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Author Topic: [XMR] Monero - A secure, private, untraceable cryptocurrency  (Read 4548638 times)
fluffypony
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December 17, 2014, 04:35:26 PM
 #18241


With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary.

You overstate this a bit. A bit of tail emission to incentivize mining won't prevent great fortunes to be made in XMR. Greed as a bootstrapping mechanism was part of bitcoin's genius. I hope you agree that in the end, it will be people's willingness to hold Monero rather than their willingness to use it as a payment system that will keep Monero alive. And if people don't think it will be worth more in the future (i.e. a good investment), then they won't hold XMR. If all merchants end up using the Bitpay-equivalent of Monero to immediately receive USD and consumers use it temporarily to buy what they need anonymously because no one wants to hold it, then it becomes a game of Hot Potato.

You miss the point.

We don't want to exactly duplicate the dynamics of fiat. Freicoin already tried that, to a large degree, with their demurrage effort. Who uses Freicoin today? No, the point is not to preclude making "great fortunes" with Monero, it's just that the process of making such fortunes should not be as simple as buying $500 worth and hoping for the best. It should require genuine, honest effort and work...or it should at the very least require you to be a fairly intelligent criminal...just like with cash:-P

Edit: just to add that I also don't disagree with the share model (where you own shares in companies that make money) but again, you should be purchasing shares in a company because you have done due diligence. Owning some cryptocurrency should not be the same process, even though it pretty much is at the moment.

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December 17, 2014, 04:37:36 PM
 #18242

That is all true but- To lure in the community of builders, creators and innovators you need incentive- and that -maybe sadly- is based very much on price and "investability" of the coin. Bitcoin would not be anywhere close to where it is if the spectulators didnt push the price up to where it made it visible on the radar.

I don't disagree that you need incentive.

So, tell me then, what is it about the US Dollar's price and "investability" that makes people build, create, and innovate products that are denominated in USD?

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December 17, 2014, 04:38:56 PM
 #18243

That is all true but- To lure in the community of builders, creators and innovators you need incentive- and that -maybe sadly- is based very much on price and "investability" of the coin. Bitcoin would not be anywhere close to where it is if the spectulators didnt push the price up to where it made it visible on the radar.

I don't disagree that you need incentive.

So, tell me then, what is it about the US Dollar's price and "investability" that makes people build, create, and innovate products that are denominated in USD?

The might of the US government and "tradition"  Wink

"We are just fools. We insanely believe that we can replace one politician with another and something will really change. The ONLY possible way to achieve change is to change the very system of how government functions. Until we are prepared to do that, suck it up for your future belongs to the madness and corruption of politicians."
Martin Armstrong
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December 17, 2014, 04:46:13 PM
 #18244

I don't disagree that you need incentive.

So, tell me then, what is it about the US Dollar's price and "investability" that makes people build, create, and innovate products that are denominated in USD?

The might of the US government and "tradition"  Wink

Very true:) I think the point I'm trying to make is this: all controversy aside, people like Bill Gates or Mark Zuckerberg or Steve Jobs didn't make money through good fortune alone, nor by buying some rare token and hoping it appreciates. They made money by creating and innovating, and they did so despite any currency fluctuations or movements. Monero is merely a vehicle that happens to provide advantages over Bitcoin in the area of privacy (and hopefully in future in the area of usability), but the stuff that will make Monero useful comes from external projects that are created by people truly wanting to change the world.

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December 17, 2014, 04:59:41 PM
 #18245

XMR is so cheap now Angry

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December 17, 2014, 05:04:02 PM
Last edit: December 17, 2014, 05:14:31 PM by jehst
 #18246


With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary.

You overstate this a bit. A bit of tail emission to incentivize mining won't prevent great fortunes to be made in XMR. Greed as a bootstrapping mechanism was part of bitcoin's genius. I hope you agree that in the end, it will be people's willingness to hold Monero rather than their willingness to use it as a payment system that will keep Monero alive. And if people don't think it will be worth more in the future (i.e. a good investment), then they won't hold XMR. If all merchants end up using the Bitpay-equivalent of Monero to immediately receive USD and consumers use it temporarily to buy what they need anonymously because no one wants to hold it, then it becomes a game of Hot Potato.

You miss the point.

We don't want to exactly duplicate the dynamics of fiat. Freicoin already tried that, to a large degree, with their demurrage effort. Who uses Freicoin today? No, the point is not to preclude making "great fortunes" with Monero, it's just that the process of making such fortunes should not be as simple as buying $500 worth and hoping for the best. It should require genuine, honest effort and work...or it should at the very least require you to be a fairly intelligent criminal...just like with cash:-P

Edit: just to add that I also don't disagree with the share model (where you own shares in companies that make money) but again, you should be purchasing shares in a company because you have done due diligence. Owning some cryptocurrency should not be the same process, even though it pretty much is at the moment.

I think you are discounting the valuable role of speculators in any market. A month or so ago, I've committed to eventually owning about 0.1% of all XMR. I do not intend to provide any "genuine, honest effort and work" to XMR besides buying it. Yet I believe that my efforts will pay off within two years, and I believe my actions will contribute to XMR by soaking up some supply. I don't think this makes me a criminal, either. As you say in your edit, this is the share model. But I disagree that owning crypto shouldn't be the same process. I hold currencies that I believe will do well. That's the only reason I hold them. Otherwise, I hold just enough of my local currency to make the purchases I need to make. Crypto will be the same, now and forever.


Year 2021
Bitcoin Supply: ~90% mined
Supply Inflation: <1.8%
fluffypony
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December 17, 2014, 05:33:55 PM
 #18247

I think you are discounting the valuable role of speculators in any market. A month or so ago, I've committed to eventually owning about 0.1% of all XMR. I do not intend to provide any "genuine, honest effort and work" to XMR besides buying it. Yet I believe that my efforts will pay off within two years, and I believe my actions will contribute to XMR by soaking up some supply. I don't think this makes me a criminal, either. As you say in your edit, this is the share model. But I disagree that owning crypto shouldn't be the same process. I hold currencies that I believe will do well. That's the only reason I hold them. Otherwise, I hold just enough of my local currency to make the purchases I need to make. Crypto will be the same, now and forever.

I'm not discounting them at all - I'm merely saying that a rise in XMR's value should come directly from utility, and not directly from speculators + fudging numbers to create artificial demand. That's not to say that speculators are at all bad, it's just that they should be along for the ride instead of being the ones solely responsible for the ride!

Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

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December 17, 2014, 05:46:31 PM
 #18248


Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

You're right. Bitcoin's market cap without speculation is probably not much. But I don't think that infinite tail emission changes this in XMR at all. Predictable changes in supply will constantly be factored into speculation. DOGE's value went down during halvings. People knew the changes in supply were coming. The majority of XMR's value will always be based on speculation. It's inescapable, sorry to say.

Year 2021
Bitcoin Supply: ~90% mined
Supply Inflation: <1.8%
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December 17, 2014, 06:19:01 PM
 #18249


Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

You're right. Bitcoin's market cap without speculation is probably not much. But I don't think that infinite tail emission changes this in XMR at all. Predictable changes in supply will constantly be factored into speculation. DOGE's value went down during halvings. People knew the changes in supply were coming. The majority of XMR's value will always be based on speculation. It's inescapable, sorry to say.

Just as the price of gold is mostly because of hoarding and speculating. It's "utility only" (electronics and jewelry lets say) value is so much lower.

"We are just fools. We insanely believe that we can replace one politician with another and something will really change. The ONLY possible way to achieve change is to change the very system of how government functions. Until we are prepared to do that, suck it up for your future belongs to the madness and corruption of politicians."
Martin Armstrong
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December 17, 2014, 07:23:06 PM
 #18250

The value of gold is that it is shiny and if you bury it and come back in a thousand years it is still shiny.

I saw an exhibit in a museum of artifacts worn by the Kings and Queens of Korea when they were buried long long ago.  The silver looked like crud and the gold was shiny.  That quality of gold is what man has desired since he found out the inevitable.  But looking at it another way, who would want to be inert?

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December 17, 2014, 07:50:26 PM
 #18251


Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

You're right. Bitcoin's market cap without speculation is probably not much. But I don't think that infinite tail emission changes this in XMR at all. Predictable changes in supply will constantly be factored into speculation. DOGE's value went down during halvings. People knew the changes in supply were coming. The majority of XMR's value will always be based on speculation. It's inescapable, sorry to say.

Just as the price of gold is mostly because of hoarding and speculating. It's "utility only" (electronics and jewelry lets say) value is so much lower.

I enjoy this debate, and obviously I don't know the future - maybe the decisions we've made are unsubstantiated right now, and maybe they're wrong, so of course I stand to be completely wrong and only find out in future:-P

That said, I do think infinite tail emission changes things substantially - once we hit minsubsidy it makes trading based on a microcosmic timeline (ie. demand for the Monero that is emitted over, say, a month) vs. the view a speculator would take of a deflationary currency where supply is fixed. You, for instance, indicated you want to own "0.1% of all XMR". Tail emission makes this a moving target - you'd only ever be able to fulfil that for a snapshot in time (ie. "of all XMR currently emitted").

I'm also not arguing that there will be no speculation, clearly that's never going to be the case. However, I do think that most speculators don't have a very high risk tolerance, and thus there will be enough of a fundamental difference (vis-à-vis Monero's slightly inflationary nature when contrasted with Bitcoin's deflationary nature) that there will be less "hoarding" for the sole purpose of becoming overnight millionaires.

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December 17, 2014, 08:00:07 PM
 #18252

.....
I'm also not arguing that there will be no speculation, clearly that's never going to be the case. However, I do think that most speculators don't have a very high risk tolerance, and thus there will be enough of a fundamental difference (vis-à-vis Monero's slightly inflationary nature when contrasted with Bitcoin's deflationary nature) that there will be less "hoarding" for the sole purpose of becoming overnight millionaires.

hehe  I'm willing to wait more than overnight- I'll settle for a year Wink

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December 17, 2014, 08:12:27 PM
 #18253

People might buy (read: hoard) currency because it may be valuable, but they use (read: spend) currency because it's easy and convenient. Convenience of use should be the ultimate priority when building a currency.

"VISA: It's everywhere you want to be"

The currency that replaces fiat will be easier to use than a credit/debit card. Much easier.

Apple Pay attempts to simplify payments by storing the user's credit card info on the device. It's a step in the right direction, but it can still be better (read: easier):

Imagine if checking out at the grocery was as easy as scanning your fingerprint and walking out the door? Instead of storing payment info on a device it could be stored in a database (or blockchain!). Sound scary? Absolutely... but damn easy!

Beyond a certain point, no amount of utility will increase adoption until it's actually easier and more convenient than fiat.
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December 17, 2014, 08:16:40 PM
 #18254

Beyond a certain point, no amount of utility will increase adoption until it's actually easier and more convenient than fiat.

I agree with this 100%. There's a lot of thinking that's being done, particularly by the MRL guys, to see if we can provide these convenience layers on top of a solid foundation.

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December 17, 2014, 08:23:38 PM
 #18255


Maybe I must put it differently: if genuine demand for Bitcoin by "ordinary" people (ie. not speculators) was the sole price driver, what would Bitcoin's price be? $1 - $3 maybe? (I have no idea, I'm thumb-sucking here) Either way, the gap between that and the current price means that speculators are propping the balance of the price up. What we are hoping to achieve with Monero (in particular with the infinite tail emission) is to reduce that gap so that the price of Monero in the far future more closely reflects the actual demand than any artificial demand. Who knows if we're on the right path or not, but I do sincerely believe it's a better path than just cloning Bitcoin;)

You're right. Bitcoin's market cap without speculation is probably not much. But I don't think that infinite tail emission changes this in XMR at all. Predictable changes in supply will constantly be factored into speculation. DOGE's value went down during halvings. People knew the changes in supply were coming. The majority of XMR's value will always be based on speculation. It's inescapable, sorry to say.

Just as the price of gold is mostly because of hoarding and speculating. It's "utility only" (electronics and jewelry lets say) value is so much lower.

I enjoy this debate, and obviously I don't know the future - maybe the decisions we've made are unsubstantiated right now, and maybe they're wrong, so of course I stand to be completely wrong and only find out in future:-P

That said, I do think infinite tail emission changes things substantially - once we hit minsubsidy it makes trading based on a microcosmic timeline (ie. demand for the Monero that is emitted over, say, a month) vs. the view a speculator would take of a deflationary currency where supply is fixed. You, for instance, indicated you want to own "0.1% of all XMR". Tail emission makes this a moving target - you'd only ever be able to fulfil that for a snapshot in time (ie. "of all XMR currently emitted").

I'm also not arguing that there will be no speculation, clearly that's never going to be the case. However, I do think that most speculators don't have a very high risk tolerance, and thus there will be enough of a fundamental difference (vis-à-vis Monero's slightly inflationary nature when contrasted with Bitcoin's deflationary nature) that there will be less "hoarding" for the sole purpose of becoming overnight millionaires.

The decisions that core team have made here are fundamentally sound. In fact the tail emission idea makes XMR far more closer to gold than XBT will ever be. That is not the issue. The real problem here is that these decisions are not being communicated in a clear and concise manner so that proper due diligence can be made. Try to reconcile the above post with the following from the OP.

...
  • PoW algorithm: CryptoNight [1]
  • Max supply: ~18.4 million [2]
  • Block reward: Smoothly varying [3]
  • Block time: 60 seconds
  • Difficulty: Retargets at every block

[1] CPU + GPU mining (about 1:1 performance for now). Memory-bound by design using AES encryption and several SHA-3 candidates.
[2] Actual number of atomic units is M = 264 - 1. A minimum subsidy may be implemented in the future with <1% annual inflation to preserve mining incentives.
[3] Uses a recurrence relation. Block reward = (M - A) * 2-20 * 10-12, where A = current circulation. Roughly 86% mined in 4 years (see graph).
...

I suspect that one of the reasons for current market behaviour is that the market simply cannot reconcile "Max supply: ~18.4 million" and "Roughly 86% mined in 4 years" with a tail emission. After all 14% of infinity is still infinity and infinity is >> 18.4 million. Making the OP actually reflect the consensus reached by the core team will go a long way toward calming the market jitters. Furthermore the sooner the tail emission amount is set the better.

Concerned that blockchain bloat will lead to centralization? Storing less than 4 GB of data once required the budget of a superpower and a warehouse full of punched cards. https://upload.wikimedia.org/wikipedia/commons/8/87/IBM_card_storage.NARA.jpg https://en.wikipedia.org/wiki/Punched_card
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December 17, 2014, 08:33:14 PM
 #18256

I suspect that one of the reasons for current market behaviour is that the market simply cannot reconcile "Max supply: ~18.4 million" and "Roughly 86% mined in 4 years" with a tail emission. After all 14% of infinity is still infinity and infinity is >> 18.4 million. Making the OP actually reflect the consensus reached by the core team will go a long way toward calming the market jitters. Furthermore the sooner the tail emission amount is set the better.

Remember that the OP reflects the current status of the code. Once the tail emission is set and committed to master the OP will be updated to reflect that:)

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December 17, 2014, 09:10:21 PM
 #18257


We've said this before, and it bears repeating: Monero is not an "investment". In fact, we are actively working against the price "naturally" rising merely as a result of us fudging some numbers. You see, Bitcoin's price rose because of an artificial scarcity created by a fixed number of coins and a diminishing block reward. Now that's all well and good, but the sudden creation of quite a bit of wealth for some early adopters has had several interesting consequences. The most interesting of them is the Coattail Riding Effect. You see, the vast majority of altcoins that are released nowadays, and this is especially true for proof-of-stake coins, exist solely to try and ride Bitcoin's coattails, making the group of early adopters in that altcoin tremendously wealthy.

With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary. This means that Monero is NEVER going to become incredibly valuable overnight, and it's not going to make insta-millionaires out of anyone. It means that its value is going to come entirely from utility and usefulness, and that hoarding it for 6 months or a year or maybe even 2 years is not going to make you rich.

What is the new emission rate?

With T=2^64-1 unit in total and the (T-A)/N emission per block, when the total reach T in a few years, can you still use a small inflation to increase the total number of units? Or you have to change T = 2^128-1, for example?

There is no change. There is a small minimum once it gets close to T, and eventually T will be exceeded, but even that won't happen right away. What fluffypony is saying is there is no enforced scarcity due to coins "running out" (although even for bitcoin this process takes >100 years so maybe the significance is somewhat overstated). There will always be some new coins.

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December 17, 2014, 09:16:18 PM
Last edit: December 17, 2014, 09:39:09 PM by smooth
 #18258

...
  • PoW algorithm: CryptoNight [1]
  • Max supply: ~18.4 million [2]
  • Block reward: Smoothly varying [3]
  • Block time: 60 seconds
  • Difficulty: Retargets at every block

[1] CPU + GPU mining (about 1:1 performance for now). Memory-bound by design using AES encryption and several SHA-3 candidates.
[2] Actual number of atomic units is M = 264 - 1. A minimum subsidy may be implemented in the future with <1% annual inflation to preserve mining incentives.
[3] Uses a recurrence relation. Block reward = (M - A) * 2-20 * 10-12, where A = current circulation. Roughly 86% mined in 4 years (see graph).
...

I suspect that one of the reasons for current market behaviour is that the market simply cannot reconcile "Max supply: ~18.4 million" and "Roughly 86% mined in 4 years" with a tail emission. After all 14% of infinity is still infinity and infinity is >> 18.4 million. Making the OP actually reflect the consensus reached by the core team will go a long way toward calming the market jitters. Furthermore the sooner the tail emission amount is set the better.

These statements basically make sense, even interpreted in light of infinite supply. The actual number has a footnote after it. Follow the footnote and you see the minimum inflationary subsidy (at least the possibility of it). The supply will only grow very slowly once the minimum reward is reached so "roughly 86%" might be interpreted as ~86% of the amount that will exist in the near future (a decade or two).

The base supply target is the dominant short term effect, and the inflation only becomes dominant beyond 10-20 years (and even then slowly).

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December 17, 2014, 09:21:50 PM
 #18259


With Monero we have opted not to repeat that process, and instead of simply running with a deflationary currency and hoping for some form of profit, we have instead aimed to aggressively move in the opposite direction and make it slightly inflationary.

You overstate this a bit. A bit of tail emission to incentivize mining won't prevent great fortunes to be made in XMR. Greed as a bootstrapping mechanism was part of bitcoin's genius. I hope you agree that in the end, it will be people's willingness to hold Monero rather than their willingness to use it as a payment system that will keep Monero alive. And if people don't think it will be worth more in the future (i.e. a good investment), then they won't hold XMR. If all merchants end up using the Bitpay-equivalent of Monero to immediately receive USD and consumers use it temporarily to buy what they need anonymously because no one wants to hold it, then it becomes a game of Hot Potato.

Even if widely useful as a currency, people have to believe it has at least stable value, otherwise you end up with this: https://twitter.com/StateOfUkraine/status/545014542590554113

People don't necessarily need to believe they will become extremely wealthy to hold it. Even a modest return is acceptable as long as there is not a big fear of losing value.

The Monero version of those picture above is people dumping on Polo. It's become self-reinforcing to an extent: people think the value is dropping so they dump. Eventually we will reach some kind of equilibrium though, and build from there.


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December 17, 2014, 09:34:19 PM
 #18260

An extra 100k xmr added relatively low on the asks. Wonder if its due to .001 being broken, this tail emission discussion, both or something else.

https://bitcointalk.org/index.php?topic=753252

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