Why use rewards instead of starting with 1 BTC?

[nevafuse]

Imagine Satoshi coded bitcoin so that the first miner would receive the only bitcoin ever to be created & it could be infinitely divisible.  Of course, he would be the first miner, so he receives the only bitcoin.  Just like he distributed early bitcoins by convincing people to run the software, he could have convinced them to download the software & he'd send them .01 BTC.  Eventually, enough micro-bitcoins would be in circulation that people could buy them from others instead of asking Satoshi.  Then you'd be at the same situation we are now.

The largest differences are inflation & transaction fees.  Inflation wouldn't exist because no more coins can ever be created.  People would understand transaction fees early on because miners would be more restrictive since the fees would support their mining costs.

It is easy to prove the reward model works since bitcoin uses that model.  But I don't see any reason someone couldn't try the other model out with a change to the protocol.  The owner of the first coin could even setup a website like bitcoin fountain to distribute the currency instead of keeping track of PMs & emails.  Would it be a slower distribution model?  Hard to say.  Is the reward model the main reason for bitcoin's success?  Hard to say.  But I'd personally prefer this coin if it was at the same popularity as bitcoin is now.

Any thoughts?  Could this work?  Does this alt coin already exist?  Has this been mentioned before?

[Parazyd]

Just not good enough. Bitcoin will also reach 21M and there will be no more coins.

This system is way better.

Interesting idea though...

[nevafuse]

Just not good enough. Bitcoin will also reach 21M and there will be no more coins.

We're only half way there.  So your bitcoins will be worth half as much as they could be if 10.5M was the cap.  Still a better inflation rate than fiat.

[mestar]

Imagine Satoshi coded bitcoin so that the first miner would receive the only bitcoin ever to be created & it could be infinitely divisible.  Of course, he would be the first miner, so he receives the only bitcoin.  Just like he distributed early bitcoins by convincing people to run the software, he could have convinced them to download the software & he'd send them .01 BTC.  

That scheme would have no chance of ever becoming popular.

Why exactly would he give anybody that 0.01?  For downloading software?  What happens after after 100 downloads, and still nobody is running the client? (because, why run it?)

How would you market this?  "Hey I created a new currency and gave it all to myself.  Please use it." 

No good.

[nevafuse]

Why exactly would he give anybody that 0.01?  For downloading software?  What happens after after 100 downloads, and still nobody is running the client? (because, why run it?)

How would you market this?  "Hey I created a new currency and gave it all to myself.  Please use it." 

Keep in mind, Satoshi basically used the same strategy for bitcoin.  And the same questions can be asked in the beginning of bitcoin.  Giving people .01 is equivalent to him telling people to download the software.   He could have mined forever by himself, accumulating all the bitcoins, but they would be worthless.  Giving away .01 or telling people to download the software prevents him from acquiring every bitcoin but hopefully works out in the long run by making it worth more.

And realize this was before blockchain.info & other online wallets.  So the only way to see your balance or even generate an address to send bitcoins to was to download & run the software.  This idea does remove the incentive to run the software 24/7, but Satoshi could just leave theirs on until more people were transacting & people were making money from transaction fees.

[SgtSpike]

Why exactly would he give anybody that 0.01?  For downloading software?  What happens after after 100 downloads, and still nobody is running the client? (because, why run it?)

How would you market this?  "Hey I created a new currency and gave it all to myself.  Please use it." 

Keep in mind, Satoshi basically used the same strategy for bitcoin.  And the same questions can be asked in the beginning of bitcoin.  Giving people .01 is equivalent to him telling people to download the software.   He could have mined forever by himself, accumulating all the bitcoins, but they would be worthless.  Giving away .01 or telling people to download the software prevents him from acquiring every bitcoin but hopefully works out in the long run by making it worth more.

And realize this was before blockchain.info & other online wallets.  So the only way to see your balance or even generate an address to send bitcoins to was to download & run the software.  This idea does remove the incentive to run the software 24/7, but Satoshi could just leave theirs on until more people were transacting & people were making money from transaction fees.

It would defeat the purpose of Bitcoin if a single person were to be in control of minting it.

[nevafuse]

It would defeat the purpose of Bitcoin if a single person were to be in control of minting it.

Zero people will be minting bitcoins after 2140, so how would that defeat the purpose?  This basically starts right at that 2140 position where no bitcoins are minted, and the only way to acquire them is to trade.  And just like bitcoin, the more you trade early on, the better off you will be long term.

[debianlinux]

It has already been proven that no one likes premined coins except the preminer. I mean, you do realize this scheme is exactly, that, premining, right?

[nevafuse]

It has already been proven that no one likes premined coins except the preminer. I mean, you do realize this scheme is exactly, that, premining, right?

Just like I said before, someone that is born 2140 could say the same thing about bitcoin.

[SgtSpike]

It would defeat the purpose of Bitcoin if a single person were to be in control of minting it.

Zero people will be minting bitcoins after 2140, so how would that defeat the purpose?  This basically starts right at that 2140 position where no bitcoins are minted, and the only way to acquire them is to trade.  And just like bitcoin, the more you trade early on, the better off you will be long term.

Only if in 2140, a single guy has every Bitcoin in existence and can distribute them however he sees fit.

[JoelKatz]

Only if in 2140, a single guy has every Bitcoin in existence and can distribute them however he sees fit.

I think his point would be that Bitcoin in 2140 won't be much different from a 100% pre-mined coin after the coins have become reasonably distributed due to sales, giveaways, or whatever. While true, this model probably wouldn't work well for Bitcoin  -- the block reward was needed to encourage mining which is needed to secure the block chain. And block rewards probably still are needed. By 2140, either Bitcoin will have already died off or a reward won't be needed to encourage mining anymore. Boostrapping Bitcoin adoption by people mining for transaction fees just doesn't seem doable.

[nevafuse]

It would defeat the purpose of Bitcoin if a single person were to be in control of minting it.

Zero people will be minting bitcoins after 2140, so how would that defeat the purpose?  This basically starts right at that 2140 position where no bitcoins are minted, and the only way to acquire them is to trade.  And just like bitcoin, the more you trade early on, the better off you will be long term.

Only if in 2140, a single guy has every Bitcoin in existence and can distribute them however he sees fit.

And if that was the case, bitcoin would be worthless, just like it was when Satoshi just released bitcoin.  If he keeps it to himself, it will continue to be worthless.  If it is distributed, just like Satoshi told people about mining, it will start to gain value.  The more people that have at least some fraction of coin, the more popular it will become, and the more it will be worth.  Therefore it would be in the best interest of the first miner to distribute their coins so his remaining coins will start to have value.  The more coins you keep, the higher the risk is that the currency will never take off because there isn't enough in circulation.

[nevafuse]

While true, this model probably wouldn't work well for Bitcoin  -- the block reward was needed to encourage mining which is needed to secure the block chain. And block rewards probably still are needed. By 2140, either Bitcoin will have already died off or a reward won't be needed to encourage mining anymore. Boostrapping Bitcoin adoption by people mining for transaction fees just doesn't seem doable.

A valid opinion, certainly.  I personally think relying on transaction fees to supplement mining costs from day 1 would work fine because there would be other incentives at hand.  The cheaper & easier to transfer coins early on, would make the coins worth more & more.  The electricity to mine early on was very little.  The appreciate of wealth from active/cheap/easy trading could easily supplement the cost of mining.  Mining in bitcoin is skewed to be very expensive because it is also a way of receiving new coins which devalues the existing coins.  Granted, this also makes the network very secure, who's to say having an smaller portion of the hashrate wouldn't be secure enough?  Assuming relying on transaction fees only instead of an additional block reward would create a network that uses only a portion of the current bitcoin hasrate.

[SgtSpike]

It would defeat the purpose of Bitcoin if a single person were to be in control of minting it.

Zero people will be minting bitcoins after 2140, so how would that defeat the purpose?  This basically starts right at that 2140 position where no bitcoins are minted, and the only way to acquire them is to trade.  And just like bitcoin, the more you trade early on, the better off you will be long term.

Only if in 2140, a single guy has every Bitcoin in existence and can distribute them however he sees fit.

And if that was the case, bitcoin would be worthless, just like it was when Satoshi just released bitcoin.  If he keeps it to himself, it will continue to be worthless.  If it is distributed, just like Satoshi told people about mining, it will start to gain value.  The more people that have at least some fraction of coin, the more popular it will become, and the more it will be worth.  Therefore it would be in the best interest of the first miner to distribute their coins so his remaining coins will start to have value.  The more coins you keep, the higher the risk is that the currency will never take off because there isn't enough in circulation.

I completely disagree.  To mean, a major part of the appeal of Bitcoin is that its distribution is not controlled by any single person.  If it was, it would be worthless to me, both before and after he started distributing it himself.

Now if you argue that he could give everything but 1 coin away, but whose to say he didn't give 1 million coins to 1 million addresses that he owns that just happen to look like legitimate other users?  I don't see any way to verify that the coins are indeed given away, and not just redistributed back to himself.

If you think this is a good idea, then start an altcoin, give part or all of them away, and see what happens.

[JoelKatz]

Now if you argue that he could give everything but 1 coin away, but whose to say he didn't give 1 million coins to 1 million addresses that he owns that just happen to look like legitimate other users?  I don't see any way to verify that the coins are indeed given away, and not just redistributed back to himself.

Either his accomplices/clones/puppets act substantially the same as non-accomplices or they don't.

If the accomplices act substantially the same as non-accomplices, then it doesn't matter. The supply and demand will be the same. The currency will still be just as useful as either a means of exchange or a store of value.

If his accomplices act substantially different from the way non-accomplices would act, then you have a way to tell -- the supply and demand will be what would be consistent with accomplices rather than what would be consistent with non-accomplices.

That's not to say it doesn't matter if someone cheats, lies or steals. That's definitely bad and probably criminal. It's inexcusable and we would probably hope that such a person is punished. But it's not going to effect the usefulness of the currency, assuming the supply and demand are the same. (Although, of course, it might be useless for other reasons.)

If the concern is that someone might hoard large amounts of currency and dump them on the market as some sort of secret plan to make lots of money, that has nothing to do with the initial distribution. Someone could buy up a currency to do that. Once you have something, how you can make the most money from it is independent of how you go it. (And these schemes never work anyway.)

[nevafuse]

I completely disagree.  To mean, a major part of the appeal of Bitcoin is that its distribution is not controlled by any single person.  If it was, it would be worthless to me, both before and after he started distributing it himself.

Now if you argue that he could give everything but 1 coin away, but whose to say he didn't give 1 million coins to 1 million addresses that he owns that just happen to look like legitimate other users?  I don't see any way to verify that the coins are indeed given away, and not just redistributed back to himself.

If you think this is a good idea, then start an altcoin, give part or all of them away, and see what happens.

I don't think this takes away the decentralized nature of bitcoin.  Before Satoshi told anyone about bitcoin or before anyone downloaded the client, bitcoin was controlled by a single person - Satoshi.  The only reason he lost control of it was because he told people about it.  In the same way, the first miner could lose control by giving away a portion (or all) of his first coin.

To address your other concern, Satoshi could own a majority of bitcoins now.  We have no way of knowing whether Satoshi owns none or a huge percentage.  I'll agree the chances are greater that he owns less than 25% because only half of all bitcoins exist & mining has gotten pretty popular.  But I could be wrong.  And I've already mentioned the incentives for the first miner to distribute a portion of that only single coin.

I do think its a good idea, and I would start an altcoin if I had the programming expertise.  But I'm a horrible promoter.  =D

[SgtSpike]

Now if you argue that he could give everything but 1 coin away, but whose to say he didn't give 1 million coins to 1 million addresses that he owns that just happen to look like legitimate other users?  I don't see any way to verify that the coins are indeed given away, and not just redistributed back to himself.

Either his accomplices/clones/puppets act substantially the same as non-accomplices or they don't.

If the accomplices act substantially the same as non-accomplices, then it doesn't matter. The supply and demand will be the same. The currency will still be just as useful as either a means of exchange or a store of value.

If his accomplices act substantially different from the way non-accomplices would act, then you have a way to tell -- the supply and demand will be what would be consistent with accomplices rather than what would be consistent with non-accomplices.

That's not to say it doesn't matter if someone cheats, lies or steals. That's definitely bad and probably criminal. It's inexcusable and we would probably hope that such a person is punished. But it's not going to effect the usefulness of the currency, assuming the supply and demand are the same. (Although, of course, it might be useless for other reasons.)

If the concern is that someone might hoard large amounts of currency and dump them on the market as some sort of secret plan to make lots of money, that has nothing to do with the initial distribution. Someone could buy up a currency to do that. Once you have something, how you can make the most money from it is independent of how you go it. (And these schemes never work anyway.)

Interesting thoughts... I honestly cannot think of any decent rebuttal to this, but somehow, the idea of it still doesn't jive with me wanting to get involved in utilizing such a currency.  I appreciate it from a logical standpoint, just not from a "gut feeling" standpoint, and I can't pinpoint why, given these arguments.

[JoelKatz]

Interesting thoughts... I honestly cannot think of any decent rebuttal to this, but somehow, the idea of it still doesn't jive with me wanting to get involved in utilizing such a currency.  I appreciate it from a logical standpoint, just not from a "gut feeling" standpoint, and I can't pinpoint why, given these arguments.

I completely share your feeling, actually. We've watched a long list of people who have brought no innovations to the table declare that Bitcoin is fundamentally broken somehow and that their alt coin is the way to fix it. (It's deflationary, that means it's broken. CPUs can't mine, that means it's broken. It doesn't force people to give money to open source software that means it's broken. It's unfair. It needs company. Etcetera, ad nauseum.)

Unfortunately, people have invested in these alt coins, causing jumps in price that have caused others to similarly invest. It's all obviously got to implode because none of these currencies had any realistic chance at being used as a means of exchange which is the only thing that can sustain them.

What I object to is people making up nonsensical claims about Bitcoin to try to make a personal profit without contributing any innovation or taking any risk whatsoever. I don't begrudge the Bitcoin early adopters because they contributed innovation and took risk.

(And if you search back, you will find that I took this exact same position long before I was associated with Ripple.)

[poly]

Interesting thoughts... I honestly cannot think of any decent rebuttal to this, but somehow, the idea of it still doesn't jive with me wanting to get involved in utilizing such a currency.  I appreciate it from a logical standpoint, just not from a "gut feeling" standpoint, and I can't pinpoint why, given these arguments.

I completely share your feeling, actually. We've watched a long list of people who have brought no innovations to the table declare that Bitcoin is fundamentally broken somehow and that their alt coin is the way to fix it. (It's deflationary, that means it's broken. CPUs can't mine, that means it's broken. It doesn't force people to give money to open source software that means it's broken. It's unfair. It needs company. Etcetera, ad nauseum.)

Unfortunately, people have invested in these alt coins, causing jumps in price that have caused others to similarly invest. It's all obviously got to implode because none of these currencies had any realistic chance at being used as a means of exchange which is the only thing that can sustain them.

What I object to is people making up nonsensical claims about Bitcoin to try to make a personal profit without contributing any innovation or taking any risk whatsoever. I don't begrudge the Bitcoin early adopters because they contributed innovation and took risk.

(And if you search back, you will find that I took this exact same position long before I was associated with Ripple.)

Hmm.. responds to a thread about 100% premine while working for a 100% premined scam currency..

[MagicBit15]

Get um while there hot lol