A Better Coin

[SgtSpike]

I propose a new coin.

The block reward would start at 1 coin per block. Over the next 10 years (or other forcasted time-to-adoption period), the reward increases exponentially to 500,000 coins per block. Once reached, this reward is sustained forever.

This solves all three problems that Bitcoin has:  The early adopter problem, the psychological barrier-to-entry, and the deflationary currency problem (creates a stable, non-inflationary, non-deflationary currency).

I wrote about this in a lot more detail here:  http://bitcoinforums.net/index.php?threads/a-better-coin.206/

It also solves a potential fourth problem, which is the possibility that transaction fees are too low to maintain a high enough number of miners to keep the network secure.

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[SgtSpike]

I'm surprised... 48 views and no replies? 

Maybe it's because everyone's mad they couldn't be an unfair early adopter with such a currency.  So the currency might actually be viable and realistic!

[NothinG]

I think it would be an interesting idea.
I mean Bitcoin is the first of it's kind to combine computer power and a currency.

And, I agree with the new/better coin idea.

[NB]: I've more though on this, but can't be expressed as of yet.
[PS]: Too bad Simplecoin is taken.


[Edit] (See, I told you I had more though):
Maybe instead of changing how much a block generates...just make it a decent static number?
Maybe, base it off of...difficulty, number of miners, and/or hash/s of all the mienrs?

[TTBit]

I'm surprised... 48 views and no replies? 

Maybe it's because everyone's mad they couldn't be an unfair early adopter with such a currency.  So the currency might actually be viable and realistic!

Without the "early adopter problem", who has the incentive to adopt it? BetterCoin might not have an early adoption problem, but it would have an adoption problem.

[SgtSpike]

And BTW, I would vote for it dropping the "coin" suffix that everyone seems to love to use.  I don't know, call them "Gacks" or something.

NothingG:  Regarding block generation rewards - a static number wouldn't work, as it rewards early adopters too much (in my opinion).  In order for it to be a viable currency, we CANNOT have people who hold more than 0.5% of the currency by themselves.  I've thought about basing it off of various metrics, including number of miners, etc, but the biggest problem is that any and all of those numbers could be manipulated for the gain of the miners (or gain of the currency holders).  They would also have to be agreed upon statistics by the miners/clients, which would be impossible for any statistics that are not automatically calculated.

TTBit:  The same people who adopted Bitcoin at first, when they were worthless and didn't seem to have any hope of being used.  Those who believe in it will adopt it.  I do still believe that early adoption would be rewarded, just not on the scale that Bitcoins have allowed.  And as the block reward is increased (which, as long as at least one person is mining, it will increase), it *should* attract more miners, more users of the currency, etc.  But the slow start will ensure that everyone has ample time to jump in when they want, instead of hearing about it several months or years too late.  If I was the only person mining for the first year, that would be fine with me.  I would probably fire up an old P3 machine I have and just let it CPU mine.  Then, as the reward increases from 1 to say, 100 over the first year, people might get more interested and start mining/trading the currency themselves.

Perhaps the reward shouldn't increase exponentially to 500,000, but increase linearly to 500,000.  Then, the reward would increase by 140 coins/day for 10 years.  That is a piece that should be more thoroughly thought out and discussed.

[NothinG]

I just don't see it being logical to have it going anywhere near 500k/block.
I like our current method.
Once all the blocks are mined, the pools can force a minimum transaction fee to be allowed by them.
I do think that 21million coins is a LOW amount, but that's why there a numbers bellow 0 (to the 8th).

[JohnDoe]

It's been suggested a number of times before under Inflatacoin, Keynescoin, etc. Nobody has cared enough about the idea to actually spend the time creating the new chain. People wouldn't buy or mine it because with inflationary currencies you either use it right now or you lose your purchasing power, and since there would be nothing to buy with it then the only option is to lose.

[SgtSpike]

I just don't see it being logical to have it going anywhere near 500k/block.
I like our current method.
Once all the blocks are mined, the pools can force a minimum transaction fee to be allowed by them.
I do think that 21million coins is a LOW amount, but that's why there a numbers bellow 0 (to the 8th).

500k/block would be necessary if 300,000,000 people used it.  That would keep the currency at roughly parity with the dollar (which makes sense, in order to avoid the psychological "less is not more" barrier).

It is also necessary to continue with block rewards, so that the currency doesn't go into a deflationary spiral (which WOULD happen - see "The Great Depression").

I also believe that, with the current Bitcoin client, transaction fees will not be high enough to maintain a sufficient number of miners to keep the network secure.  Once we hit 25 BTC rewards, the number of miners will drop in half.  Same thing when we reach 12.5 BTC rewards, etc.  The end result is that we wouldn't have enough money being spent on mining to keep the network secure, which I'll explain in further detail.

If we assume there is no growth in bitcoins from now until the reward is effectively gone (and thus no value increase), then miners will see a reward of 0.05 BTC/block or so.  Which means that the network would be secured, theoretically, by 1/1,000 of the number of miners that currently secure it.  We'd have 20-50 GPU's securing the entire network worth $210M.  In order to maintain the same level of network security that we have today, on a "hash-per-market-cap" basis, we'd have to have 1000 times the number of transactions in each block that are currently had.  That's just not going to happen unless worldwide adoption becomes a reality, so we will always have a discrepancy between the hashing power securing the network and the total value of the network.  Sure, if prices reach $1,000, then we might have 2,000 to 5,000 GPU's securing the network, but that network would be worth $21B.  So 2,000 to 5,000 GPU's probably isn't going to be enough at that point either.  At the current transaction rate, the network will not be sustainable in the future.

See the problem?

It's been suggested a number of times before under Inflatacoin, Keynescoin, etc. Nobody has cared enough about the idea to actually spend the time creating the new chain. People wouldn't buy or mine it because with inflationary currencies you either use it right now or you lose your purchasing power, and since there would be nothing to buy with it then the only option is to lose.

It's not inflationary - it's stable.  Well, eventually anyway.

Once the number of coins generated equals, roughly, the number of coins accidentally lost, then the currency is stable.  It shouldn't increase or decrease in value.  Up to that point, it would be inflationary, but the hope would be that the adoption rate of the currency would keep up.

[error]

I ROFL'ed at the top post. But it seems that you're actually serious?

[NothinG]

There still needs to be an incentive for early adopters.
Even if it's not big...something.

Maybe for the first 10k blocks, generate 1k coins per block...then you can start it at 1coin per block every 10 blocks raise it up 10%.

[JohnDoe]

Once the number of coins generated equals, roughly, the number of coins accidentally lost, then the currency is stable.  It shouldn't increase or decrease in value.  Up to that point, it would be inflationary, but the hope would be that the adoption rate of the currency would keep up.

Hmm, interesting point. Never thought about that.

I must say that even though I love Bitcoin and Namecoin as stores of value, I feel constantly worried about the lending/equity problem in a deflationary currency. This currency could definitely find a place in those markets.

[JohnDoe]

There still needs to be an incentive for early adopters.
Even if it's not big...something.

Maybe for the first 10k blocks, generate 1k coins per block...then you can start it at 1coin per block every 10 blocks raise it up 10%.

It could be set up as an aux chain to allow for merged mining. The required early incentive would be greatly lowered then.

[ercolinux]

There still needs to be an incentive for early adopters.
Even if it's not big...something.

Maybe for the first 10k blocks, generate 1k coins per block...then you can start it at 1coin per block every 10 blocks raise it up 10%.

Early adopter incentive is good but, if as for bitcoin, this is too big for the economy to sustain them the speculation risk is really big.
The bitcoin model is good enough, but if I was in Satoshi's shoes I've put not more than 25 coins for block in the first geneartion, and sustained this rate for twice the time.

[ercolinux]

Once the number of coins generated equals, roughly, the number of coins accidentally lost, then the currency is stable.  It shouldn't increase or decrease in value.  Up to that point, it would be inflationary, but the hope would be that the adoption rate of the currency would keep up.

Hmm, interesting point. Never thought about that

I must say that even though I love Bitcoin and Namecoin as stores of value, I feel constantly worried about the lending/equity problem in a deflationary currency. This currency could definitely find a place in those markets.

No it's not stable is still deflactionary. You forgot to consider the market economy: when more people will use that money to buy goods and services the value of the coin must rise (to talk simple if you have 10M coins in a 10M market a coin worts 1, but if the market is 100M the coin must worth 10 or the market collapse).

[SgtSpike]

I ROFL'ed at the top post. But it seems that you're actually serious?

Indeed I am.  Please inform me as to why I should not be serious?

There still needs to be an incentive for early adopters.
Even if it's not big...something.

Maybe for the first 10k blocks, generate 1k coins per block...then you can start it at 1coin per block every 10 blocks raise it up 10%.

There doesn't need to be an incentive for early adopters.  If I am the only early adopter until coin generation reaches a significant rate (say, 1000 coins/block), does it matter?  As long as at least one person is mining, then transactions could be made.  The point is, it completely erases the argument that early adopters (aka early miners) would have an unfair advantage.

Once the number of coins generated equals, roughly, the number of coins accidentally lost, then the currency is stable.  It shouldn't increase or decrease in value.  Up to that point, it would be inflationary, but the hope would be that the adoption rate of the currency would keep up.

Hmm, interesting point. Never thought about that.

I must say that even though I love Bitcoin and Namecoin as stores of value, I feel constantly worried about the lending/equity problem in a deflationary currency. This currency could definitely find a place in those markets.

Exactly.  There are all sorts of issues with a deflationary currency (just the same as there are all sorts of issues with an inflationary currency).  The only way to make a stable currency is not to limit the number of coins, but to manufacture as many coins as are being lost.

Of course, a lot more information/data should be gathered before determining exactly what that loss rate would be.  Might be a difficult metric to truly figure out when we're talking about something that only started a couple of years ago.  I think it is fair to gather data on bitcoin losses to figure this number out, but would that number apply to the general populace as a whole?  Or would the public tend to lose MORE coins than we've lost here?  Or would the lessons learned with Bitcoin be applied to this new coin, thus helping to prevent losses?  Hard to say...

[error]

I ROFL'ed at the top post. But it seems that you're actually serious?

Indeed I am.  Please inform me as to why I should not be serious?

A block chain like this has been proposed several times before. Each time it has failed to pass the laugh test. And of course, nobody's even bothered to introduce an actual block chain.

[SgtSpike]

I ROFL'ed at the top post. But it seems that you're actually serious?

Indeed I am.  Please inform me as to why I should not be serious?

A block chain like this has been proposed several times before. Each time it has failed to pass the laugh test. And of course, nobody's even bothered to introduce an actual block chain.

Laugh all you want.  I just don't think Bitcoin is viable in its current form, for the four reasons mentioned above.  I like the idea of Bitcoin though.  I like it a lot.  It's just not quite right.

I would do it right this moment if I knew how. 

[error]

I ROFL'ed at the top post. But it seems that you're actually serious?

Indeed I am.  Please inform me as to why I should not be serious?

A block chain like this has been proposed several times before. Each time it has failed to pass the laugh test. And of course, nobody's even bothered to introduce an actual block chain.

Laugh all you want.  I just don't think Bitcoin is viable in its current form, for the four reasons mentioned above.  I like the idea of Bitcoin though.  I like it a lot.  It's just not quite right.

I would do it right this moment if I knew how. 

The early adopter problem isn't a problem. This has been discussed to death and I suggest you search the forum.

The deflationary spiral problem isn't a problem. This has been discussed to death and I suggest you search the forum.

The psychological barrier to entry problem needs further explanation. It's not obvious what you mean.

The miners dropping out due to lack of transaction fees problem is only a theoretical problem. This has been discussed to death and I suggest you search the forum.

[SgtSpike]

I ROFL'ed at the top post. But it seems that you're actually serious?

Indeed I am.  Please inform me as to why I should not be serious?

A block chain like this has been proposed several times before. Each time it has failed to pass the laugh test. And of course, nobody's even bothered to introduce an actual block chain.

Laugh all you want.  I just don't think Bitcoin is viable in its current form, for the four reasons mentioned above.  I like the idea of Bitcoin though.  I like it a lot.  It's just not quite right.

I would do it right this moment if I knew how.  

The early adopter problem isn't a problem. This has been discussed to death and I suggest you search the forum.

The deflationary spiral problem isn't a problem. This has been discussed to death and I suggest you search the forum.

The psychological barrier to entry problem needs further explanation. It's not obvious what you mean.

The miners dropping out due to lack of transaction fees problem is only a theoretical problem. This has been discussed to death and I suggest you search the forum.

Yes, it IS a problem.  And I HAVE been in previous discussions on the forum about this subject, with no convincing resolution that it is not a problem.  So please, enlighten me how it is not a problem.

Yes, it IS a problem.  And I HAVE been in previous discussions on the forum about this subject, with no convincing resolution that it is not a problem.  So please, enlighten me how it is not a problem.

Psychological barrier to entry is simply this: Few people are going to be willing to buy a single bitcoin for $1,000.  It's a psychological thing.  Having $1,000 in your bank account just "feels" a lot better than having 1 bitcoin, even if they're both worth the same amount and both have the same purchasing power.  To a lot of people, buying a handful of bitcoins for a lot more than a handful of dollars feels like they are getting ripped off.  Unless the virtual currency can have rough parity with the dollar, it will not ever be fully accepted by the general public.

It maybe be only a theoretical problem at this point, but only because we haven't reached the point of no block rewards.  Please do point out how my calculations are wrong?  Why would we NOT have such a small percentage of miners securing the entire network?  Because more people will be sending more transactions?  How do you know that that will be the case?  The fact of the matter is, unless we have transaction fees that equal 50 BTC for every block, we will have fewer miners compared to the total value of all existing bitcoins.  And the more that discrepancy grows, the weaker the bitcoin network becomes, and the threat of a double-spend attack becomes more probable.

[JohnDoe]

The early adopter problem isn't a problem. This has been discussed to death and I suggest you search the forum.

The deflationary spiral problem isn't a problem. This has been discussed to death and I suggest you search the forum.

The psychological barrier to entry problem needs further explanation. It's not obvious what you mean.

The miners dropping out due to lack of transaction fees problem is only a theoretical problem. This has been discussed to death and I suggest you search the forum.

I agree these are mild or non-problems. The real problem is the raising of capital. It is extremely difficult to raise capital with a deflationary currency because the risk of investors is way too high. Most of the time it will be better to just keep your coins in your wallet so it's impossible to reconcile financial markets with deflation, they just don't work together.