Would you support moving to a system with controled inflation?

[kiba]

Look....the fact is...nobody want to use inflatecoin. All your rational fore why inflatecoin is a good thing is bunk if you can't get self-interested individuals to move to your new-fanged currency.

Even new people don't want to use inflatecoin.

[1714888934]

1714888934

[ShadowOfHarbringer]

I don't doubt your motives are good and genuine casacius. Interested to know why you think the current programmed inflation method is contributing to destabilising bitcoin valuations? Is there something you have noticed that can draw a link?

First, it's not the inflation method.  I am not calling for perma inflation.  Just a corrective action to deal with the disparity between 25% of the coins being out there for a community that is only less than 0.1% arrived, a disparity that can be exploited the same way scammers exploit a pump-n-dump penny stock.

Second, the most obvious sign I'd point to is how the price of the BTC jumps and falls with such little volume.  What held BTC over the dollar mark temporarily was volume well under 100kBTC, or less than 2% of the entire circulation.

The next most obvious sign is the thinness of the market.  If 0.1% of the BTC gets sold on the open market today, the value crashes to nothing, and the person doing the selling walks away with all the money on the market.  The disparity provides an opportunity for the holders of the 5M+ BTC to do that repeatedly - or as is more likely to happen - incrementally so it's not so obvious.  Not a good thing for longevity and, under such circumstances, certainly not a better place to put wealth than Bernanke Bucks.

The value of the BTC today is more tightly bound to how much it is being hoarded - an artificially scarce supply - rather than the true demand versus supply if it weren't manipulated.  This is part of why I have encouraged so much mining - to grease the free market a little, by putting bitcoins in the hands of people who are more likely tol move or sell them, and less in the hands of those who collectively have millions of them stashed away.

If fewer people were holding tightly to BTC in hopes of getting an outrageous return, more BTC would be flowing freely in the market.  The end result I would expect would be a much lower BTC price, but a far more consistent one.

You can't make people hoard or not hoard BTC. It is not your call.
Hoarding does happen and it will happen. Some people may hoard for very long time, and you cannot do anything about it really.

I like the market the way it is now. Sure, there will be ups and downs, but more inflation will not fix anything.
If you create new "Inflacoin" and start from scratch, the effects will be exactly the same. The early adopters will start their rigs first, acquiring 70% of the currency before it becomes popular enough so that other miners will want to risk joining.

So what you are proposing does not fix Bitcoin childhood problems at all.  And at the moment we are experiencing childhood of the currency, so instability is expected.

You cannot fix instability with more inflation !

[nanotube]

well, i think the main point is this:

now that current bitcoin exists, nobody in his right mind would trade current-bitcoins for inflata-coins, because they know that current-bitcoin ultimately has a limited supply, and is likely to increase in value, while the new inflata-coin will not.

so... nobody stops you from creating inflata-coin - it is a simple change of about 5 lines of code in the current bitcoin client, and you're off to the races with your new inflata-coin block chain. (well, that and you have to create a new genesis block). if you inflata-coin supporters want to get together and jump onto the inflata-coin block chain, nobody's stopping you, give it a go, and see what happens.

that's what satoshi did - rather than arguing about deflata-coin (current bitcoin ), he just came out and did it to see what happens, in an experimental fashion. so do the same.

my prediction, however, is that you'll have a hard time attracting significant mining power.

[casascius]

that's what satoshi did - rather than arguing about deflata-coin (current bitcoin ), he just came out and did it to see what happens, in an experimental fashion. so do the same.

my prediction, however, is that you'll have a hard time attracting significant mining power.

If I was gonna do it, then I probably would set it up with the following parameters.

Same 21 million just like Bitcoin.  There is nothing wrong with this number.  But instead of 50 coins for the first 210000 blocks, I would make the reward try to mimic an objective measure of the community size with a formula.

Here is an example formula (BTC per block) for that: B * (ln(difficulty)² / 4)  where B is a percentage of coins not yet distributed (1 for 21 million, 0.5 for 10.5 million, 0 when they're all distributed).

This would result in 50 coins being given out per block once the difficulty reached 2.3 million.  Current difficulty of about 70000 would pay about 30 coins.  If I fired up just my own GPU's (eight 5970's), the difficulty would be about 700 and the payout would be about 9.50 per block.

Then I would correlate the maximum block size with the difficulty.

[marcus_of_augustus]

that's what satoshi did - rather than arguing about deflata-coin (current bitcoin ), he just came out and did it to see what happens, in an experimental fashion. so do the same.

my prediction, however, is that you'll have a hard time attracting significant mining power.

If I was gonna do it, then I probably would set it up with the following parameters.

Same 21 million just like Bitcoin.  There is nothing wrong with this number.  But instead of 50 coins for the first 210000 blocks, I would make the reward try to mimic an objective measure of the community size with a formula.

Here is an example formula (BTC per block) for that: B * (ln(difficulty)² / 4)  where B is a percentage of coins not yet distributed (1 for 21 million, 0.5 for 10.5 million, 0 when they're all distributed).

This would result in 50 coins being given out per block once the difficulty reached 2.3 million.  Current difficulty of about 70000 would pay about 30 coins.  If I fired up just my own GPU's (eight 5970's), the difficulty would be about 700 and the payout would be about 9.50 per block.

Then I would correlate the maximum block size with the difficulty.

Okay, I see. You are not proposing inflatacoin as others are saying and I didn't think so. Basically, you are proposing that instead of the block mining payout drops (every 4 years) to be a smooth transition over time and to be more loaded to the mature network than the immature network. What about keeping an incentive for mining after the 21million BTC have been distributed? Still have fees?

[casascius]

Okay, I see. You are not proposing inflatacoin as others are saying and I didn't think so. Basically, you are proposing that instead of the block mining payout drops (every 4 years) to be a smooth transition over time and to be more loaded to the mature network than the immature network. What about keeping an incentive for mining after the 21million BTC have been distributed? Still have fees?

Yep, but have some sort of minimum network-mandated fee that allowed both miners and payers to exert some sort of force on the going rate so as to permit an equilibrium to form.  Some random ideas:

1 - A default recommended fee generated by the system is one that would be based both on the blocksize and difficulty, such that it would pay the same as B=100% when exactly filling a block, but the minimum fee should be no more than 1% of a transaction.

2 - A minimum fee imposed by the system MOST of the time would be a function of what minimum fees have been accepted by MOST miners in the last 100 blocks that were at least half full.  That way, the majority of miners can exert upward pressure on the fees, but not by refusing to process transactions at large.

3 - Special case, if someone is willing to generate a block whose own SHA256 hash ends in 00, the current block may be exempt from minimum fees imposed by the system.  Maybe such a block can get a special name, like a sludge block.  These blocks would serve as exceptions to the minimums.  This block would allow miners to exert significant downward pressure on the price, but would be 4 times as difficult for them to create.

So transactions with no or insufficient fees have a chance as to when they might eventually get through.  So if the mining community at large is pushing for a fee that's too high, payers can start offering lower transaction fees.  If enough low-fee transactions start piling up and look desirable, someone can start mining for sludge blocks - which will have 4 times the difficulty, but might be more profitable if payers are both unwilling to pay the minimum fee and willing to wait for the next sludge block to be mined to make a point of it.

Why this might work:

* people can still get free or name-your-price transactions but will be forced by the network to wait a while
* miners of normal blocks can optionally exert upward pressure on the transaction price, but too high of such a price will incentivize sludge mining
* sludge mining would exert a downward force on the minimum transaction fee and would be a windfall for sludge miners, but only when the normal miners are asking too much so as to make it worthwhile and the payers are willing to vote for that with how long they wait for transactions.

[casascius]

As far as I'm concerned, the fact that I intend to wait for a far more fertile opportunity to do so should not be construed as a concession to the idea that I'm not willing to put my effort where my mouth is.  After all, the recipe has all but been handed to me - but to be done right, more changes should be made (either a fork, or this'll really annoy some of ya: a patch to the mainline Bitcoin client that allows it to participate in a different network with different rules without needing a fork, either with a command line switch, or by being compiled with different compiler flags).

If you expect to use bitcoin infrastructure for your permainflation currency, I think you are mistaken. My best guess is that you will need to arrange for your own infrastructure, including separate code repo, forum, support, wiki, port to listen on, promotion, different name which could not be confused with bitcoin etc...

I think you're about 10 posts behind.  A quick Cliffs Notes summary of my various points: the disparity between coins issued (25%) and community at the table (0.1%) is a danger to public acceptance and compromises the "fairness" that Bitcoin supposedly promotes.  Several solutions exist, one of which is permanent 50BTC (eliminates the 25% aspect), but is by far not the only solution.  Read carefully and look for the forest between the trees: I am not advocating for a perma-inflation currency, just any solution that makes any progress at bringing those two percentages close together for as long as sustainable.

[casascius]

Still this is a "Community Infiltration Attack" attempting to change fundamental properties of bitcoin or fragment it in your favour.

I am not concerned with forest or trees here I look into roots.

Isn't that like a "terrorist attack", but using nice language?  You know, how they went from "Immigration and Naturalization Service" to "Department of Homeland Security"?  It sounds so much more, you know, homely, when the word "home" or "community" is slapped in the middle of it.

Though, I'm interested in hearing a plausible scenario as to what "in my favour" could be.  Kind of like, fill in the blanks:  I am a ___A___ who will be ___B___ if the suggestions I'm proposing were accepted by the community.

A) waiting in the bushes with a fistful of cash, B) eager to see BTC at 0.06 so I can buy it up?

A) someone with lots of BTC, B) happy to see it drop in value?

A) B)

[marcus_of_augustus]

Hang on, how do we tell the difference between "Community Infiltration Attack" ... and someone merely proposing ways to improve bitcoin?

[N12]

Hang on, how do we tell the difference between "Community Infiltration Attack" ... and someone merely proposing ways to improve bitcoin?

Changing the very foundations on which a currency was built is an attack, no matter what.

[casascius]

Hang on, how do we tell the difference between "Community Infiltration Attack" ... and someone merely proposing ways to improve bitcoin?

Changing the very foundations on which a currency was built is an attack, no matter what.

That's what the government says when you challenge the status quo and start proposing ideas that ruin whatever good shell game they got goin' on.

http://en.wikipedia.org/wiki/Suppression_of_dissent

While we're talking about my interests, what about yours (not addressed to anyone in particular)?  How many BTC do you have, and how much mining are you doing?  It would just help with perspective.

Full disclosure, I have about 26,000 BTC and have eight 5970's mining full time.

[N12]

The government doesn’t encourage you to make your own system if you don’t like theirs. They want to force it upon you.

I want you to make your own blockchain instead of tampering with Bitcoin. If you ever damage Bitcoin’s trust in this way, I can assure you they will be worthless the next day.

My Bitcoin wealth is private, but I have enough to be concerned. Still I appreciate your input, because now I’m pretty sure that inflacoin wouldn’t succeed.

[casascius]

I want you to make your own blockchain instead of tampering with Bitcoin. If you ever damage Bitcoin’s trust in this way, I can assure you they will be worthless the next day.

Me damage Bitcoin's trust?  Trust with whom?

This wouldn't sound so ironic if, for example, Bitcoin.org would stop using a self-signed certificate on its website even though I have brought it up repeatedly over the past four months.

My Bitcoin wealth is private, but I have enough to be concerned. Still I appreciate your input, because now I’m pretty sure that inflacoin wouldn’t succeed.

Am I proposing inflacoin?  I thought I made it pretty clear that I'm not, really.  Read posts 106 and 109 in detail, just in case it's not clear exactly what I am proposing.

[marcus_of_augustus]

Hang on, how do we tell the difference between "Community Infiltration Attack" ... and someone merely proposing ways to improve bitcoin?

Changing the very foundations on which a currency was built is an attack, no matter what.

Okay, how do we tell what is "changing the very foundations" and what isn't? I'm not trying to be funny here, you are proposing some kind of subjective boundaries about what can and cannot be discussed in "polite" bitcoin company ... correct?

There are probably unknown unknowns type weaknesses being let into the protocol every time a change is made but who's not talking about that?

PS: I'm partial to any formula with a natural log function in it, so I might be biased.

[N12]

I’m talking about changing any of this. If you use Bitcoin, you agree to it.

I can assure you that any changes to it would destroy Bitcoin due to enormous panic sells and very little demand. Also, it would make it impossible for me to trust any future currency of this kind – and I’m sure I’m not alone.

[grondilu]

Am I proposing inflacoin?  I thought I made it pretty clear that I'm not, really.  Read posts 106 and 109 in detail, just in case it's not clear exactly what I am proposing.

Casascius, whatever you are proposing, please just do it.

It would be quite a relief if we could redirect people complaining about the constant final amount of bitcoins.

[casascius]

I’m talking about changing any of this. If you use Bitcoin, you agree to it.

Not per the license agreement.  Bitcoin is free to use, copy, modify, merge, publish, distribute, sublicense, and/or sell, without deference to the chart.

I can assure you that any changes to it would destroy Bitcoin due to enormous panic sells and very little demand. Also, it would make it impossible for me to trust any future currency of this kind – and I’m sure I’m not alone.

Where would all that demand go?  Does that demand even exist at the current price?  It can't be both ways.

I could personally clean out all the open visible buy orders at MtGox three times over with my BTC, and I'm one guy, with 0.5% of the total BTC out there.  In a panic, where would the other 99.5% of the BTC in circulation get sold?

[casascius]

Yes, there are a lot of problems with my assumptions, and I ran out of fingers and toes while sorting it out, so I can't vouch for the accuracy of my figures... But it was enough for me to say... Nah...

Yeah, but my goal is to create a sustainable medium of exchange, not get rich into the stratosphere by mining coins and having them go up in value exponentially.

There is nothing wrong with a coin being worth 2 cents if that's it's value as determined by uninhibited supply and demand.

[marcus_of_augustus]

I’m talking about changing any of this. If you use Bitcoin, you agree to it.

I can assure you that any changes to it would destroy Bitcoin due to enormous panic sells and very little demand. Also, it would make it impossible for me to trust any future currency of this kind – and I’m sure I’m not alone.

Actually if you use any currency you agree to its definitions, by definition. If you're so titchy about changes in software you might be more heavily invested than you should be, it does still say BETA on the front page of the thing.

The whole thing sounds kind of ironic coming from guy with pyramid scheme offers in his signature. Easy come, easy go.

[grondilu]

Yeah, but my goal is to create a sustainable medium of exchange, not get rich into the stratosphere by mining coins and having them go up in value exponentially.

It is not so easy to become rich by hoarding or even cornering a commodity.  First, there is a competition between hoarders.  The less greedy gets his profit first, and reduces the price of the commodity, and thus destroys any hope for others to get rich.

Second, even if you manage to corner the commodity, your profit is not guaranted.   See the story of the Hunt brothers with silver.

I dare you to try anyway.  You'll see it's not that easy.