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[JohnDoe]

People can start using the other network, and once supply of the original currency gets low there will be powerful incentive to do so.  We are starting to see that already to a certain extent with Bitcoin. 

In this currency the available supply will always be close to 100% of the base because demurrage is taken from every address and given back to miners as part of the block reward. So money that got locked up due to lost private keys will slowly get back in circulation.

Nobody has studied the long term effects of demurrage.

This is true but it is also true for a currency like Bitcoin (before anyone says anything, no, the gold standard was never deflationary during its lifespan). It doesn't make the reasoning behind them any less meaningful.

  Savings and loaning out savings are an important part of economic growth, demurrage provides a disincentive for this.

What? Loaning out your savings is certainly encouraged by demurraged. If you just leave your money sitting in your wallet then you'll slowly lose it.

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[bansal]

In this currency the available supply will always be close to 100% of the base because demurrage is taken from every address and given back to miners as part of the block reward. So money that got locked up due to lost private keys will slowly get back in circulation.

But someone will still create a new currency at some point to compete with it once your coins become valuable enough or too hard to mine, I wasn't really talking about lost coins.  The supply of coins from the new network would diminish the value of your coins.

  Savings and loaning out savings are an important part of economic growth, demurrage provides a disincentive for this.

What? Loaning out your savings is certainly encouraged by demurraged. If you just leave your money sitting in your wallet then you'll slowly lose it.

I should say savings is discouraged, which in turn would diminish lending since money to lend comes from savings.  Of course a bank would pay enough interest to cover fees on the savings, but I guess it would also raise interest rates.  Of course I doubt there would be any banks for your new currency for a good long while, if ever.  Basically holding your money is heavily discouraged, I'm not sure if this is always a desirable result.  Maybe you're right in that there is a benefit to it, but this hasn't been proven.  It all comes down to again convincing people to jump on board, which is hard enough to do with crypto-currency without having the added complexity of demurrage.

[wndrbr3d]

Everyone is driven by greed, this argument gets a little tiresome.  All these forks tried something different to implement what they felt was an improvement over Bitcoin.  I agree that is many cases this wasn't much improvement at all, but if you are angry that someone is making money, who cares?  Let them make money, how is that hurting you?  If you think an alternate currency is no good tell us why, not just that you don't like the fact that someone besides you is making money.

I never said there was anything wrong with their being greedy, but let's call a spade a spade and not try and hide it under the guise that these new block chains are breaking new technical ground.

That's the part that bothers me is that these technical "enhancements" spread indirect misinformation about Bitcoin itself.

Honestly, these new block chains could easily be likened to a typical pyramid scheme. Where people who get in early are in a good position to make money, but only if they can get more people to buy into the idea. Bitcoin is the same way, but at least it has an actual 1st tier market behind it. These other block chains are only trading against BTC, which to me shows there's little interest in true investment from people sitting on fiat.

[Syke]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

[jackjack]

ITT: people think mining 6 1-minute blocks in a row is as difficult as mining 6 10-hours blocks in a row

Unless I missed something, then that's correct, but only if you interpret it in a certain way.
With the same relative hashpower vs. the rest of the network, over the same # of blocks, chances of finding X blocks in a row are the same, doesn't matter if avg. time/block is 10 seconds or 10 days.
But... wouldn't a theoretical attacker care more about how much time it takes to get a successful double-spend instead of how many blocks?

Yup. Faster blocks mean more attempts can be made, and thus the less secure the chain is.

That exactly what I meant

[bansal]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

Variance has nothing to do with it.  You can't create the longest chain if you have less hashing power than the rest of the network.  It's one of the most basic concepts of the current design of crypto-currencies actually.

[jackjack]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

Variance has nothing to do with it.  You can't create the longest chain if you have less hashing power than the rest of the network.  It's one of the most basic concepts of the current design of crypto-currencies actually.

[bansal]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

Variance has nothing to do with it.  You can't create the longest chain if you have less hashing power than the rest of the network.  It's one of the most basic concepts of the current design of crypto-currencies actually.

Yeah real useful response thanks.

[JohnDoe]

But someone will still create a new currency at some point to compete with it once your coins become valuable enough or too hard to mine, I wasn't really talking about lost coins.  The supply of coins from the new network would diminish the value of your coins.

Well sure, that can and will happen, but the new competing currency must first be superior to devalue the old currency, as the failures of Ixcoin and I0coin have demostrated. The primary purpose of this currency is as a means of exchange rather than a store of value anyway so a new superior currency would be embraced, not fought.

I should say savings is discouraged, which in turn would diminish lending since money to lend comes from savings.  

Saving as in "holding your money on your wallet" is discouraged, saving as in "trying to maintain your purchasing power somehow" is not. The only thing that changes is the way to save; instead of just holding it you buy assets like stocks, bonds, ETFs, commodities, etc.

@jackjack: Unable to refute like a man huh?

[dree12]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

Variance has nothing to do with it.  You can't create the longest chain if you have less hashing power than the rest of the network.  It's one of the most basic concepts of the current design of crypto-currencies actually.

*facepalm*

Unfortunately, it's correct that varience has nothing to do with it. In fact, varience is lower with shorter blocks because of the lower difficulty.

[wolftaur]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

Variance has nothing to do with it.  You can't create the longest chain if you have less hashing power than the rest of the network.  It's one of the most basic concepts of the current design of crypto-currencies actually.

Yeah real useful response thanks.

Here's a more useful one:

Variance means that even with less than 51% of the hashing power you have a chance, albeit a smaller one, to disrupt the chain. For example, a bunch of people freaked out some weeks ago because the Bitcoin chain managed to get... I think it was like 3 blocks in a 10 second period? People also often freak if there's the occasional hour between blocks, but this has happened MANY times without a drop in hashing power.

Think of it this way: Take, say, a d12 for roll playing, and assume you and several players are sitting at a table, and to "win" the game you have to roll a 1. The average chance of you rolling a 1 is going to be 1 in 12, but...

You could roll that 1 result twice in a row, or, you could get 24 rolls in a row... that come up with a different number. In a large enough sample set, with a truly balanced die to roll, it'll just about always be "even" among the different numbers, but if you're looking at just a few rolls in a row...

If you play many games with dice, cards, etc, it only takes a moment of pondering that before you can realize that if you were to roll that die 12 times, it's quite possible for you to _NOT_ get each number exactly one time.

Now imagine the block chain lottery as rolling a die with 115792089237316195423570985008687907853269984665640564039457584007913129639936 sides... (Someone correct me if I'm remembering wrong and it's not a 256 bit hash in use, please.)

[dree12]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

Variance has nothing to do with it.  You can't create the longest chain if you have less hashing power than the rest of the network.  It's one of the most basic concepts of the current design of crypto-currencies actually.

*facepalm*

Yeah real useful response thanks.

Here's a more useful one:

Variance means that even with less than 51% of the hashing power you have a chance, albeit a smaller one, to disrupt the chain. For example, a bunch of people freaked out some weeks ago because the Bitcoin chain managed to get... I think it was like 3 blocks in a 10 second period? People also often freak if there's the occasional hour between blocks, but this has happened MANY times without a drop in hashing power.

Think of it this way: Take, say, a d12 for roll playing, and assume you and several players are sitting at a table, and to "win" the game you have to roll a 1. The average chance of you rolling a 1 is going to be 1 in 12, but...

You could roll that 1 result twice in a row, or, you could get 24 rolls in a row... that come up with a different number. In a large enough sample set, with a truly balanced die to roll, it'll just about always be "even" among the different numbers, but if you're looking at just a few rolls in a row...

If you play many games with dice, cards, etc, it only takes a moment of pondering that before you can realize that if you were to roll that die 12 times, it's quite possible for you to _NOT_ get each number exactly one time.

Now imagine the block chain lottery as rolling a die with 115792089237316195423570985008687907853269984665640564039457584007913129639936 sides... (Someone correct me if I'm remembering wrong and it's not a 256 bit hash in use, please.)

You might be correct that varience has a near-zero effect for lower-confirmation transactions, but still remember that shorter block times give less varience. So someone with 49% has a near-zero, close enough to zero, chance. The actual probability of getting 7 blocks in a row is less than 0.6% for a 49% holder. The actual probability is smaller, because you aren't rolling an infinite amount of dies.

[wolftaur]

You might be correct that varience has a near-zero effect for lower-confirmation transactions, but still remember that shorter block times give less varience. So someone with 49% has a near-zero, close enough to zero, chance. The actual probability of getting 7 blocks in a row is less than 0.6% for a 49% holder. The actual probability is smaller, because you aren't rolling an infinite amount of dies.

Someone computed what the actual odds were. Even for a 60% holder it was a small fraction of a percent. But it wasn't zero for below-51%.

So it isn't that you can't create a longer chain, it's that it's extremely unlikely any attempt to do so would succeed, and even if you have 75% of the power the variance is much higher than I think you're assuming: look at the luck charts of large pools if you want proof of that.

[dree12]

You might be correct that varience has a near-zero effect for lower-confirmation transactions, but still remember that shorter block times give less varience. So someone with 49% has a near-zero, close enough to zero, chance. The actual probability of getting 7 blocks in a row is less than 0.6% for a 49% holder. The actual probability is smaller, because you aren't rolling an infinite amount of dies.

Someone computed what the actual odds were. Even for a 60% holder it was a small fraction of a percent. But it wasn't zero for below-51%.

So it isn't that you can't create a longer chain, it's that it's extremely unlikely any attempt to do so would succeed, and even if you have 75% of the power the variance is much higher than I think you're assuming: look at the luck charts of large pools if you want proof of that.

A 60% holder can, however, use a stronger attack - simply fork the entire blockchain. A 49% holder, trying to do that, will not be able to sustain it for long. Varience is higher when difficulty is higher, however, so this is hardly an argument FOR bitcoin.

[bansal]

As can 49%, 40%, 20%, etc., they just have zero chance of succeeding.

Fixed it for ya

You seem to misunderstand now cryptocurrencies work. Read over http://en.wikipedia.org/wiki/Variance and come back when you understand it.

Variance has nothing to do with it.  You can't create the longest chain if you have less hashing power than the rest of the network.  It's one of the most basic concepts of the current design of crypto-currencies actually.

childish attempt at humor removed

Yeah real useful response thanks.

Here's a more useful one:

Variance means that even with less than 51% of the hashing power you have a chance, albeit a smaller one, to disrupt the chain. For example, a bunch of people freaked out some weeks ago because the Bitcoin chain managed to get... I think it was like 3 blocks in a 10 second period? People also often freak if there's the occasional hour between blocks, but this has happened MANY times without a drop in hashing power.

Think of it this way: Take, say, a d12 for roll playing, and assume you and several players are sitting at a table, and to "win" the game you have to roll a 1. The average chance of you rolling a 1 is going to be 1 in 12, but...

You could roll that 1 result twice in a row, or, you could get 24 rolls in a row... that come up with a different number. In a large enough sample set, with a truly balanced die to roll, it'll just about always be "even" among the different numbers, but if you're looking at just a few rolls in a row...

If you play many games with dice, cards, etc, it only takes a moment of pondering that before you can realize that if you were to roll that die 12 times, it's quite possible for you to _NOT_ get each number exactly one time.

Now imagine the block chain lottery as rolling a die with 115792089237316195423570985008687907853269984665640564039457584007913129639936 sides... (Someone correct me if I'm remembering wrong and it's not a 256 bit hash in use, please.)

Ok I shouldn't say it's zero, but negligible, not much higher than zero.  I especially objected to you using 20%, etc.  You're talking a fraction of a percent, so it's actually not all that useful to talk about.  Nice try though.

[wolftaur]

Ok I shouldn't say it's zero, but negligible, not much higher than zero.  I especially objected to you using 20%, etc.  You're talking a fraction of a percent, so it's actually not all that useful to talk about.  Nice try though.

I should have really trimmed out that quote chain...

I'm not claiming 20% is a potential attack, that was someone else. I just wanted to provide a USEFUL response to your statement instead of the X-Files face palm someone else gave.

[Syke]

You might be correct that varience has a near-zero effect for lower-confirmation transactions, but still remember that shorter block times give less varience.

Shorter block times means the attacker can make more attempts.

So someone with 49% has a near-zero, close enough to zero, chance. The actual probability of getting 7 blocks in a row is less than 0.6% for a 49% holder. The actual probability is smaller, because you aren't rolling an infinite amount of dies.

Think it can't happen? I had to search long and hard to find a real example. I had to go all the way back to...today.

Bitcoin network right now: 12.224 Thash/s
Deepbit network right now: 5282 Gh/s

How many block can deepbit get in a row with 43% hashpower? Blocks 143334 - 143341 are deepbit blocks. Deepbit just solved 8 blocks in a row with only 43% hashpower. I'm sure if someone analyzed the blockchain we'd find even longer runs of deepbit-only blocks.

Variance = someone with <51% can successfully attack the blockchain.
Faster block target speeds = more chances to attack = weaker security.

[bansal]

Well sure, that can and will happen, but the new competing currency must first be superior to devalue the old currency, as the failures of Ixcoin and I0coin have demostrated. The primary purpose of this currency is as a means of exchange rather than a store of value anyway so a new superior currency would be embraced, not fought.

Well the point is that there is no security in the fact that your original currency is "limited".  If a new superior currency comes along, your original coins will be worthless, that's pretty deflationary.

Saving as in "holding your money on your wallet" is discouraged, saving as in "trying to maintain your purchasing power somehow" is not. The only thing that changes is the way to save; instead of just holding it you buy assets like stocks, bonds, ETFs, commodities, etc.

True, and if you guys are able to have stocks, bonds, etc. available when you launch I'll be impressed and buy some coins  .  The general concept is interesting, I just feel this works better in the short term weak economy environment, it would definitely help our current economic situation.  The question is would it work long term, and what effect would all that spending have in a good economy?  What are the long term consequences.  I don't know.

[bansal]

Ok I shouldn't say it's zero, but negligible, not much higher than zero.  I especially objected to you using 20%, etc.  You're talking a fraction of a percent, so it's actually not all that useful to talk about.  Nice try though.

I should have really trimmed out that quote chain...

I'm not claiming 20% is a potential attack, that was someone else. I just wanted to provide a USEFUL response to your statement instead of the X-Files face palm someone else gave.

Sorry my bad I was responding to you as if your were the facepalm guy.

[Syke]

Ok I shouldn't say it's zero, but negligible, not much higher than zero.  I especially objected to you using 20%, etc.  You're talking a fraction of a percent, so it's actually not all that useful to talk about.  Nice try though.

Not useful? How about you post the first 13 digits of your 16 digit credit card number. That means I'd have a 1 in 1000 chance (.1%) to guess your credit card number. Care to try me?