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Author Topic: bitcoin vs solidcoin  (Read 18212 times)
MoonShadow
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September 03, 2011, 12:52:59 AM
 #81

Indeed you are. Well.. go ahead than and do this deflation thing if you want.

This economic model will never work, because we will never get enough people to adopt to it.

Trust me I LOVE Bitcoin technology, but we need to start taking some of the economists that come around here a bit more serious...

Which ones?  You, incorrectly, assume that economists agree that the deflationary model is universally bad.  That is not the case, and only Keynesians agree with one another on this point, and Monetarist depending upon conditions.  Austrians, almost never.  The gold standard was, due to rising population rates, generally deflationary over long stretches of time, and only inflationary for short stretches and in regions with close economic ties to the new found sources of gold.  A gentle, predictable deflation is at least as economicly benign as a gentle, predictable inflationary currency.  Currently, Bitcoin is neither, as it's highly inflationary (of it's monetary base) whilst also being incrediblely predictable.  Bitcoin's value has increased over the past year, as much as it has, only because the size of the bitcoin user base (and thus it's aggregate demand) has increased by several orders of magnitude since I discovered it in April of 2010.  The high (but declining) inflation is somewhat contradicted by it's predictability, which helps to assure early adopters and speculators (same thing, mostly) that the currency will have value in the distant future, once the inflation rate levels off.

That said, Solidcoin is not a better choice here either, using a much steeper inflationary model followed by a sudden stop.  Solidcoin might prove to have it's place in the market, but not as a direct competitor to Bitcoin.  Namecoin has a nitche.  A localized version of bitcoin might as well.  Solidcoin doesn't seem to have a nitche as far as I can tell.  The sudden stop nature of solidcoin could also prove it's undoing, as the geometric halving of Bitcoin's block reward (potentially) serves the function of weaning a growing market economy off of a subsidy.  If Solidcoin has any success at all at 2022, the sudden stop in block rewards is as likely as not to be a major disruption in the system.  If the market is weak, such a disruption would likely kill it off, even with it's own high degree of predictability.  The reward system in Bitcoin, as well as it's interval, are certainly arbitrary; but they are well considered.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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September 03, 2011, 12:59:52 AM
 #82

Indeed you are. Well.. go ahead than and do this deflation thing if you want.

This economic model will never work, because we will never get enough people to adopt to it.

Trust me I LOVE Bitcoin technology, but we need to start taking some of the economists that come around here a bit more serious...

Which ones?  You, incorrectly, assume that economists agree that the deflationary model is universally bad.  That is not the case, and only Keynesians agree with one another on this point, and Monetarist depending upon conditions.  Austrians, almost never.  The gold standard was, due to rising population rates, generally deflationary over long stretches of time, and only inflationary for short stretches and in regions with close economic ties to the new found sources of gold.  A gentle, predictable deflation is at least as economicly benign as a gentle, predictable inflationary currency.  Currently, Bitcoin is neither, as it's highly inflationary (of it's monetary base) whilst also being incrediblely predictable.  Bitcoin's value has increased over the past year, as much as it has, only because the size of the bitcoin user base (and thus it's aggregate demand) has increased by several orders of magnitude since I discovered it in April of 2010.  The high (but declining) inflation is somewhat contradicted by it's predictability, which helps to assure early adopters and speculators (same thing, mostly) that the currency will have value in the distant future, once the inflation rate levels off.

That said, Solidcoin is not a better choice here either, using a much steeper inflationary model followed by a sudden stop.  Solidcoin might prove to have it's place in the market, but not as a direct competitor to Bitcoin.  Namecoin has a nitche.  A localized version of bitcoin might as well.  Solidcoin doesn't seem to have a nitche as far as I can tell.  The sudden stop nature of solidcoin could also prove it's undoing, as the geometric halving of Bitcoin's block reward (potentially) serves the function of weaning a growing market economy off of a subsidy.  If Solidcoin has any success at all at 2022, the sudden stop in block rewards is as likely as not to be a major disruption in the system.  If the market is weak, such a disruption would likely kill it off, even with it's own high degree of predictability.  The reward system in Bitcoin, as well as it's interval, are certainly arbitrary; but they are well considered.
What is your current opinion on demurrage? I

copy and pasted this from a post I made in alt currency's,

I just don't see how we can put buying/investing pressure on people if we don't have some sort of incentive to spend.

The only way to put pressure is either by printing more money (inflation) or giving a cut of lost/stored coins right back into the miners pockets (demmurage).
I must admit this concept of demmurage on a digital currency is a radically different concept. Normally when people talk about demmurage they are talking about giving money to a "third" party to keep their money safe from going missing. Instead of giving this money to the banks/stores/and any other third party entity, with a demmuragecoin we would be giving the money right back to the miners, literally fueling our economy, and never loosing a single coin.

And in the end it will still have the deflationary properties of Bitcoins that people seem to love so much, but it will come with a price.

It's a win, win for everyone.

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September 03, 2011, 01:21:06 AM
 #83


What is your current opinion on demurrage?


I've discussed this topic in the past, and since Bitcoin is intended to model gold's resource extraction curve (and the secure storage of gold is demurrage) I don't have issues with the concept.  However, in the past I couldn't imagine (and neither could anyone else IMHO) a ruleset that could be added to Bitcoin (or to an alt currency) that would introduce a mild, market based demurrage without significant risks of unintended consequences.  I had argued that demurrage would not really encourage spending so much as 'churn', but that would also be a good thing for bitcoin because a demurrage based upon the age of a transaction (not it's value) would encourage users who didn't need anominity to consolodate holdings into fewer & newer transactions; thus not only maintaing the profitability of miners (and thus helping to pay for security on savings as well as transactions, increasing the security level in general) and 'rotting' lost coins back into the pool, but also serving to incentive the consolidation of the blockchain itself.  Allowing pruning to be more effective, but efforts towards anonimity less effective or more costly.  The problem was how do you do it?  The system is a set of simple rules that interact.  How do we impliment demurrage such as this?  Solidcoin actually forces this issue, by permitting the old blocks to actually die, however the time period is much too short, and can't be relative to the age of the transaction, as it's either good and free or just gone.  The demurrage model for bitcoin, to be effective without becoming a damaging factor, would have to occur over decades.  No gold storage vault would ever charge the user so much for storage that the balance was gone after a year or two.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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September 03, 2011, 01:26:25 AM
 #84


What is your current opinion on demurrage?

No gold storage vault would ever charge the user so much for storage that the balance was gone after a year or two.
I wasn't suggesting that extreme of a rate... Freicoin is going to be 1% a year. I think the rate should be small enough so that it's not extreme like you say, and large enough to still have a psychological impact on consumers and investors alike.

Free money sounds like a SCAM to investors, and that's exactly what Bitcoin will be if adoption is ever to become a reality.

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September 03, 2011, 01:59:44 AM
 #85

Which ones?  You, incorrectly, assume that economists agree that the deflationary model is universally bad.  That is not the case, and only Keynesians agree with one another on this point, and Monetarist depending upon conditions.  Austrians, almost never. 

Can you point me to Mises, Hayek, Rothbard or any other respected Austrian saying that deflation is superior to inflation? I'm pretty sure they advocated for price stability rather than deflation.

The gold standard was, due to rising population rates, generally deflationary over long stretches of time, and only inflationary for short stretches and in regions with close economic ties to the new found sources of gold.

Actually the gold standard was mostly inflationary. Between 1880 and 1914 the average annual inflation rate was 0.1%, and from 1914 to 1932 it was 1.43%.

A gentle, predictable deflation is at least as economicly benign as a gentle, predictable inflationary currency. 

Can you expand on this? I believe deflation discourages spending, investing, lending and borrowing, making the economy contract. I can't see it as being benign in any way, no matter how gentle and predictable.

The high (but declining) inflation is somewhat contradicted by it's predictability, which helps to assure early adopters and speculators (same thing, mostly) that the currency will have value in the distant future, once the inflation rate levels off.

The predictability of the supply does nothing to assure the future value of the currency. Value is subjective, so it is tied to human psychology, not to a technical feature. Currently the value of Bitcoin is being held by speculators believing that it will become a mainstream currency. If it starts looking like it won't achieve this objective then people will start cashing out and the price will go down.
MoonShadow
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September 03, 2011, 02:21:26 AM
 #86


What is your current opinion on demurrage?

No gold storage vault would ever charge the user so much for storage that the balance was gone after a year or two.
I wasn't suggesting that extreme of a rate... Freicoin is going to be 1% a year.

First, how?  And second, demurrage based upon value of the transactions isn't really demurrage.  It doesn't have the same incentives as a fee relative to the age of the transaction.  But both have negative effects.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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September 03, 2011, 04:16:44 AM
 #87

Which ones?  You, incorrectly, assume that economists agree that the deflationary model is universally bad.  That is not the case, and only Keynesians agree with one another on this point, and Monetarist depending upon conditions.  Austrians, almost never. 

Can you point me to Mises, Hayek, Rothbard or any other respected Austrian saying that deflation is superior to inflation? I'm pretty sure they advocated for price stability rather than deflation.
I didn't say superior.  Try to check your assumptions.
Quote
The gold standard was, due to rising population rates, generally deflationary over long stretches of time, and only inflationary for short stretches and in regions with close economic ties to the new found sources of gold.

Actually the gold standard was mostly inflationary. Between 1880 and 1914 the average annual inflation rate was 0.1%, and from 1914 to 1932 it was 1.43%.

A gentle, predictable deflation is at least as economicly benign as a gentle, predictable inflationary currency. 

Can you expand on this? I believe deflation discourages spending, investing, lending and borrowing, making the economy contract. I can't see it as being benign in any way, no matter how gentle and predictable.
I can't speak to your beliefs, but there is no evidence that a predictable deflationary environment is worse or better than a predictable inflationary environment.  Yet, savings of capital must precede economic growth.  Liquidity, alone, does not substitute for real capital.  If it did, stimulus would work.
Quote
The high (but declining) inflation is somewhat contradicted by it's predictability, which helps to assure early adopters and speculators (same thing, mostly) that the currency will have value in the distant future, once the inflation rate levels off.

The predictability of the supply does nothing to assure the future value of the currency. Value is subjective, so it is tied to human psychology, not to a technical feature. Currently the value of Bitcoin is being held by speculators believing that it will become a mainstream currency. If it starts looking like it won't achieve this objective then people will start cashing out and the price will go down.

It's irrelevant, in this context, that value is subjective.  The predictablilty of the monetary base removes one, significant, future variable.  Namely the ability of a third party to affect the monetary base, such as a central bank.  The declining nature of the inflation also provides a growing variable of stability into the forseeable future.  These features do, indeed, something to assure the future value of the currency.  They help to assure that it's not zero, for a number of reasons.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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September 03, 2011, 07:54:59 AM
 #88

the fork, the fanboys and the old dragon...  Wink  (http://sinfest.net)


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September 03, 2011, 09:36:53 AM
 #89

1)  So to solve the problem of 'instant' transfer confirmations, they reduce the target time from 10 minutes to three minutes.  Okay, but it's still three minutes.  How does that help?  If you are standing in a checkout line trying to buy a hamburger, fries and a coke you aren't going to be waiting for a confirmation in either case.  If you are sitting in the new car dealership then you are going to be waiting for several confirmations in any case.  This doesn't solve anything, and is just as arbitrary of an interval than Bitcoin's 10 minutes.  By what logic is three minutes better?  And why not two minutes?  And what is the expected network latency going to be if Solidcoin is running transaction volumes near to that of Visa?

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September 03, 2011, 09:50:14 AM
 #90

Quote from: There's Something About Mary
 
"You walk into a video store, you see 8 minute abs sitting there and then you see 7 minute abs on the shelf right beside it. Which one are you gonna pick man?"

The one that isn't completely screwed? Wink

Just a small hint, the new diff algo makes a 51% attack *really* profitable, I'll leave it to you to figure out why.

They don't even have to turn off mining
1. Pull a mining cartel attack and fork the chain when another miner finds a block.
2. Start fucking with block timestamps.
3. Huh.
4. Near-infinite number of blocks!
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September 03, 2011, 10:50:27 AM
 #91

Can you expand on this? I believe deflation discourages spending, investing, lending and borrowing, making the economy contract. I can't see it as being benign in any way, no matter how gentle and predictable.
Deflation does indeed discourage spending but the key issue is that I don't actually think that's a bad thing. It's better for the people if they have more incentive to save money instead of spending it and it's way better for the environment and our sustainability in general. An economic model based on infinite growth is absolutely utopian-ridiculous taking account the current realities so any system based on that is basically doomed, this is one of the main reasons why we're seeing so many problems in the real world right now.

Of course if the deflation is massive it's causing problems, just like massive inflation. But I think a low deflation rate is better than low inflation. It's not the best for optimal economic growth, but optimal economic growth is a load of crap that has nothing to do with social and ecological sustainability which is all I care about.

And the thing of it is, even with deflation people will use money to purchase what they need to live. They will even purchase luxuries, you see this very clearly with electronics. Electronics get better (deflate) massively in a very short amount of time but still people keep buying them even if they can get much better ones later with the same amount of money. Deflation is not a serious problem unless it's totally out of control.


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September 03, 2011, 10:54:23 AM
 #92

@Vladimir (or other big miner) there is a business opportunity for you:

1) mine yourself some solidcoins.
2) fork the solidcoin block chain by disconnecting your miner from the network.
3) send all your solidcoins to https://btc-e.com (or some other exchange).
4) sell them for USD/BTC and withdraw the money.
5) ensure that your block chain is the longest in the solidcoin network.
6) sync your block chain into the solidcoin network - yours will be the valid one as it is the longest.
7) now you have your former sent solidcoins back (the tx is no longer in the blockchain) and the withdrawn USD/BTC and the new mined solidcoins.
Cool goto 2 until solidcoin==$0

The beauty of this is that on every iteration you can sell not only the new mined solidcoins but also the already sold onces, so your profit is ever increasing.
The only thing that could prevent this, is that there are not that many stupid people out there buying solidcoins. Probably even less after their solidcoins did disappear a few times Wink
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September 03, 2011, 12:01:00 PM
 #93

@Vladimir (or other big miner) there is a business opportunity for you:

1) mine yourself some solidcoins.
2) fork the solidcoin block chain by disconnecting your miner from the network.
3) send all your solidcoins to https://btc-e.com (or some other exchange).
4) sell them for USD/BTC and withdraw the money.
5) ensure that your block chain is the longest in the solidcoin network.
6) sync your block chain into the solidcoin network - yours will be the valid one as it is the longest.
7) now you have your former sent solidcoins back (the tx is no longer in the blockchain) and the withdrawn USD/BTC and the new mined solidcoins.
Cool goto 2 until solidcoin==$0

The beauty of this is that on every iteration you can sell not only the new mined solidcoins but also the already sold onces, so your profit is ever increasing.
The only thing that could prevent this, is that there are not that many stupid people out there buying solidcoins. Probably even less after their solidcoins did disappear a few times Wink

+1. This sounds like fun. I'm in if somebody sets up a pool to do it.

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September 03, 2011, 12:04:25 PM
 #94

I bet most  big miners and pool operators are fully aware about this possibility, most probably just cannot be bothered, when the alternative is simply to do nothing and shitcoins will just die out on their own.

But if someone does this it would be technically a very interesting event. Pass the popcorn.

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September 03, 2011, 12:17:51 PM
 #95

would need 300GH or so at the moment...  the seven largest pools could pull it off

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September 03, 2011, 12:23:47 PM
 #96

would need 300GH or so at the moment...  the seven largest pools could pull it off

They hit a low of 91.5GH.  I expect it'll get lower.
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September 03, 2011, 12:34:31 PM
 #97

Apparently Ruxum paused their solidcoin trading:
http://help.ruxum.com/customer/portal/questions/34063-soildcoin-trading-area-disappeared-
Seems the solidcoin "developer" needs to fix solidcoin
http://help.ruxum.com/customer/portal/articles/147455-solidcoin-faq
Lol, solidcoin looks very solid
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September 03, 2011, 12:34:49 PM
 #98

I bet most  big miners and pool operators are fully aware about this possibility, most probably just cannot be bothered, when the alternative is simply to do nothing and shitcoins will just die out on their own.

But if someone does this it would be technically a very interesting event. Pass the popcorn.

It would also be an asshole move. Of course young projects can easily be trampled to death by cyber bullies. That proofs nothing at all about the technical side of SolidCoin. Even if one day a clearly superior alternative to Bitcoin emerges (and I don't believe SolidCoin to be that), then this SuperiorCoin will most likely go through the same vulnerable phase and it would be a disservice to the progress of crypto-currencies to take advantage of this vulnerability and kill it off early.

If you think, like me, that SolidCoin does not bring enough advantages over Bitcoin to be a serious competitor, then just let them alone and run their course. I don't see it cause much harm. It even provides a nice field test for some of the alternative approaches, like the new difficulty adjustment algorithm. If this turns out to be a worthwhile change, it could be even adopted for Bitcoin in the future, starting from some checkpoint block number, and we would already have a better understanding how that would play out.

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September 03, 2011, 12:36:53 PM
 #99

I do not disagree with you jav.

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September 03, 2011, 12:42:53 PM
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I do not disagree with you jav.

I thought as much. :-) Just to make that clear: I didn't want to imply that you were suggestion such an attack. I understand you were just discussing the theoretical technical side of it and I just quoted you for some context. I was mostly talking to others in this thread, who seem to entertain such an idea.

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