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Author Topic: A true, fast deflationary blockchain? An idea I've had for a while  (Read 754 times)
tacotime
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September 26, 2011, 08:12:55 PM
 #1

...maybe someone has already implemented it.

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Yes, this is the harsh reality of the bitcoin -- it would be a true deflationary commodity if difficulty were able to not go back down over time with relation to the number of people mining it, but since it does it is neither a deflationary nor inflationary commodity but both depending on the direction of the difficulty and the hash rate.

An ideal digital, actual deflationary digital commodity would have variable block sizes based on hash rates (to ensure that even if network hash rate went down, transactions would still go through), would start at a very high difficulty, and would increase in difficulty based on the amount of it mined but never decrease in difficulty.  It would also have an infinite supply, but the difficulty in obtaining more of that supply should accelerate with the speed of computing.  As soon as someone implements this, I'll stop mining bitcoin and start mining that because I think such a currency would hold its value over time much better than bitcoin.

That's basically how I see bitcoin now, as inflating in the short term because of the decreasing hash rate... but is it possible for someone to program something like the above, to ensure that the supply of the digital currency is always shrinking over time?  Do you think this is a good idea?

I would hazard a nickname of "Aurums", after gold and its limited supply on Earth and dropping the -coin suffix because I would rather it be thought of as a commodity.

Code:
XMR: 44GBHzv6ZyQdJkjqZje6KLZ3xSyN1hBSFAnLP6EAqJtCRVzMzZmeXTC2AHKDS9aEDTRKmo6a6o9r9j86pYfhCWDkKjbtcns
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Bobnova
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September 26, 2011, 08:34:53 PM
 #2

High difficulty + low hash rate = long delay for confirmations.
Long delay for confirmations = unhappy customers.
Unhappy customers = lower hash rate.


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steelhouse
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September 26, 2011, 08:54:57 PM
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bitcoin will be deflationary due to lost coins.  namecoin actually destroys coins on certain transactions, see their block explorer you will see 70,000 destroyed.  Presently all alternativecurrencies and bitcoin are undergoing massive inflation.

However, the post you mention is really not needed or do I completely understand it.  Around January 3rd, 2013 you will only get 25 bitcoin for every block.  Speed of computing should have nothing to do with coin generation rate imho. 

What I would like to see is 1% of every transaction destroyed.  Just ask Norway and Singapore how deflation is working.
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September 26, 2011, 09:00:40 PM
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Please please pretty please, x-coins can neither be truly deflationary nor truly inflationary because they are all essentially infinitely divisible and can undergo infinite denomination at a drop of a hat.

Now, a CC where diff only goes up is a fun idea (but in a bad way) Wink

Geist Geld, the experimental cryptocurrency, is ready for yet another SolidCoin collapse Wink

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tacotime
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September 26, 2011, 09:26:10 PM
 #5

High difficulty + low hash rate = long delay for confirmations.
Long delay for confirmations = unhappy customers.
Unhappy customers = lower hash rate.



As long as you have the block size decrease in relation the hash rate, this is not a problem at all.  The confirmation delay should still be the same.

For instance, if it take 100 hours to solve 100 blocks of 50 units and the confirmation rate is dependent on the number of blocks solved, just make the blocks smaller in terms of units so more blocks are solved more quickly.

Quote
Around January 3rd, 2013 you will only get 25 bitcoin for every block.

The problem is that by then, bitcoin may have already inflated into worthlessness and been long forgotten.

Code:
XMR: 44GBHzv6ZyQdJkjqZje6KLZ3xSyN1hBSFAnLP6EAqJtCRVzMzZmeXTC2AHKDS9aEDTRKmo6a6o9r9j86pYfhCWDkKjbtcns
Bobnova
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September 26, 2011, 09:33:29 PM
 #6

That doesn't make any sense to me.
What does the size of the block have to do with how often a block is found?

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tacotime
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September 26, 2011, 09:37:59 PM
 #7

That doesn't make any sense to me.
What does the size of the block have to do with how often a block is found?

Perhaps I don't understand the way this is programmed, then.  Is the rate of block solvation based upon only the difficult and has nothing to do with the number of units it contains?

The problem mostly has to do with confirmation rate (a function of block solvation rate, correct?) as far as I can see it, and I might be seeing the solution incorrectly.  If the above is the case, then I guess all you'd have to do is have the numbers of coins in the blocks constantly decreasing but the difficulty staying the same?  But I guess then problems would be eventually encountered if the difficulty never increased, because block rate would become too fast.

The point is, I guess, that although bitcoin is deflationary in nature, the responsiveness of this deflation should not be over the course of years but over hours or days.

Code:
XMR: 44GBHzv6ZyQdJkjqZje6KLZ3xSyN1hBSFAnLP6EAqJtCRVzMzZmeXTC2AHKDS9aEDTRKmo6a6o9r9j86pYfhCWDkKjbtcns
JohnDoe
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September 26, 2011, 10:40:48 PM
 #8

...maybe someone has already implemented it.

Quote
Yes, this is the harsh reality of the bitcoin -- it would be a true deflationary commodity if difficulty were able to not go back down over time with relation to the number of people mining it, but since it does it is neither a deflationary nor inflationary commodity but both depending on the direction of the difficulty and the hash rate.

An ideal digital, actual deflationary digital commodity would have variable block sizes based on hash rates (to ensure that even if network hash rate went down, transactions would still go through), would start at a very high difficulty, and would increase in difficulty based on the amount of it mined but never decrease in difficulty.  It would also have an infinite supply, but the difficulty in obtaining more of that supply should accelerate with the speed of computing.  As soon as someone implements this, I'll stop mining bitcoin and start mining that because I think such a currency would hold its value over time much better than bitcoin.

That's basically how I see bitcoin now, as inflating in the short term because of the decreasing hash rate... but is it possible for someone to program something like the above, to ensure that the supply of the digital currency is always shrinking over time?  Do you think this is a good idea?

I would hazard a nickname of "Aurums", after gold and its limited supply on Earth and dropping the -coin suffix because I would rather it be thought of as a commodity.

Disregarding the fact that Bitcoin will be deflationary because it has a limited supply, what does difficulty/hash rate have to do with making a currency deflationary? And what does variable block sizes have to do with making a currency deflationary?

Please please pretty please, x-coins can neither be truly deflationary nor truly inflationary because they are all essentially infinitely divisible and can undergo infinite denomination at a drop of a hat.

Now, a CC where diff only goes up is a fun idea (but in a bad way) Wink


Inflation
noun
1.
Economics . a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency.

Deflation
noun
1.
Economics . a fall in the general price level or a contraction of credit and available money.

So what does divisibility have to do with anything?
tacotime
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September 27, 2011, 04:04:07 PM
 #9

Disregarding the fact that Bitcoin will be deflationary because it has a limited supply, what does difficulty/hash rate have to do with making a currency deflationary? And what does variable block sizes have to do with making a currency deflationary?

You can make your financial unit deflationary by making it more difficult to obtain with higher difficulties.  The parallel process would be with the mining of oil over the years, initially it was very easy to obtain but as time goes on, the difficulty in obtaining oil has increased not only because of the supply decreases but because the process with which to obtain the supply has decreased.  For instance, now crude may need to be extracted from oil sands which are more expensive than wells in the 80's and 90's.

If block solvation is based on difficulty, making the return of the block solvation smaller at the same difficulty increases the time and cost to produce, making the supply shrink.  Supply is related not only to the overall quantity of the good but also the difficulty in obtaining it.

Code:
XMR: 44GBHzv6ZyQdJkjqZje6KLZ3xSyN1hBSFAnLP6EAqJtCRVzMzZmeXTC2AHKDS9aEDTRKmo6a6o9r9j86pYfhCWDkKjbtcns
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