Bitcoin: The Digital Kill Switch

[mobodick]

Remember, all governments need us to need them.  If we can function independently, then there's no need for government.  *The whole military/police argument is a sad excuse* Again, fear is just the government's way of manipulating us.

You haven't met a lot of humans, have you?

Overall humanity needs these institutions to function at the level we do.
If there was no military or police we would live in chaos.
Of course it would all be rosy if everyone agreed with your particular set of ideologies but in reality only a small group of people will.
Most people will have different sets of ideals and these ideals tend to change depending on the situation a person is in.
Most people will say that stealing is bad but if they have no food i think most people will consider stealing food.
So to protect society from ignorant egoism we need something that prevents your neighbour from robbing you without you needing to create a wall around your premise and arm yourself. And military/police do a good job at this.
Fear is part of the way governments are manipulating society and its pretty effective in stopping a lot of chaos.
Of course i also think that they go too far in some places but that doesn't negate the fact that humanity cannot operate this stable on this scale without these power structures.
I, for one, am pretty happy that in my country i don't have a real fear that someone will kill me in my house for a can of food.
To me the situation feels so stable that i don't even feel the need to posess a gun. I don't need that kind of protection.
This, in turn, gives me a lot of happy time where i don't have to think about the terrors of other people.
I can't imagine that things would be this stable if there was no overarching force that applied the law.

But maybe you have a solution to offer to humanity.
So let me propose a typical human situation like they have played out for hundreds of thousands of years.

Group A has a resource that group B needs to survive but they don't want to give it up.
Group B doesn't have anything economically valuable for group A.
Group B now wants to pillage group A to get at the resource.

How would you prevent this invasion without any military or police?

Imagine the USA dissed its army and all its weapons 30 years ago.
What do you think that would have done with the position of north korea?
I can tell you, the USA would be a suburb of Pyongyang.

So all i'm saying is that , despite the problems, we actually need the overarching force to enforce the rules of the game we happen to play.
There is no other way to get organized into such a complex society and have it not fall appart at the seams.
Without the global force we would naturally diverge into several parts that will all independantly compete for the earths reources.
I can tell you that with the current level of technology this competition would be far worse than anything humanity has ever seen.
I mean, sure you can start a little club of people that shunt violence. But that doesn't force other people to put down their guns and so if those other people want to abuse you in some way they will be able to do so. If you do not take a weapon in the hand you stand no chance against an average fellow human being.
So to even survive as a viable economical group of pacifists you will need an army to protect yourself from being raped by non-pacifists.
It is how humans operate and it is why stability is reached only under these circumstances.

I think it is possible to get to some sort of good compromise tho.
If a government assures certain basic needs then most of the unguided demand from the population will be luxury in nature.
Not many people are willing to fight over a better version of something they already had so that dampens a lot of the real aggression in populations.
(nothing promotes a revolution as effectively as empty shops).
What is left is a game for acquiring luxury goods.
And that's fine but needs to be capped.
The amount of resources any individual can take out of society needs to be capped.
The ammount of resources any non-human entity takes out of society needs to be monitored and democratized.
Then i think a lot of problems would be solved.
There would be a lot less need for the power structures to act.
At the same time the power structures would be unable to accumulate unnessesary power.

[AnonyMint]

mobodick, I will soon be getting back on the technical exposition, but not today.

In the meantime, coincidentally I had been writing else where over the past days about statism and technology solutions:

http://esr.ibiblio.org/?p=4927&cpage=1#comment-399859

(follow also the 2 links in the post, and the subsequent posts on both pages)

[AnonyMint]

Finally had some time to think more deeply on the technical issues.

1. Independently of the hard disk space Proof-of-Work concept, I am unsure about the idea that I previously floated up thread to allow any mining peer to record a transaction, i.e. an attempt to avoid having the winning block peer decide which transactions are in a block. A spender can create a transaction that is backdated to a prior block time, unless there is a forward moving master record of transactions. I was thinking that if a spender tried to send such a backdated transaction, the peers would reject it because it is backdated, but even with a vote, a majority of rogue peers could introduce backdated transactions, so the idea trades the attack of rogue peers refusing to include transactions for the attack of rogue peers introducing backdated double-spends. The advantage of the idea is that non-rogue peers might be able to identify rogue peers, but what is the resolution mechanism? And how to distinguish between rogue peers and failure to communicate a transaction that did occur at that historical block time?

2. I have an unresolved problem with the hard disk space Proof-of-Work concept. The selection of the next peer to perform work is the one whose key is closest to the "next key". The problem is the "next key" can't be known a priori, else peers can game it when they select their key. So where does the entropy of the "next key" come from? It seems it must come from a hash of transactions, since that is the only non-centralized source of entropy we have. So if the current block peer is selecting the transactions, the "next key" can be gamed to point to a chosen peer. Whereas, if the peers compete to include the most transactions that has a hash that is closest to their key, this can still be gamed by introducing transactions. This also appears to be related to the problem that #1 was trying to address-- requiring that mining peers don't exclude transactions. I had mentioned this issue in my original draft of the specification at anonymint.com

3. I have another unresolved problem with the hard disk space Proof-of-Work concept. The concept is based on the current block peer having to provide a mutual digital signature with the "next peer" (or prior peer), so the current block peer has to maintain a hard disk storage of all these signatures. But how can a peer which is closest (and thus should be next) prove that it communicated with the current block peer if the current block peer doesn't have the record? I had handwaved at a solution in the original specification, where the peers keep track record of peers that persistently lie. I am doubting if such self-policing schemes are robust enough. Will think more on this.

These issues have to be resolved. I don't have a decision yet whether it is impossible to resolve them, yet I am leaning to that it is impossible.

[townf]

I first read this in the marketoracle a few days ago and im glad to see it somewhere being discussed because it is very important. Many people do not realize that unless explicitly and actively prevented, the natural inevitible progression of anything is a monopoly, and bitcoin's mining network does not do enough to prevent at least a 51% cartel from forming after the mandatory incentive is gone. This is guaranteed to progress deeper into monopoly. For this specific mining incentive problem, where does Freicoin fall short? I need to read more of the details on their system, but it supposedly was invented to address this very problem.

The full ambition or potential exercised by a would be mining/transaction processing cartel (or any other type of "attacker") probably cannot be contained solely with the architecture of a new internet cryptocurrency system in and of itself anyway, no matter how well designed and implemented. Other facets of the monetary system in the physical, real world need to be properly implemented to complement the cryptocurrency in the electronic realm. That being said, a crytocurrency system better than bitcoin in the 51% cartel attack vector regard (and maybe some others) must be designed and implemented to address the very real problem you bring to light in the kill switch and will go a long way in making a network transaction processing cartel less feasible, but relying on this alone to solve potential oppression by a power elite through a monetary system is putting all your eggs into a basket they already have their hands all over.

There exists of course a permanent, unperishable public record of all transactions ever made in the form of a giant perusable blockchain. This blockchain combined with the current siphoning and storage and sifting of the entire internet of all webpages, emails, texts, bank statements, DNS records, tax records, etc and the use of subpoenas, traffic analysis, secret warrants, criminal botnets, and everything else means there is absolutely no lasting anonymity using bitcoin. Bitcoin is going to be positively anti-anonymous as soon as it goes mainstream, guaranteed. The fact that people still think bitcoin is or will continue to be anonymous is ridiculous. Assuredly there are already teams of monkeys everywhere creating and using tools to mine for and plainly connect the dots of an always ever growing number of unmasked cryptocurrency addresses. Anybody or any institution, corporation, etc will be able to learn how much money their boss, neighbors, competitors, enemies, friends make and what they spend their money on and vice versa.

The solution to the anonymity problem is off the network. Inert, physical notes, coins, and accounting entries need to be issued on bitcoin reserves, guaranteed to be redeemed by the issuer for actual network blockchain cryptocurrency units. This adds total anonymity and furthermore will kickstart the use of cryptocurrency as an actual currency in the real world instead of the store of wealth/speculation gizmo that it currently is right now.

This sounds like a plug for fractional reserve banking, but there is no other way. Fractional reserve lending does not need to occur simply to issue and redeem inert notes one to one, although the temptation and ability will always be there. Fractional reserve banking becomes oppressive when banks become irresponsible, run out of reserves, and then get bailed out. One could also argue here that fractional reserve lending will be much more difficult to get away with using cryptocurrency reserves instead of precious metal reserves, because demand for the actual specie will be so much higher as it actually has a real use in transacting goods and services over the internet.

Furthermore, the issuance of notes on cryptocurrency reserves need not and should not be done by private entities for profit. It can be done by a p2p network issuing, counterfeit-proofing, validating, and redeeming physical notes based on open physical standards such as openpgp cards or the like. The method of issuing inert cryptocurrency notes is crucial because the current financial bloc performs this very function (based on pretty much nothing as reserves), and they will be tempted and have the means to FR lend. It needs to be cryptographically bailout proof and furthermore totally preclude the need for any bailout.

Centralization, lack of competition, or globalization is dangerous, not only for users of a currency on the internet but in the real world. Different cryptocurrencies need to proliferate not just on the internet, but geographically, each with its own blockchain, note issuance, etc, based in separate geographic areas that make sense. To illustrate the importance of this, who can argue that the ECB is less oppressive to Europeans than each country's own previous currency issuers? Who can argue that the FED is less oppressive to Americans than the Bank of North Dakota is to citizens of North Dakota? Who can say that Wall Street in 1912 was less oppressive to the US economy than the proliferation of smaller, regional, separately owned and controlled currency issuing banks across the country in the mid 1800's?

Tin foil hats, as the negligently naive masses call them, have been warning of a cashless global currency with no anonymity, controlled by a power elite for decades. Bitcoin in its current implementation is potentially poised to become just that.

I'm going to post this elsewhere in the forum as soon as I get out of noob jail. Please let me know what you guys think and feel free to publish these ideas anywhere.

[AnonyMint]

townf, I need to study freicoin more thoroughly. Will do and report my analysis.

Anonymity can be much improved using a MUTE concept.

Any system that trades over internet whether fractional reserve or not, must address monopolization and anonymity. Physical trading is a different need and utility.

3. I have another unresolved problem with the hard disk space Proof-of-Work concept. The concept is based on the current block peer having to provide a mutual digital signature with the "next peer" (or prior peer), so the current block peer has to maintain a hard disk storage of all these signatures. But how can a peer which is closest (and thus should be next) prove that it communicated with the current block peer if the current block peer doesn't have the record? I had handwaved at a solution in the original specification, where the peers keep track record of peers that persistently lie. I am doubting if such self-policing schemes are robust enough. Will think more on this.

This #3 can be resolved since all peers have a list of all peers, then for any registration requests not honored (possibly network error), the request can be sent to all peers who are required to proxy the request and either return the registration from the target peer. If target peer doesnt reply to any peer then it is banned. Peers have an incentive to help else they could be banned when they are target peer. Given the delay to reregister, there is an incentive to participate.

Note this doesnt consider overhead practicality, which must be analyzed. This doesnt resolve item #2.

[townf]

Anonymint, i think i was mistaken when i implied the purpose of freicoin is to specifically solve the mining monopoly problem. Its stated purpose is to improve the velocity of money and to be used more for a medium of exchange as opposed to a store of wealth. It hopes to accomplish this by charging demurrage, which is then given to miners. This demurrage fee paid to miners can possibly be the mandatory incentive necessary to keep smaller, honest miners in the game, however im not familiar with what hashing algo is used or what kind of mining hardware is required to be competitive.

[BlockChains]

Anonymint, I support your attempts to rectify the problem. I don't like the name duracash very much because from a marketing perspective it just sounds somewhat "scammy," at least when I first read it. I think its due to the use of "cash" and the overusage of the word by hucksters and bad infomercials (cash4gold for example). I like anonybit or just another "generic" coin name like digicoin.

To Arcavum and the argument about anonymity being lost converting from fiat to digital currency. Even converting to stereos purchased at Amazon is a leak on anonymity.  Anytime you give a physical address and a wallet address in communication for an order, anonymity is effectively blown. I know SR has a few workarounds but the average user connecting without the darknet loses digital coin anonymity in everyday usage pretty quickly.

[mrm0]

Anonymint, I support your attempts to rectify the problem. I don't like the name duracash very much because from a marketing perspective it just sounds somewhat "scammy," at least when I first read it. I think its due to the use of "cash" and the overusage of the word by hucksters and bad infomercials (cash4gold for example). I like anonybit or just another "generic" coin name like digicoin.

On the other hand, Bitcash sounds quite OK to me. And I agree, good name is a big part in gaining acceptance.

[Pzi4nk]

While I agree the success of bitcoin will encourage the development of other digital currencies, I don't believe they will surpass bitcoin as there is a substantial amount of momentum behind bitcoin already.

[BlockChains]

After thinking about it, something with cash in the name might be necessary to convey that this maintains more of the cash functionality then other cryptos.

[townf]

How about CashCowCoin?

[AnonyMint]

All thoughts on names are useful. I also registered DuraCoin.

townf, your synopsis agrees with my prior analysis of freicoin.

The sort of anonymity I want to improve is the inability to track a transfer to/from a specific IP address, and built-in as standard. Certainly shipping physical merchandise disrupts anonymity, but such purchases are small in value compared to the need to transfer net worth anonymously.

In my view, the future value in economics will mostly come from computer software, since everything will be automated. Thus physical assets which be the minority of the portfolio.

We won't need to ship, when we download the software that 3D prints the item locally.

I hope everyone is aware that the death of the current statism is due to the 78 year technology disruption cycle:

http://esr.ibiblio.org/?p=4927&cpage=1#comment-400320
http://copute.com/edu/Intro%20to%20Computers.html#Why_Learn_Programming

[AnonyMint]

While I agree the success of bitcoin will encourage the development of other digital currencies, I don't believe they will surpass bitcoin as there is a substantial amount of momentum behind bitcoin already.

The goal is not to surpass Bitcoin, rather to provide an alternative that is hopefully popular enough (say 5% of Bitcoin usage), so there is always an option for people to use that isn't monopolized by a cartel. And hopefully is more anonymous. And hopefully which anyone can realistically mine with their personal computer, so they don't have to necessarily buy via an exchange with fiat (and thus not be reported to the government by the exchange).

Realize the G20 just called for all countries to share information on movement of cash. The reason is because the Europeans are hiding their cash in the USA in real estate (etc.) and the corrupt Chinese taipans that steal most of the profits via shifting profitable portion of pricing to Singapore, are storing their money in London and Switzerland and the USA.

So when the global economy crash circa 2016 or so, the impoverished masses are going to call for a global taxation of wealth to go after all those people who escaped with their capital. Europeans think they they can leave their country and not be taxed by their home country. They are going to be very shocked when the global reporting cooperation comes in a few years.

Bitcoin is going to be a complete record of everything too and the governments will tax everyone after the fact.

Everyone is planting their own jail time by not reporting everything now. Because everything is tracked now. Just the governments have not yet set the plan in action to go after you.

THEY WILL.

[Pzi4nk]

The sort of anonymity I want to improve is the inability to track a transfer to/from a specific IP address, and built-in as standard. Certainly shipping physical merchandise disrupts anonymity, but such purchases are small in value compared to the need to transfer net worth anonymously.

I share your enthusiasm for anonymity but I wonder if in the future we'll even be able to use a computer without being monitored. Will an anonymous currency even be accessible in an anonymous way?

[marcus_of_augustus]

The sort of anonymity I want to improve is the inability to track a transfer to/from a specific IP address, and built-in as standard. Certainly shipping physical merchandise disrupts anonymity, but such purchases are small in value compared to the need to transfer net worth anonymously.

I share your enthusiasm for anonymity but I wonder if in the future we'll even be able to use a computer without being monitored. Will an anonymous currency even be accessible in an anonymous way?

Easily ... the technology exists today so it is inevitable since that is the medium of exchange that the market will naturally select.

[Kazimir]

There is no way that other smart developers won't respond when now they see $100 per coin created out-of-thin-air.

Ehhr, you see to be confused. It's the US Dollar that is created out of thin air, not Bitcoin.

[AnonyMint]

I agree that the technology for anonymity exists. And thus the market should move that direction once the governments go bezerk with capital controls.

Tor is not completely anonymous, because the injection node or the destination node may be compromised.

The solution is to inject your transaction from your mining peer (so you know it isn't compromised), but the way the system would be designed, it wouldn't be resolvable where a transaction was injected:

http://en.wikipedia.org/wiki/MUTE

If enough of the peers are not compromised, it becomes very unlikely for traffic analysis to determine where transactions originated from. If transactions can't be tracked to an originating IP address, then there is no technical way to subvert the anonymity.

I still have the prior listed unresolved problem with my proposed design. I will report if I have resolved it.

I have briefly looked at a Proof-of-Share proposal:

https://bitcointalk.org/index.php?topic=189239.msg2119596#msg2119596

[ilostcoins]

I don't want to get into that "diabolical cartel" talk. However, I totally agree in the very long term, coin generation should continue to provide incentive for miners to secure the system. Unlimited coin creation is a good thing as long as the trend is easily predictable.

I'd support something like, 0.1-1% annual increase in coin quantity in the very long term future. A small percentage of total "money supply" should be enough to pay for the computing power necessary for sustaining the network in the long term.

[AnonyMint]

2. I have an unresolved problem with the hard disk space Proof-of-Work concept. The selection of the next peer to perform work is the one whose key is closest to the "next key". The problem is the "next key" can't be known a priori, else peers can game it when they select their key. So where does the entropy of the "next key" come from? It seems it must come from a hash of transactions, since that is the only non-centralized source of entropy we have. So if the current block peer is selecting the transactions, the "next key" can be gamed to point to a chosen peer. Whereas, if the peers compete to include the most transactions that has a hash that is closest to their key, this can still be gamed by introducing transactions. This also appears to be related to the problem that #1 was trying to address-- requiring that mining peers don't exclude transactions. I had mentioned this issue in my original draft of the specification at anonymint.com

Seems this problem may be solved when the entropy is grabbed ever day or so, instead for every transaction block:

https://bitcointalk.org/index.php?topic=189239.msg2120749#msg2120749

But the details are still unclear to me on how to have a global consensus on this randomized hash.

[ethought]

Very interesting thread.

I seems clear to me that Bitcoin as it currently is seems to have a fundamental flaw. When all, or even nearly all, coins are mined, difficulty has risen to a ridiculous point and the power of electricity is constantly rising what incentive do miners have to keep mining. Without miners the system is dead.

I also agree with you AnonyMint that if mining could be equally available to all, the system would be much more sustainable in the long run. Professional miners could set up large mining rigs but also the average person with an average pc could also mine. I have put some thought into this before and was thinking about an algorithm that uses large amounts of memory per processor that would make it impossible to mine on GPUs or ASICs. How that algorithm would actually work I have no idea yet. I like your idea of a hard drive mining algorithm though. One advantage of your low power usage idea is that is makes the whole digital currency concept much more environmentally feasible which I think is a powerful selling point, in terms of the general public, going forward.