MC2: A cryptocurrency based on a hybrid PoW/PoS system

[m3kt3k]

You could easily do both. BTC and Kickstarter. Some of us dont really care if the govt see's we helped a project like this. What are they gonna do take away my clearance level and machine gun? LOLZ they would be doing me a favor. NO just either do both or pick one and I will donate. I would much rather see this then a premine and the stigma that tends to go with that.

[1713544851]

1713544851

[bybitcoin]

You could easily do both. BTC and Kickstarter. Some of us dont really care if the govt see's we helped a project like this. What are they gonna do take away my clearance level and machine gun? LOLZ they would be doing me a favor. NO just either do both or pick one and I will donate. I would much rather see this then a premine and the stigma that tends to go with that.
 

From a legal point of view, it is better to do it with fiat currency.

Ingsoc is absolutely right regarding this and I applaud his efforts at ensuring a standard of transparency and professionalism.

Really, just so (You seem talented for short manifestation)  

In an ideal world, perhaps the world we're building, funding ideas through cryptocurrency is a huge step forward. Unfortunately, we're not there yet. There are a number of things to consider at present. Firstly, as much as banks can cause people headaches, in most cases money in an account is insured against theft. It'd be great if we could have something similar for a cryptocurrency as well one day. Secondly, we want to do this as professionally and transparently as we can with the medium available to us. The fact of the matter is that most individual developers or teams of developers would enter into a contractual agreement with us for the development of Netcoin, or a component of it. That means paperwork, invoices, documented transactions, etc. That could happen with cryptocurrency as well, but in all likelihood any breach of our agreement wouldn't be as enforceable as it would be in traditional systems.

I know it's not ideal, but I'm thinking of the best ways to my knowledge that we can do this as smoothly as possible. There are no guarantees whatsoever with this, which is why I want to stress that if you can't afford losing what you put toward the fund, please don't do it! It would be horrible to know that if something goes wrong someone suffered because of it. Having said that, tacotime, xwebnetwork, and myself are all putting in money of our own as well. Hopefully the advance notice will help you with this. I think one day this will all be very different and we can incubate ideas through new platforms for sure.

[Luckybit]

Tacotime, this is something you should have a look at because it has serious potential to change the cryptocurrency playing field.

https://payswarm.com/specs/source/web-api/
https://dev.payswarm.com/
http://blog.meritora.com/launch/
https://hacks.mozilla.org/2013/04/introducing-navigator-mozpay-for-web-payments/
https://wiki.mozilla.org/WebAPI/WebPayment

I propose the idea to make Netcoin an underlying web protocol and develop with Payswarm open standards in mind. I believe sooner or later cryptocurrencies are going to become an underlying protocol of the web.

PaySwarm allows currencies to be specified by either an internationalized currency code, like “USD”, or by an IRI that identifies a currency. This means that anyone capable of minting an IRI, which is just about anybody on the Web, has the ability to create a new alternative currency. The one draw-back for alternative currencies is that there must also be a location, or network, on the Web that acts as the currency mint. The concept of a currency mint will be covered later in this blog post.
http://manu.sporny.org/2011/web-payments-comparison/#currency-mints

Payswarm is also coming in the near future and it includes a specification of "currency mint" based around an IRI which identifies the currency. I propose that developers put the creation of a Netcoin IRI on the development to-do list. If it's relatively simple and could be done before or shortly after the release of Netcoin it could greatly benefit Netcoin users in the long term and promote adoption through integration with Payswarm technology and thus integrate it into the web itself.

If "Bitcoin" becomes the only standard and it's cemented in stone then it stops progress, innovation, and evolution of digital currencies. Bitcoin has many flaws, and there are few reasons why we should expect it to be the only coin ever any more than we would want there to only be one credit card, search engine, payment processor, operating system, etc. That in itself would be centralization of power in a way which does not improve security of cryptocurrencies over the long term.

This sounds excellent and this should be taken seriously. I just tried the demo and already see the big potential for this. It can help with the adoption problem for the layman person, and we can take advantage of the businesses that already accept Payswarm, so that Netcoin can expand its reach.

One thing that I'm uncertain about is whether or not we would need to create an organization to support the Payswarm. From my understanding, it seems that Payswarm is a payment processing platform that we can implement into a central website. Would we need anyone to handle the customer support as well invest in managing the security of the account information? Basically, are we creating our own Paypal with the Payswarm payment processing technology?

The most important thing for a cryptocurrency is that it be used. It's a good idea for Netcoin to embed itself into the web as a long term adoption strategy. Think of Netcoin as becoming the Netcoin protocol, and think of Bitcoin as becoming the Bitcoin protocol, and so forth so that at some point the technology of it speaks and it can exist independently of tribal / partisan politics. At this time Bitcoin is a product and products never become as widely used as core protocols. Productism and politics in my opinion are holding Bitcoin back from mainstream adoption at this point.

I would hesitate to label it our Paypal because Paypal is an "evil" business with a corrupt political agenda. I suggest we unofficially refer to it as project Freepal because it opposes the very essence of what Paypal is doing. Freepal liberates the will of the user by allowing the user to have free speech in the economic form. There is to be no middle man, no centralized master telling us what we can or can't buy, no boss to lend us money we don't really get to own, no third party or man in the middle to charge us fees. It's a direct expression of the economic will of the user to send value person to peerson or peer to peer.

Payswarm is superior to Paypal on every level. It's an open standard, it's built into the web as a specification, it's not proprietary so that the political views and opinions of the some CEO cannot influence anything. Payswarm is attempting to be as politically neutral as possible and I think that is a good direction for Netcoin as well. Offer a very good core technology from a politically neutral point of view, offer the tools of liberty and democracy and let the users determine what direction to take Netcoin.

The reason to have an organization isn't to promote Payswarm particularly but to give people the capability of economically focused electronic democracy. To have a community you need the ability to vote, and to protect a community you need the ability to make decisions. To make it as fair as possible you need the ability to allow stakeholders to vote in a manner which is coercion resistant. It also has to be anonymous, if we know how everyone is voting then we can bully them into voting for our way of doing things or our candidate, I just want the product to adhere to the will of the users and the community of users who give Netcoin meaning.

I don't think it's enough just to build a tool but not give the community any way to regulate itself. When you don't give the community any kind of democratic processes at all then you can end up with fiefdom corporate type systems where they lock the common users out from the decision making process or share holding. We could end up with a digital caste system where individuals from other industries come in years from now and buy everything up and then set up gatekeepers, unfair legal regulations, bosses, middlemen and very undemocratic systems to create a high tier of unaccountable rulers.

Winkelvoss makes people uneasey because of what they could do. They could end up owning the Bitcoin eco-system, and if people disagree with a decision how would that be expressed? So in my opinion sooner or later the voting mechanisms and democratic processes have to be brought in and one thing I like about Netcoin is it's forward thinking enough to reach the conclusion that after 27 years we will have to bring that in for determining the interest rate. I think any cryptocurrency protocol is ultimately backed by the faith of a community and a community is in my opinion better off with democratic processes built in.

For instance lets say it's a year from now and Netcoin is released and I propose the idea that Netcoin should adopt a strategy of embedding itself into the web. If users could somehow vote on it and if they agree or disagree we know, then we have feedback which is very important. If we just for instance rely on Bitcointalk then you could have the votes get fudged because people who have nothing to do with Netcoin could vote in ways to sabotage it or confuse.

I think long term the situation is cryptocurrencies are going to be regulated. It can be self-regulating, or not self-regulated in which case it will be made to conform into the will of others. If it's self-regulating to a certain extent then the elected Netcoin leadership or representatives whomever they turn out to be would go to the SEC, Congress and politicians around the world to explain how things work. The worst case scenario is that there is a leadership void and there are no representatives for the interests of the community to go to the government/politicians and help formulate the legislation and laws around cryptocurrencies. I don't think Netcoin in particular has to be the only cryptocurrency community involved in this but I think the best case scenario is a scenario where you have various cryptocurrencies which have a way to get feedback from the community and then determine the rules based on a combination of that feedback and discussion with lawmakers. I don't think the wild west will last forever.

[tacotime]

An update has been given on the PoW hash function and it has been dramatically simplified; it now uses the digits of pi to random algorithm selection.  N is fixed because I'm worried about it potentially introducing vulnerabilities into the chain if you play with it a lot, and I'm not sure if offers much more security even if you do.

http://www.netcoin.io/wiki/Netcoin_Proof-of-Work_Hashing_Function

Nonetheless, an easy PoW function will let us put the chain out faster, which will let enable us to much more easily avoid the whole super fast ASIC fiasco.  If solar designer comes up with his proposed scrypt fork we can talk about that then, but right now it doesn't exist and Netcoin needs to move forward.

There's only a couple topics left to edit on the wiki (that I'm still meditating on), then we shall move to launching the crowdfunding.

Some answers to commonly asked questions:
1) The distribution of funds was designed to get at least $50,000 by crowdfunding ASAP, which I think should be the absolute minimum we use to launch the development with.  $100,000 is ideal, though.  There is a mathematical function governing it (that should be obvious) and you can manipulate that to cause variable price differences among the tiers.  I have sent this data to _ingsoc for him to look at and see what he thinks.
2) I want to deal with fiat so that we don't have a totally irresponsible BFL preorder-ish fiasco where the product doesn't come out forever and the investors make nothing back.  If one crowdfunder is better for global persons eg indiegogo vs kickstarter, we will go with the one that is more accessible.
3) I will add some more notes on how you will get NTC with your stake tickets soon, and how the keys will be distributed (likely PGP or snail mail).

I can't address things directly right now like web API, etc due to time constraints, but if you think it is a good idea, please add it to the wiki!  I am just going to concentrate on this so we can get the ball rolling with the basic development.  Obviously things like equivalents of BitPay or CoinBase (especially coinbase) are critical to the support and adoption of the currency, but that's beyond me right now.

[Etlase2]

If solar designer comes up with his proposed scrypt fork we can talk about that then,

Details?

[tacotime]

If solar designer comes up with his proposed scrypt fork we can talk about that then,

Details?

I am going to continue posting about possible incompatible changes to
scrypt (thus, deviating from scrypt) to crypt-dev only.  I made this
posting to the scrypt list as well because the numbers above are for
scrypt proper (a modified implementation of it producing same results,
as verified against test vectors).

This is nothing new/unexpected, but I thought some of you could find
this useful to get a better feeling of how the scrypt TMTO behaves.

http://www.openwall.com/lists/crypt-dev/2013/03/21/1

He later made a TMTO defeater and then defeated it himself using a thread desynchronization trick, you can read about it on crypt-dev.  In any case, he still actively posts about sCrypt related posts in crypt-dev, I wouldn't be surprised if the problem wasn't still in the back of his head today.

[Luckybit]

An update has been given on the PoW hash function and it has been dramatically simplified; it now uses the digits of pi to random algorithm selection.  N is fixed because I'm worried about it potentially introducing vulnerabilities into the chain if you play with it a lot, and I'm not sure if offers much more security even if you do.

http://www.netcoin.io/wiki/Netcoin_Proof-of-Work_Hashing_Function

Brilliant idea.

Some answers to commonly asked questions:
1) The distribution of funds was designed to get at least $50,000 by crowdfunding ASAP, which I think should be the absolute minimum we use to launch the development with.  $100,000 is ideal, though.  There is a mathematical function governing it (that should be obvious) and you can manipulate that to cause variable price differences among the tiers.  I have sent this data to _ingsoc for him to look at and see what he thinks.
2) I want to deal with fiat so that we don't have a totally irresponsible BFL preorder-ish fiasco where the product doesn't come out forever and the investors make nothing back.  If one crowdfunder is better for global persons eg indiegogo vs kickstarter, we will go with the one that is more accessible.
3) I will add some more notes on how you will get NTC with your stake tickets soon, and how the keys will be distributed (likely PGP or snail mail).

I can't address things directly right now like web API, etc due to time constraints, but if you think it is a good idea, please add it to the wiki!  I am just going to concentrate on this so we can get the ball rolling with the basic development.  Obviously things like equivalents of BitPay or CoinBase (especially coinbase) are critical to the support and adoption of the currency, but that's beyond me right now.

One question that you can answer is whether or not there should be any caps, should the crowd funding be set up and a whale were to purchase most of the slots in bulk would this be an acceptable situation?

I'm looking at what RealSolid said when offering fee shares https://bitcointalk.org/index.php?topic=264182.msg2825833#msg2825833, and the Lealana physical litecoin sale https://bitcointalk.org/index.php?topic=243341.0 , both had to introduce a sort of cap so that there is a max that any single person can buy within a set period of time.

These caps were introduced to promote a more decentralized distribution so that more people overall have a stake. Is this something which should be replicated or are limits like these bad? I wouldn't have a problem with it either way, I just figure it should be brought up prior to the crowd funding as a move to be considered and debated.

At this point I can't wait for the Kickstarter or crowdfunding campaign to start.

[tacotime]

@Impaler

Now I remember why we need bits from the current block; see the latest wiki update for more details, but I'll x-post a note from it here:

NOTE: It may not be immediately clear why we use 6-bits from the most recent block. Consider the attack in which a malevolent stakeholder has the majority of tickets for any given block header hash. If we use only old blocks, especially ones far back in the history of the blockchain, no matter how many new proof of work blocks are generated the attacker can still halt the chain. Now consider the instance in which 6 bits are taken from the most recent block; we have 2^6 = 64 possibilities for the lottery winner. The malicious stakeholder in this case can block only one of 64 possible blocks from entering the blockchain; in the event this block is not voted on by the malicious stakeholder, PoW miners can continue work from the previous block and generate another block with a different lottery winner. Then, non-malicious stakeholders can push this block through the network and the chain can continue. It is extremely important that PoW miners continue on old work until the latest block has been verified by a majority of stakeholders for this reason. This also gives an interesting trade-off for security: we can choose up to 16 bits from the current block, however, the more bits we choose from the current block, the more readily a PoW miner can manipulate the lottery winner. Using blocks that are weeks or months old mitigates this manipulation, however, without choosing several bits from the current block we enter the case where an attack as detailed is extremely likely. So, we must select n bits from the current block at a level that allows for some options in terms of lottery hash, but which does not allow for the complete manipulation of the lottery winner. In the case of 6 bits (64 possible lottery winners), the PoW attacker mining at the current block can only generate (64 / 65536) * 100% = 0.01% of possible tickets.

[tacotime]

Brilliant idea.

Thanks,

One question that you can answer is whether or not there should be any caps, should the crowd funding be set up and a whale were to purchase most of the slots in bulk would this be an acceptable situation?

I'm looking at what RealSolid said when offering fee shares https://bitcointalk.org/index.php?topic=264182.msg2825833#msg2825833, and the Lealana physical litecoin sale https://bitcointalk.org/index.php?topic=243341.0 , both had to introduce a sort of cap so that there is a max that any single person can buy within a set period of time.

These caps were introduced to promote a more decentralized distribution so that more people overall have a stake. Is this something which should be replicated or are limits like these bad? I wouldn't have a problem with it either way, I just figure it should be brought up prior to the crowd funding as a move to be considered and debated.

At this point I can't wait for the Kickstarter or crowdfunding campaign to start.

We will be capping contributions to $10k per individual or company to prevent severe centralization, as it'd be bad to have the majority of stakeholder tickets in the hands of any single individual (not that anyone is likely to destroy the chain in the first 90 days anyway, as it doesn't make a lot of sense monetarily for the contributor).

[Stark-Fujikawa]

I now have the spare time needed to fully dedicate myself to translations of the wiki and whitepaper. If you want to assign priorities to which text you'd like to see translated first, feel free to hit me up with the details.

[bybitcoin]

Is the forum still under maintenance and not working? When will be up then?

[_ingsoc]

Is the forum still under maintenance and not working? When will be up then?

It's still in maintenance mode. We'll open it up when the new whitepaper comes out. We'll be a few steps closer to a live Netcoin by then. It actually wasn't intentional for the forum to shut down - we ended up getting severely attacked by spam, which is under control now. No harm in just opening it up at present, but since the new whitepaper will stimulate conversation again, might as well do it then. Whitepaper should be out later this week.

[bybitcoin]

Is the forum still under maintenance and not working? When will be up then?

It's still in maintenance mode. We'll open it up when the new whitepaper comes out. We'll be a few steps closer to a live Netcoin by then. It actually wasn't intentional for the forum to shut down - we ended up getting severely attacked by spam, which is under control now. No harm in just opening it up at present, but since the new whitepaper will stimulate conversation again, might as well do it then. Whitepaper should be out later this week.

Then please announce its arrival here as well 

[tacotime]

@Impaler

Now I remember why we need bits from the current block; see the latest wiki update for more details, but I'll x-post a note from it here:

NOTE: It may not be immediately clear why we use 6-bits from the most recent block. Consider the attack in which a malevolent stakeholder has the majority of tickets for any given block header hash. If we use only old blocks, especially ones far back in the history of the blockchain, no matter how many new proof of work blocks are generated the attacker can still halt the chain. Now consider the instance in which 6 bits are taken from the most recent block; we have 2^6 = 64 possibilities for the lottery winner. The malicious stakeholder in this case can block only one of 64 possible blocks from entering the blockchain; in the event this block is not voted on by the malicious stakeholder, PoW miners can continue work from the previous block and generate another block with a different lottery winner. Then, non-malicious stakeholders can push this block through the network and the chain can continue. It is extremely important that PoW miners continue on old work until the latest block has been verified by a majority of stakeholders for this reason. This also gives an interesting trade-off for security: we can choose up to 16 bits from the current block, however, the more bits we choose from the current block, the more readily a PoW miner can manipulate the lottery winner. Using blocks that are weeks or months old mitigates this manipulation, however, without choosing several bits from the current block we enter the case where an attack as detailed is extremely likely. So, we must select n bits from the current block at a level that allows for some options in terms of lottery hash, but which does not allow for the complete manipulation of the lottery winner. In the case of 6 bits (64 possible lottery winners), the PoW attacker mining at the current block can only generate (64 / 65536) * 100% = 0.01% of possible tickets.

This introduces another vulnerability.  As these bits come from further in the past, the majority of the numbers used by the ticket are known well in advance.  The problem with this is that a person can seek to acquire all tickets with these knowns bits and effectively halt the chain if they get 64 * 3 = 192 tickets in advance, probably by collaboration with someone.  So, someone with only 0.05859375% of the total network tickets (at ideal concentrations of tickets) can now halt the chain.

The solution is to just use bits from the most recent blocks instead of those far in the past.  Creating a chain of length 8 containing all the bits you want to select for certain tickets is likely quite a computational ordeal.  Conversely, you would need to procure all these tickets within this timeframe if you didn't want to manipulate the PoW chain, also very unlikely.

[tacotime]

The following sections have been updated:
http://www.netcoin.io/wiki/Distribution_Scheme_for_Crowdfunding
http://www.netcoin.io/wiki/Netcoin_Proof-of-Stake_Voting_for_Proof-of-Work_Blocks

The following sections have had their initial commits:
http://www.netcoin.io/wiki/Algorithms_for_PoS_Voters_to_Assess_the_Validity_of_PoW_Blocks
http://www.netcoin.io/wiki/Netcoin_Adjustments_to_the_Proof-of-Work_Transaction_Tree
http://www.netcoin.io/wiki/Addressing_the_%22Bitcoins_and_Red_Balloons%22_Issue

It looks like the "Red Balloons" issue is largely mitigated by the PoS mechanism Netcoin uses, but I adjusted the way fees are dispensed as well to further address this.

Now that this seems squared away, I can finally get back to tearing apart the old version of the whitepaper.  The new one should be shorter and more to the point, with the wiki reinforcing the concepts.

Forum will be back online when next ed. of whitepaper is released.

[human]

An update has been given on the PoW hash function and it has been dramatically simplified; it now uses the digits of pi to random algorithm selection.  N is fixed because I'm worried about it potentially introducing vulnerabilities into the chain if you play with it a lot, and I'm not sure if offers much more security even if you do.

http://www.netcoin.io/wiki/Netcoin_Proof-of-Work_Hashing_Function

Brilliant idea.

How about using the Golden Number instead of Pi? It is arguably the most noble number.
http://mathworld.wolfram.com/GoldenRatio.html

[tacotime]

You would need a BPP-type formula for the golden ratio -- I don't believe one yet exists.

http://crd-legacy.lbl.gov/~dhbailey/dhbpapers/bbp-formulas.pdf

[JessicaMILFson]

Why did the price per coin values change?

[tacotime]

Why did the price per coin values change?

Ingsoc felt like the formula I was using before was a little too penalizing to latecomers, so I tweaked it a bit.

[kelsey]

sounds like the same ol same ol here  just maybe promoted a bit more, but nuthing that 101 alts don't have, kinda reminds me of ftc alot of promotion but nothing in the coin of any new substance?