives" where currency is harvested from the
activities in networks of mutual currency exchanges can be bitcoin.

Forget about the term "mining" it is essentially arbitrary.

First thing you can do is choose your community. After you have done so build a communication network in it
that lists all the things it is willing to produce and trade. After you have done so offer the service for bitcoins.
Now you can trade on exchanges for your preferred fiat to bring back to your community.
If you want to operate a full bitcoin node that does "mine" or "harvest" or "grow" or "recycle" from gained
profits is up to your *local* community.

You might consider bitcoin less a currency and more of a community ledger if it helps you.

As long as you are not much clearer on how exactly you wish to implement a 2.0 cryptocurrency I suggest you
use a 1.0 until you find the things that can be changed to provide incremental development.

A system as I understand from your initial idea could easily be gamed by a group of people rapidly exchanging things
just to create trade.

[Foxpup]

Currently miners are compensated for this work with a subsidy.  The subsidy declines over time and will be replaced by tx fees. 

Once all blocks are found - what happens to offline wallets (paper wallets)? E.g. today one can use to private key to fund his account (e.g. MtGox). But there are no tx fees in this process.

Nothing happens to offline wallets. Or online wallets, for that matter. You seem to be seriously misunderstanding something. What do you suppose MtGox (or anyone) does with those private keys? They use the private keys to sign transactions to spend the coins! Private keys have no other function than to sign transactions, and paper wallets (actually, all wallets) have literally no value except for the transactions they allow the bearer to sign. And of course, these transactions will have fees.

So will the funds in offline/paper wallets then be lost (because: inaccessible).

There is no way to "access" funds other than signing transactions to spend them, which can be done as long as the private key exists in some form (offline or otherwise). The only way for funds to become inaccessible is for the private key to be lost.

[laurencefass]

@saintflow: Thanks for your perspectives. IMO our words are certainly not arbitrary and they have enormous influence over our collective imagination. Real life extends way beyond technology and GPU power, and I hope one day for a currency to reflect this reality.

@frizz23, @foxpup: Please can you limit this thread to discussion of 2nd generation cryptocurrencies. Thank you.

[loadrs2009]

+100 what DeathAndTaxes said

[laurencefass]

as I am posting here a discussion perhaps you have something more to offer other than meaningless "+100" comments? Whats this? Follow the leader/hero?