Forks! Towncoins! Credit unions! A plethora of plethoras! What to do about it!

[AntiVigilante]

From the bitcoin fork discussion:

So why try to limit who can use it? If you open it up to the world then the townfolk, as earliest adopters, could bring a lot of wealth into the town as out of town people discover it and adopt it.

It would even have one advantage over bitcoin: an entire town that accepts it in return for real goods and services.

-MarkM-

DRAMAAA!
I have had blistering arguments over the idea of separating into mini-networks (I'm for btw) and it doesn't have anything to do with "flaws" in Bitcoin.

Bitcoin storage is decentralized (yay freedom.)
Bitcoin production is heavily consolidated (like corporate mergers just a bit less evil.)
Bitcoin dynamics affect everyone at once (big fat self-righteous mentality of IMF and World Bank).

All these factors should be such that independence of effects is encouraged. Proximity or distance is hard to define in bitcoin, but this towncoin idea is the perfect way to experiment with it.

This can be corrected.

OPPORTUNITIES!
Proximity would use neighboring towns' difficulties like control valves.
1. Award amounts per block to networks based on the square root of the ratio of their difficulty compared to the mainline.
2. Update the local difficulty more often.
3. Implement an adapted version of the bitcoin daemon with cuddlefish's modifications. Can be done later.

I say square root rather than by the straight ratio itself for two reasons:
1. A straight ratio would attract control freak administrators who want to add more ratios under control of some official department.
2. Square root allows everyone to experience 'early adopter' opportunities which reduces the rush to create new crypto-currencies with few differences.
3. Square root avoids a hard drop between subnets making transfers between more "stretchy".

Some of the innovations coming to us are going to be motivated by the excitement of Bitcoin multiplied by the jealousy of opportunities lost, real or perceived. That's going to hurt Bitcoin and sister currencies' credibility.

MATH and GUTS!
Having said that the plain square root should probably replaced with a more dynamic value.

If we care about decentralization, bitcoin subnets should behave somewhere between separate currencies and a single currency.
The difficulty variations should encourage global and local decentralization. Bitcoin vs bitcoin (a kind of self-awareness on top of the self-correction).

It's much more advisable right now for new incompatible blockchains to start rather than be at the mercy of specialists (hobbyists with meaty GPUs). One internet is worth 1000. One cryptocurrency is worth 1000. Validating the Internet protocols allowed millions of sites and communities to flourish. Same thing with Bitcoin. The concept is proven even if the implementation isn't. It wouldn't make sense to force new subnets to start from scratch any more than it makes sense to force everyone to send email through fido.

A. Differences in hashrates for groups, of people who have similar hashrates, should not punish late comers.

B. Having fewer miners per pool means less consolidation.
We multiply A * B to encourage mainline and subnets to compete with smaller pools. We amplify things we need to fix.

C. Having more pools means more choices.

D. Having more miners per network means decentralization of power.
We multiply C * D to encourage subnets to have more of their users participate.

E. The trades / difficulty update for mainline.

F. The  trades / difficulty update for subnets.
We divide E / F to encourage subnets to move money quicker.

Now for the conversion factor: This is where we encourage mainline participants to move into subnets.

X = A * B = the relative internet influence factor.
Y = C * D = the relative intranet influence factor.
Z = E / F = the relative activity factor.

X = A) avg hashrate of mainline pools / avg hashrate of subnet pools * (avg participation in mainline pools / avg participation in subnet pools)
Y = C) pools in mainline / pools in subnet * (ratio of traders to miners in mainline / ratio of traders to miners in subnet)
Z = D) trades per day in mainline / trades per day in subnets weighted by the diff update time ratio

Example: Whole network versus 36,000 (numbers are out of thin air but should be close)
36 Ghashes / 25 Mhashes * (100 miners per pool / 25 miners per pool)       (trades per day in mainline / trades per day update period in subnets)
-------------------------------------------------------------------- * --------------------------------------------------------------------
10 pools / 4 pools * (1000 traders per miner / 100 traders per miner)         update time in mainline / update time in subnet

144 * 4 / (2.5 * 10) * 25 = 576

Now the actual value of a gpu versus a cpu is on the order of 360 Mh/s / 2.5 Mh/s = 144x

Square root of 576 = 24 = 6 times the actual output value
Square root of 144 = 12 = 12 times the actual output value

Towncoin being worth 12x as much as "really" is too much of a boost. 24x makes it 6x.

PROBLEM, CITIZEN?
-------------------
We've heard a lot of complaining about:
deflation
hoarding
speculation
legalities

this approach resolves these "issues" without adding arbitrary purely rhetorical one size fits all solutions (inflation, demurrage, high transaction costs, begging the system to like us). and it creates true decentralization. deflation is not an issue - it controls overreactions. hoarding is a natural reaction to market forces but can be self-defeating. speculation can cause epileptic fits. legalities have to cross the soccer mom threshold. the minute bitcoin becomes soccer momcoin, the threat of banning drops to near zero.

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[TradersEdgeDice]

 

I like it.  Spawning subnets that are compatible with the main network is a truly revolutionary concept.

Funny how the term "towncoin" might catch on.  We'll have to note who made it.  I think it was MarkM.

[Vladimir]

If these towncoins work than this all does appear to make sense. Bitcoin serves as a backbone and medium of exchange for multitude of various towncoin kinds, while all the towncoin emitents are free to innovate and try things. Sounds like a great system.

I just do not see how this would work technically on towncoin level, maybe it is because I did not think hard enough about it yet

[markm]

The main problem I keep seeing is most towns or other relatively small groups probably do not want Vladimir and other owners of massive hashing power to own the majority of their coins.

Did I come up with that name? I'm not sure whether I did or not.

-MarkM-

[FreeMoney]

From the bitcoin fork discussion:

So why try to limit who can use it? If you open it up to the world then the townfolk, as earliest adopters, could bring a lot of wealth into the town as out of town people discover it and adopt it.

It would even have one advantage over bitcoin: an entire town that accepts it in return for real goods and services.

-MarkM-

It wouldn't. You don't get adoption via restriction. Why is money that can be used in your town less good than money that can be used in your town (and somewhere else, optionally, if you want to)?

[darbsllim]

It's a good idea in a perfect marketplace where everyone had a way to spend their digital currency.

[AntiVigilante]

Alrighty then. I'll get to working on a more solid proposal and see if bitcoind guys would like to give me room to try this.

And the best part is that there are natural analogs to this design.

You GPU is your Harley.

In Times Square, you might get a few whistles, maybe an invitation to a club.
In a rural area, your Harley means nada. Your ability to operate farming equipment matters more.

GPU mining to the rural areas is like owning a monster truck. It's so out of reach in terms of both skill and time investment that it looks like collecting classic cars rather than productive work. Now I think Bitcoins are valuable because of the escape hatch they provide from billionaire bank directors stealing real wealth. But when I bought diapers recently because I held onto coins, that made them much more real.

Now bitmunchies.com sells diapers in BTC. Still prices change vs dollar costs. The currency is proven to be legitimate in a practical sense. Bitcoin is quickly becoming soccer momcoin, and I'm gonna push it over that threshold. All that remains is making sure it doesn't encourage new pyramids to be built in its own environment. Now it should allow them to be built as a moral test of the community. If we are that dumb, then we are not ready for the solution and can only hope we wake up soon. So yes self-destruction should be allowed to be possible, but should be evaded as best we can.

Now if we are allowing pyramids to be built and we spend much time arguing about pyramids is it not contradictory to make shanty towns difficult to set up?

This system creates a series of locks in crossing bodies of water of different altitudes, depths, and densities. That's all it does. The choice is still up to you to move your mining rig to the country side. Will your mining rig catch as many blue marlins as in the ocean (the mainline)? No. Can you use it to help a town hit by a tornado? Yes.

It makes the choices BTCers have for evolving much more diverse and fruitful.

[AntiVigilante]

The main problem I keep seeing is most towns or other relatively small groups probably do not want Vladimir and other owners of massive hashing power to own the majority of their coins.

Did I come up with that name? I'm not sure whether I did or not.

-MarkM-

Vladimir's rig would earn a reduced reward at a higher than bare ratio rate so no there would be no take over. And the CPU miners get the boosted rate as well so there would be no conflict. You want the quiet of the country side? Then you can accept fewer service requests.

[AntiVigilante]

It's a good idea in a perfect marketplace where everyone had a way to spend their digital currency.

A small town has desperate needs that they would want a lubricating currency to begin with. A lake is not an ocean.

[AntiVigilante]

From the bitcoin fork discussion:

So why try to limit who can use it? If you open it up to the world then the townfolk, as earliest adopters, could bring a lot of wealth into the town as out of town people discover it and adopt it.

It would even have one advantage over bitcoin: an entire town that accepts it in return for real goods and services.

-MarkM-

It wouldn't. You don't get adoption via restriction. Why is money that can be used in your town less good than money that can be used in your town (and somewhere else, optionally, if you want to)?

Not being able to participate in mining pools is a restriction. A scorched earth one at that. Why should I be able to purchase cheaper electronics in the West coast US than East coast? Silion Valley is closer and has smaller transportation costs. Ebay is likely responsible for forcing down prices somewhat on the East coast. But for Staples and Radio Shack shoppers there's a markup that they are unable to avoid.

Again lakes exist and to go from a lake to an ocean and back you have to go through a series of locks.

Freedom is participation.
Health is diversity.
Value is efficiency.

Wisdom is balancing them properly.

[markm]

Maybe for this smaller scale it would use useful to start the number of coins a lot higher and halve it a lot sooner?

The idea being to get at least half the coins into the hands of the townsfolk fast enough that hopefully they will already have their half or more by the time some foreigner finds out about it and decides to start mining it.

You could start with what seems like massive amounts compared to the few merchants accepting it, but have it worth very little in terms of what a shopkeeper will actually give you for it. But at some point hopefully some shopkeeper who has a huge number of them will figure giving awat a few products in return for some coins will make his stash look more valuable, and maybe the twoncoin-millionaires will get into a price war all trying to offer more and better products per coin to make the coin seem more and more valuable.

If you had 280,000 bitcoin wouldn't you have at least some incentive to buy coins whenever they threaten to fall precipitously in value? Wouldn't it be worthwhile, having converted some to other currencies, to stand ready to buy them with any of those various currencies at any time to keep their exchange rates up?

If the town has less than half of their coins though they might as well have used someone else's coins maybe to begin with, as all they'll've done is created someone else yet another currency to suck value out of their town with maybe?

It is to explore some of this that various Freeciv Galactic Milieu nations are looking into creating their own game-currencies; if they use some variant of bitcoin software to do it, as some of them are hoping to achieve, they will face the same problems as towncoin so this towncoin idea is very relevant to all of them.

-MarkM-

[AntiVigilante]

Maybe for this smaller scale it would use useful to start the number of coins a lot higher and halve it a lot sooner?

The idea being to get at least half the coins into the hands of the townsfolk fast enough that hopefully they will already have their half or more by the time some foreigner finds out about it and decides to start mining it.

You could start with what seems like massive amounts compared to the few merchants accepting it, but have it worth very little in terms of what a shopkeeper will actually give you for it. But at some point hopefully some shopkeeper who has a huge number of them will figure giving awat a few products in return for some coins will make his stash look more valuable, and maybe the twoncoin-millionaires will get into a price war all trying to offer more and better products per coin to make the coin seem more and more valuable.

If you had 280,000 bitcoin wouldn't you have at least some incentive to buy coins whenever they threaten to fall precipitously in value? Wouldn't it be worthwhile, having converted some to other currencies, to stand ready to buy them with any of those various currencies at any time to keep their exchange rates up?

If the town has less than half of their coins though they might as well have used someone else's coins maybe to begin with, as all they'll've done is created someone else yet another currency to suck value out of their town with maybe?

It is to explore some of this that various Freeciv Galactic Milieu nations are looking into creating their own game-currencies; if they use some variant of bitcoin software to do it, as some of them are hoping to achieve, they will face the same problems as towncoin so this towncoin idea is very relevant to all of them.

-MarkM-

I'll check that out. I'll also add that the market value of a whole community if it could be bought and sold doesn't vary much.

A few shops accepting expensive coins due to fear of a new thing is similar to distributing those few coins and splitting them up to more people so more light bulbs can go off. Now which one do you think will evolve faster?

I'm gonna make this nice and shiny.

Edit: quoting malfunction.

[TradersEdgeDice]

From the bitcoin fork discussion:

So why try to limit who can use it? If you open it up to the world then the townfolk, as earliest adopters, could bring a lot of wealth into the town as out of town people discover it and adopt it.

It would even have one advantage over bitcoin: an entire town that accepts it in return for real goods and services.

-MarkM-

It wouldn't. You don't get adoption via restriction. Why is money that can be used in your town less good than money that can be used in your town (and somewhere else, optionally, if you want to)?

But this solves your objections and mine at once.

There is a strong incentive to become a bitcoin subnet and a very real disincentive to fork the code.  If you modify the code, you can't be a bitcoin subnet (towncoin).

You can allow towncoin nets to modify some of the rules.  Perhaps hash rate, total coins, overall curve of distribution.  All those factors are going to weigh heavily on the exchange rate towncoin to bitcoin.

The vast majority of towncoin subnets simply will not be exchangeable to bitcoin holders with no interest in the towncoin in question.  The value would be highly localized. Some towncoins, however, might have a very good and useful exchange rate with BTC.

Imagine, if you will, the exchange rates of towncoin from the Upper West Side of Manhattan, Moscow, London, Tokyo, Shanghai, etc. I know Manhattan alone could support at least five valuable towncoin subnets.

To borrow an example from the fiat world… If you think the Euro serves all member states equally, then you don't understand the problem.  But I think you do understand the problem in your primary objection is that you want the protocol to be open.

So do I.

Decentralization and more decentralization.  Miners, speculators, criminals and spies can't be everywhere at once without costing a helluva lot of fiat.

I think we can bury the hatchet from the last thread.

[publickeyhash]

I remember thinking about nonlinear reward factors, they have some interesting properties:

linear: reward derivative is constant per added effort (irrespective of identity)
nonlinear: small efforts can be rewarded (say reward=sqrt(effort)) more than big efforts or vice versa (reward=effort^2)

I will henceforth refer to Reward as R and Effort as E

However keep in mind that bitcoin is pseudonymous. Keep in mind also that there is a difference between verifying a user is human (say captcha) and verifying his identity (say identity smart card available in some nations).

Suppose no Turing Test nor identification is done:

R = sqrt(E): attempt to reward average joe for mining more than BitCoin city heating rigs.
Average joe: downloads miner and will follow R=sqrt(E) for sizeable but not huge E
Greedy bastards: sybil attack compute many small E's (smaller than average joes), the derivative is higher than average joes with a sizeable E.
Now we have given greedy bastards an even bigger edge, and computing power and bandwidth etc still determine how many sockpuppets you can have solve tiny efforts. (in effect being rewarded linearly, if we recombine the many very small efforts at higher tangent)
Note how rewarding many small people promotes rigs, and makes for many accounts for the same person. in theory a slight deviation from linear reward in this sense could have the power to break up megapools...

R = E^2: punish small cpus and reward big rigs compared to linear reward: Only rigs and pools are worthwile, people tend to group and enlist under the same identity. Having pseudonymous accounts is a lossy business, performing effort under one name is more rewarding.

Note how there is a tradeoff between [Grassroots vs Centralization] and [one or multiple accounts]

Requiring an identity card signature for mining efforts could very well be used to reward average joe to promote wide quick adoption of currency, but would allow the goverment to produce fake identity signatures (not of real people since supposedly the private keys are generated on smart cards and never leave the card aherm...)

I also thought about what would happen if the proof of work was purely human: a mass pictionary game or something... and verification of blocks is done by human inspection this would only be necessary during the introduction phase: we could organise a mass pictionary game during a few  hilarious weeks and then many different humans would have coins that will never be replenished after which it could function just as bitcoin with miners safeguarding the network. There is a distinction between mining as a concept to distribute money and mining as a concept to secure the blockchain, I think few would honestly doubt their effectiveness for the latter, but a lot of people would have liked to see the introduction of money differently... oh well perhaps we just jealous fucks...

Can anyone think up a game that would be hard for a computer to play (probably with recognition and creativity)?

Perhaps a captcha solving game? I think the best captcha is making a captcha?

[bitoption]

This is a technocratic solution to a market problem; it will fail.

The market problem is a simple one; towns might want in on using bitcoins, or towncoins. Great!

There won't (and shouldn't) ever be a function-driven exchange rate between the towncoins and bitcoins. Demand will, inevitably, be anything but the function. This will create massive instability / exchange rate problems for your town. Towncoin speculators will ruin your day.

Nobody in your town wants this; they want to use something like Bitcoin (and, maybe, to your point, get 'in' early.)

I would suggest that you work upfront to minimize the interest level people in, say, Russia would have in getting or generating your towncoins, probably geographic restrictions on spending them would be a good start.

I don't think you can solve the 'outside mining pool' problem perfectly, but it's possible you could make it much less appealing if towncoins dont' readily exchange for dollars in large amounts, since they're mostly used around town, and nobody bothered to build an exchange yet, especially for your small town.

So, if someone wants to hire Vladimir, great. It's just that paying him is going to come out of pocket, since you won't be able to make it back on appreciation of towncoin very easily.

[AntiVigilante]

This is a technocratic solution to a market problem; it will fail.

Rhetorical answers.

"OMG, you apply formula? you are teh FAIL!"

And the difficulty parameter isn't "technocratic"? Actually the solution is not technocratic at all. It's based on natural analogs.

1. Your Monster Truck collection has no celebrity status in rural areas.
2. The basis for the calculation is based on a simple fact: Lower difficulty and proportionally reward does not change the reward total over time.
3. When multinational corporations move into a third world country food prices go up and the poor starve harder.
4. Towncoins are more likely to be backed by work and trade than mainline bitcoins.

This solution respects those real world issues. Nothing about this scheme is arbitrary.

The market problem is a simple one; towns might want in on using bitcoins, or towncoins. Great!

There won't (and shouldn't) ever be a function-driven exchange rate between the towncoins and bitcoins. Demand will, inevitably, be anything but the function. This will create massive instability / exchange rate problems for your town. Towncoin speculators will ruin your day.

Nobody in your town wants this; they want to use something like Bitcoin (and, maybe, to your point, get 'in' early.)

Towncoin speculation via GPU can't ruin your day:
1. The reward rate is lower.
2. The reward rate differential only exists while there's a huge difference.
3. The closer the town hashrate approaches the mainline, the difficulty skyrockets.
4. Trying to rape the towncoin currency will result in people laughing at the attempt.
 
The reality:

Your monster truck collection in a rural area is unwanted. The biggest rigs won't be interested. So all your electricity wasting is going to be frowned upon in towns. They don't want to empower the power company. Though CPUs are inefficient for blockchain generation, they do not use nearly the wattage of GPUs.

So a bargain is offered: GPUs can accept lower reward rates in towncoin at higher than base ratio rate, while towncoins also get the boost.

The demand is already here. It's not causing change. That disconnect will rip bitcoin apart.

I would suggest that you work upfront to minimize the interest level people in, say, Russia would have in getting or generating your towncoins, probably geographic restrictions on spending them would be a good start.

Sounds "geo"-cratic to me. The "techno"-cratic bargain is way better than the "geo"-cratic restriction.

I don't think you can solve the 'outside mining pool' problem perfectly, but it's possible you could make it much less appealing if towncoins dont' readily exchange for dollars in large amounts, since they're mostly used around town, and nobody bothered to build an exchange yet, especially for your small town.

So, if someone wants to hire Vladimir, great. It's just that paying him is going to come out of pocket, since you won't be able to make it back on appreciation of towncoin very easily.

They won't appreciate that fast because Vladimir will get a smaller reward for the "quiet of the farmlands."

If anything it will drive more labor and commodity transactions into the bitcoin market which will cause bitcoin to appreciate instead.

Go ahead and try to convince people that bitcoin powered by everyday transactions won't cause the value to increase.

[bitoption]

I don't have time to answer all of your post here, but you glibly handwave over my very specific concerns to an extent that I hope nobody is relying on you for their personal wealth generation.

We're all learning the dynamics of this system, exploring together, if you will. It makes sense to be cautious when you are discussing considerable time and expense by potentially a whole community.

Since we're discussing 'towncoins', I think you're complaint about being geo-cratic is silly -- the entire discussion is on making a fork that works for a small town.

The fundamental issue is that neither you nor I can properly weigh the impact of the variable changes proposed here. There is only one way to get even a somewhat reasonable read on the actual impact; letting people bid on the value to themselves of those differences.

I stand by my statement that forcing an exchange rate upfront, using a formula on something like this will create significant value and exchange imbalances, almost certainly to the detriment of the towncoin community at many points.

Finally, Satoshi's formula for difficulty is technocratic, in that computers calculate it, but this is a non-sequitur. It is market driven in that the market decides together what the difficulty will be, and it is a clever constraint designed to help fulfill the 'deflationary' aspect of his goals.

[AntiVigilante]

I don't have time to answer all of your post here, but you glibly handwave over my very specific concerns to an extent that I hope nobody is relying on you for their personal wealth generation.

Wealth is what is used to maintain your own freedom and safety. The rest is "riches", trinkets that only add risk.

As for being glib, your responses are straight out of the textbook without actually reading. Who's glib now?

We're all learning the dynamics of this system, exploring together, if you will.

Until someone comes in and suggests a change that, unlike inflation and demurrage and the other contraptions proposed, is not arbitrary.

It makes sense to be cautious when you are discussing considerable time and expense by potentially a whole community.

Yes, except it requires no time and expense at all. Simple plugin that allows small pools and large pools to trade.

Since we're discussing 'towncoins', I think you're complaint about being geo-cratic is silly -- the entire discussion is on making a fork that works for a small town.

You suggested preventing some place in Russia from being involved. I disagree. I think that populations that operate at similar difficulties would be very happy to work together.

The fundamental issue is that neither you nor I can properly weigh the impact of the variable changes proposed here. There is only one way to get even a somewhat reasonable read on the actual impact; letting people bid on the value to themselves of those differences.

You want to wait years to exercise demand that already exists. Why shouldn't those who have the demand write code? And preferably in a way that enhances the decentralization of bitcoin. What good is it to be your own bank if you can't get started unless someone drops you a few crumbs? Structurally bitcoin is decentralized. Dynamically it's becoming the opposite.

I stand by my statement that forcing an exchange rate upfront, using a formula on something like this will create significant value and exchange imbalances, almost certainly to the detriment of the towncoin community at many points.

No one is forcing anything. Read the proposal. The dynamic reward rate only exists for those who wish to work together.

Finally, Satoshi's formula for difficulty is technocratic, in that computers calculate it, but this is a non-sequitur.

So is what I'm offering. This is much like the fact that the reward will drop to 25 bitcoins soon. I created a more dynamic version based on the goal of decentralization. That is it.

It is market driven in that the market decides together what the difficulty will be, and it is a clever constraint designed to help fulfill the 'deflationary' aspect of his goals.

So is this proposal. The dynamic difficulty doesn't kick in until people from diverse pools try to get together.