Annual 10% bitcoin dividends if mining were Proof-of-Stake

[SlipperySlope]

Consider this:
How is mass consumerism going to operate as a motive force when people don't have any money or any way to get money because human labor will be obsolete within a 100 years?

There will be no tax base to support them with the welfare state. So basically what that means is market distribution has reached the limit of it's utility and will be abandoned by the end of the century.

The adoption of digital currency will be a minor stop down that path.

I am postponing my artificial general intelligence R&D for the duration of the Bitcoin proof-of-stake project, which should succeed or fail in 2016.  I believe in the concept of the Technological Singularity, and indeed Bitcoin is a milestone along that path.

J. Storrs Hall says it all, without mentioning Bitcoin, in . . .“The Age of Moral Machines”: an interview with J Storrs Hall on nanotech, AI and the Singularity.

He, and I too, think of the Singularity as giving us all the opportunity to take early retirement.

I believe that capital flows to its wisest custodian, and with the advent of AGI, intelligent computers will control capital far beyond today's algorithmic trading. When the constraint of limited human labor is removed from a conventional model of economic growth, the result is super-exponential. We cannot really foresee the trajectory beyond - hence the notion of Singularity.

How the fruits of machine labor get distributed to we humans is a progressive politician's dream. The drawbacks of the Welfare State are removed if no person must be motivated to work. The issues are mainly that we, being human, desire some sort of meaningful work. What might that work be?

I would not care to discuss the general technological future any further because I must focus instead on a detailed and convincing whitepaper for Bitcoin proof-of-stake.

[1715560296]

1715560296

[1715560296]

1715560296

[rpietila]

Basically the world is in an economic mess because because the people who control the economy are ignorant and still  believe in fanciful theories from the 18th and 19th centuries

LOL. The mess originated when they threw the said theories and common sense out of the window.

(Almost as hilarious as saying that something with an IPO is a coin and not a share.. )

That opinion has it's basis in a basic misunderstanding of historical facts.

The truth is that reduced economic regulation due to the adoption of policies such as those outlined von Mises in the last decades has resulted in the top 2% of the population owning 80% of the wealth. This is what caused the current economic problems.

That is what happens when you adopt policies such as those championed by Austrian economists. Corporate profits have never been higher, but that money has to come form somewhere and that somewhere is our pockets. That is why the middle class is gone and people have less access to money than ever before.

That is oligarchy. That's what type of political economy we have.

During feudalism, the top 2% owned 100% of the wealth.

The mercantile age and later, industrial age, and liberalism, all increased the middle class (although the poor stayed poor until liberalism tried to lift them up also). The current concentration of wealth has nothing to do with Misesian policies. In reality what has happened is that the age of liberalism (with maximal freedom that the western world has enjoyed lately) ended in Federal Reserve in 1913 and the war 1914 (war could only be started when Fed had been founded). Since that the world has suffered from a tightening grip of one collectivist cabal, who have controlled and control both the collectivist Soviet Union and the collectivist USA. The details of wealth concentration are slightly different, but in both the wealth has been concentrated to the inner circle.

With Bitcoin we see how wealth is concentrated in a fully voluntary fashion. The end result is not even very different. Currently 1400 bitcoin holders (0.15%) own half of the bitcoins, and 80% of the bitcoins are in the hands of 2.5% of the people. The same!

I am not a great fan of the current system, but the reason is not that they are too capitalist (because they are not; socialism is a better word, or fascism, corporatism, collectivism). The reason is that the system is unfair.

Bitcoin, as a fair equal opportunity system, has produced a similar wealth distribution, therefore we cannot say the wealth disparity is evil per se. All market participants, you, me, and everyone else can decide to buy or sell bitcoins. How can that result in anything but optimal distribution?

[SlipperySlope]

Bitcoin, as a fair equal opportunity system, has produced a similar wealth distribution, therefore we cannot say the wealth disparity is evil per se. All market participants, you, me, and everyone else can decide to buy or sell bitcoins. How can that result in anything but optimal distribution?

As a child I think that I understood what frugality, savings and compound interest meant over the long remainder of my life. Frugality is against human nature; perhaps evolution favors one who would eat today and conceive tomorrow.

I am OK with the current wealth distribution. As I say, capital flows to its wisest custodian. And perhaps Bill Gates is a wiser custodian for his vast estate than would be millions of other Americans should that estate be leveled.

[clout]

Basically the world is in an economic mess because because the people who control the economy are ignorant and still  believe in fanciful theories from the 18th and 19th centuries

LOL. The mess originated when they threw the said theories and common sense out of the window.

(Almost as hilarious as saying that something with an IPO is a coin and not a share.. )

That opinion has it's basis in a basic misunderstanding of historical facts.

The truth is that reduced economic regulation due to the adoption of policies such as those outlined von Mises in the last decades has resulted in the top 2% of the population owning 80% of the wealth. This is what caused the current economic problems.

That is what happens when you adopt policies such as those championed by Austrian economists. Corporate profits have never been higher, but that money has to come form somewhere and that somewhere is our pockets. That is why the middle class is gone and people have less access to money than ever before.

That is oligarchy. That's what type of political economy we have.

you are misinformed. the reason for the stratification of wealth stems from technological unemployment and the fact that our economy redistributes wealth disproportionately through employment as opposed to capital ownership. as the barriers to capital ownership are alleviated through technological advancements in financial exchange this gap will lesson as more individuals privately own the means of production and the profits there in are equitably divided. you do not really understand bitcoins place in our economic development if you do not understand that phenomenon. and you certainly do not understand economics and collective decision making if you do not believe in capitalism and the free exchange of capital.

[Adrian-x]

Also, so you know, you have no idea what my economic ideas are about, but since you think must be a choice between Austrian economics and the corruption of Keynes' economic theories that is currently dominant I can see you have the same extremely limited economic perspective shared by almost all Americans.

If the idea of a free currency is going to take hold those ideas needs to be jettisoned quickly.

It is evident you are ignorant of the ideas I give merit, i was just commenting on the ides you expressed. I think I am radically removed from the perspective of most Americans, and even disagree fundamentally with the idea libertarians hold in defining property.

My ideas are not my ideas but just an understanding of existing principals that are based on systems in nature and free market synergies between the underlying Marxist principals and that of Hayek in managing resource allocation to the benefit of all species on the planet.  They originate from the principal there are equal rights shared by all living organisms on the planet, when a right is violated one needs the free market to compensate to restore balance.

I have a clear understanding of economics, it is foremost and fundamentally the study of economic interactions between participants, I believe it is you who may be mistaken thinking it is something that is managed or manipulated for the greater good.  

[Adrian-x]

It's the same situation as gold and gold mining.  The marginal cost of gold mining tends to stay near the price of gold.  Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange.

I think the case will be the same for Bitcoin.  The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used.  Therefore, not having Bitcoin would be the net waste.

The cost of proof-of-work is not merely equal to the power used, it is indeed equal to the mining rewards - $557,358,000 annually at today's quoted price.

I concede that this is a lower figure than the 10% of the world's economy consumed by the financial sector, yet it is a waste because Satoshi could not conceive of proof-of-stake, nor did he debate the concept. The existing idea of hashing proof-of-work instead was adopted for Bitcoin.

I believe you are correct he didn't debate the the topic but I believe he saw the problem of energy consumption and introduced a diminishing return.
I also believe early adopters understood this to be key. 

[Adrian-x]

The truth is that reduced economic regulation due to the adoption of policies such as those outlined von Mises in the last decades has resulted in the top 2% of the population owning 80% of the wealth. This is what caused the current economic problems.

That is what happens when you adopt policies such as those championed by Austrian economists. Corporate profits have never been higher, but that money has to come form somewhere and that somewhere is our pockets. That is why the middle class is gone and people have less access to money than ever before.

That is oligarchy. That's what type of political economy we have.

You are correct in that the policies such as those outlined Mises and Hayek have led to to extreme distortion of wealth distribution and failing economy today, the outcome is not the fault of Mises and Hayek ideas, but that of the perverted ideas of Milton Friedman. He has robbed the world of the institutions implemented by the ideas of Keynes, Friedman's ideas have destroyed the checks and balances provided by the free market by advocating a central bank control the money supply.

The ideas of Mises and Hayek can now be tested for the first with the likes of cryptocurencys.

[Adrian-x]

Good news for PoS systems,

http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R007.pdf this could have be a bit of a bummer.

Funny though FINCEN can see how dirty Bitcoin can be laundered via Casascius coins, but overlooks the rental of mining equipment to launder dirty fiat.

[cbeast]

Good news for PoS systems,

http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R007.pdf this could have be a bit of a bummer.

Funny though FINCEN can see how dirty Bitcoin can be laundered via Casascius coins, but overlooks the rental of mining equipment to launder dirty fiat.

Only in Amerika. Besides, they can rent anonymously using Bitcoin.

[mgburks77]

The truth is that reduced economic regulation due to the adoption of policies such as those outlined von Mises in the last decades has resulted in the top 2% of the population owning 80% of the wealth. This is what caused the current economic problems.

That is what happens when you adopt policies such as those championed by Austrian economists. Corporate profits have never been higher, but that money has to come form somewhere and that somewhere is our pockets. That is why the middle class is gone and people have less access to money than ever before.

That is oligarchy. That's what type of political economy we have.

You are correct in that the policies such as those outlined Mises and Hayek have led to to extreme distortion of wealth distribution and failing economy today, the outcome is not the fault of Mises and Hayek ideas, but that of the perverted ideas of Milton Friedman. He has robbed the world of the institutions implemented by the ideas of Keynes, Friedman's ideas have destroyed the checks and balances provided by the free market by advocating a central bank control the money supply.

The ideas of Mises and Hayek can now be tested for the first with the likes of cryptocurencys.

I put the Chicago school and the Austrian school in the same basket, but am open to experimentation and being proven wrong.

One of the reasons crypto interests me  It's a great way for people to learn about what has been presented as a sort of esoteric subject firsthand.

[Peter R]

http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R007.pdf this could have be a bit of a bummer.

My interpretation is that I could start a service that "rents" hashpower for fiat and directs the mined bitcoins to the renter without registering with FinCEN and probably without AML/KYC requirements too.  

Now what if I create a bidding system to determine the fair-market value of the hashpower rentals (similar to cex.io)?  Would this still be outside FinCEN jurisdiction?

And if that is the case, isn't this sort of a bitcoin exchange is disguise?  But instead of trading bitcoins, it is more like trading contracts for bitcoins that will be mined in the future….In fact, my intuition suggest that that such "rental contracts" could be a hedging tool for traders.

[Adrian-x]

I put the Chicago school and the Austrian school in the same basket, but am open to experimentation and being proven wrong.

Typical Austrians advocate for (market money) often free banking, when fractional reserves are used it fuels the boom bust cycle, fractional reserves banking being the alkalise heal in Austrian theory. Keynesians advocate counter action to keep economic balance and control, Chicago school advocate general Austrian theory with the exception of centralised control of the money supply.

Chicago school in my opinion is a hybrid of the two schools of thought less the necessary counterbalances.

[Adrian-x]

And if that is the case, isn't this sort of a bitcoin exchange is disguise?  But instead of trading bitcoins, it is more like trading contracts for bitcoins that will be mined in the future….In fact, my intuition suggest that that such "rental contracts" could be a hedging tool for traders.

This is exciting, but mining is still too profitable and needs more competition. 

[Brangdon]

It seems to me that the essence of the PoS-vs-PoW debate is whether one prefers "soft" or "hard" money.  I would define "hard" money as coins that are created by doing work (mining for gold or searching for nonces).  I would define "soft" money as shares that are created by popular agreement of stakeholders (issuing new fiat currency or creating new PoS shares).

I completely disagree. PoW is primarily a way of securing the block chain. It is a way of creating coins only incidentally. In 2140 Bitcoin will not be creating any coins at all, yet it will still be a PoW currency, with even more work being done than today. Clearly, the work being done does not relate to the coins created.

PoS uses a different way to secure the block-chain. Like PoW, any coins created by PoS are incidental. Indeed, it is easier to have no money created at all because income from transactions fees will be enough to pay for the miners because their costs are so much lower. So money is not harder or softer in PoW or PoS.

PoW supporters see PoS as wasteful and dangerous because:

  (a) there are no physical constraints limiting share creation (only popular opinion) which tends to over issue shares for the "greater good" resulting in malinvestment and misallocation of capital.

The same is true for PoW. It's trival to create a PoW system with that creates coins according to whatever schedule you want. Popular opinion will determine whether it succeeds. We could make a fork tomorrow that gave every current owner a million new Bitcoins, and if it was popular it would replace Bitcoin. (It wouldn't be popular, obviously.)

  (b) it is not possible to stop or necessarily even identify that a cabal of anonymous central planners is controlling a PoS system.

Again, this is true for PoW. Many of us are concerned that someone could secretly acquire enough hashpower to launch a 51% attack. It's harder to identify with PoW because the hashpower doesn't have any representation on the block-chain. You have to know what is physically going on in a chip foundry in China to detect it. At least with PoS the cabal has to acquire actual coins, and this will show up in the block-chain.

[Brangdon]

The entire Bitcoin network uses less energy than one out of thousands of large banks like the Philippine National Bank.

If that's true, it's surely true because the network is so small and lacking in features. To get the same ease of use as a credit card, Bitcoin will have to expend much more energy than it does now.

[jonald_fyookball]

It's trival to create a PoW system with that creates coins according to whatever schedule you want. 

the 'schedule' is based on number blocks, not a timestamp though , right?

I ask because it relates to another conversion thread about time being
the critical factor used to create distributed consensus.

[mgburks77]

Again, this is true for PoW. Many of us are concerned that someone could secretly acquire enough hashpower to launch a 51% attack.

or perhaps not so secretly

[mgburks77]

Basically the world is in an economic mess because because the people who control the economy are ignorant and still  believe in fanciful theories from the 18th and 19th centuries

LOL. The mess originated when they threw the said theories and common sense out of the window.

(Almost as hilarious as saying that something with an IPO is a coin and not a share.. )

That opinion has it's basis in a basic misunderstanding of historical facts.

The truth is that reduced economic regulation due to the adoption of policies such as those outlined von Mises in the last decades has resulted in the top 2% of the population owning 80% of the wealth. This is what caused the current economic problems.

That is what happens when you adopt policies such as those championed by Austrian economists. Corporate profits have never been higher, but that money has to come form somewhere and that somewhere is our pockets. That is why the middle class is gone and people have less access to money than ever before.

That is oligarchy. That's what type of political economy we have.

During feudalism, the top 2% owned 100% of the wealth.

The mercantile age and later, industrial age, and liberalism, all increased the middle class (although the poor stayed poor until liberalism tried to lift them up also). The current concentration of wealth has nothing to do with Misesian policies. In reality what has happened is that the age of liberalism (with maximal freedom that the western world has enjoyed lately) ended in Federal Reserve in 1913 and the war 1914 (war could only be started when Fed had been founded). Since that the world has suffered from a tightening grip of one collectivist cabal, who have controlled and control both the collectivist Soviet Union and the collectivist USA. The details of wealth concentration are slightly different, but in both the wealth has been concentrated to the inner circle.

With Bitcoin we see how wealth is concentrated in a fully voluntary fashion. The end result is not even very different. Currently 1400 bitcoin holders (0.15%) own half of the bitcoins, and 80% of the bitcoins are in the hands of 2.5% of the people. The same!

I am not a great fan of the current system, but the reason is not that they are too capitalist (because they are not; socialism is a better word, or fascism, corporatism, collectivism). The reason is that the system is unfair.

Bitcoin, as a fair equal opportunity system, has produced a similar wealth distribution, therefore we cannot say the wealth disparity is evil per se. All market participants, you, me, and everyone else can decide to buy or sell bitcoins. How can that result in anything but optimal distribution?

I understand that perspective, because I shared it at one time. But consider:

Objectively speaking, the current system is a slightly modified version of feudalism, with owners of capital forming the aristocracy rather than it being formed around the archiac notion of noble lineage. There's certainly no "free market" but rather a series of nested cartels and other associations (corporatism, as you noted).

Almost all of the progress we've seen since then is due to technological advancement rather than social advancement. Most of the social advancement that has occurred happened in response to empowerment made possible due to technological improvements that allowed the individual to actualize. (btc is this sort of improvement). At the same time other tech has emerged that serves to suppress the individual.

Unless we create a humane system where human beings are not treated as draft animals the systemic unfairness you spoke of will exist. Whether that is a system of fair market distribution, such as mutualism, or perhaps a different sort of system not yet envisioned remains to be seen.

In the meantime lets produce the best technology for individual actualization (crypto) we can. I think it is humanity's best bet.

[mgburks77]

Also, so you know, you have no idea what my economic ideas are about, but since you think must be a choice between Austrian economics and the corruption of Keynes' economic theories that is currently dominant I can see you have the same extremely limited economic perspective shared by almost all Americans.

If the idea of a free currency is going to take hold those ideas needs to be jettisoned quickly.

It is evident you are ignorant of the ideas I give merit, i was just commenting on the ides you expressed. I think I am radically removed from the perspective of most Americans, and even disagree fundamentally with the idea libertarians hold in defining property.

My ideas are not my ideas but just an understanding of existing principals that are based on systems in nature and free market synergies between the underlying Marxist principals and that of Hayek in managing resource allocation to the benefit of all species on the planet.  They originate from the principal there are equal rights shared by all living organisms on the planet, when a right is violated one needs the free market to compensate to restore balance.

I have a clear understanding of economics, it is foremost and fundamentally the study of economic interactions between participants, I believe it is you who may be mistaken thinking it is something that is managed or manipulated for the greater good.  

No such thing as inherent rights or free markets. The inclusion of idealistic abstractions into your theorizing is it's weak point IMHO.

The idea that an economy cannot be measured or controlled is nothing more than a pretext for non-regulation of destructive economic behavior. These types of destructive behaviors can emerge in any ideological format, if there is no social pressure to inhibit them.

Governments are not the main entity that individuals need to protect themselves from. There are economic entities that are far more powerful and suppressive than any government. Government is merely the interface between these entities and the populace.  

[Peter R]

[There is] No such thing as inherent rights or free markets. The inclusion of idealistic abstractions into your theorizing is it's weak point IMHO.

If logic and theory is his weakness, does that mean that your ignorance is strength?

The idea that an economy cannot be measured or controlled is nothing more than a pretext for non-regulation of destructive economic behavior. These types of destructive behaviors can emerge in any ideological format, if there is no social pressure to inhibit them.

If we need regulation, force and control to stop destructive behaviour, does that mean that war is peace?

Governments are not the main entity that individuals need to protect themselves from. There are economic entities that are far more powerful and suppressive than any government. Government is merely the interface between these entities and the populace.  

If we need government to control our lives to protect our freedom, does that mean that freedom is slavery?


The three phrases in bold come from George Orwell's novel 1984.  In fact, they are the chapter titles of the fictitious book The Theory and Practice of Oligarchical Collectivism used by the Inner Party in Orwell's plot line.  Apparently, this book describes how the Inner Circle promotes "doublethink" to keep the outer party and the proles under control.  Doublethink is the act of ordinary people simultaneously accepting two mutually contradictory beliefs as correct.

I thought it was revealing that the protagonist in 1984, Winston Smith, worked at the Records Department of the Ministry of Truth, and each day he would re-write history to to reflect the "new reality" as dictated by the Inner Party.  What was key to the Inner Party's power was that history was easy to re-write (and it was Winston's job to assist each day in this process).  

In addition to proof-of-work making it difficult to create new coins, I realized today that it also makes it extremely difficult to re-write history.  On the other hand, since no work is required in proof-of-stake (just enough voting power), history can be re-written cheaply and insidiously.