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Author Topic: The economics of generalized bitcoin  (Read 7093 times)
ribuck
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December 10, 2010, 11:32:04 AM
 #41

The miners and the block chain benefit from this, but existing app users (bitcoin currency) suffer a bit.

Every app user is also a potential miner, even if it's in the form of distributed mining for the little guy. Bringing more economic value to mining is not a bad thing.
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December 10, 2010, 02:07:08 PM
 #42

Adding a new application data stream (BitDNS) to the mainline block chain taxes everyone, not just the users of the new app.  The miners and the block chain benefit from this, but existing app users (bitcoin currency) suffer a bit.

This creates a natural tension that incentivizes creation of new block chains, when popular ones simply become too expensive due to large number of application users.  It is interesting to ponder how an application may move from one block chain to another, while retaining value.

BTW, I happen to agree on this point.  Adding new data to a block chain is going to raise transaction fees.  In addition, if some data which is at least for its bandwidth is more valuable than perhaps even the transaction data (which I think domain registration data fits that description) it skews the market for transaction fees in a negative way for those transactions which are purely financial transactions.

On top of all that, some of the fee proposals I've seen with BitDNS would further skew the market and I believe even challenge those who would claim that miners will take in all possible transaction fees no matter how small.  It certainly would drive up the cost to both run a node (and in particular a miner) and drive out the free transactions from the network.

For myself, I think it would be healthy to see what alternate currencies might do, but I do think it could drive Bitcoin itself under as a currency too, or at least marginalize it.  This isn't a given and only raw speculation based upon a gut instinct here and not based upon any sort of hard data.  I just don't know if Bitcoin could survive against other currencies based upon services which drive their value.

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December 24, 2010, 05:56:01 AM
 #43


For myself, I think it would be healthy to see what alternate currencies might do, but I do think it could drive Bitcoin itself under as a currency too, or at least marginalize it.  This isn't a given and only raw speculation based upon a gut instinct here and not based upon any sort of hard data.  I just don't know if Bitcoin could survive against other currencies based upon services which drive their value.

"An economist, a philosopher and a coder walk into a bar..."

I agree that separation of bitcoin from other bitx clients is essential. We need a study group to examine the large pool of opportunity alternate currencies/apps might have on the original network. Tying any of them together more than technically through the chain is sound thought. What we need is to explain the different forces at play here.

We could create an allegory that describes bitcoin and any additional bitx (including bitDNS/domain). The original client is facinating because we are witnessing something new - a self-sustaining trust network. Topologically speaking, bitcoin engine is a closed loop torus with a constantly(?) increasing area of bitcoins creating the torus' girth. The central column of the torus is the engine or chain. The beauty of the design is this enclosed nature that can be verified by the lightness of the client/miner which creates these chains/increasing currency.

If we now juxtapose a tree's root system now, to describe the original chain, we can see that other trees are possible from the roots of the original. Just as shoots would spring up from from crown, or base of the tree. These other trees need protection while in the start phase to prevent "hackers" from overwhelming them. They rely on the original chain (roots) created by bitcoin and create there own root system (new chain) simultaneously. What no one but Hal has proposed yet is a protective system to guard the newly sprouted chains.

We could consider something akin to worker bees - scouts, workers, attack drones that monitor the trees of bitx. These bees would have ability to mimic transactions to avoid rejection. They should be able to check the codebase actively running and the directory tree files for modifications. They could make up a small percentage of current tx volume and increase their presence when intrusions or cartels enter the system. The attack bees would warn nearby nodes of something afoot, while trying to get fresh information to "hive servers" which could better determine the issue.

Scouts - looks like normal tx to everyone in the network, but generates a worker
Workers - examine codebase, registers, files, etc and report to hive
Attack drones - alert nearby nodes to potential threats - eliminate threats

Many ANT swarm networks use this technology to avoid network congestion and routing issues. We could likewise cure any routing issues that may isolate nodes, or nodes that lose connectivity. Workers simply let the client know that the chain is healthy and continue as normal.
Scouts would basically get a worker to gather info and send it back to the hive. Workers gather the integrity of running client/miner. Attack drones can isolate originating IPs or cartels that are disturbing the network and potentially block their progress by overwhelming the non-compliant chains.
Workers and scouts are necessary for clients/miners, but attack drones are reserved for hive servers and act as a health inspector.

Some simple Bayesian algorithms should suffice for the volume of scouts and workers created. Attack drone only appear when health of network is reporting problems.

Any thoughts on my allegory of trees and bees?

Hal, can you summarize your thoughts on a separate protective system/shell for the bitcoin client and help me with any missing points?

PS. sorry about jamming three topics into post but I was on a roll. Wink

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December 24, 2010, 07:18:30 AM
 #44

Please fix your quoting Smiley

Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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December 24, 2010, 09:59:38 AM
 #45

This is another general application for the economics:
http://bitcointalk.org/index.php?topic=2299.0

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