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Author Topic: Decrits: The 99%+ attack-proof coin  (Read 44039 times)
Etlase2
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April 27, 2013, 06:05:13 PM
 #1

With the recent talk of stable currencies popping up again, I wanted to make a new thread regarding my proposal for Decrits, where the primary goal is to provide a currency that is fundamentally different from bitcoin in that currency can be produced for a stable cost--and much more.

This post is intended revise that proposal with my current notes and provide a digestible version that is a starting point for people to ask questions. I'm going to approach this with the same tactic as a famous gaming company and use The Four Pillars of Decrits as topic points.

Notes: Every time I use a number or a percentage, assume that figure is up for debate. I apologize for using a lot of acronyms, I hope it makes this easier to read. I am terrible at creating terminology, so please feel free to make suggestions. If you think an important detail is missing, please ask the question rather than pointing it out as a weakness or failure--I am glossing over a lot of details for brevity and to promote easier discussion.

1. Securing the Network Without Proof-of-Work: Reaching and Maintaining Proof-of-Consensus

  • A. The Consensus Block (CB) The CB, at its core, is simply just a merkle-root hash? that 100% of Shareholders have agreed is the hash of the entire state of the network at a certain point in time. Disagreements are resolved by providing cryptographic proof. A CB point is locked in every 10 Consensus Days (CDs), which are periods of 87,660 seconds or 1/360th of 365.25 regular days. Network time will be roughly agreed on by using NTP pool.
  • B. Consensus by Shareholders Consensus is determined by a group of peers called Shareholders (SH). Anyone may purchase shares in the network with Decrits using a special transaction? and become a SH. The price of each share will be a meaningful amount (intended to be in the range of 3,000-5,000 USD), and this money is locked for a period of at least 1 Consensus Year (CY - 360 CDs), automatically renewing unless a SH declines to renew. Each SH will be selected to provide a Transaction Block (TB) for a specific 10 second period during each CB. Each new TB will acknowledge the last seen TB, and the SH that created it will sign the CB along with a hash of the changes to the network state as of that moment. Note: When there are less than the number of SHs required to make a TB each 10 seconds each CB, SHs will have to make more than one during a CB. When there are more, some SHs will confirm the TBs of others.
    • i. Shareholder Incentives SHs are primarily incentivized by receiving 50% of the transaction fees collected by the network. Transaction fees are 0.01 Decrits or 0.01% of the transaction amount, whichever is greater. SHs earn Shareholder Reputation (SR) as they perform their duty to the network without incident. This reputation is used to determine what percentage of transaction fees they will receive. The highest reputed SH will earn no more than double the lowest, and the SR system will only be on a scale of 2-3 CYs of service (e.g. after 3 years you are among the highest reputed).
    • ii. Shareholder Disincentives Reaching 100% consensus is of utmost priority. If a SH misses his TB, he must sign the prior CB within the next 10-20 CDs (depending on when he needed to create a TB). If he does not, his share will be destroyed, including the money associated with it. Missing a TB but then signing the CB results in a soft strike. If three soft strikes are received in one CY, the SH will be removed from consensus with his share returned less a 25% penalty which is destroyed. Creating a bad block (a second TB for the same time period or one that contains a bad spend) will also result in the share and money being completely destroyed.

IMPORTANCE: Securing the network requires only the energy needed to validate transactions, the bandwidth needed to distribute them, and the storage to hold the network state. No proof of work is necessary, therefore the amount of energy required to secure the network is magnitudes lower than Bitcoin. Using an account ledger instead of a transaction ledger means that both storage and bandwidth requirements are also significantly reduced. Transactions will be typically confirmed in 5-15 seconds depending on network propagation lag, though if a TB is missed they may take an additional 10 seconds. As long as the TB chain is unbroken, these transactions are secure unless a massive network split occurs within the next 10-20 CDs before it has been accepted into the CB and signed by 100% of the consensus. Even then, as with bitcoin, unless your transaction is being specifically targeted, it should still be secure.

2. Decentralizing the Network: Incentivizing Network Propagation, Preserving Anonymity, and Checks and Balances

  • A. Primary Network Propagation via the Cloudnet (CN) The Cloudnet is a group of peers called Cloudnet Peers (CNP). Anyone may become a CNP by creating a special transaction that includes an IP address (IPv4, IPv6, tor, i2p), an asymmetric encryption key, a public key, and a deposit of 1/20th of a share. This information is stored in the CB. A CNP will be able to retrieve his deposit fairly easily but with some restrictions to deter abuse. New CNPs will make efforts in connecting to several other CNPs, and they will accept and retransmit new transactions and network data as well as provide an access point for Cloudnet Clients (CNC - "light" clients) to retrieve (provable) portions of network data.
    • i. Cloudnet Peer Incentives CNPs are primarily incentivized by receiving the other 50% of transaction fees collected by the network. A portion (10%?) of these fees will be distributed based on Cloudnet Peer Reputation (CNR) which is gained by being in the top 90% of credited CNPs during a random interval of the previous CB. CNPs receive credit by CNCs who use their identification code in a transaction. The other 90% of the fees will be distributed in a bracketed manner (slight bonus to the top, slight penalty to the bottom) towards those who were credited with transactions during that random interval.
    • ii. Cloudnet Peer Disincentives CNPs are required to provide a public key so that their identity may be proven to a CNC. A CNC may request that a CNP sign information retrieved so that the CNPs deposit is destroyed for providing provable disinformation. CNPs will lose reputation over time if they are not credited during the random intervals.
    • iii. Shadow Peers Shadow Peers (SP) are CNCs that dedicate some bandwidth to transmitting network activity between other SPs. SP information will be given out very sparingly by those that request it of CNPs. In the event of a major DDoS attack against the published CNP addresses, SPs will continue to transmit network activity.
  • B. Preserving Anonymity of CNCs Providing an asymmetric encryption key allows CNCs to connect to CNPs in a completely encrypted handshake process, preserving anonymity against outside observers. The public key provided by the CNP will ensure that no man-in-the-middle attack can be taken against a CNC. The default CNC implementation will provide a weighted but random system for determining whom to credit to preserve CNC->CNP anonymity. CNCs can trade bandwidth for privacy and retrieve blocks of information rather than account-specific information. Support for tor and i2p should be part of the protocol from the start to allow for "preserved anonymity" connections that can operate with much less bandwidth and only send or retrieve necessary information.
  • C. Preserving Anonymity of CNPs (and SHs) CNPs will often have to associate IP addresses with account numbers when joining or cashing out of the CN. This is terrible for privacy-minded people and they should not have to be forced to use some outside "laundry" service to disassociate this connection. To provide this, buy-ins and cash-outs may be performed with blind transactions (invented by Chaum). More detail here.
  • D. Checks and Balances Transmitting network data is a voluntary activity by each CNP. If a significant group of SHs are intent on disrupting the network, CNPs do not have to transmit their TBs. This means, assuming enough CNPs agree that disruption is being attempted, honest SHs down the road are unlikely to see the disruptive blocks (e.g. ones that drop all transactions or do not include important transactions). This will cause strikes to be accrued against disruptive SHs and potentially destruction of their deposit. This is an effective and decentralized deterrent against malicious SH activity.

IMPORTANCE: Being a transmitting node pays dividends. This encourages as many people as is profitable to transmit data for the network. The group securing the network is balanced by a different and larger group transmitting for the network; the "powers" are separate. Bitcoin transaction fees can be lower if transmitting nodes are fewer because the miners are the source of approved transactions as well as the price of transaction fees. Because transaction fees are set with Decrits and the costs of securing and transmitting are low (no mining), the securing and transmitting parts of the network will expand as transactions increase. The Decrits network is encouraged to become more decentralized as it expands. The Bitcoin network is encouraged to become less decentralized as it grows because transaction fees can be reduced as less energy is required to secure the network. Since energy is not required for Decrits' security, many, many more people can participate. With Bitcoin, the more people that participate, the higher the transaction fees must be.

3. Creating Money: Making it Stable and Energy-Efficient

  • A. Producing a Mint Block (MB) A Mint Block is a potential block of money that can be created by the network if several prerequisites have been met: 1) Sufficient transaction activity has occurred since the beginning of the last MB, 2) The current/prior MB has been completed, and 3) Between 5 and 10% of the MB's monetary award must be "burned" by potential minters in a limited time frame to join the Mint Block Queue (MBQ) to create new money. The MBQ is joined individually by those wishing to create currency and each queuer will be assigned to create 2-3 coins. A full MBQ proves to the network that sufficient demand for new currency exists and sufficient power is ready to create it. More details. These restrictions place a brake on unbound monetary creation.
    • i. Adjusting Difficulty Difficulty is adjusted after each MB by dropping the 25% fastest and 25% slowest queuers to create currency, and comparing the middle 50% to the current difficulty. A speed increase will directly reduce the award of the MB (e.g. if speed increased 3%, each coin produced will award 3% less). This is so that technological advances that create profitability, not economic demand, are disincentivized. The next MB's difficulty will be adjusted based on a weighted scale of the last 10 MBs. This is so that it requires a sustained change in the power of the network to really increase the difficulty. Difficulty will never decrease; producing a block more slowly than expected will simply set the increase at 0%.
    • ii. Minting Incentives and Disincentives To avoid difficulty stagnation and to penalize those who join the queue more times than their system can reasonably handle, queuers who create coins in the top 50% will receive additional money while those in the bottom 50% will take penalties. The initial idea for this is also described in this post. However, to avoid potential ways to game the system (including using ASICs), each queuer will be compared with a random sample of his peers rather than the whole MBQ. There are other designs that increase the profitability of being honest* (or reduce the profitability of being dishonest) that go a bit beyond the scope of this document.
  • B. Producing Energy Efficient Currency All of the difficulties associated with minting are in place so that new currency is created only when the value of Decrits are profitably above their cost to produce. However, this is not at all energy efficient. To provide energy efficiency in currency creation, free money will be distributed to users of the network (not minters) based on minted money. 5x the MB award will be given to either the sender or receiver of a random set of transactions during a certain time frame before (and potentially after) the MB based on multiples of the tx fee; 5x will be awarded to a random selection of accounts based on each account's percentage of the total amount of currency in existence. If a second MB is started within a time window of the first, these multiples will increase to give out more free money in response to network expansion. More details: at the end of this post and here.
  • C. Achieving Stability and Reducing the Hardware Tax The intent of the complicated process of minting currency is to provide a stable cost to produce new currency. This in turn, I believe, will result in a reasonably stable value when compared to other commodities--perhaps even providing a stabler value compared to the whole basket than many or most other individual commodities. This requires a deeper explanation for the reasoning behind the design decisions which will be provided in the next post.

* - I use the term "honest" to mean network users whose actions do not threaten the stability or security of the system. I use this in a very general sense--the network itself will not specifically identify or penalize users it thinks are dishonest, but it will make their actions more obvious and it will give time for honest users to respond. I will go into detail in the next post.

IMPORTANCE: To provide a strong base for a currency, people must want to use it as currency. People must also be able to create it as necessary in the face of economic expansion or manipulation. Hoarding can not manipulate the price upwards because minters can create new currency in response. During network expansion, transaction activity will receive a greater amount of new currency (in terms of award to volume) than minting or hoarding. This encourages both spending and accepting Decrits--and without the dire need for businesses to convert back to fiat. When the network is stable, hoarding offers no incentive over stuffing a non-price inflationary currency under a mattress.

4. Creating a Dynamic Network: Making it Scale and Adapt by Providing a Decentralized Foundation for Modifying the Network

  • A. The Voting System SHs and CNPs will be allowed to propose changes from either a predefined list of voting options or by proposing changes to the core code. The core code will be part of the Consensus Block so that updating to new code "on the fly" will be possible. Core code changes will not pass unless a 90% majority of SHs and CNPs agree. If less than a 90% majority agrees, it is possible for the network to peacefully split and allow one way transactions from the old to the new network for some period of time. This is another extensive topic that will be detailed in a future post.

IMPORTANCE: A sufficiently large network simply cannot and should not rely on a core group of developers as the only source of the reference implementation. By providing the core code within the network, "hard forks" are an issue of the past. Those wishing to fork the network can do so peacefully and retain value from the existing network. If many people (not SHs or CNPs) agree that the idea is better, they may transfer currency over to the new network. Future, unforeseen changes in the world or in cryptography may require quick and decisive action from the network. Waiting for millions of clients to update to new software or thousands of miners (or maybe only tens or hundreds in the centralized way Bitcoin has gone so far) is not acceptable in the face of major problems.

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Etlase2
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April 27, 2013, 06:05:26 PM
 #2

Reserved for more explanation of sections 1 & 2.

4/29/13: Details on how Decrits is 99% attack resistant.

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April 27, 2013, 06:05:34 PM
 #3

Reserved for more explanation of sections 3 & 4.

5/4/13: https://bitcointalk.org/index.php?topic=194994.msg2031259#msg2031259

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April 27, 2013, 06:05:42 PM
 #4

https://bitcointalk.org/index.php?topic=189239.msg2030308#msg2030308

A recap on some deeper reasoning behind the ideas of Decrits:

1) Decrits is intended to be a "trickle-in" type currency, where most new currency enters the economy in a random way. The randomness ensures that those with lots of decrits can't control new money, and they can't make credit/fractional reserve/debt money more appealing than "real" decrits. When demand for new currency arises, the people are intended to make it and distribute it, so there is little incentive whatsoever to accept a bank's credit.
2) An expanding economy is indicated by those willing to waste resources in creating new currency to facilitate trade. If decrits could be compared to a metal that does not have much utility other than in trade, then it would be a metal commonly distributed throughout the Earth that only requires you to invest tools and time.
3) Most of the time, enough of the currency will be in circulation so that it is not necessary to waste the effort and doing something actually productive will be much more lucrative--like a job. But if money for basic human needs is hard to come by, people will waste effort in making currency. This is the threat that all people should be able to have over the wealthy.
4) This further encourages increasing the velocity of money because money will then be given away freely. It discourages using money--a tool, no more--as a way to control or disrupt society.
5) If changing something as irrelevant as a hashing algorithm is what it takes to restore the balance, then the protocol must facilitate this in every way possible. Via section 4, a new currency can be created where the old currency can be accepted at a 1:1 value, while new currency can be created again by whatever means is easily available to the population.

If EvilMegaCorp owns the hardware, a large chunk of the shares, and a large chunk of the peers, it must still sanction the new currency or everyone will know it is a fraud (and the new currency will continue to operate), so it is in EvilMegaCorp's best interest to never attempt this control in the first place because it will lose all shares in the new currency. In completely different scenarios, currencies with different ideals could simply compete, or if developing countries have different needs they could have regional currencies, or if the network becomes too large for individual nodes to handle it could split into shards. These are the types of things that are necessary to account for if a currency is intended to replace fiat. It must be easy enough to foster these types of things to truly separate the people from goverbankwealthy controlled money.

If there is not consensus, the Decrits proof-of-consensus design allows both ideals to separate peacefully. Again, if peace is not desired, those who don't desire peace just look like bullies (or a huge takeover attempt) and accomplish little.

A bar-napkin type goal would be to have around 0.25-0.5% of all decrits tied up in the network's security. EvilCorp who is strong in fiat but weak in decrits can't do much at all here. It must accept decrits and the properties of decrits. Create specialized hardware to make a lot of decrits? Heavily limited by the restrictions in place. Lots of money distributed randomly to everyone but you. This is protection in the early years. EvilCorp can waste fiat effort to upset the system, but all it really accomplishes is adding power and value to Decrits. Value away from the powerful and to the people. Worst case scenario near-unanimous vote to change the algorithm and change difficulty. Money supply won't get too upset if the difficulty is off because difficulty and coin award is adjusted after each mint block.

There are massive consequences in value in trying to take control. And the people can wrest it back. It is an undefeatable system. I would imagine that those who become very wealthy under this system would be those that truly innovated and moved society forward. Putting the people of the world on level ground in regards to currency means that manipulating developing countries would be much more difficult--innovation by subjugation is much less profitable. Bank/government manipulations of credit and the money supply is an afterthought of a time past.

Everything I think real libertarians hope a currency can be, rather than wallstreet 2.0. Imagine the scenario leading up to the housing crisis. Banks give away subprime mortgages but then start running out of money, so interest rates increase, encouraging the production of new money, giving money freely away and making it easier for those to afford housing payments, allowing housing market value to be transferred into Decrits in the form of the people owning more of their property so that new people may also afford property. The end results is banks are a mildly profitable business in the business of helping people store wealth in property, breaking the system of never-ending debt.

Anyone interested in helping? Tongue

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April 27, 2013, 06:30:16 PM
 #5

Any TL;DR version? Or something long but for humans with IQ<160?
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April 27, 2013, 07:08:53 PM
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  • A. The Consensus Block (CB) The CB, at its core, is simply just a merkle-root hash
There you go! Grin Sentence 1, and you are already using words I cannot understand. What is a merkle-root hash?

Once again, you've listed and detailed the many mechanisms of your currency, but you haven't explained what each thing does. For example: you've explained that Shadow Peers help prevent DDoS attacks. That's good, now add in explanations like that for the other mechanisms.

Because you probably owe me money: 1ChFoNZ9HBsBJRDP4J9uTtYLSWZHKazvc DJMq34hrdkJZ9Pobm5sk2eDFFVpbgy26vo
Etlase2
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April 27, 2013, 07:28:15 PM
 #7

Wikipedia can explain these things better than I:

https://en.wikipedia.org/wiki/Hash_tree

"In cryptography and computer science a hash tree or Merkle tree is a tree in which every non-leaf node is labelled with the hash of the labels of its children nodes. Hash trees are useful because they allow efficient and secure verification of the contents of larger data structures."



I can't teach crypto 101 and bitcoin 101 while also teaching decrits 101 in the same post. It is off-topic for the OP. I am willing to explain any of these things further in depth if the questions are asked (preferably nicely).

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April 27, 2013, 08:24:35 PM
 #8

interesting.
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April 27, 2013, 09:17:51 PM
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This was referenced in another thread and I was curious about it. I like it, although the implementation could be a bit complex. As for the complaints that this document is too technical and requires a TLDR... This is pretty high level. This IS the tldr. It could be generalized more, but we'd lose information.
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April 27, 2013, 09:22:37 PM
 #10

no, this will not work. the post is just a bunch of buzz words.

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
Etlase2
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April 27, 2013, 09:52:14 PM
 #11

no, this will not work. the post is just a bunch of buzz words.


Please test me.

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April 27, 2013, 10:12:13 PM
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Testing Etlase2....
...
...
Testing Etlase2....
...
...

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April 28, 2013, 05:23:39 AM
 #13

100% consensus of Shareholders is a myth.
There will be majority and minorities.
Maybe at every CB.
Of course you can have 100% agreement,
 but only after disagreeing minorities got
 decimated by some mechanism Wink

Have you read this ? :
http://www.usenix.org/events/nsdi09/tech/full_papers/clement/clement.pdf

I doubt that further discussion will
be helpful for this proposal.
Just code prototype of it in a modular
 (and not Satoshi-style) way.
Like the wall of many breaks.
After testing you can redesign it,
and with semi-working proto/concept you'll
get more feedback from the community
(and from coders too).

Or if you can not do it yourself,
hire someone who has the skills needed.


"...Enemies are everywhere ! Angka is all rage ! Be a good soldiers, blow everything... " <-- Pol Pot (C)
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April 28, 2013, 07:56:40 AM
 #14

no, this will not work. the post is just a bunch of buzz words.
Please test me.
the way SHs can buy their way into CB is fishy. it does either depend on a central authority or is not safe. 

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
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April 28, 2013, 10:05:54 AM
 #15

the way SHs can buy their way into CB is fishy. it does either depend on a central authority or is not safe. 

Poppycock. I didn't leave "truly decentralized - except for this one, huge, major thing" out of the title on accident. It's not there because it's not true.

To start, SHs don't "buy their way into the CB", anything that is network data is added to the CB by consensus. Someone who has enough Decrits to buy a share and wants to buy a share can buy a share by creating a valid share buying transaction. The share money will be removed from the initiating account, and after consensus is reached that person will be assigned to create a Transaction Block in the next CB along with other SHs. At this point, no one can deny that the share buyer is a share holder. I have edited the original post to make it clear that this is a special transaction, and cited this post. You are not sending money to some guy you don't know on the internet, the transaction is managed by the network itself.

Now, you could make the argument that SHs have an incentive to drop share buying transactions because it means they will receive a smaller percentage of the transaction fees. However, this is already addressed in section 2.D. Share purchases fall under the "important transactions" category. Honest CNPs have an incentive to see as many SHs as possible because it is better for decentralized network security, and their "take" from the transaction fees will be unchanged. Although this brings up something I hadn't yet considered--CNPs are not incentivized at all to propagate special transactions that are buying into the CN. This can easily be addressed by offering a small, short-term incentive that some will be willing to take (by adding in the CNP identification code to receive credit), so everyone may as well attempt it because it will eventually find a SH. Additionally, SPs would transfer these transactions around too (presumably smart SHs will be active as SPs), as it is in their best interest to have more CNPs--again in the name of a robust and decentralized network.



Ukigo, your post drives at the very heart of the network security. I will answer it in some detail later. But I must have gone through a hundred different ways this could work from the first time I decided to separate mining from security, and I found 99 ways to make it fail or show that it was horribly inefficient. This one is highly efficient and it will not fail. It is even remotely possible that governments could collaborate to make it fail, so I have written ideas down regarding how the network could adapt to operating within a meshnet-like infrastructure that must be presumed to be in place to protect against this remote possibility.

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April 28, 2013, 10:11:37 AM
 #16

come up with a implementation and i will hack it. Wink

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
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April 28, 2013, 10:15:25 AM
 #17

come up with a implementation and i will hack it. Wink

How much BTC are you willing to wager?

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April 28, 2013, 10:17:26 AM
 #18

come up with a implementation and i will hack it. Wink
How much BTC are you willing to wager?
5 btc.

if i can find a central authority or are able to cheat the system, i win.

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
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April 28, 2013, 10:21:59 AM
 #19

I dont understand the need for absolute stability and in fact the notion of trying to enforce it probably brings more issues than it solves.

All you need to know about decentralized cryptocoins is that they are deflationary by nature. Over the LONG TERM, they will go up in value.

It might take months or years for it to go up from where it is now or recover from a downswing, but by its nature the value will hold or go higher.

If businesses want to accept bitcoins they dont need to hold them. This is a crucial point in the crypto-economy.

Businesses can accept cryptos like BTC and have them immediately and automatically converted into fiat, so there is no risk to them.

If the business decides it wants to invest in the currency long term, they can hold them, but holding them is NOT required for accepting them.

Holding coins is for people or businesses that understand the long term deflationary value of a decentralized cryptocurrency.

The only people who are hurt by short term volatility are short term speculators and day traders. I think we can all agree that isnt a major problem.

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April 28, 2013, 10:25:04 AM
 #20

To start, SHs don't "buy their way into the CB", anything that is network data is added to the CB by consensus. Someone who has enough Decrits to buy a share and wants to buy a share can buy a share by creating a valid share buying transaction. The share money will be removed from the initiating account, and after consensus is reached that person will be assigned to create a Transaction Block in the next CB along with other SHs. At this point, no one can deny that the share buyer is a share holder. I have edited the original post to make it clear that this is a special transaction, and cited this post. You are not sending money to some guy you don't know on the internet, the transaction is managed by the network itself.
a) where does my money go?
b) can i buy more then one share? can i buy a majority anonymously?
c) who is the first SH?

"The whole problem with the world is that fools and fanatics are always so certain of themselves and wiser people so full of doubts." -Bertrand Russell
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