Ideas for a Bitcoin 2.0

[mpfrank]

I have been thinking about ways to improve Bitcoin that might promote its more widespread adoption.  Apart from relatively minor issues of ease-of-use, security, etc. (which will improve naturally as tools improve), I see two major fundamental structural problems with Bitcoin at present:

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).  I think that a major reason why the BTC peaked at $30 and is only around $4 now is that it is just too hard for most people to believe that each unit of a new, relatively untested currency could possibly be worth much more than a dollar.  (Yes, I know that absolute exchange rates are meaningless, but they are psychologically significant for most people nonetheless.)

2.  Regardless of supply considerations, there is no floor on the value of each Bitcoin - i.e., there is nothing to prevent the BTC value in terms of other currencies from just drifting down and down until it reaches zero.  This would happen if, for example, over time, everyone just got bored with it and give up on it.

I have a suggestion that would solve both of these problems:

Start a brand-new Bitcoin network from scratch (call it "Bitcoin 2.0", 3-letter currency symbol BC2), with the following key differences from the original Bitcoin:

     (A) The asymptotic maximum number of BC2 that will ever exist is set at 10 trillion (instead of 21 million), a number comparable to the base money supply of traditional sovereign currencies.  This gives the currency much more room to grow, without running afoul of anyone's instincts about how much 1 unit of a currency should be worth.

     (B) The initial rate of creation is set at 500 billion BC2 per year, and every 10 years the creation rate is cut in half.  So in 10 years there will be 5 trillion, after another 10 years 7.5 trillion, after another 10 years 8.75 trillion, and so forth.  So in only a few decades, the supply of BC2 will become comparable to the base supply of existing currencies.

     (C) Each user of the reference client, which is copyrighted in every country, is required to first register their real-world identity with a central service, and sign a legally-binding contract promising that, in exchange for a perpetual license to use the reference client or any other software derived from the reference client, they will, in perpetuity, accept 1 BC2 from anyone in place of at least US$1 worth of any existing sovereign currency that is owed them (based on the exchange rates on the date that the BC2 block chain was started).  International patents are also secured, to ensure that other clients following the protocol but not derived from the reference client and not subject to its licensing agreement cannot be distributed.

Now, some neat things to note about this new system:

* Suppose the difficulty is calibrated by the algorithm so that on average, 1 new block will get added to the block chain every minute.  Then the reward for each new block is
500B/365/24/60 = 951,293, or almost a million dollars' worth of BC2!

* Due to this, if you think the growth of the existing Bitcoin network was impressive, the gold rush towards this new system will be so explosive that it will make the growth rate of the existing system look plodding in comparison!!!  In almost no time, everyone will switch over to mining BC2, because the rewards will be so much greater than with BTC.  

* Further, the contractual agreement will give all participants in the new system the confidence that the value of BC2 will never fall below that of existing currencies, so merchants and ordinary people will much more quickly come to feel safe investing both their working cash and their savings in the form of BC2.

Any thoughts?

[Edit: Just wrote a blog post on this idea: http://minetopics.blogspot.com/2011/10/how-to-fix-bitcoin.html.]

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[herzmeister]

is required to first register their real-world identity with a central service

once you require a central service, you're vulnerable to government intervention and you'll suffer the same fate as egold et al. heck, if you want to rely on something central, you could run the transaction database centrally as well and leave out all that mining stuff.

the only thing to ponder is that it's true that anonymity (as in no id necessary) is not required for a currency to save world economy. but as long as governments are not interested in saving the world economy, it has to be done by a digital grassroots movement like bitcoin, which demands for anonymity simply because there can't be a central authority to verify identities.

[Snapman]

is required to first register their real-world identity with a central service

once you require a central service, you're vulnerable to government intervention and you'll suffer the same fate as egold et al. heck, if you want to rely on something central, you could run the transaction database centrally as well and leave out all that mining stuff.

the only thing to ponder is that it's true that anonymity (as in no id necessary) is not required for a currency to save world economy. but as long as governments are not interested in saving the world economy, it has to be done by a digital grassroots movement like bitcoin, which demands for anonymity simply because there can't be a central authority to verify identities.

amen

[FreeTrade]

Just to get this straight - you want to create 10 Trillion BC2 and you want me to back each one with $1 USD? I fear my funds might not be equal to the obligation.

[BitterTea]

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).

A dollar is divisible to 2 decimal places ($0.01). A bitcoin is divisible to eight decimal places (0.00000001). If you express the total number of bitcoins to two decimal places, you get 21,000,000,000,000.00 (21 trillion).

[evoorhees]

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).

A dollar is divisible to 2 decimal places ($0.01). A bitcoin is divisible to eight decimal places (0.00000001). If you express the total number of bitcoins to two decimal places, you get 21,000,000,000,000.00 (21 trillion).

+1

When considered correctly, there are actually 2.1 quadrillion "bitcoin units."  If Bitcoins rise in price to such an extent that we cannot efficiently purchase a coffee with the smallest such unit, then we can all relax, because the currency already succeeded in taking over the world.

We say there are "21 million" just as a notational issue. But each of the 21 million pieces is a group of 1 million smaller units.

[bc]

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).

A dollar is divisible to 2 decimal places ($0.01). A bitcoin is divisible to eight decimal places (0.00000001). If you express the total number of bitcoins to two decimal places, you get 21,000,000,000,000.00 (21 trillion).

Exactly. Let's call it Bitcoin 2.0, with 7-letter currency symbol "satoshi". There will only every be 2.1 quadrillion of them. Then the common man can really get behind it.

[Phinnaeus Gage]

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).

A dollar is divisible to 2 decimal places ($0.01). A bitcoin is divisible to eight decimal places (0.00000001). If you express the total number of bitcoins to two decimal places, you get 21,000,000,000,000.00 (21 trillion).

Exactly. Let's call it Bitcoin 2.0, with 7-letter currency symbol "satoshi". There will only every be 2.1 quadrillion of them. Then the common man can really get behind it.

Ergo, each Bitcoin unit if currently worth $.000000000535762122. I am currently selling 7,466,600,000 of these Bitcoin units, commonly referred to as B8, for the ridiculous low price of only $5.29. This price will fluctuate up and down, so use the timestamp of this post as a guide. e.g., if you want to purchase 52 hours from now and the MtGox price has dropped $.04, then my selling price will only be $5.25--$.04 lower than when this post was posted.

The reason I'm able to sell so low is because I deal in volume. I currently have several million B8s currently in stock, with more being purchased exclusively from a well-known mining pool daily.

For other deals, please visit myb82u.com.

FAQ:

Q: Can I buy a B8 with Bitcoin?
A: Yes.
Q: Can you be trusted?
A: Search the internet. You won't find a single negative comment about myb82u.com.
Q: What state are you incorporated in?
A: http://www.youtube.com/watch?v=lj3iNxZ8Dww

[phillipsjk]

     (C) Each user of the reference client, which is copyrighted in every country, is required to first register their real-world identity with a central service, and sign a legally-binding contract promising that, in exchange for a perpetual license to use the reference client or any other software derived from the reference client, they will, in perpetuity, accept 1 BC2 from anyone in place of at least US$1 worth of any existing sovereign currency that is owed them (based on the exchange rates on the date that the BC2 block chain was started).  International patents are also secured, to ensure that other clients following the protocol but not derived from the reference client and not subject to its licensing agreement cannot be distributed.
...
Any thoughts?

Kill it with fire.

I returned a $200 printer, possibly a $400 dollar printer sold "at cost", because the box claimed that by using the printer I was subject to a patent license (which required using the print catridge exactly once, then mailing it back to Lexmark). I now avoid the store I bought the printer at becuase they are willing to sell products that impose unreasonable conditions on their customers.

Bitcoin is still experimental. If bitcoin really is good, a pyscological price barrier won't last long. If you think there is such a barrier and that bitcoins are undervalued, you should be buying them up cheap.

[Nesetalis]

Just a small detail... but can I request that we have bitcoin 1.0 first?

[DonnyCMU]

     (C) Each user of the reference client, which is copyrighted in every country, is required to first register their real-world identity with a central service, and sign a legally-binding contract promising that, in exchange for a perpetual license to use the reference client or any other software derived from the reference client, they will, in perpetuity, accept 1 BC2 from anyone in place of at least US$1 worth of any existing sovereign currency that is owed them

* Suppose the difficulty is calibrated by the algorithm so that on average, 1 new block will get added to the block chain every minute.  Then the reward for each new block is
500B/365/24/60 = 951,293, or almost a million dollars' worth of BC2!

* Due to this, if you think the growth of the existing Bitcoin network was impressive, the gold rush towards this new system will be so explosive that it will make the growth rate of the existing system look plodding in comparison!!!  In almost no time, everyone will switch over to mining BC2, because the rewards will be so much greater than with BTC. 

Any thoughts?

Why is everyone focusing on the central service part? The most striking part should be the legally-binding contract for $1/coin part.

So.............  the OP want a new Bitcoin that would that miners would pump out 950,000 coins every minute = 1,368,000,000 coins a day. And these coins will be sold to bitcoin users who are FORCED to buy them at at least $1 per coin.

I think there's around 100,000 - 200,000 bitcoin users (based on Mt.gox hack last few months revealing 60,000 accounts). Probably, less than half of that is active.

You know what, i'll up that number and give you 1,000,000 bitcoin users, who will be absorbing the coins from your new system. This means each user today will have to spend $1,368 a day to buy the coins popping out from miners. Would you like that? (If they don't buy it, the miners will trade them for $1/coin worth of goods from Bitcoin-accepting merchants anyway)

In short, you solve declining price by fixing a minimum price, and want more growth by pumping out 100 times more coin.

Sounds really promising... I have a few questions:

... How old are you? If you're over 13, are you high when you post this? or just plain silly.

[Nesetalis]

because a central service is what breaks the back of  p2p....

[Shuai]

wow this is really a terrible idea...

You get points for trying though

[worldinacoin]

I feel that bitcoin 1.0 is still over much on the beta stage to consider bitcoin 2.0 and subsequent.  More talks on 2.0, 3.0, 4.0 may just prove confusing and divisive.

[freequant]

This post should be in "Alternate Currencies".
Thanks.

[cbeast]

Just a small detail... but can I request that we have bitcoin 1.0 first?

Bitcoin 0.5 is due out soon.

[Phinnaeus Gage]

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).

A dollar is divisible to 2 decimal places ($0.01). A bitcoin is divisible to eight decimal places (0.00000001). If you express the total number of bitcoins to two decimal places, you get 21,000,000,000,000.00 (21 trillion).

Exactly. Let's call it Bitcoin 2.0, with 7-letter currency symbol "satoshi". There will only every be 2.1 quadrillion of them. Then the common man can really get behind it.

Ergo, each Bitcoin unit if currently worth $.000000000535762122. I am currently selling 7,466,600,000 of these Bitcoin units, commonly referred to as B8, for the ridiculous low price of only $5.29. This price will fluctuate up and down, so use the timestamp of this post as a guide. e.g., if you want to purchase 52 hours from now and the MtGox price has dropped $.04, then my selling price will only be $5.25--$.04 lower than when this post was posted.

The reason I'm able to sell so low is because I deal in volume. I currently have several million B8s currently in stock, with more being purchased exclusively from a well-known mining pool daily.

For other deals, please visit myb82u.com.

FAQ:

Q: Can I buy a B8 with Bitcoin?
A: Yes.
Q: Can you be trusted?
A: Search the internet. You won't find a single negative comment about myb82u.com.
Q: What state are you incorporated in?
A: http://www.youtube.com/watch?v=lj3iNxZ8Dww

Sorry for quoting my own post, but...

Great News:

My B8 2U, over at myb82u.com, is now able to sell a single B8 for only $5.40. This is due to the $.11 decrease in value of Bitcoin since the first posting of this post of which this is only the second post related to myb82u.com. Remember, from my first post, a B8 currently equals 7,466,600,000 Bitcoin Units (BU) and was originally priced at $5.29. I will keep you posted of any further updates in this thread. I would have started my own thread, but I didn't want Theymos moving it, making it difficult for you to find.

My exclusive mining pool is hashing away and I'm buying partial blocks continuously, restocking my B8s on hand.

For a limited time only, with each B8s purchased, I will throw in an extra 1,000 BUs for free. Give them away as gifts as one gal who PM said she would do. I hope I'm not letting the cat of the bag, but she mentioned creating a facet to give away her extra free B8s calling it "B8 on V8"--great idea!

Also new on myb82u.com, I'm selling alpaco cocks for only 6 B8s a pair with free delivery within the lower 48.

Bitcoin 2.0 is the greatest invention since slice bread: http://www.youtube.com/watch?v=xBIVlM435Zg

[mpfrank]

Just to get this straight - you want to create 10 Trillion BC2 and you want me to back each one with $1 USD? I fear my funds might not be equal to the obligation.

I'm not saying you have to "back" them, as in, make them convertible to dollars - I'm just saying if someone owes you $X, you agree that they can pay you with X BC2 instead.

[mpfrank]

1.  The limit on the total of Bitcoins that may ever exist is, numerically speaking, much too small compared to the world money supply, which leads to a significant psychological barrier - since it is very difficult for a normal "man on the street" to believe that 1 BTC could someday be worth $100,000 or more (as it would have to be if Bitcoins ever became as widely adopted as the US dollar, say).

A dollar is divisible to 2 decimal places ($0.01). A bitcoin is divisible to eight decimal places (0.00000001). If you express the total number of bitcoins to two decimal places, you get 21,000,000,000,000.00 (21 trillion).

+1

When considered correctly, there are actually 2.1 quadrillion "bitcoin units."  If Bitcoins rise in price to such an extent that we cannot efficiently purchase a coffee with the smallest such unit, then we can all relax, because the currency already succeeded in taking over the world.

We say there are "21 million" just as a notational issue. But each of the 21 million pieces is a group of 1 million smaller units.

Yes, but I think it's a serious problem that the entire Bitcoin community has been talking in terms of the larger unit since inception.  If we had just been using the smaller units all along, the BTC price might not have attracted so many attacks, and might still be growing steadily and quietly.

[mpfrank]

     (C) Each user of the reference client, which is copyrighted in every country, is required to first register their real-world identity with a central service, and sign a legally-binding contract promising that, in exchange for a perpetual license to use the reference client or any other software derived from the reference client, they will, in perpetuity, accept 1 BC2 from anyone in place of at least US$1 worth of any existing sovereign currency that is owed them (based on the exchange rates on the date that the BC2 block chain was started).  International patents are also secured, to ensure that other clients following the protocol but not derived from the reference client and not subject to its licensing agreement cannot be distributed.
...
Any thoughts?

Kill it with fire.

I returned a $200 printer, possibly a $400 dollar printer sold "at cost", because the box claimed that by using the printer I was subject to a patent license (which required using the print catridge exactly once, then mailing it back to Lexmark). I now avoid the store I bought the printer at becuase they are willing to sell products that impose unreasonable conditions on their customers.

Bitcoin is still experimental. If bitcoin really is good, a pyscological price barrier won't last long. If you think there is such a barrier and that bitcoins are undervalued, you should be buying them up cheap.

I'm saying the psychological barrier is currently preventing Bitcoin from growing as much as it otherwise would be able to.  If we redefined the standard BTC unit to a smaller one, it might indeed help the situation.  It's the same reason why companies do stock splits - because a stock priced at $200/share looks frighteningly "expensive" to the casual observer at first glance, regardless of whether it is actually overvalued in terms of fundamentals like market cap or earnings per share.