A legitimately novel idea for a new crypto.

[Anon136]

there are a couple of issues with this proposal. issues that i have since solved but there is no reason for me to belabor the point since BTCNext beat me to the implementation of this basic idea. so please do go check out the altcoin NXT

I'm SO excited to tell you guys about this idea I've been working on!

This idea was created to address the problem of traditional POW schemes where by investment in ASIC producing infrastructure leads to logarithmic improvements in hashing efficiency rather than more ideal linear improvement. Someone else explained it best so I'm going to quote.

The nature of IC manufacturing is such that a very small number of companies, about two to three, can afford the immense capital costs required to operate top-of-the-line chip fabrication facilities. Put another way, the entire world's economy is unable to support a diverse IC manufacturing industry at the current level of technological sophistication. Control those chip fabs and you control mining. It would be extremely easy for the US government to tell Intel and TSMC that from now on any wafers they process capable of doing Bitcoin mining must include additional circuits that let the US government control how, and by whom, they are used.

Advantages:

• Higher security with fewer confirmations resulting for better decentralization
• Significantly fewer resources consumed in the maintenance of the network
• Self regulating max block size
• Self regulating money supply, no inflation OR deflation (after some time)
• No incentive for transaction block creators to pool means more decentralization
• Very strong incentive against address reuse equals better anonymity
• no incentive for miners to store up and dump secret POW chains

In common with bitcoin:

• Private key pairs are created to demonstrate ownership of coins in a decentralized ledger
• transactions are signed with private keys and bundled into blocks with inputs that reference previous outputs
• Change in transactions is sent to new addresses created by the sender as one of the outputs on the transaction

All that good old fashioned bitcoin stuff, we love you satoshi.

Overview

• The key insight here is that a reliable stream of unpredictable but consensus verifiable numbers is basically all you need in order to build a secure cryptocurrency.
• In It's most condensed form the idea is basically to separate those who are performing the POW calculations from those who are minting the new transaction blocks.
• Separation of powers eliminates so very many of the principal agent problems that complicate the successful implementation of other more POW centric cryptos.

 

Miners :

• Miners maintain a blockchain exactly like bitcoin except for some key differences
• Miners will not store any transaction information in their blocks.
• The only information that will be contained inside of blocks produced by miners is the address that that miner would like to use to receive compensation for his service.
• Miners will be compensated with 100% of the newly issued currency
• The difficulty of the POW is to be adjusted in a similar fashion to traditional cryptos (traditional cryptos lawl ) so that new mining blocs will come in at a steady rate.

Once you read this whole post, and think all the way through the logic, the implication is that, in effect, miners will be compensated for their service with the value of all of the coins that people accidentally lose. Though it will take some time before everything settles down to that point

Minters:

• Every transaction is a sort of entry into a sort of lottery
• When a miner mints a new mining block everyone looks at all of the public keys that have have been used in the past, and whoever has used the key that is numerically closest to the hash produced by the miner is entitled to mint the newest transaction block
• Transaction block minters are compensated with 100% of the transaction fees
• You may have noticed that this puts a lot of pressure on people to not reuse addresses, this is a very good thing
• If it is too computationally difficult for all nodes to look through all of the private keys used this could be mitigated with a time limit. I.E. all of the keys used in the last year, or month, or week etc...

I know what you are thinking, blockchain bloat, don't stop reading we will get to that.

Block size:

• At the beginning of each transaction we could include one extra bit of data, 1 equals max block size should be increased, 0 equals max block size should be decreased
• Votes would be time weighted with higher weights applied to more recent votes.
• there wouldn't be any more aesthetically preferable option to latch onto in the state of ignorance, so ignorance on one side would ACTUALLY cancel out ignorance on the other, unlike in politics. (one option doesn't have nicer hair than the other)

I don't generally find myself advocating democracy but i think it could work well for max block size adjustment. There would be no real means or motive here for anyone to "game" the system. No one is going to find it in their interest to author a bunch of fake transactions in order to vote over and over, because the marginal value of that transaction space to you would be so much less than someone who wanted to vote AND actually move money. There is no incentive to be selfish either because the chance that your vote would effect the outcome in a way that is quantifiable and positive for you is infinitesimal.

Blockchain size:
With the idea that I'm proposing i really feel that the advantages outweigh the costs, but there is atleast one cost i have found. One of the drawbacks is that the incentives are such that blocks will be 100% full with transactions 100% of the time. In order to help deal with this, and in order to allow the max block size to be as large as is possible the blockchain would only be stored for a limited amount of time. As bad as this sounds its actually the way bitcoins should have always been. It is very dangerous to have people storing a 100year old blockchain. If ecdsa is ever cracked, bitcoin can fork into newer encryption schemes, but there is the potential for people to unlock all of the coins that have been lost throughout history. In the distant future, this could potentially multiply the money supply several times over in a metaphorical heartbeat. The drawback is that you have to move your coins to new addresses every few years. I know its a bummer, but you'll survive i promise .

Issuance:
This part is going to get a lot of my fellow libertarians in a tizzy but please bear with me until i finish the argument. The block reward for miners would never be lowered, it would be a constant amount for ever. This would not lead to endless inflation i promise. You have to remember that each new issuance would represent a smaller rate of inflation of the over all money supply than the previous issuance. So for example the second block doubles the money supply, but the third only increases it by 1/3 and the fourth by only 1/4. This is much less inflationary than a scheme that, for example, increases the money supply at a rate of 1% of outstanding issuance. Furthermore at some point in the future an equilibrium would be reached where the marginal value of a unit of currency would be less than the marginal value of taking the necessary precautions to secure it from loss. In other words, at some point in the future, the amount of currency lost due to carelessness would match almost 1 for 1 the rate of new currency being issued.

The little details:
You may have noticed that i left out a lot of details such as: target block time, block target readjustment interval, hashing algorithm, number of coins per block and denomination. The truth is those things don't really matter that much. With that being said i do have preferences. I think scrypt is probably better than sha256 because it would lead to more homogeneous distribution; I think bitcoin is a little bit slow on its block time, i would like to see 2 maybe 3 minute blocks; I think it re-targets unnecessarily slowly; and I think bitcoin should probably always have been denominated in satoshis.  But again that stuff really Isn't that important, these ideas are much bigger, i think, than faster re-targets.

Conclusion:
Well thats basically it guys. I'm going to post this in a very raw form and continue to edit it into the future based what ever else i think of and what ever feedback i get. Thank you so much to those who stuck with it all the way to the end! If i can get some verification from some bitcoin experts here on the forums that this is in fact feasible and that I have in fact not made any major irreconcilable mistakes, than we can proceed to starting work on a bounty!

[Anon136]

Q&A

Doesn't that mean that a 51% attack can be performed by owning 51% of the addresses?

Yes absolutely. I don't know how you would make a crypto that was totally resistant to all 51% attacks. The idea here is that, with bitcoin each additional dollar you invest in attempting to get that 51% nets you MORE advantage than the dollar before it, with this system each additional dollar you invest nets you LESS advantage than the dollar before it.

What if the owner of the randomly chosen key is offline, or has lost the key? Then what?

The network just waits 4 minutes instead of 2 minutes for its next confirmation working on this one still

[digitalindustry]

I'd say 100%

for some idea like this :

but use some bullet points , and perhaps even a picture to explain the different PoW .

i'm still not fully understanding .

perhaps just explain the PoW - to me like i'm the tard i am.

[pmconrad]

Doesn't that mean that a 51% attack can be performed by owning 51% of the addresses?

[defaced]

Reserved

[Come-from-Beyond]

Sub

[CoinGeneral]

Unless BTC somehow becomes hacked and exploited, then I don't think it'll be dethroned from its spot no matter how many new alternatives pop up. It was the first, it's the most popular, and it might just be like the 'qwerty' keyboard layout, first it started out as a prototype but eventually it just became so popular even the person who created it, even when he made a much better improved version, no one wanted to switch over.

[miffman]

Interesting. Reserved

[roozifus]

Unless BTC somehow becomes hacked and exploited, then I don't think it'll be dethroned from its spot no matter how many new alternatives pop up. It was the first, it's the most popular, and it might just be like the 'qwerty' keyboard layout, first it started out as a prototype but eventually it just became so popular even the person who created it, even when he made a much better improved version, no one wanted to switch over.

Unless bitcoin has some way to stop users from also using other coins I don't see how it can get locked into first place indefinitely. Personally I see a future where businesses and websites use 3rd party services to manage their crypto transactions and these services support multiple coins. In this scenario users will gravitate to the coins with the best features rather than the ones that have been around the longest.

[Anon136]

I'd say 100%

for some idea like this :

but use some bullet points , and perhaps even a picture to explain the different PoW .

i'm still not fully understanding .

perhaps just explain the PoW - to me like i'm the tard i am.

Yep i know I have a lot more work to do on my presentation. I was just getting crazy tired by 5am so i decided to go ahead and publish it in a rather rough form and work on it some more after i woke up. 4 hours later apparently...

The thing to understand about the pow is that its just a contrivance for creating a never ending string of varafiable unpredictable numbers that can be used as a means to reach consensus in the network. What you would do as a miner is hash the genesis block + the address you wanted your reward to be payed to + a series of random nonces. the first person to come up with a hash that it below a certain threshold wins the competition, everyone starts trying to hash his block plus the address they want to be payed too. Its just like bitcoin, except the blocks contain no transactions, only the address you want to be payed out too.

Once you have these random numbers that are produced by the miners, you can compare every address recorded in the blockchain and the person with the address that is numerically the closest to that random number earns the right to mint the next transaction block.

Doesn't that mean that a 51% attack can be performed by owning 51% of the addresses?

Yes absolutely. I don't know how you would make a crypto that was totally resistant to all 51% attacks. The idea here is that, with bitcoin each additional dollar you invest in attempting to get that 51% nets you MORE advantage than the dollar before it, with this system each additional dollar you invest nets you LESS advantage than the dollar before it. Its still possible to be 51% attacked, but it should in theory be significantly more difficult than cryptos that came before it.

Unless BTC somehow becomes hacked and exploited, then I don't think it'll be dethroned from its spot no matter how many new alternatives pop up. It was the first, it's the most popular, and it might just be like the 'qwerty' keyboard layout, first it started out as a prototype but eventually it just became so popular even the person who created it, even when he made a much better improved version, no one wanted to switch over.

I love bitcoin, I don't want to conquer the market, just a niche.

[Anon136]

keep the questions coming guys, help me build up my Q&A section please.

[markjamrobin]

keep the questions coming guys, help me build up my Q&A section please.

This is meant to be implemented in a new coin, or hard forked? I doubt you could get support for such a radical change in the Bitcoin protocol if that is what you are looking for.

[cunicula]

I'm too drunk to critique this right now, but want to post so I remember to keep track of this.

The idea of mining empty blocks to improve security is an excellent one. The core benefit is that you can have extremely rapid confirmations w/o latency issues.

Will reread this later.

[Anon136]

I'm too drunk to critique this right now, but want to post so I remember to keep track of this.

The idea of mining empty blocks to improve security is an excellent one. The core benefit is that you can have extremely rapid confirmations w/o latency issues.

Will reread this later.

thanks so much! i expect some of the details to be off but if the fundamental core concept is sound than thats all i could hope for and would make me very happy indeed.

[Etlase2]

The idea of mining empty blocks to improve security is an excellent one. The core benefit is that you can have extremely rapid confirmations w/o latency issues.

You can have extremely rapid confirmations of already confirmed tx. On the other hand, if whoever is selected does not create a tx confirmation list out of a pool of everyone who has a tx in the last 2-3 years, you are waiting for an additional mining block--and potentially many more. However, the amount of data required to monitor this is small, which is good (although lite nodes will have to ask a full node who is the closest--this could be a vulnerability).

Overall, a very huge boon to decentralization, one I espoused with the very first encoin proposal over 2 years ago in that transaction security needs to be separate from money creation.

This part is going to get a lot of my fellow libertarians in a tizzy but please bear with me until i finish the argument. The block reward for miners would never be lowered, it would be a constant amount for ever.

You mean bittardtarians, not libertarians. There is not a fixed supply of money in any sane school of economic thought. However, there are many economic issues this still does not address, but that does not detract from the fact that this simple idea is probably a lot better than how bitcoin currently works.

[sangaman]

I've thought about something like this before. What if the owner of the randomly chosen key is offline, or has lost the key? Then what?

[Anon136]

The idea of mining empty blocks to improve security is an excellent one. The core benefit is that you can have extremely rapid confirmations w/o latency issues.

You can have extremely rapid confirmations of already confirmed tx. On the other hand, if whoever is selected does not create a tx confirmation list out of a pool of everyone who has a tx in the last 2-3 years, you are waiting for an additional mining block--and potentially many more. However, the amount of data required to monitor this is small, which is good (although lite nodes will have to ask a full node who is the closest--this could be a vulnerability).

Overall, a very huge boon to decentralization, one I espoused with the very first encoin proposal over 2 years ago in that transaction security needs to be separate from money creation.

My idea was to wait for additional mining blocks. I hadn't even considered the possibility of secure single confirmation transactions.

This part is going to get a lot of my fellow libertarians in a tizzy but please bear with me until i finish the argument. The block reward for miners would never be lowered, it would be a constant amount for ever.

You mean bittardtarians, not libertarians. There is not a fixed supply of money in any sane school of economic thought. However, there are many economic issues this still does not address, but that does not detract from the fact that this simple idea is probably a lot better than how bitcoin currently works.

I wonder if you could elaborate on what economic issues it does not address. At some point the currency supply should stabilize as the marginal value of securing one unit of currency becomes higher than the value of new units produced. So inother words, at some point we will reach a point where the unit of currency is worth so little that people lose more than the amount thats being created. then when too much is lost the value goes back up, people work harder to secure the currency and the amount lost is less than is being produced. then the supply keeps oscillating up and down across this line and eventually the amount lost due to carelessness finds a steady predictable equilibrium with the amount of new currency being produced. It seems like a pretty awesome model for maintaining a steady currency supply to me so i would really like to know what it fails to account for.

[Anon136]

I've thought about something like this before. What if the owner of the randomly chosen key is offline, or has lost the key? Then what?

Well i can think of 2 possibilities.
One is that miners, instead of hashing empty blocks, hash the transaction block + previous hash + their public key + nonces. If they did this than the second closest (lets call him #2) could publish a transaction block in the hopes that the owner of the randomly chosen key (lets call him #1) was unavailable. I If it worked like this than if #1 returned in time to mint the block than #2's transaction block would be orphaned, otherwise the right to mint the new transaction block could default to #2. this is all wrong let me think on this some more

The other option is that miners do not hash transaction blocks, and instead just hash previous hashes + their public key, and if the owner of the randomly chosen key is off-line than everyone in the network just waits 4 minutes for a confirmation instead of 2.

[Anon136]

keep the questions coming guys, help me build up my Q&A section please.

This is meant to be implemented in a new coin, or hard forked? I doubt you could get support for such a radical change in the Bitcoin protocol if that is what you are looking for.

There is NO way this would fly as a fork. New coin definitely.

[Etlase2]

I wonder if you could elaborate on what economic issues it does not address.

No, I've spent enough time on that sort of thing. No more talking, now is the time for doing.

At some point the currency supply should stabilize as the marginal value of securing one unit of currency becomes higher than the value of new units produced. So inother words, at some point we will reach a point where the unit of currency is worth so little that people lose more than the amount thats being created. then when too much is lost the value goes back up, people work harder to secure the currency and the amount lost is less than is being produced. then the supply keeps oscillating up and down across this line and eventually the amount lost due to carelessness finds a steady predictable equilibrium with the amount of new currency being produced. It seems like a pretty awesome model for maintaining a steady currency supply to me so i would really like to know what it fails to account for.

You're losing me here. You can't make any economic basis on how many coins are "lost", it is irrelevant compared to the change in velocity of money.

The other option is that miners do not hash transaction blocks, and instead just hash previous hashes + their public key, and if the owner of the randomly chosen key is off-line than everyone in the network just waits 4 minutes for a confirmation instead of 2.

You can't do this because then no one needs to keep track of the history of transactions, thus no one is required to have proof of who should be creating the next tx block.