Why the maximum of 21.000.000 bitcoins cannot be enforced

[Stevie1024]

In my paper (http://www.newbitcoin.org/documents/newbitcoin.pdf) one of my objections was that the current distribution of bitcoins is unfair. I didn't write this because I felt personally discriminated against, but I see it as a fallacy of the Bitcoin system. (Sorry, just learned a new word, 'fallacy', just had to use it.) A new insight has struck me that needs sharing.

In order to understand why the 21.000.000 limit cannot be enforced, it is important to understand that a distribution system with reward linear to the amount of work to find them (as described in my paper) is very possible. And that it is in fact the only way a cryptocurrency can be logically implemented. I'd be happy to defend that or answer any questions about that.

Latecomers to the bitcoin system will see a wealth distribution where less than 50% of its users own more than the other 50%. (Much more it seems: http://forum.bitcoin.org/index.php?topic=8667.0.) Where they have to do half a million times (current 'difficulty') as much work as the finders of the first blocks. (Current figures, situation getting worse.) They have the option of accepting this or start a new currency or a new blockchain. But they have another, much likelier option.

At the time enough latecomers realize how unfair the distribution is (and if at that time Bitcoin has achieved any economic significance), the "Fair Bitcoin Initiative" will be founded. They will bring out a bitcoin client that is completely compatible with the specification, except that it will award bitcoins linearly with the amount of work to find them, without an upper limit. (Yes, I know, that is not completely in line with the specification. But it's not so hard to imagine how it will be achieved.)

As soon as 50% of the bitcoin community has joined this initiative (promoted by hip webshops, mining pools with a yellow ribbon campaign), they effectively rule the distribution of bitcoins. They will adopt the only logical distribution scheme. Any early-adopter thinking this will not happen, that latecomers will accept the absurdly large early-adopter advantage, is wishful thinking.

So far I have been refraining from cashing in more bitcoins than to get back my little investment. I'll give all speculators three days to realize the implications of the above, then I start cashing in some more. Anyone willing to pay me more than my (electricity) cost to produce them will be sponsoring my new mountain bike.

[jhansen858]

Before I listen to anything you say, do you have any credentials that are worth noting?

[Stevie1024]

Before I listen to anything you say, do you have any credentials that are worth noting?

Well, if it is about credentials here more than about what I have to say: I did graduate in IT at university.

[swusc2]

It's the inevitable issue of any currency. The ones entered early potential have the best outcome. It's the advantage of foresight and sometimes plain luck. But if it was just as easy to make money by someone who comes in really late as someone early, there would be no point in economics or currencies.

[triforcelink]

There are people out there that would not touch bitcoin with a ten foot stick right now (rightly so, just look these price jumps) and you want to award these people on the same level down the line when bitcoin becomes stable? Now THAT'S unfair. Besides, bitcoin is supposed to serve as a medium of exchange and not as an investment vehicle, these huge incentives are supposed to help bitcoin grow in its early stages.

[Stevie1024]

There are people out there that would not touch bitcoin with a ten foot stick right now (rightly so, just look these price jumps) and you want to award these people on the same level down the line when bitcoin becomes stable? Now THAT'S unfair. Besides, bitcoin is supposed to serve as a medium of exchange and not as an investment vehicle, these huge incentives are supposed to help bitcoin grow in its early stages.

It's not about what I want, it's about what will unevitably happen.

[hugolp]

You are not very original, this has been discused and answered forever.

At the time enough latecomers realize how unfair the distribution is (and if at that time Bitcoin has achieved any economic significance), the "Fair Bitcoin Initiative" will be founded. They will bring out a bitcoin client that is completely compatible with the specification, except that it will award bitcoins linearly with the amount of work to find them, without an upper limit. (Yes, I know, that is not completely in line with the specification. But it's not so hard to imagine how it will be achieved.)

As soon as 50% of the bitcoin community has joined this initiative (promoted by hip webshops, mining pools with a yellow ribbon campaign), they effectively rule the distribution of bitcoins. They will adopt the only logical distribution scheme. Any early-adopter thinking this will not happen, that latecomers will accept the absurdly large early-adopter advantage, is wishful thinking.

And then you will have two currencies. The old system and the new system. The new system is more inflationary and people wont trust it and it will die. I actually think that the miners will see this and wont even go for the change in the first place.

[da2ce7]

It's not about what I want, it's about what will unevitably happen.

I would love you to make a compatible fork of bitcoin... That makes the coins I own TWICE as valuable as I can spend them on both block-chains!

So what you are really creating is a HUGE and UNFAIR advantage to the early adopters.

(note) the coins in the bitcoin block chain will remain much more valuable.  Therefore, not twice as valuable... but you get the point.

[Stevie1024]

You are not very original, this has been discused and answered forever.

And then you will have two currencies. The old system and the new system. The new system is more inflationary and people wont trust it and it will die. I actually think that the miners will see this and wont even go for the change in the first place.

I would love you to make a compatible fork of bitcoin... That makes the coins I own TWICE as valuable as I can spend them on both block-chains!

The idea might have been stated before, if you drop me a link I'll even say sorry.

But please do understand, I'm not speaking of a situation of two co-existent currencies. I'm speaking of the current block-chain being taken over.

[amincd]

The idea that early adopters are unfairly rewarded is ridiculous nonsense. I'm not an early adopter, but I can recognize that if someone acquires something when its value is low and no else is interested, and the value of that asset subsequently appreciates, they are absolutely entitled to the gain.

If it's so easy to get rich by contributing to a block chain when it's new, then why isn't every one mining namecoins right now?

If it's so stacked in favor of early adopters, then clearly every one will choose to be an early adopter.

The truth is there is no easy way to KNOW what the market will demand, and contributing to something that eventually does become valuable is a valuable contribution to the economy and should be rewarded.

[da2ce7]

You are not very original, this has been discused and answered forever.

And then you will have two currencies. The old system and the new system. The new system is more inflationary and people wont trust it and it will die. I actually think that the miners will see this and wont even go for the change in the first place.

The idea might have been stated before, if you drop me a link I'll even say sorry.

But please do understand, I'm not speaking of a situation of two co-existent currencies. I'm speaking of the current block-chain being taken over.

lol... as soon as you change the rules you create a fork, it doesn't matter if the fork has a shorter or longer chain... The original block chain will remain intact, and will keep on going happily.

[hugolp]

lol... as soon as you change the rules you create a fork, it doesn't matter if the fork has a shorter or longer chain... The original block chain will remain intact, and will keep on going happily.

This. And the guy has written a whole paper about bitcoins and makes mistakes like this...

[westkybitcoins]

You are not very original, this has been discused and answered forever.

And then you will have two currencies. The old system and the new system. The new system is more inflationary and people wont trust it and it will die. I actually think that the miners will see this and wont even go for the change in the first place.

I would love you to make a compatible fork of bitcoin... That makes the coins I own TWICE as valuable as I can spend them on both block-chains!

The idea might have been stated before, if you drop me a link I'll even say sorry.

But please do understand, I'm not speaking of a situation of two co-existent currencies. I'm speaking of the current block-chain being taken over.

You missed his point.

Even if what you're proposing was possible, and it somehow made bitcoins more valuable, you would still be making the early adopters, those sitting on hundreds of thousands (millions?) of bitcoins that much richer.

And that's a bad thing, right?

[Stevie1024]

lol... as soon as you change the rules you create a fork, it doesn't matter if the fork has a shorter or longer chain... The original block chain will remain intact, and will keep on going happily.

This. And the guy has written a whole paper about bitcoins and makes mistakes like this...

50% Or more will not be early adopters -> 50% or more will have envy -> 50% or more will have 50% of the computer power necessary to create the longest chain

Please do tell me my mistake?

Speaking of 'envy', mathematicians use 'envy-free' for the distribution I think is the only logical one: http://en.wikipedia.org/wiki/Fair_division

[nazgulnarsil]

topic creator: you don't understand the definitions of the words you are using.  please read any introductory econ text.

[AntiVigilante]

The idea might have been stated before, if you drop me a link I'll even say sorry.

But please do understand, I'm not speaking of a situation of two co-existent currencies. I'm speaking of the current block-chain being taken over.

None of the problems you are worried about need forks or even major changes. I already have a model involving angel miners for towncoins and they will stronger than mainline.

No redesign is necessary.

[da2ce7]

50% Or more will not be early adopters -> 50% or more will have envy -> 50% or more will have 50% of the computer power necessary to create the longest chain

Please do tell me my mistake?

Sure... Bitcoin regards the longest valid chain as the correct version of the truth.  If you change bitcoin so the fees remain at 50 BTC forever, that would create a invalid chain for every bitcoin user that has not agreed with your modification.

Even if you had 100x the hashing power on your '50 forever' chain... that chain will still be rejected by every client that has not adopted your changed rules.

[Klestin]

Would the situation the op proposes not result in the devaluation of BTC relative to the current value at that point?  How does one convince 50% of the users to adopt a policy which devalues their holdings?

Also difficult is getting them to do so all at once.  If they don't, their early generated blocks will invalidate, as they won't be able to maintain the longest block chain.

[westkybitcoins]

Would the situation the op proposes not result in the devaluation of BTC relative to the current value at that point?  How does one convince 50% of the users to adopt a policy which devalues their holdings?

Also difficult is getting them to do so all at once.  If they don't, their early generated blocks will invalidate, as they won't be able to maintain the longest block chain.

And that's the real issue... who plans on being first to make some attempt at forking the chain? Who wants to spend time and energy risking that the new blocks they generate may, eventually, perhaps, be recognized by enough other clients to matter? Even if you tried to organize a situation where thousands of agreeable miners have all promised to come online with the modified software at the same time, how does each of them know the others won't bail at the last minute? And if they have doubts, what's to stop them from bailing at the last minute?

[hugolp]

Would the situation the op proposes not result in the devaluation of BTC relative to the current value at that point?  How does one convince 50% of the users to adopt a policy which devalues their holdings?

Also difficult is getting them to do so all at once.  If they don't, their early generated blocks will invalidate, as they won't be able to maintain the longest block chain.

And that's the real issue... who plans on being first to make some attempt at forking the chain? Who wants to spend time and energy risking that the new blocks they generate may, eventually, perhaps, be recognized by enough other clients to matter? Even if you tried to organize a situation where thousands of agreeable miners have all promised to come online with the modified software at the same time, how does each of them know the others won't bail at the last minute? And if they have doubts, what's to stop them from bailing at the last minute?

And even if they do get their act together, how will they know merchants will accept their new bitcoin instead of the old one? If you are a merchant would you accept a currency whose supporters are inflationists or a currrency whose supporters want sound money?