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Author Topic: mining-less alternative chain?  (Read 915 times)
stefanx
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June 14, 2011, 06:41:03 AM
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Please excuse my confusion, I have a question regarding the usage of Bitcoin's approach for an alternative chain ( https://en.bitcoin.it/wiki/Alternative_Chains ).

Would it be possible to create an alternative chain where all coins are pre-calculated from the beginning on so that no mining is possible? The system should be used to secure transactions only. I guess this question is related to the question "what happens when all 21 million Bitcoins are mined?".

Thanks for your advice.
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_ikke_
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June 14, 2011, 07:09:23 AM
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A bitcoin is divisible up to 8 decimal places. So in fact, you have 21*10^14 bitcoins. There is not real shortage of bitcoins in the near future or even the somewhat far future. And even if that is becoming a problem, they can choose to split them up even further.
stefanx
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June 14, 2011, 11:10:00 AM
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Thanks for the reply. Anybody has an answer to my question?
3phase
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June 14, 2011, 11:25:13 AM
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Who would create and distribute these Bitcoins then? Whatever the answer might be, the creator/distributor would need to be a singular entity. If it wasn't then anyone could claim to create Bitcoins.

So, if it was a singular entity, who of the Bitcoin crowd would want to do business with them, with a centrally controlled currency? Isn't this what we have already going on in each country?

The idea of Bitcoin, as described in Satoshi's paper points specifically to a distributed production and transaction scheme, so that not one entity can control the currency. This is a feature, not a bug. The whole "mining" thing is a very well thought out method to make the production of Bitcoins "difficult", therefore costly, therefore increasing in value as time passes.

Hope it does give you an answer to the question.

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Stephen Gornick
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June 14, 2011, 12:28:14 PM
 #5

Please excuse my confusion, I have a question regarding the usage of Bitcoin's approach for an alternative chain ( https://en.bitcoin.it/wiki/Alternative_Chains ).

Would it be possible to create an alternative chain where all coins are pre-calculated from the beginning on so that no mining is possible? The system should be used to secure transactions only. I guess this question is related to the question "what happens when all 21 million Bitcoins are mined?".

Thanks for your advice.

Without the baggage of decentralization there are a number of transaction systems that would do what you ask.

 Some options that I can think of:
 - http://truledger.com
 - http://en.bitcoin.it/wiki/Open_Transactions

[Edit: you only asked that mining activity not issue new currency, not about how to eliminate the mining function entirely.  sorry.]


There is an effort already underway like what you describe: BeerTokens
 - http://forum.bitcoin.org/index.php?topic=9493.0



Sukrim
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June 14, 2011, 12:40:25 PM
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Please excuse my confusion, I have a question regarding the usage of Bitcoin's approach for an alternative chain ( https://en.bitcoin.it/wiki/Alternative_Chains ).

Would it be possible to create an alternative chain where all coins are pre-calculated from the beginning on so that no mining is possible? The system should be used to secure transactions only. I guess this question is related to the question "what happens when all 21 million Bitcoins are mined?".

Thanks for your advice.
Yes, such a system would be perfectly possible, it just wouldn't be "Bitcoin" any more but some other hashed blockchain with different rules (you could probably even use Bitcoin mining programs, but not the unmodified Bitcoin client. Also your network would have a different Hashrate + Difficulty than Bitcoin).

The implications are the same as "endgame-Bitcoin": Miners only earn from transaction fees. Additionally you have created a centralized authority that could give out these coins.

I believe something like this could be used in smaller communities, as a replacement for gift vouchers that are valid ony in a certain region. The "centralized authority" could then sell and buy(!) "1 Vouchercoin" at a guaranteed rate of 1 USD each (for example). If mining vouchercoins is not really public, but sponsored by the main authority (1 cheap GPU is enough to produce blocks at a steady rate of 1 block per 10 minutes) you wouldn't even need to worry about attacks or even impose transaction fees, if you trust that authority (you already do so, if you give out other kinds of vouchers anyways). Also the block generation rate could be upped to 1 block every minute or even every second (you'd need a bit more storage capacity then though) to make sure payments are confirmed more or less instantly.

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yellowknife
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June 14, 2011, 12:44:54 PM
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Would it be possible to create an alternative chain where all coins are pre-calculated from the beginning on so that no mining is possible? The system should be used to secure transactions only.

Sure, it's possible for someone to do that.  But in that scenario, who owns the coins?  Mining is a way to distribute coins to the people who invest in securing the network. But if all of the coins are owned by whoever created the chain, I'm not sure why anyone other than that one person would embrace it.

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Rob P.
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June 14, 2011, 01:19:45 PM
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Would it be possible to create an alternative chain where all coins are pre-calculated from the beginning on so that no mining is possible? The system should be used to secure transactions only. I guess this question is related to the question "what happens when all 21 million Bitcoins are mined?".

As stated previously.  Yes, it's possible.

However, you then have to figure out how to distribute the coins.  How do you propose to do that?

In Bitcoin, mining distributes the coins, based on "work" done by the miners.  In fact, since there were so few transactions at first, Bitcoin used an elegant approach and "paid the miners" a finders fee if you will for doing the work to confirm transactions and build the block chain.  If you participate in helping the block chain, you can get paid for doing so.  It distributes coins based on work effort.

Eventually the 21,000,000 coin limit will be reached and miners will not longer "pay themselves" for mining.  At that point they will get paid for "confirming" and the earned monies will be the transaction fees on the transactions that are in the blocks.  With hope, there will be a lot of transaction fees so the miners will continue to "mine"/confirm. 

Without miners Bitcoin dies, because no transactions will be confirmed and placed on the block chain.

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stefanx
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June 17, 2011, 10:59:51 AM
 #9

Thank's alot for the useful answers. Indeed I was thinking about a centralized fixed value "gift voucher" kind system which could be bounded to - let's say - 1 Euro per coin. Still I don't understand if for this scenario all coins would need to be calculated by the central instance and the users (who perform transactions) would not need to mine any more?
Rob P.
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June 17, 2011, 04:58:52 PM
 #10

Thank's alot for the useful answers. Indeed I was thinking about a centralized fixed value "gift voucher" kind system which could be bounded to - let's say - 1 Euro per coin. Still I don't understand if for this scenario all coins would need to be calculated by the central instance and the users (who perform transactions) would not need to mine any more?

And to whom do I pay my 1 Euro?  The central "bank"?  They distribute the coins? 

Then you've completely missed the point of Bitcoin, which is to avoid having centralized control over the resources.

Also, what's stopping you from selling more "coins" than you originally stated, thus making all of the coins in the market worth less?  Nothing.

That's basically the currency systems we have today, so what are the advantages of the system you're talking about?

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