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Author Topic: Starting a new proof-of-work chain  (Read 2710 times)
fergalish
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April 15, 2010, 08:55:53 AM
 #1


So I remember there was some discussion a while ago about how eventually some bitcoins will dissappear (people's computers crashing, people dropping out of bitcoin, MenInBlack collecting as many BTC as possible to drain them out of the system etc).  And it's still not clear to me if this will eventually be a problem or not.  Clearly, if the number of bitcoins will stabilise at close to 21 million, no problem, but if BTC loss is serious, then it may impact the economy.

So, one of the counter-arguments was that a new proof-of-work chain could be trivially started, with a whole new economy.  "BTCv2" let's say.  Well, there are a couple of problems.  First of all, everyone who has BTCs will be really pissed off that suddenly their BTCs are valueless because everyone wants only BTCv2s.  Second is, I think, a more serious problem, but then maybe I just haven't understood the coin generation process correctly, and it goes like this: bitcoin is a once off experiment.  If you decide to start a new proof-of-work chain for BTCv2, then all I have to do is get all the old BTC proofs-of-work, and add them to the new chain, and I'll instantly have lots of BTCv2s to my credit.

Problematic?
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dwdollar
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April 15, 2010, 11:14:34 AM
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This is what I'm thinking.  It's possible that multiple Bitcoin versions will coexist with each other.  As older versions deflate, new ones will spawn.  People will freely move in and out of each currency.  Nobody will be forced to adopt a newer standard version.  A certain percentage will elect to adopt it and leave the older version.  This will inflate the older currency and allow more coins per person.  The whole thing will naturally balance itself.
theymos
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April 15, 2010, 12:31:27 PM
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Deflation isn't a big problem because coins are very divisible. If only 5 coins remain in the system, people can just trade in 0.0000001 coin increments or something.

Proofs-of-work can't be reused like that because they are hashes of a particular block's contents.

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gkelly
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April 17, 2010, 11:48:51 PM
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If you decide to start a new proof-of-work chain for BTCv2, then all I have to do is get all the old BTC proofs-of-work, and add them to the new chain, and I'll instantly have lots of BTCv2s to my credit.

Problematic?

Thankfully, no. The Bitcoin mechanism has the concept of a genesis block hash, which is the theoretical hash (0x000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26f) of a nonexistant 'root' block. To start a separate block chain you'd start with a new genesis block hash and start adding new blocks to that chain rooted at your new genesis block. Since each new block contains a hash of the previous block in the chain, you could not re-use blocks for the current block chain in your new block chain.

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lachesis
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June 03, 2010, 11:14:25 PM
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Deflation isn't a big problem because coins are very divisible. If only 5 coins remain in the system, people can just trade in 0.0000001 coin increments or something.
At the moment, that isn't true (at least in the CLI version). Bitcoin rounds to the nearest 0.01 BC. Of course, that's just an implementation detail, and there's no reason that couldn't be changed. Just throwing that out there. Also, even so, currencies that undergo an unstable rate of inflation or deflation (second derivative of their value) tend to be untrusted. If a dollar today might buy you $50 worth of goods tomorrow but also might only be worth $0.05, would you want to have a dollar?

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theymos
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June 04, 2010, 01:40:33 AM
 #6

The BitCoin core deals with much more precision than what is currently allowed with the interface.

Unless a horrible problem is found with the BitCoin spec, I think it's a pretty safe bet that the value of BitCoins will rise gradually. While temporary bouts of inflation are likely (due to hoarding), BitCoin has a built-in limit to inflation, and this will hopefully prevent any serious disruptions.

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nandnor
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June 05, 2010, 09:58:26 AM
 #7

The BitCoin core deals with much more precision than what is currently allowed with the interface.

Unless a horrible problem is found with the BitCoin spec, I think it's a pretty safe bet that the value of BitCoins will rise gradually. While temporary bouts of inflation are likely (due to hoarding), BitCoin has a built-in limit to inflation, and this will hopefully prevent any serious disruptions.
I assume you mean prices..  They deflate when hoarding happens, as does the money supply.

And why would a deflationary currency be untrusted? Quite the opposite, i would trust it more than any inflationary alternative, regardless of the math behind the deflation rate, lol.

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theymos
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June 05, 2010, 02:37:59 PM
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They deflate when hoarding happens

I mean that the deflation they were causing by hoarding can be quickly turned into inflation if they spend their coins all at once.

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