Bitcoin Forum
May 23, 2022, 06:30:46 PM *
News: Latest Bitcoin Core release: 23.0 [Torrent]
 
   Home   Help Search Login Register More  
Pages: [1] 2 3 4 »  All
  Print  
Author Topic: [StableCoin] Welcome and Introduce Yourself...  (Read 8134 times)
Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 18, 2013, 08:12:00 PM
Last edit: April 18, 2013, 08:24:43 PM by Red
Merited by d5000 (1)
 #1

Recent bitcoin price volatility has sparked growing interest in creating a "coin" designed to remain price stable over an extended period of time.

For speculators, it can be best thought of as a complementary currency to Bitcoin. When Bitcoin's value is rising, speculators want to hold Bitcoins. When Bitcoin's value is falling, hold StableCoins. Why not just let a "trusted" exchange hold on to your fiat currency while Bitcoin values are falling?... Really?... No sense enumerating all the posts on exchange fraud, hacking, closures, account seizures, etc.

IF a theoretical StableCoin existed, it would be possible to trade between BitCoin and StableCoin at will. All while remaining completely anonymous, even to the exchange that facilitates your trades. In addition, you wouldn't need to "trust" an exchange to secure your fiat, your coins or protect your personal information. Both sides of every trade could be done while keeping your coins securely in your wallets, in their respective chains.

At least that is the vision...

Currently, no stable bitcoin-like currencies exist. Over the past four years many individuals have kicked around promising ideas, but no social moment has every formed in support of a stable coin.

---------------

The point of this thread is to create a gathering place for people who SUPPORT the concept of a stable-value COMPLEMENT to bitcoin. This thread is NOT the place to bash the StableCoin concept or criticize its supporters. Nor is it the place to bash any particular BitCoin attribute or its supporters.

SUPPORTERS, Please post a message introducing yourself and please LINK any papers you've written or insightful posts you've made on the subject. Many people have hidden many insightful things somewhere on this forum. I'd like this thread to serve as a quick reference for any new supporters that might arrive.
1653330646
Hero Member
*
Offline Offline

Posts: 1653330646

View Profile Personal Message (Offline)

Ignore
1653330646
Reply with quote  #2

1653330646
Report to moderator
1653330646
Hero Member
*
Offline Offline

Posts: 1653330646

View Profile Personal Message (Offline)

Ignore
1653330646
Reply with quote  #2

1653330646
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1653330646
Hero Member
*
Offline Offline

Posts: 1653330646

View Profile Personal Message (Offline)

Ignore
1653330646
Reply with quote  #2

1653330646
Report to moderator
Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 18, 2013, 08:14:24 PM
Last edit: April 22, 2013, 12:41:36 AM by Red
Merited by d5000 (1)
 #2

To aid discussion, I'd like to propose the following definitions.

StableCoin - An abstract class of COINS which have the shared property that their monetary policy (coin creation/destruction bounding algorithms) will never allow the coin's future value to "tend toward infinity" or "tend toward zero" given the case of unbounded adoption and unbounded increase in external value traded.

GrailCoin - sub-class of StableCoin whose value attempts to always tend toward the value it had on the day the coin was first launched. It should retain long term value stability even if every reference its value can be measured against varies independently.

InertiaCoin - a subclass of StableCoin whose value is intended to deliberately resist change. InertiaCoin may be pushed off its initial price by extreme external conditions. But it will always re-stabilize to some appropriate value. (non zero, non infinite) Any coin with infinite inertia IS A GrailCoin. But not all GrailCoins need be InertiaCoins. Grail coins always move back to their initial value when pushed off. InfiniteInertia means the value can never be pushed off.

PeggedCoin - a subclass of StableCoin whose target value is dependent on some outside value.

GoldCoin - a specific PeggedCoin whose value is pegged to 1 troy oz of gold.
CPICoin - a specific PeggedCoin whose value tends toward a particular measurable consumer price index.
FiatCoin - a specific PeggedCoin whose exchange rate value tends toward a particular fiat currency.
DollarCoin, EuroCoin, YenCoin, etc. - A FiatCoin intended to always trade 1 to 1 with USD, Euro, Yen, etc.

MordorCoin - a sub-class of StableCoin requiring a fixed expenditure of electricity to mine.
Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 18, 2013, 08:17:24 PM
Last edit: April 29, 2013, 06:40:33 AM by Red
 #3

I'm going to link active [StableCoin] threads here. That makes them easier for new arrivals to find. PM me any active threads you think should be added.

StableCoin
New alt idea, way more stable and widely used. Ideas welcome.
Has anyone proposed a coin that adjusts its supply to stabilize prices?
I will create a forked bitcoin chain
TrueCoin <-- coin with moderate inflation
StableCoin: please criticize
Looking for inflationary cryptocurrency dev
GRouPCoin a currently running LinearCoin

Historical
Goldcoin and Stablecoin proposals
alex_fun
Full Member
***
Offline Offline

Activity: 196
Merit: 100


View Profile
April 18, 2013, 09:06:42 PM
 #4

Link in the signature Cheesy

Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 18, 2013, 10:57:21 PM
 #5

Hi I'm Red!

I came here first on July 19, 2010. I'm a fan of P2P distributed system and anonymity. Back in 2010 it occurred to me that privacy was disappearing as everything we did became tracked transaction by transaction. I'm a big fan of physical cash. It always gets you the best prices. Has the least overhead. And nobody asks for your name, drivers license, phone number, zip code, or other personal information when you spend it. That is superfluous and generally considered impolite.

However, physical cash doesn't travel well over the internet. And as more and more transaction took place over the internet. Less and less would be anonymous cash transactions. That seemed HIGH RISK to me from a social perspective. I'd been thinking about ways to create internet digital cash when I ran across a slashdot article on BitCoin. It got me really excited. I'm a software developer by trade, so I dug in to see technically how BitCoin worked.

Like most people I was blow away by Satoshi's genius. Sure I was disappointed by some details, things weren't really as anonymous as I would have liked. But I could live with everything except the monetary policy. That seemed (to me) to doom BitCoin niche status over the long term. Maybe a big niche, but not a replacement for physical cash.

I started these threads to hopefully begin discussion about possible StableCoin alternatives.
BitBucks - a discussion starter
Bitcoin as a GET System
The StableCoin concept wasn't very popular. I gave up and left the site for while.

----

In September of 2011, I got a PM from Etlase2 calling me back to this site to look at his EnCoin proposal. He claimed you could get stability by requiring the generation of 1 EnCoin to ]REQUIRE expending 1 KWH of electricity. I thought I was misunderstanding him because that concept seemed stupid. There's clearly not enough information... At least I thought at the time. And nobody would waste so many posts on so stupid an idea.

I decided he must be trying to say, "1 EnCoin is equal to the COST of 1 KWH of electricity." That still seemed impractical and stupid but at least the units of the equation matched. Both were measures of value at least. That had to be what Etlase2 meant. At least, that's what I thought.

So even though I thought it was impratical and stupid I decided to explore the concept. Surely Etlase2 wouldn't allow so many people to call him an idiot, over and over, if he wasn't on to something? It didn't take long before I had some plausible ideas so I posted them in the EnCoin thread. Etlase2 kept calling me an idiot who couldn't understand his most basic concepts. So I'd look at what I wrote, find a flaw and fix it...

After about a week, I found a solution that created a StableCoin. It used the cost of electricity to discourage over production of coins. But it didn't actually need to peg the price to the cost of electricity. Instead it used non-linear equations.

I thought it was genius. I'd proved that a StableCoin could theoretically be created. Etlase2, however, still thought I was an idiot. My presumption wasn't what he was saying at all. I had failed to understand his most basic premise. He was proposing that it always on average required 1 KWH to generate 1 Coin.

I thought the concept was silly, but just as an exercise I decided to see if I could make his concept work. I could! He was correct a stable coin could be created using his principles. So for the sake of having another concrete example of a potential StableCoin, I wrote it up for discussion as GEM.

Now when I wrote it up, I still thought burning so much energy was stupid. It SHOULD NOT require so much energy to create a stable currency. WTF! the Federal Reserve and Bureau of Engraving and Printing combined don't use that much energy! But at least three people were discussing the concept so I decided not to derail the discussion. I figured that if I could convince 10 people that a StableCoin was plausible, then I'd work on convincing them we could make the whole system more electrically efficient.

Unfortunately, we never got more that 4 people to believe that StableCoins could be created. Everyone presumed a central exchange was needed to directly make monetary policy decisions. We'd PROVED the opposite at least 3 separate ways, but it was a hard sell to a hostile audience. I got bored and left this site, again.

----

I came back a few days ago on a whim. I figured that after a huge spike and a crash, more people might see the value of a stable valued electronic currency. Surprisingly, a thread called StableCoin started to gain a little traction. As did another thread I tried to be interesting in.

In one of the threads I suggested we create an index thread so we could all find each other now. No one objected, so here we are...
Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 19, 2013, 01:14:39 AM
 #6

...to actually govern the value of such a coin you have to be able to regulate inflation through the rate of creation, as well as the rate of destruction... Coin destruction is bound to be unpopular because it means that people will observe their wallet balances disintegrate before their eyes,...

Actually, increasing or decreasing the supply of coins attempting to be exchanged is all that is required. You don't have to "haircut" the total number of coins in existence.

In any StableCoin, as soon as the value falls below target, its no longer "rational" to continue non-essential coin exchanges. Better to wait until the value inevitably returns to target. Hoarding, in this situation, is the behavior you want to encourage. No sense punishing that. My proposals only tax/destroy the coins of the "irrational" actors. Those who knowingly sell their coins below target. They already know they are taking an irrational loss. Making their potential loss bigger discourages some from doing so.


If, on the other hand, you were to create a suite of coins that are designed to be uncorrelated with one another, a regimen ot trading between them could also be designed to provide a customized risk profile, from low-risk/low-return in the long term to high-risk/high-return in the short term, or even very low risk, with maybe a slightly negative return. From cash-like, bond-like, equity-like... And even lottery-like depending on how you set the parameters for trading between the instruments.

This is an insightful concept I've never seen discussed in the context of creating a StableCoin. Would you consider expanding on your thoughts in the StableCoin discussion thread?
Impaler
Sr. Member
****
Offline Offline

Activity: 826
Merit: 250

CryptoTalk.Org - Get Paid for every Post!


View Profile
April 19, 2013, 12:09:58 PM
 #7

Red I'm glad you have a new thread and your encouraging a good productive conversation here.  I am convinced that solving this stability problem will be for Crypto-Currency what solving the double-spend problem was, a Paradigm shifter.  I'm very interested in seeing a solution implemented in Freicoin and if a solution that I find satisfying is produced I will advocate for it to be implemented there.  Alternatively a new coin could be established.

A few general features that I think any solution will have.

- Separation of transaction processing from money creation:  The BTC solution (brilliant in its own way) of combining the coin creation process with the transaction validation process is inherently unstable because the whole system is dependent on a continual coin creation process which in turn depends on valuation.  If these processes can be decoupled it opens up considerable flexibility.  Proof of Stake or some other novel method not yet created may be the solution, or a new compensation structure for the miner.

- Feedback Mechanism that creates And possibly destroys coins:  I think everyone basically in agreement on this what ever solution your advocating, the code works a bit like the difficulty adjustment code or even cruder.  Once a 'push' is established the protocol creates or destroys coins until the 'push' stops.  Thus a target quantity never needs to be identified directly, just a direction of change.  Creation is much easier then destruction so the implementation of the destruction process is a challenge.  A solution that only creates might be viable but I'd be much more confident in a bi-directional solution

- Fully distributed without central point of failure:  One of the core principles of peer-2-peer systems and one I'm committed too very strongly.  This more then any economic reason is why I'm opposed to taking external inputs because of the 'injection' problem, who passes the data into the chain, if its one person its a point of failure, if its a multitude then the input is just hearsay and opens up the next issue.

- Resistant to manipulation by actors with perverse incentives:  Controlling the supply of money is THE single greatest power in a currency.  It matters not what money is if you control the quantity you control all, you can enrich or ruin borrowers or lenders at your pleasure.  Any system remotely worth of the name Stable will need to be resistant to manipulation and SOPHISTICATED manipulation at that.  This is why something trivially easy to spoof like transaction volume is useless (even if it DID reflect value which is doesn't).

 
                                . ██████████.
                              .████████████████.
                           .██████████████████████.
                        -█████████████████████████████
                     .██████████████████████████████████.
                  -█████████████████████████████████████████
               -███████████████████████████████████████████████
           .-█████████████████████████████████████████████████████.
        .████████████████████████████████████████████████████████████
       .██████████████████████████████████████████████████████████████.
       .██████████████████████████████████████████████████████████████.
       ..████████████████████████████████████████████████████████████..
       .   .██████████████████████████████████████████████████████.
       .      .████████████████████████████████████████████████.

       .       .██████████████████████████████████████████████
       .    ██████████████████████████████████████████████████████
       .█████████████████████████████████████████████████████████████.
        .███████████████████████████████████████████████████████████
           .█████████████████████████████████████████████████████
              .████████████████████████████████████████████████
                   ████████████████████████████████████████
                      ██████████████████████████████████
                          ██████████████████████████
                             ████████████████████
                               ████████████████
                                   █████████
CryptoTalk.org| 
MAKE POSTS AND EARN BTC!
🏆
Impaler
Sr. Member
****
Offline Offline

Activity: 826
Merit: 250

CryptoTalk.Org - Get Paid for every Post!


View Profile
April 19, 2013, 01:22:43 PM
 #8

Further thoughts that pertain more to my specific Market based solution and which are mostly for Red's consumption.  Let me start off with some back ground of how my thinking evolved and see if this is at all helpfull or stimulates some idea on your part.

My initial goal was actually the regulation of the Demurrage rate in Freicoin.  Under Gesells theory this rate should equal the 'Liquidity Premium' of money at all times.  Liquidity Premium is simply the value that money has above its face value because it is 'liquid', all financial assets have varying degrees of liquidity but currency by definition has the highest.  Ultimately a fixed rate was chosen as their was a good historically researched 5% figure recommended in the literature, but this is not really an issue for a none demurrage coin.

My though was to create 'Bonds' out of the block-chain (this would be money creation) and then have buyers compete to bid up the price of these bonds.  The Bond are just illiquid coins, like immature coins but with some specific and long period they are illiquid.  So by buying illiquid coins with liquid ones your basically selling your liquidity back to the block-chain.  If the current demurrage rate is too low then the bids should fall for bonds as people find it more desirable to keep coins liquid, thus demurrage rises.  The opposite happens as the bids rise.

While this was a good first stab I realized quickly that it completely ignored inflation and that it would probably be necessary to take that into account.  Also the number of bonds created was arbitrary and with only one side of the market being human it would be easy to manipulate by falsely up biding which would lower demurrage, a fairly obvious group-wide collusion might set in.

I thought that perhaps all coins could be created as these 'Bonds' and sold on the market, miners receive the sale price but otherwise don't control the process so they can not withhold supply.  Bonds could be of a slow-payout type too rather then a fixed period frozen coin, this would make them in essence a second kind of coin in the system with different rules governing their movement.  The goal would be to make them an illiquid instrument so they might be non transferable.

It then looked like I needed a second market to solve the 'untangling' problem, one market could predict inflation and the result of that would be subtracted from another market per the Fisher equation Interest = Inflation + Liquidity Premium (or any combination of two markets that allow the two values to be found).  I began to think the market had to be composed of two opposing groups of bid and offer so they could both be driven by profit motive and would determine the volume of trade too.

 
                                . ██████████.
                              .████████████████.
                           .██████████████████████.
                        -█████████████████████████████
                     .██████████████████████████████████.
                  -█████████████████████████████████████████
               -███████████████████████████████████████████████
           .-█████████████████████████████████████████████████████.
        .████████████████████████████████████████████████████████████
       .██████████████████████████████████████████████████████████████.
       .██████████████████████████████████████████████████████████████.
       ..████████████████████████████████████████████████████████████..
       .   .██████████████████████████████████████████████████████.
       .      .████████████████████████████████████████████████.

       .       .██████████████████████████████████████████████
       .    ██████████████████████████████████████████████████████
       .█████████████████████████████████████████████████████████████.
        .███████████████████████████████████████████████████████████
           .█████████████████████████████████████████████████████
              .████████████████████████████████████████████████
                   ████████████████████████████████████████
                      ██████████████████████████████████
                          ██████████████████████████
                             ████████████████████
                               ████████████████
                                   █████████
CryptoTalk.org| 
MAKE POSTS AND EARN BTC!
🏆
Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 19, 2013, 04:48:45 PM
Last edit: May 02, 2013, 01:52:10 PM by Red
 #9

I spend a little while reading up on Friecoin, Demurrage currencies and Gesell. It gave me a bit of an epiphany. Sorry, I'm not a true believer... But it did give me added clarity. A while back a guy was advocating for a new COIN with a concept he called the Universal Dividend. I thought the concept was so naive and stupid that I'm pretty sure I ran him off the site.
EDIT: Found this Universal Dividend Currency link. http://wiki.openudc.org

Now, however, UD, Demurrage, & BitCoin all make me realize that there are orthogonal dimensions to coin design.

Code:
                  Fixed #       Unbounded
                   Coins          Coins
                ------------------------------
                |             |              |
laissez faire   |  BitCoin    |  Red's Coin  |   <-- my ideas for a StableCoin fit here
                |             |              |
                ------------------------------
                |             |              |
Redistributed   |  FreiCoin   | Universal Div|
                |             |              |
                ------------------------------


I've noticed two other related dichotomies.

Facilitating Trade vs. Saving
Speculative vs. Value Preserving

As Impaler pointed out, all these seem directly related to time.
"Likelyhood of a coin owner's wanting/needing to spend coins during a given period of time." Is an external force that acts on human behavior. Human behavior affects exchange value.

There is another human dichotomy that drives different peoples behavior in different ways. It seems to involve the emotional want to be rewarded for...

Work Performed           vs.    External Value Created
"I did what I was told"         "I created a new *good* that can be traded"

As services become increasingly important in our economy, this dimension becomes increasingly emotional. This emotionality also seems to be related to the perception of time as an actual *good* that can be saved and traded.

"I performed a service so someone else wouldn't have to, so they could..."

Work Performed           vs.    External Value Created
"Rest on their laurels"         "Create additional new *goods* that can be traded."

I think all of these dichotomies will end dictating what kind of "StableCoins" each of us thinks should be created.
timhuge
Newbie
*
Offline Offline

Activity: 25
Merit: 0


View Profile
April 19, 2013, 06:19:11 PM
 #10

Hi,

While I'm relatively new to thinking about Bitcoin, I do have a ph.d. in economics - that is, an agonizingly long training period of thinking carefully about one narrow question. The economics of money is far away from my field, though. My most relevant background before two weeks ago was spending a few months tweaking the rules of Settlers of Catan with friends trying to introduce different types of money (to take the place of barter exchange).

What I did take away from studying economics, however, is that when you are trying to understand something complicated, it is essential to first consider the simplest possible example. Only then can you see clearly that you don't understand the problem. Wink

The situation with Bitcoin is that most enthusiasts do not believe that stable prices are possible without centralization (if they even agree that stable prices are desirable). To me, then, it's clear that priority #1 is to explain a variant of Bitcoin that exhibits self-stabilizing prices in the simplest possible setting. So that's what I've been working on.

Sure enough, I've found over the past couple days that even after making all kinds of simplifying assumptions, I was confused about how my idea would really work. So I'm delayed in writing my answer up. My new target release date for my brief paper is at the end of next week.
Adrian-x
Legendary
*
Offline Offline

Activity: 1372
Merit: 1000



View Profile
April 19, 2013, 07:22:00 PM
Last edit: April 19, 2013, 09:24:28 PM by Adrian-x
 #11

What makes Bitcoin attractive is:
The value of Bitcoin as a medium of exchange is inherent in the protocol.  
The ledger is maintained in a P2P system and not centrally controlled.
There are a finite number of coins.

Volatility is a result of demand because of what Bitcoin is, keeping the benefits Bitcoin offers, while reducing volatility is in effect manipulating demand.

This volatility in price is the market distribution mechanism at work and consistent with the laws of diffusion of innovation, once about 2/3ds of total adoption is complete you will have relative adoption and as a result relative stability. If Bitcoin reaches maximum adoption early say tomorrow, the economy will stop growing and the $/BTC will deflate to the size of the current economy and stabilise, base on the existing economy it is estimated to be around $2-$10.

However if the human preference factor is to cause it to grow, Bitcoins value is not a reflection of the economy size but a reflection of the benefits of storing fungible and transferable wealth in a finite medium that is secured and distributed on a P2P network, that demand will naturally be subject to human preference and is reflected as volatility.

One improvement I could think to achieve your goal would be to not adjust but build in the rate of supply to reflect (a Logistic Function) and not the current step function to a normal distribution model, and have new coins mined on a Gaussian Curve (GaussCoin) to better correlate supply with growth, for added stability and greater and faster user adoption all the while not manipulating demand

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
timhuge
Newbie
*
Offline Offline

Activity: 25
Merit: 0


View Profile
April 19, 2013, 08:00:48 PM
 #12

This thread is NOT the place to bash the StableCoin concept or criticize its supporters.

Adrian-x, it's understandable if you missed this request by Red.  But please do respect it.  I guess you're free to post whatever you want, but I would ask you to use one of the other thousand threads to debate whether StableCoin is a good idea. I would really enjoy it if we could set that debate aside here and stay on-topic.
Adrian-x
Legendary
*
Offline Offline

Activity: 1372
Merit: 1000



View Profile
April 19, 2013, 09:24:01 PM
 #13

This thread is NOT the place to bash the StableCoin concept or criticize its supporters.

Adrian-x, it's understandable if you missed this request by Red.  But please do respect it.  I guess you're free to post whatever you want, but I would ask you to use one of the other thousand threads to debate whether StableCoin is a good idea. I would really enjoy it if we could set that debate aside here and stay on-topic.

Sure I understand, wasn't bashing the idea, I was making what I thought was a realistic way to achieve the goal
"One improvement I could think to achieve your goal would be to not adjust but build in the rate of supply to reflect (a Logistic Function) and not the current step function to a normal distribution model, and have new coins mined on a Gaussian Curve (GaussCoin) to better correlate supply with growth, for added stability and greater and faster user adoption all the while not manipulating demand"

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 19, 2013, 11:00:39 PM
 #14

Hi Adrian-x. Welcome to the discussion.

I do appreciate your wanting to preserve bitcoin's "hard money" philosophy. And I agree a better initial distribution function is a key to increased "stability and greater and faster user adoption."

However, personally, I don't know how to predict the initial adoption curve of a new coin. I'm pretty convinced that the rate of actual user adoptions is, very likely, directly related to the proposed initial distribution function. For me that means solving simultaneous non-linear equations and I suck at that.

However, way smarter people than me have written volumes I'll never read unless given a starting reference. And that is the whole point of this thread. I'm actually reading your references in between typing. Thank you very much for the links.

A concept that intrigues me is, say for discussion, a Gaussian based initial distribution DOES IMPLY a Logistic Function based adoption curve. Let's also postulate that the "natural" public adoption logistic curve tends toward a 15 year period. BUT, in coding, we guessed the wrong timescale. Say we chose 30, or maybe 10 years instead.

Have you written or posted about how the "actual" adoption curve would be affected?
Etlase2
Hero Member
*****
Offline Offline

Activity: 798
Merit: 1000


View Profile
April 20, 2013, 12:19:21 AM
 #15

Hi, I'm Etlase2. I used to be called etlase, but that account was squelched and posts deleted for vehemently speaking out against bitcoin just prior to the 2011 bubble and collapse.

Being of a programmer's mind, I immediately went to create something better. The first four designs were called Encoin, which attempted to associate coin value to the electricity cost required to produce them. During this time, I read hundreds of papers on cryptography, several books on economics, researched various different economic and monetary theories, and argued with many people.

The latest design is Decrits, which has dropped the idea of a coin having any direct relationship with electricity. The link for the proposal is in my signature, but the design has had many overhauls and fleshings-out since then.

I made a post describing how the minting system would work recently, so I will copy and paste it here. I spent tons of hours designing a system different from bitcoin and that would require several pages to explain, so please assume that the things I take for granted have been proposed, in my notes, how to work.

https://bitcointalk.org/index.php?topic=178140.msg1890016#msg1890016


First of all, the energy usage is only one facet. The cost of hardware *does matter*. The human resource cost *does matter*. It doesn't matter what the mhash cost is in real terms is--as long as you can foster competition, people will find ways to do better, and this in turn must raise the difficulty to where the mhash cost is in line with whatever inertiacoin's (potentially original) mhash cost is.

The original way I came up with to foster this competition was to algorithmically change the coin award at certain intervals. During these intervals, miners would be encouraged to lower their output, because if they don't, the difficulty is going to increase. However, more efficient machines would not really be bothered by this and would be able to profit handsomely during this interval. However, for whatever various reasons that could thunk up for this, more efficient machines may not want to or can not oblige, and this could cause a longer-term inflation of the crypto CPI.

I will walk you through what I am currently thinking Decrits will do:

1) It will algorithmically determine the number of coins to be created in the next Mint Block, as I call them.
1a) This number of coins is determined by a percentage of transaction volume over time. (note: for this to matter, transactions must be charged a percentage fee, which in Decrits is 0.01%)
1b) This figure will be difficult and costly to manipulate because it will require significantly increasing the transaction volume of the entire network over a period of a year or more while paying those fees.

2) A Mint Block cannot begin until enough money has been transacted to warrant it.
2a) This will be based on either a (large) percentage, equal to, or a (small) multiplier of the number of coins transacted since the last Mint Block.

3) Once enough money has been transacted, those who wish to create money will have to join a queue to begin the Mint Block.
3a) For the first 25% of the queue, 10% of the individual coin award (the amount each queuer will receive) must be supplied in the currently accepted difficulty with a 10% winning hash and an account number. (note: this can *always* be accomplished in 40-50 bytes because of the account ledger)
3b) For the rest, 5% of the award must be supplied. The most efficient are the most likely to start the next block, but we do not want to unnecessarily raise the difficulty if the majority of people are less efficient, so they get a slight bonus. (This will eventually lead to deflation if we do not account for it, and perhaps because of money supply manipulation.)
3c) Once 75% of the the block's worth has been queued, a minimum amount of time must pass before the queue will close. This figure will be based on some percentage of the the average time it has historically taken to create a Mint Block. (This means that magnitudes more powerful ASICs can not shut others out)
3d) If more than 100% have queued before the minimum amount of time has passed, a random selection of the queued minters will be made to complete the block.

4) Once the block begins, all minters are encouraged to mint at once because:
4a) The coin award is higher the faster you finish. Likely +10% for the top 25%, +5% for the next 25%, -5%, and -10%.
4b) Taking longer than an algorithmically determined amount of time (based on prior blocks) will result in penalties of at least 10% and perhaps more. (e.g. if everybody finished past this time, even the top 25% would still only receive -10% of the promised coin award.)
4c) At some point the block will close, and unminted coins are lost.

5) (Tentative) After the block is over, minters will be randomly assigned to groups (probably of 40) to determine the 10/5/-5/-10 payouts.
5a) This means that there will be groups where ASICs fight ASICs and GPUs fight GPUs (NB: obviously not all of them). This reduces the overall profitability potential of ASICs.


To avoid the p2pool-like data spam, the number of coins mined per queuer must be relatively high. I think the target length for each block will be around 5-10 days. This requires commitment from those minting. It will be annoying. And the fee to join the queue could be completely lost. 50% of those queued will make less than the award.

In addition to all of this, we must eschew mordorcoin and give money away for free. Now we know for damn sure that new money is needed with the difficulties associated with minting. The written decrits proposal proposes giving away 5x of this block of coins to transactions and 5x to existing accounts, both randomly (blocks of accounts will be stored together, and this will be the starting point for awarding free money to them because awarding every account is infeasible in a network of any reasonable size). This area can be nitpicked, but I have come up with some very solid solutions.

In addition to that, because network expansion could easily outpace the time constraints set on Mint Blocks, each successive Mint Block within a defined period will increase the tx/account award further. The second block in a row will award 6x to each. The third will award 7x. This may max out at 10 each, or maybe it could go on continuously (perhaps after 20x the difficulty could start increasing say 3% per block; with so much new money in circulation [especially to transactors], if this causes mild deflation it would likely not have any problems being counteracted). So even in the worst case scenario of everyone instantly switching to ASICs and intentionally not raising the difficulty, designing and producing those ASICs will never be profitable. Plus the inflation has to catch up and raise the average amount of transactions over an extended period, or the ASICs will simply run into a wall where they can not mint for extended periods.

Adrian-x
Legendary
*
Offline Offline

Activity: 1372
Merit: 1000



View Profile
April 20, 2013, 01:05:57 AM
Last edit: April 23, 2013, 04:52:06 AM by Adrian-x
 #16

I haven't got a solution but my initial though was to look at Bitcoin and try and fit the current adoption rate to the new coin adoption rate.  

History shows us when a superpower like the British Empire gains a relative monopoly in gold, and uses its military might to control other countries gold, what happened in the "free" New World of America is the market just used silver instead, the "Tea Party" was an uprising agenised the British Empire because all triad taxes had to be paid in gold, which had to be obtained from the British Empire and the Empire control the gold monopoly as a predictable result exchange was unfavourable.  What we learn is money that is free of manipulation, control and somewhat limited is a good foundation to build an economy that will out produce all others.

I see Bitcoin becoming the equivalent of the British Empire's gold, and a possibility for a better distributed cryptocurrency becoming the New World's Silver. (Litecoin and other alternates at this stage share the same distribution model as Bitcoin and for that reason don't make a viable alternate.)

Someone in another thread pointed to a video I won't reference it, as it is misinformation regarding peek oil being a myth, the video does make the valid point that rising prises, encourage, innovation and alternate market solutions. It is in this mechanism that supply and demand should influence or increase the new coins to meet demand.

So working with the preface that rising demand causes prises to rise, the introduction of new coins could be distributed to users for; 1) Mining; and 2) maintaining the Blockchain, if an effective way could be found to measure demand that isn't linked directly to price, you could solve the problem.  

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
Impaler
Sr. Member
****
Offline Offline

Activity: 826
Merit: 250

CryptoTalk.Org - Get Paid for every Post!


View Profile
April 20, 2013, 01:43:58 PM
 #17

A small tid-bit of an idea with regards to that 'futures-market' idea.  What if a token existed that conferred the privilege of mining future coins? Without this token a person can not mine, a Proof-of-stake algorithm would be utilized on these 'futures' and they would very much resemble the classical use of futures to buy the fall harvest before the exact value of that harvest was known.

Now this token provides someone with a deflation prediction with something they would value as in the future they can realize the value of deflated coins by mining the coins themselves.  Because mining is no longer PoW it is a simple matter for a client node to mine from this token, naturally these cryptographic tokens will be called ORE.

In order to predict longer trends ore comes in different types that are for different amounts of time into the future.  Shortest duration ore can be used in say 3 months, while the longest duration would be something like 30 years and the intermediates would follow a simple power of 2 relationship (and we could even give them metal names too just to be cute).  The mining process simply uses a modulus on the block count to determine what kind of ore is valid for each block so theirs an endless rotation that provides opportunity to mine all the ores in every hour.

Each grade has its own market and this provides us with a more nuanced picture of future inflation and deflation are likely to be and helps stabilize the system.

 
                                . ██████████.
                              .████████████████.
                           .██████████████████████.
                        -█████████████████████████████
                     .██████████████████████████████████.
                  -█████████████████████████████████████████
               -███████████████████████████████████████████████
           .-█████████████████████████████████████████████████████.
        .████████████████████████████████████████████████████████████
       .██████████████████████████████████████████████████████████████.
       .██████████████████████████████████████████████████████████████.
       ..████████████████████████████████████████████████████████████..
       .   .██████████████████████████████████████████████████████.
       .      .████████████████████████████████████████████████.

       .       .██████████████████████████████████████████████
       .    ██████████████████████████████████████████████████████
       .█████████████████████████████████████████████████████████████.
        .███████████████████████████████████████████████████████████
           .█████████████████████████████████████████████████████
              .████████████████████████████████████████████████
                   ████████████████████████████████████████
                      ██████████████████████████████████
                          ██████████████████████████
                             ████████████████████
                               ████████████████
                                   █████████
CryptoTalk.org| 
MAKE POSTS AND EARN BTC!
🏆
Red
Full Member
***
Offline Offline

Activity: 210
Merit: 106


View Profile
April 20, 2013, 02:39:45 PM
 #18

A small tid-bit of an idea with regards to that 'futures-market' idea...

Now that I've read yours and Etlase2's ideas again, I think you are both on to the same principle.

As I read him, his ideas is more like investing in a temporary mining company that may or may not end up being profitable for you in the near future. Before any mining can start, sufficient people must put at risk sufficient (A) stake. If enough people (B) don't buy in, the venture collapses before it can start, and the organizers loose what they've staked. Once the venture launches, an varying amount (C) of gold is mined each month investors get paid by they're share.

I read yours more like free-range berry picking. (X) number of berries grow in a field every month. But if nobody pays a picker to go gather them then they're eaten by birds. Investors contract with pickers by the month. But there are only (Y) number of pickers available and each can only pick (Z) berries/month. If you have contracted with a picker but no longer want the berries, you can sell the contract to someone else.

wingding
Hero Member
*****
Offline Offline

Activity: 770
Merit: 500



View Profile
April 22, 2013, 08:06:18 PM
 #19

Hi, I am wingding.
I appreciate very much the initiative taken here.

I have scientific background in technology and have been reading articles from time to time about digital money since the 90s. (I also read Simon Singh's book about the history of cryptography, which I higly enjoyed and recommend)  However, when I stumbled across bitcoins in mid 2012 i realized immediately that Satoshis brilliant work was it! This was the digital money that would work!

It took some time before I actually bought some coins, but I was lucky to to do it before the real hype started. When it crashed down from 260 to 55 in a few days, I felt a really deep dissapointment and gloom. I did not loose any money, but I realized that this bubble thing is likely to happen over and over again. And that will prevent bitcoin from becoming used for online merchandise.

I have described the issue more deeply here (with some nice graphs): https://bitcointalk.org/index.php?topic=179961.0

and a shorter version here: https://bitcointalk.org/index.php?topic=181488.0

So my solution is not very fancy and advanced, but I think it will work, in the sense of keeping prices more stable and encouraging spending of coins and not only hoarding.


blogospheroid
Full Member
***
Offline Offline

Activity: 133
Merit: 100


View Profile
April 23, 2013, 06:02:35 AM
 #20

Hi All,

Not much to introduce about myself. Very little technical knowledge, but have an interest in economics and alternate ways of organization of society.

Here are my thoughts on the issue of a stable crypto coin. Caveat, They don't form a coherent whole.

[Thought 1  - Locking of coins] 

There are 2 sources of inflation in a crypto-currency. There are the new coins generated and there is the influx of already existing coins coming into the market on the sell side.

I asked a question earlier in the forum about "locking" of coins, rendering them unspendable for sometime. This would create a clearer picture of the money supply that is in actual usage now.

Right now, people say that a lot of their coins are in cold storage, but we have no way of verifying the same. They can appear anytime in the nearest exchange and drive down the price to whatever the market will bear at that time. So stablecoin needs to have a way of clearly placing coins in cold storage in plain sight, with clear indicators that during the next few hours, days or so, more than X number of coins or Y percentage of coins, simply cannot be traded. Thus, not only is the money supply (M1, is it?) in plain sight, but money placed in short term and long term locked coins (bonds?) is also in plain sight.

The issue really is that these bonds will also be traded and we may be back at the same place where we are now, but atleast merchants who deal only with the coin can be more assured, I think. How to incentivize people locking up their coins publicly, not really sure.

I read a few threads on this and realize that all of your thinking on this is much more advanced, but my above point was not made explicitly anywhere, so I thought it is better to put it out there.

[Thought 2 - Liquidity, Velocity, etc.]

The best suggestion that was made in this regard was coin days destroyed, but coin days destroyed could be manipulated by round tripping to one's own account. To counteract that, one can have a minimum transaction fee. A transaction fee however, is something that should be decided by benchmarking against competitors.

[Thought 3 - Demurrage]

The simplest forms of demurrage are flat percent off every account and a flat fee off every account. One is a flat tax, the other is a regressive tax. For a currency, the first one seems to be the better. An authority imposing a currency may have the second to persuade people to centralise their account (maybe with a bank).

A progressive demurrage may lead to people choosing to split the currency across many accounts, thus not yielding much more than a flat percentage.

[Thought 4 - Incentive]
List of people to incentivize
1. People holding the currency, but not too much
2. Verifiers/miners
3. Merchants providing new and needed products to the community
4. Publicly locked coins

So, there they are, my thoughts or a incoherent ramble, as some might portray it.
Pages: [1] 2 3 4 »  All
  Print  
 
Jump to:  

Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!