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Author Topic: Bitcoin trades the inequity of dynastic power for the inequity of early adoption  (Read 10511 times)
Coincrazy
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April 13, 2013, 06:56:32 PM
 #121

What risk was there with mining Bitcoins when difficulty was 1?

The problem with proof-of-work is that in order to make the ledger impeachable, people need to throw real-world value into a hole.

Most notably, that the time and electricity would be wasted if Bitcoin failed.


Right, so in the beginnings we're talking absolutely negligible.People throw CPU cycles at all kinds of activities more computationally intense than early coin miners and they do not consider themselves to be taking a 'risk'.

Never said it was a big risk. Just that they took it, back when it was a risk, and as a result, they have seen gains.

I don't see a problem with that... but then, I'm a capitalist, not a communist.

The problem is that for the sake of defending your argument you are attributing risk to a non-risk taking activity. I bet nobody mining these coins for fun at the time considered they were taking a risk, and yet you now argue retrospectively that somehow they were.

Just because they weren't concerned about the risk, or even didn't consider it a risk, Doesn't mean it wasn't a risk. And you're assuming they all kept them. Much more likely, they risked that taco, and gained a few pizzas or similar items of value.


The Shamir paper makes it clear that early adopters went to significant lengths to hide the true extent of their hoarding of Bitcoins. frankly the more you look into the history of Bitcoin, its origins, and the actions of the early players, the more it seems like a big trojan horse.

One argument against the Shamir paper. A large bit coin balance and NO transactions could be just pure neglect or a screwed up hard disk with NO back up

I've read it on reddit..one chappie lost 5 or 10 thousand coins and still had 5000 left on another hard disk / machine that he cashed at around 200 per coin and became a millionaire

I don't think  the lost 10 thousand had any transaction , but essentially is NOT an evil get rich hoarder

Having said that I am all against evil get rich schemes

~~~~~~~~

One way of diffusing that "get rich" idea is to start alternate crypto currencies

Call them litecoins. Call them ripples call them what you want

Already there are venture capitalists investing in the ripples

If you look at hoarding value of bit coins - say anywhere between 0.5 to 1 billion USD as of date versus 'the actual commerce day to day ...again as of date,  the actual commerce would be nothing

Amounts traded on mt gox could be 100 x amounts used to order any of the goods or services including shady drugs

Bit coins don't even have the ornamental value that gold has

So bit coins are just being hoarded ...not just by early adopters, but by who ever buys this tulip mania including many a chappie having just 5 or 10 coins and holding on to it for dear life

True ...lite coins and ripples are much less accepted in real commerce as of date,  but you..me...late adopters...any large store chain...or the  bunch of venture capitalists behind ripples and others behind other currencies could easily reverse that situation ( of better commercial adaptability for the next crypto currency )

I'm beginning to believe that the bitcoin experiment has been allowed to survive so far and even the FINCEN paper has sort of regulated and NOT banned crypto currencies for this precise reason ..this is an experiment and more is yet to come . There is more drama left and we have seen only the first few scenes here

_______ Have a nice day folks =:) _______
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April 13, 2013, 06:59:06 PM
 #122


I mention LETS not as a possible replacement to Bitcoin but as a concrete example that stable value (or unbounded coin) implementations are indeed within reasonable possibility.

I like LETS. Cyclos has some promise also:

http://www.cyclos.org
Qoheleth
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April 13, 2013, 07:05:52 PM
 #123

Is your objection that the monetary base would grow without bound?

It would need to, or we'd rapidly hit that bound, and then new users would come in and post threads like this one, whining about the early adopters having all the coins.
In other words, even an S-Curve model like Kárhozat proposed would still have the tail of the S, which you argue will be indistinguishable from Bitcoin's logarithmic curve once you get past the bend.

Decent argument, unless the bend is placed such that the currency must be assumed to be either widely known (so that you can credibly state that people "had their chance") or dead.

(Like I said earlier, the placement of the bend is the trick here.)

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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April 13, 2013, 07:08:14 PM
 #124

Bitcoin fanboys

Out of curiousity, what combined currency/payment processing network/ledger system has your devotion?

You're missing an important point: no person or group issues the currency in Bitcoin. That kind of power is removed from mere human whim and given over to an agreed upon protocol. If you don't like the protocol, you can go start your own.

The bankster cabal would never think to tell us, "Hey, go start your own currency if you don't like ours."

Umm, yes a rather special group does issue the currency in Bitcoin: the miners with enough state fiat capital to invest in the increasingly expensive equipment required to mine Bitcoins.

The underlying Bitcoin implementation is fine, but I find the mining aspect hugely problematic. Bitcoins should been distributed freely to people that want them so as to provide everyone an opportunity to be part of a financial reboot. Sadly Bitcoin went down the road of having engineered inequity and is as morally bankrupt as the system it seeks to supplant.
You do know that you can just buy the damn coins, right?

Sure, the miners currently have to shell out some fairly substantial capital to rake in big gains, but you can get in the game as a small player for a few hundred bucks - whether you buy coins, or buy hardware. Hell, If I wanted to burn out my video card, I could be mining right now in a pool.

And they are "freely distributed to any who want them," ... just not for free.

Exactly.  Another point to add here that most miss is the inclusion of technical expertise required to maximize gains for the small player.  You can play small in this game, but unlike the old-school fiat capitalization game, when you play small here you can further increase your gains with small amounts of technical expertise that might have previously been learned from another field or hobby.  i.e. if you enjoy both A) building rigs and B) burning out video cards, then mining is appealing at any profit level.

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Qoheleth
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April 13, 2013, 07:10:27 PM
 #125

I think that path is yet possible with Bitcoin. But as a flat ledger it has its limitations. Basically, we need to be able to accommodate a spectrum of inflation rates, there is too much stress in a flat global system. This would assuage critics of the difficulty of having a fixed monetary base. What will happen is that the Bitcoin exchange rate will get unbelievably hairy... We have not seen anything yet. Without a robust lending market for derivative trades (sorry, don't see it happening with Bitcoin) what we need is a basket of exchange vehicles, possibly levered off of Bitcion, but not necessarily. But that remain uncorrelated.

The entrenchment spoken of has to do basically with having superior information on a set of highly correlated markets with limited access. And having access basically to all markets while the majority of people only have access to a few markets. In this way the entrenched can lever up and lever down in their "safe" markets, and cherry pick from everything else. While the rest of humanity is left to wonder just what's going on.

In this sense the extremely wealthy have no great advantage in a market that can move so quickly, seemingly at random. They can try to play big volume games but this becomes increasingly risky. Right now BTC is fairly uncorrelated with the USD, but this could change eventually. In order to make sure the risk profile remains fairly even among participants Bitcoin will need pairs that it remains uncorrelated with. This is where I think parallel ledgers can come into play, all with their characteristic volatility, some better suited for speculation, some better suited for pocket change. Like tiered money, except for cryptos. Hopefully, in a manner that can preserve market access to broad segments of the population.
Personally, I'm really excited about colored coins, since they'd allow a single blockchain (read: unified infrastructure) to handle all of the different digital assets in question.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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April 13, 2013, 07:10:42 PM
 #126

Right, so why not do the inverse? The more users the easier to generate? The way things have been done the distribution is so ridiculously skewed to a tiny base of early users it is a systemic risk.

It turns out the the computing power to coin relationship is a red herring. More people doing something completely unnecessary doesn't create more value.

Currency value must be bound to real world economic value. A loaf of bread today needs to trade for pretty close to a loaf of bread tomorrow. Otherwise, as you pointed out at the beginning you get into a hoard and dump mindset. Not exactly the point of a "currency"

If a million more people want to trade loaves of bread tomorrow you're going to need more coins to enable the transactions. If they eat all the bread, you may need less coins to rectify the glut. The real interesting questions are where to do they come from, and where do they go?


There have been some really interesting an maddening threads in the past. A french guy proposed what he called the Universal Dividend. Everyone should get coins every year just for being alive. He argued it evened out the early adopter problem. I argued against him!

https://bitcointalk.org/index.php?topic=796.0

(UD is a proposed real world solution that goes way beyond bit coin!)
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April 13, 2013, 07:13:48 PM
 #127

(UD is a proposed real world solution that goes way beyond bit coin!)
It's also problematic in cryptocurrency, because anonymity as a system design principle means that Sybil shenanigans are trivial.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
Coincrazy
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April 13, 2013, 07:18:28 PM
 #128

Right, so why not do the inverse? The more users the easier to generate? The way things have been done the distribution is so ridiculously skewed to a tiny base of early users it is a systemic risk.

It turns out the the computing power to coin relationship is a red herring. More people doing something completely unnecessary doesn't create more value.

Currency value must be bound to real world economic value. A loaf of bread today needs to trade for pretty close to a loaf of bread tomorrow. Otherwise, as you pointed out at the beginning you get into a hoard and dump mindset. Not exactly the point of a "currency"

If a million more people want to trade loaves of bread tomorrow you're going to need more coins to enable the transactions. If they eat all the bread, you may need less coins to rectify the glut. The real interesting questions are where to do they come from, and where do they go?


There have been some really interesting an maddening threads in the past. A french guy proposed what he called the Universal Dividend. Everyone should get coins every year just for being alive. He argued it evened out the early adopter problem. I argued against him!

https://bitcointalk.org/index.php?topic=796.0

(UD is a proposed real world solution that goes way beyond bit coin!)


Fire away red... This is great ..

I came here ( to bitcoins ) by curiosity

I am getting educated in practical cryptography, communism, hoarding, emotions, economy and a lot more

Wow !!!


_______ Have a nice day folks =:) _______
===I'm wondering why I was slaving away 9 to 5 , NOT knowing Bitcoins earlier ; Regards, CC===
myrkul
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April 13, 2013, 07:20:52 PM
 #129

Is your objection that the monetary base would grow without bound?

It would need to, or we'd rapidly hit that bound, and then new users would come in and post threads like this one, whining about the early adopters having all the coins.
In other words, even an S-Curve model like Kárhozat proposed would still have the tail of the S, which you argue will be indistinguishable from Bitcoin's logarithmic curve once you get past the bend.

Decent argument, unless the bend is placed such that the currency must be assumed to be either widely known (so that you can credibly state that people "had their chance") or dead.

(Like I said earlier, the placement of the bend is the trick here.)

Frankly, it doesn't matter how you disperse the coins. In a capitalist economy, money is always going to flow out of the hands of those who are worse at handling it, into the hands of those willing to take risks and know how to manage money. It's a meritocracy, where losing your place is easy, and gaining it anew is hard. Ask Donald Trump.

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April 13, 2013, 07:21:01 PM
 #130

This is precisely why I'm a fan of PPC coin. First, big hardware isn't given as big of a preference in mining. Second, the mining rate levels off at a 1% increase per year, so nobody can ever own a large fixed fraction of all PPC coin for all eternity.
It also doesn't have a cap, right? That's problematic for its own reasons.

To pay for mining, you can either tax the holders of coins (through minting new coins) or the users of coins (through TX fees). For a variety of reasons, I would rather tax holders than users of a currency.

BTC mining is supported at first with a tax on holders in the mining phase and then changes to a tax on transactions after the mining phase. This is not my preference. If you stick with taxing holders of currency, you give better incentive to use it and you prevent the "ponzi scheme" characteristics of Satoshi or the Winklevosses owning > 1% of your economy for all time.

On top of this, PPC coin uses proof-of-stake instead of proof-of-work, which makes mining much cheaper in the first place and less vulnerable to attack by owners of large amounts of TH/s. It's a strictly superior system.


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April 13, 2013, 07:21:19 PM
 #131

This thread is moving so fast I can barely keep up!

I think that path is yet possible with Bitcoin. But as a flat ledger it has its limitations. Basically, we need to be able to accommodate a spectrum of inflation rates, there is too much stress in a flat global system...

Wow, brilliant insights! (My confirmation bias is showing! :-) )

I've been having similar ideas. That's what brought me back to this forum. If you're interested we can talk offline or start a new thread.


Quote from:  Qoheleth
Personally, I'm really excited about colored coins, since they'd allow a single blockchain (read: unified infrastructure) to handle all of the different digital assets in question.

Qoheleth, Is this statement related to chodpaba's?
And could you like me to a reference on Colored Coins? I'm only recently back here.
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April 13, 2013, 07:23:18 PM
 #132


Just under a thousand at the moment, I have had more but have been steadily giving them away to what I deem good causes. I will ultimately give away my entire holding as my interest in Bitcoin was never to make money for doing nothing of value, and it is clear Bitcoin is now infested with speculators and the wider purpose seems to have been lost.

Send some my way please! I have almost none as I was not fortunate enough to be able to pay for expensive mining equipment and don't have enough wealth to buy my way in. You will be distributing them in a more fair manner this way. Share the wealth my friend. Very much appreciated! Smiley

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Revans, I'm still waiting for my coins here!
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April 13, 2013, 07:31:18 PM
 #133

Even if you distribute the wealth evenly to everyone on the earth, after a while, some of them will go broke and some of them will become super rich

Even if everyone start the mining at the same time, after a while, some of them will quit mining and some of them will accumulate large amount of coins, especially when bitcoin still worth nothing at the first year (There are many altcoins started later and everyone had a even chance to mine from the beginning, but still most of the people quit because they worth almost nothing in the first year)

I do think that the coin generation speed could reduce 25% per year instead of 50% per year, so that total coin will be 3x the amount of the first 4 years' coin supply and it will give more chance for late adopters


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April 13, 2013, 07:34:59 PM
 #134

Revans, I'm still waiting for my coins here!

Yeah, I think he's full of shit on that one.

Even if you distribute the wealth evenly to everyone on the earth, after a while, some of them will go broke and some of them will become super rich
This.

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April 13, 2013, 07:39:29 PM
 #135


Just under a thousand at the moment, I have had more but have been steadily giving them away to what I deem good causes. I will ultimately give away my entire holding as my interest in Bitcoin was never to make money for doing nothing of value, and it is clear Bitcoin is now infested with speculators and the wider purpose seems to have been lost.

Send some my way please! I have almost none as I was not fortunate enough to be able to pay for expensive mining equipment and don't have enough wealth to buy my way in. You will be distributing them in a more fair manner this way. Share the wealth my friend. Very much appreciated! Smiley

1AXEPvEz1zQYcqoeeeimu2hMH1FNACZ8pZ


Revans, I'm still waiting for my coins here!

In what sense do you qualify as a good cause?
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April 13, 2013, 07:49:02 PM
 #136


Just under a thousand at the moment, I have had more but have been steadily giving them away to what I deem good causes. I will ultimately give away my entire holding as my interest in Bitcoin was never to make money for doing nothing of value, and it is clear Bitcoin is now infested with speculators and the wider purpose seems to have been lost.

Send some my way please! I have almost none as I was not fortunate enough to be able to pay for expensive mining equipment and don't have enough wealth to buy my way in. You will be distributing them in a more fair manner this way. Share the wealth my friend. Very much appreciated! Smiley

1AXEPvEz1zQYcqoeeeimu2hMH1FNACZ8pZ


Revans, I'm still waiting for my coins here!

In what sense do you qualify as a good cause?

This:
I was not fortunate enough to be able to pay for expensive mining equipment and don't have enough wealth to buy my way in.

Exactly the problem you created this thread to fix.

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Qoheleth
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April 13, 2013, 07:50:10 PM
 #137

Quote from:  Qoheleth
Personally, I'm really excited about colored coins, since they'd allow a single blockchain (read: unified infrastructure) to handle all of the different digital assets in question.

Qoheleth, Is this statement related to chodpaba's?
And could you like me to a reference on Colored Coins? I'm only recently back here.
Chodpaba was discussing a galaxy of different crypto-assets - I was expressing my enthusiasm about one implementation (separate blockchains being another possibility).

Basically, colored coins are a way to "create" new classes of transferrable object on the Bitcoin network, by taking some number of Satoshis and "coloring" them to stand for those objects. Here is a partially written proposal with some technical details.

If there is something that will make Bitcoin succeed, it is growth of utility - greater quantity and variety of goods and services offered for BTC. If there is something that will make Bitcoin fail, it is the prevalence of users convinced that BTC is a magic box that will turn them into millionaires, and of the con-artists who have followed them here to devour them.
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April 13, 2013, 07:53:18 PM
 #138

Quote from:  Qoheleth
Personally, I'm really excited about colored coins, since they'd allow a single blockchain (read: unified infrastructure) to handle all of the different digital assets in question.

Qoheleth, Is this statement related to chodpaba's?
And could you like me to a reference on Colored Coins? I'm only recently back here.
Chodpaba was discussing a galaxy of different crypto-assets - I was expressing my enthusiasm about one implementation (separate blockchains being another possibility).

Basically, colored coins are a way to "create" new classes of transferrable object on the Bitcoin network, by taking some number of Satoshis and "coloring" them to stand for those objects. Here is a partially written proposal with some technical details.
Neat idea.

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April 13, 2013, 08:00:29 PM
 #139

Basically, colored coins are a way to "create" new classes of transferrable object on the Bitcoin network, by taking some number of Satoshis and "coloring" them to stand for those objects. Here is a partially written proposal with some technical details.

Thanks for the link and clarity. I remember discussing the concept way back.
It's a clever idea but I'm thinking more like chodpaba now.

I do love your sig! It basically restates the thesis of this thread.
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April 13, 2013, 08:02:53 PM
 #140


Just under a thousand at the moment, I have had more but have been steadily giving them away to what I deem good causes. I will ultimately give away my entire holding as my interest in Bitcoin was never to make money for doing nothing of value, and it is clear Bitcoin is now infested with speculators and the wider purpose seems to have been lost.

Send some my way please! I have almost none as I was not fortunate enough to be able to pay for expensive mining equipment and don't have enough wealth to buy my way in. You will be distributing them in a more fair manner this way. Share the wealth my friend. Very much appreciated! Smiley

1AXEPvEz1zQYcqoeeeimu2hMH1FNACZ8pZ


Revans, I'm still waiting for my coins here!

In what sense do you qualify as a good cause?

This:
I was not fortunate enough to be able to pay for expensive mining equipment and don't have enough wealth to buy my way in.

Exactly the problem you created this thread to fix.


No, having more people throw more computational power at pointless calculations is the root problem, not something to which I wish to contribute.
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