That's why he only wants to do it in his own "pond" within the real Bitcoin network. Transactions would still be done via the vanilla client, only the money generation would be different.
Yes. Although most of the dynamics will be filtered by the fact it's a share based pool. So even the concerns TI3966 has disappear behind the angel GPU miner curtain. To be honest the small inconvenient shocks to mainline would actually be good in the long term.
There just needs to be a trusted authority (as in every pool) that watches over money distribution.
I'm fairly certain it may require less monitoring than the mainline pools.
Additionally he needs to have some incentives for people to mine - especially GPU mining must be more profitable than real bitcoin while returning far less coins.
Initially, we are talking about a town ravaged by storms. There would be inspired individuals making the temporary connection, much like jump starting a car.
If there are 0 GPU miners in the pool, the few CPU miners won't find blocks themselves and the pond dries out because no money is generated at all.
Once blockrate jumps inside difficulty outside jumps. GPUs will drift into town.
If I get it correctly, he'd need:
- A pool that somehow detects CPU miners (Hashrate could be cheated by GPU miners launching multiple instances, so there must be another way - probably a quick additional calculation or something that is easy/inexpensive on CPUs but hard on GPUs but should not cause too much loss of hashrate...?!) and hands out getworks of different difficulty but rewards the submitted shares the same. Probably using a PPS system.
Not quite. The townpool difficulty gets reduced, the reward is reduced for all. However, that special calculation is the attractive ratio aka soft gradient using the square root. I don't know if it will be needed.
- A few Bitcoins to start the system until the first block(s) have been found
Perhaps, but angel GPU miners should be able to kick that off.
- A way to track Bitcoins entering the system and a modified client that gives people the chance to see if a coin or fractions of it is a special "Towncoin" or a regular "Bitcoin" (this might be the hardest part - not the detection, but the distinction so everyone gets the menaning of it!)
This might be a nice feature especially for people to get accustomed to trading decoupled from fiat, as the value of a towncoin is 1 BTC. What towncoin will do is set a lower bound for prices for household items in town. This will have a feedback effect which causes mainline BTC to go way up. Gresham's Law will be hacked. Prices in towncoin will be more stable because of higher transaction rates so people will want BTC but towns will have a strong effect on price.
- An exchange where you can trade your Dollars for Towncoins and vice versa, with guaranteed exchange rates (that would be quite high, something around a few hundred USD for a full Towncoin probably)
Think hammers not dollars. Trading for dollars will only have local effects. Trading .005 BTC for candy on one side of town and a hammer on the other side will force mainline to shuffle a bit. Whichever price wins out (hammers make things which bring BTC which make more things so probably hammers win) will force mainline BTC prices to shift upward. And nobody will be able to call it pure speculation. Physical speculation will be in the back of the minds of traders and then hold onto your hat.