Another Part of the PPCoin puzzle

[Vorksholk]

Hello, today (and a while back, but I forgot about it then re-remembered it and had enough motivation to make this post), I realized that a major difference between Bitcoin and PPCoin is with Bitcoin, the more miners there are, the less each miner gets, but each miner's rewards add up to one, consistent number (save block-halvings). With PPCoin, the more miners the less each miner gets, but each miner's rewards don't add up to a consistent number. The higher the hash rate, the higher the difficulty. The higher the difficulty, the lower the block reward.

This in itself is common knowledge, and what I'm about to say I'm sure many have already thought of a lot more than I have.

In Bitcoin, if everyone upgrades to hardware that is 10x faster, then the proportions stay the same. (Aka if I have 1GH/s, and the network is 100GH/s, I have 1%, so I would get ~0.5BTC per network block (averaged out), and if I then upgrade to 10GH/s but everyone else does similar, I have 10:1000, which is still ~0.5BTC (before half) per block).

With PPCoin, however, if everyone upgraded to 10x the speed, the mining reward for each block would greatly decrease.

While ASIC have simply the effects on Bitcoin as increasing network hash rate, increasing difficulty, and leaving proportions about the same (aside from those who don't upgrade, of course).

On the PPCoin network, not only does the network hash rate increase and difficulty increase, proportions are the same, but reward per portion is much smaller. As this goes on and on, the block reward becomes more and more constricted and smaller with each jump to faster hardware, making a block today with our current miners worth 1,050 coins, but in 5 years, even if proportions were still the same, we could be looking at 200 coins per block or even less with the advent of ASIC's mining, creating an inverse currency distribution effect (almost like more demand = less supply created).

Anyone else see this way of working (higher hash rate = less total coins) having the effect of greatly rewarding early adopters if this currency actually takes off?

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[Etlase2]

I tried asking about this in the main thread but was summarily ignored.

[Sunny King]

For Bitcoin this is not constant, its halved every four years, first halving being in 3 months time from now.

Thus in both Bitcoin and PPCoin minting rate drops exponentially. In Bitcoin it's fix schedule based, making it easy to see that it has a upper limit of money supply (21M). For PPCoin it's dropped with difficulty, but given Moore's Law it's actually dropping in a similar fashion as Bitcoin over long term.

I chose the curve so that the long term drop schedule is close to Bitcoin. Cunicula also asked in the main thread that I should rework the curve to make it drop faster, like dropping to 0 in a couple of months. You can see that different people have different priorities and I believe I have made the best compromise between those who want it to drop faster and those who want it to drop slower.

Why does mint rate needs to drop exponentially? Because this is a known solid design to control inflation. I know this answer probably does not fit Etlase2's taste, as I see one of your main design goal for decrits is to inflate during crisis. From my point of view I think it's not a currency's job to save backrupting people, but charity's job. Remember this is a free market you cannot force your currency on people. What you are trying to achieve most likely won't have much effect other than destroying the currency itself.

As to unfair advantage of early adopters, I have clearly stated my opinion in my first weekly update. Risk taking should be rewarded this is how free market works. If we deprive early adopters of any chance to make a profit then the currency would never take off in the first place. Again I know Etlase you have different opinion on this, as you wanted decrits to have 'very slow adoption'. I think this generally indicates that you have no idea how to compete in a free market.

What about those people who don't have enough time to hear about ppcoin? Right they won't have the slight chance to get very rich, but this is the same for all successful enterprises. Can everyone share the same profit from the rise of Google, Apple or Facebook? Why don't we split the profit gained by the early shareholders? If you argue that as a currency it's different then I would say we already considered it, that we agree that for crypto-currency we as designers shouldn't build in premining/tax in the code, unlike enterprise owners who can keep large portions of shares.

I hope my answers clear up any remaining confusion.

[Etlase2]

lol ok bro I haven't attacked anything about your currency, all I did was ask questions that did not get answered. So I stopped paying attention.

Taking quotes out of context or misrepresenting my ideas does not make you stand any taller, btw. I'm glad you've got an ego complex to go along with your just-another-bitcoin-clone though.

[Sunny King]

lol ok bro I haven't attacked anything about your currency, all I did was ask questions that did not get answered. So I stopped paying attention.

Taking quotes out of context or misrepresenting my ideas does not make you stand any taller, btw. I'm glad you've got an ego complex to go along with your just-another-bitcoin-clone though.

I have no intention to attack you Etlase. This is my honest evaluation of your proposed design from a philosophical point of view. I planned to post it later in your decrits thread but as you posted it here I would just state it for clarification. Whether you would like to listen and change some parts of your design is entirely up to you.

There is no shame in following Satoshi's footsteps. If you think Satoshi had poor execution in his design I would say just maybe there is a chance you were wrong and Satoshi was right?

[Etlase2]

I have no intention to attack you Etlase. This is my honest evaluation of your proposed design from a philosophical point of view. I planned to post it later in your decrits thread but as you posted it here I would just state it for clarification. Whether you would like to listen and change some parts of your design is entirely up to you.

I am entirely willing to listen to honest criticism.

This, however, is not:

If we deprive early adopters of any chance to make a profit then the currency would never take off in the first place. Again I know Etlase you have different opinion on this, as you wanted decrits to have 'very slow adoption'. I think this generally indicates that you have no idea how to compete in a free market.

1) I did not say I "wanted" a slow adoption, I said I would "expect" it. LTC has been out for almost a year, and it has what, a $10k market cap? The cryptocraze has already happened and everybody is aware of the deal, yet LTC has not made any significant ground on bitcoin. Probably because it's totally useless, but I am only trying to be honest about the potential of the second round of cryptocurrencies.
2) There is no deprivation of early adopter profit. It just isn't a subject I spend much time on. In the proposal I talk about 5x the coins for the first 3 years. It might be 9x for a year, then 6, then 3, I don't know. Again, it's just not important at this point. I'm trying to focus on something new rather than another pyramid commodity, so my priorities are elsewhere. No, there won't be 3 million percent returns like the bitcoin early adopters enjoyed, but there will also not be a stigma about being a "late adopter" or the risk of being left holding the bag.

Right they won't have the slight chance to get very rich, but this is the same for all successful enterprises.

Hey look, the same illogic used in bitcoin arguments. It's a currency! It's a stock! It's a commodity! Get in on the ground floor while you still can, because we'll eventually settle on what it is, probably after taking your money! PS - You probably shouldn't mention facebook again in this context considering how it was manipulated and cost people millions of dollars.

[Sunny King]

I am entirely willing to listen to honest criticism.

This, however, is not:

If we deprive early adopters of any chance to make a profit then the currency would never take off in the first place. Again I know Etlase you have different opinion on this, as you wanted decrits to have 'very slow adoption'. I think this generally indicates that you have no idea how to compete in a free market.

1) I did not say I "wanted" a slow adoption, I said I would "expect" it. LTC has been out for almost a year, and it has what, a $10k market cap? The cryptocraze has already happened and everybody is aware of the deal, yet LTC has not made any significant ground on bitcoin. Probably because it's totally useless, but I am only trying to be honest about the potential of the second round of cryptocurrencies.
2) There is no deprivation of early adopter profit. It just isn't a subject I spend much time on. In the proposal I talk about 5x the coins for the first 3 years. It might be 9x for a year, then 6, then 3, I don't know. Again, it's just not important at this point. I'm trying to focus on something new rather than another pyramid commodity, so my priorities are elsewhere. No, there won't be 3 million percent returns like the bitcoin early adopters enjoyed, but there will also not be a stigma about being a "late adopter" or the risk of being left holding the bag.

Right they won't have the slight chance to get very rich, but this is the same for all successful enterprises.

Hey look, the same illogic used in bitcoin arguments. It's a currency! It's a stock! It's a commodity! Get in on the ground floor while you still can, because we'll eventually settle on what it is, probably after taking your money! PS - You probably shouldn't mention facebook again in this context considering how it was manipulated and cost people millions of dollars.

Last I checked, Litecoin has about $300k market cap, so it wasn't too bad.

I see that you are aware of the necessity of giving early adopters some incentive. So that's good.

Mentioning Facebook is no problem as that's a good illustration that the early adopters may get burned also known as risk-taking.

My suggestion is always listening to market more rather than focusing on one's own ideological dispositions. That's how you design a successful currency to compete in the free market.

[Etlase2]

Last I checked, Litecoin has about $300k market cap, so it wasn't too bad.

Oh yeah, I forgot we multiply the sell price by the total coins in existence and ignore the fact that $10k will empty the market.

Mentioning Facebook is no problem as that's a good illustration that the early adopters may get burned also known as risk-taking.

Sweet, another bitcoinism. I deserve millions of percent returns for risking several dollars of electricity! Good lord what would you peons have done without my precious kilowatt hours? This is a much bigger risk than actually spending real money and getting burned by currstomodity manipulation.

My suggestion is always listening to market more rather than focusing on one's own ideological dispositions. That's how you design a successful currency to compete in the free market.

To listen to the market, the market must be given a choice first. You are trying to put a damper on competition probably because you realize that your currency doesn't offer anything significantly different from bitcoin and, like litecoin, has no real chance of succeeding. I'll leave designing a successful currency to future history books rather than your insanely biased and unasked for opinion.

[ElectricMucus]

For all practical purposes this is true, and I can't see how it would be any more energy efficient as the incentive to consume more power depends on competition, reducing the abundance of a resource increases competition so in a sense PPCoin is less energy efficient.

That said I am staying as far away from it as possible. I think it will provide excellent pump & dump performance though.  

[Sunny King]

Last I checked, Litecoin has about $300k market cap, so it wasn't too bad.

Oh yeah, I forgot we multiply the sell price by the total coins in existence and ignore the fact that $10k will empty the market.

Is it that hard to know the difference between market cap and market depth/liquidity? Yes Litecoin market cap is currently around $300K and Bitcoin around $100M, regardless of the current liquidity.

Mentioning Facebook is no problem as that's a good illustration that the early adopters may get burned also known as risk-taking.

Sweet, another bitcoinism. I deserve millions of percent returns for risking several dollars of electricity! Good lord what would you peons have done without my precious kilowatt hours? This is a much bigger risk than actually spending real money and getting burned by currstomodity manipulation.

It is evident that your anti-free-market sentiment runs pretty deep. Why do Bitcoin early adopters deserve 1000000% gains? Very simple. If your investment has a 99.99% chance of losing it all, versus 0.01% chance of success, you would need more than one million percent profit to have a positive expected return on investment. It's all very simple market logic. If you cannot grasp this concept, and let jealousy blind your intellect, your massive disdain toward the early supporters of your own currency and free market in general will just make your currency a non-starter.

My suggestion is always listening to market more rather than focusing on one's own ideological dispositions. That's how you design a successful currency to compete in the free market.

To listen to the market, the market must be given a choice first. You are trying to put a damper on competition probably because you realize that your currency doesn't offer anything significantly different from bitcoin and, like litecoin, has no real chance of succeeding. I'll leave designing a successful currency to future history books rather than your insanely biased and unasked for opinion.

One final advice to you, if you truly want to 'get into history books' with your currency, better start showing more respect to Market. As I mentioned before, free market disfavors an inflationary currency. Put it another way, money is a machinery to transmit value through both space and time. By building in high inflation to suit whatever purpose you have, well-intentioned or not, you are depriving your currency from one half of the important functions money need to perform. Of course you don't have to agree with me, if you truly believe in an inflationary currency then bring it to market and see for yourself.

[Shadow383]

Hmmmm interesting, I had no idea PPCoin behaved this way...

Does this make mining like this counter-productive?
http://ppcpool.us.to/user.php?user=PJShtSC2brcgyKp7RAXA5V67Q1foMcEerT

[Etlase2]

Is it that hard to know the difference between market cap and market depth/liquidity?

"Fair market value" is a much better indicator that isn't deceptive. Try using that rather than inflated market caps that any stock trader would get a bellyache over. "$50USD/day volume, $300k market cap, SOLD!"

It is evident that your anti-free-market sentiment runs pretty deep.

Who was it that believes he knows what's best for the free market? Oh yeah, you. I'm just willing to try something different and see what happens.

If you cannot grasp this concept, and let jealousy blind your intellect, your massive disdain toward the early supporters of your own currency and free market in general will just make your currency a non-starter.

You can think whatever you want of me if it helps you sleep at night. Doesn't make any of it true, though.

One final advice to you, if you truly want to 'get into history books' with your currency, better start showing more respect to Market.

I better appeal to your fallacy, apparently. And I wasn't making the grandiose claim that my currency would make the history books; only pointing out that you cannot predict the future and your comments propose to stifle innovation because it is different from the status quo and therefore could never work. Unwiser words have never been spoken.

As I mentioned before, free market disfavors an inflationary currency.

Source? $400T+ inflationary currency market vs. $100M and change of deflationary commodity?

Put it another way, money is a machinery to transmit value through both space and time. By building in high inflation to suit whatever purpose you have, well-intentioned or not, you are depriving your currency from one half of the important functions money need to perform.

"High inflation", source? The inflation rate isn't preprogrammed. And I assume by "one-half of the important functions [of] money" you mean a store of value. In which case, I must counter with the fact that existing currency holders are awarded 5x the amount of any new coins produced, without doing anything. If the market is naturally expanding, this is free money, pure profit. If the coin production is expanding due to efficiency gains in hardware and the difficulty protocols can't keep up, then the money is payment to maintain the value of existing accounts rather than allowing price-inflation to rob them of value. I also have an unmentioned idea that the coin multiplier may more heavily favor existing accounts if transactional activity does not seem to indicate a real expansion of the market.

The goal is to have a stable price level (or a stable account value over time) rather than an inflationary or deflationary one. Of course it won't be perfect, but if there is a little bit of price inflation it is either counteracted by existing account awards or the fact that it isn't banks and the wealthy elite that receive all the benefits of new currency, it is everyone. I only call it an inflationary currency because, for whatever reason, so many bitcoiners have taken to heart Milton Friedman's words about inflation always being a monetary phenomenon, sometimes even going as far to misapply it to Mises or another Austrian. Perhaps you would grok that if you chose to actually read and comprehend the proposal rather than seeing the word "inflation" and assuming the worst.