Monero Economy

[Johnny Mnemonic]

I think the proposal is a good sign that he's recognized the need as valid.

What I also think is that both of your solutions don't really target the "non-arbitrary" direction that is persistent in CryptoNote.

Especially for something like an annual debasement -- is there any way to work the 2.8% proposed by a minimum of 1, or yours at 2% into something that is more adaptive?

What drives the need for inflation? Are these variables trackable in the protocol? Can they be applied in a fashion that would allow a variable rate of inflation based on some specific need for it -- more like a window from 1% to 3%. Would that be more ideal?

Clearly we can't have the value of these coins approaching infinity, so I can agree that there needs to be a debasement. But, to what extent does it need to be debased?

The idea of "smart" debasement is something that I've been thinking a lot about. Perhaps the block reward could increase or decrease depending on the transaction volume, with less movement requiring more debasement. However, could such a system be manipulated by miners to receive a larger block reward? Additionally, even if we perfected such an adaptive system, I'd guess it would be a tougher pill for the community to swallow than to simply say "3% fixed forever no matter what." If you're suggesting we somehow calculate the debasement on-the-fly to keep trade value steady, that would be an extremely tall order, and not necessary anyway. There are plenty of other vehicles where people can store value, a currency for spending shouldn't be one of them.

I'm not sure what the minimum effective dose would be, but debasement is also important for keeping the wealth distributed and the network decentralized. This is why I think closer to 5% (or maybe higher) might be appropriate. As long as the block reward is high enough for the miners to not rely on fees, then we can cap the tx fee to a small percentage of the block reward, and the payers won't have to enter a bidding war to get their transactions included.

[aminorex]

if blockchain size is key to eliminating botnet appeal just make it bigger with a large random block. problem solved.  

[aminorex]

There are plenty of other vehicles where people can store value, a currency for spending shouldn't be one of them.

there are no crypto vehicles for storing value which provide a usable and robust level of anonymization.  mro has that potential, and that is why it is interesting.  if that potential is removed, it will be useless to me.  there are better ways to spend money.

[aminorex]

Botnets.

In order to mine coins you need connectivity to peers.  If we whitelist peers, then botnets will be excluded.  I suggest this as a temporary measure.  It is good for miners because they don't have to compete with botnets.  It is good for monero because it does not suffer reputation damage as a botnet coin.  It is good for botnet victims because it is one less criminal purpose for their systems. 

I think this works well if it is incorporated into the daemon as an optional feature.  That way it is easy to use.  Any comments?

[surfer43]

Botnets.

In order to mine coins you need connectivity to peers.  If we whitelist peers, then botnets will be excluded.  I suggest this as a temporary measure.  It is good for miners because they don't have to compete with botnets.  It is good for monero because it does not suffer reputation damage as a botnet coin.  It is good for botnet victims because it is one less criminal purpose for their systems. 

I think this works well if it is incorporated into the daemon as an optional feature.  That way it is easy to use.  Any comments?

Can't a botnet tunnel all of the traffic through one ip? 

Also, now we have pool software so botnets will be able to mine on a pool. Even if the public pools reject botnets, a botnet owner can set up a private pool.

[aminorex]

Even if the public pools reject botnets, a botnet owner can set up a private pool.

It still has to connect in order to mine on the main chain.  I'm not saying it will be easy, but it is certainly possible to deny connectivity to botnets.  The easiest way being a whitelist.

We don't have to make it impossible to mine with a botnet.  We just have to make it hard enough so that it is better for the botnet owner to mine another coin.

[smooth]

Even if the public pools reject botnets, a botnet owner can set up a private pool.

It still has to connect in order to mine on the main chain.  I'm not saying it will be easy, but it is certainly possible to deny connectivity to botnets.  The easiest way being a whitelist.

We don't have to make it impossible to mine with a botnet.  We just have to make it hard enough so that it is better for the botnet owner to mine another coin.

This will not work. They just need one node on the whitelist. How will you know its a botnet? I have a bunch of computers. Or do I? Maybe I just have a botnet proxied behind my IP address. You can't tell the difference.

Alternately, the botnet itself may spread until it reaches one node on your whitelist, then p2p its own node and proxy everything through the whilelist node.

In a sense any p2p coin network itself resembles a botnet. The only real difference is the intent of the owners and you won't be able to reduce that to code.

[aminorex]

In a sense any p2p coin network itself resembles a botnet. The only real difference is the intent of the owners and you won't be able to reduce that to code.

Nor would I seek to do so, because, as you say, it would be futile.  The whitelist is a control.  A control requires an operator in order to effect the will of the operator.  The only way to prevent an operational botnet from being beneficial to its controller is to deny access to the chain.  The whitelist will in fact deny access to the chain.  When a botnet connects, after it is identified, it can be disconnected by removing that address from the whitelist.

[smooth]

In a sense any p2p coin network itself resembles a botnet. The only real difference is the intent of the owners and you won't be able to reduce that to code.

Nor would I seek to do so, because, as you say, it would be futile.  The whitelist is a control.  A control requires an operator in order to effect the will of the operator.  The only way to prevent an operational botnet from being beneficial to its controller is to deny access to the chain.  The whitelist will in fact deny access to the chain.  When a botnet connects, after it is identified, it can be disconnected by removing that address from the whitelist.

As I said, you can't "identify" the botnet. It doesn't have an IP address of its own and it doesn't behave any differently from a normal miner.

But if you think this is a good idea, I suggest you go and design it, including all the implementation details you are glossing over, because it isn't anything like the crypto coins that exist today.

This is not going to happen in Monero. In AminorexCoin, maybe.

[Johnny Mnemonic]

There are plenty of other vehicles where people can store value, a currency for spending shouldn't be one of them.

there are no crypto vehicles for storing value which provide a usable and robust level of anonymization.  mro has that potential, and that is why it is interesting.  if that potential is removed, it will be useless to me.  there are better ways to spend money.

Anonymous value storage is useless. You could use MRO to purchase bitcoins anonymously (or any other crypto-commodity), and nobody would know you own it. What the world needs is an anonymous medium of exchange.

It seems like what you want is more out of convenience, but you cannot have both. A long-term value store does not have the properties to allow high volume trade.

[aminorex]

A long-term value store does not have the properties to allow high volume trade.

I actively disbelieve you.  Gold certificates are a counter-example.

[aminorex]

This is not going to happen in Monero.

You must be the BDFL.  I'm surprised that you are so friendly to botnets.

[kneim]

A long-term value store does not have the properties to allow high volume trade.

I actively disbelieve you.  Gold certificates are a counter-example.

Gold certificates have no value, only a promise.

[smooth]

You must be the BDFL

That would be quite the promotion!

[aminorex]

A long-term value store does not have the properties to allow high volume trade.

I actively disbelieve you.  Gold certificates are a counter-example.

Gold certificates have no value, only a promise.

Some promises have value, while others do not.  Which are which will vary over time.  The same is true of other commodities, although promises are typically more volatile.  Gold certificates have been successfully used as a long-term store of value and as an exchange medium for high-volume trade -- for suitable values of "long-term" and "high-volume".

Physical metals have persisted in storing value longer than anything else, and were used for essentially all trading worldwide for centuries.  Arguably, some of the features of gold certificates which make them more usable for larger volumes of trade (in excess of say, a million dollars in value, pick a number, corresponding to the strength of your back) also contribute to their inferiority as a value store, relative to physical metal.  That does not mean that they are not suitable for both uses, within their actual limitations.  Gold or silver certificates which are fully backed by deposits and have the full faith and credit of their issuer are a pretty darn good value store.

[aminorex]

Anonymous value storage is useless.

Please explain your thoughts on this, because it is not obvious to me.  I consider anonymous value storage to be an extremely high priority.  Without it, you are unlikely to be able to retain wealth during a sovereign crisis.

[aminorex]

As I said, you can't "identify" the botnet. It doesn't have an IP address of its own and it doesn't behave any differently from a normal miner.

a botnet has i.p. addresses.   a whitelist has i.p. addresses.  as long as the two do not overlap, the botnet cannot connect to the chain.

[aminorex]

What do you mean "garbage-collecting the chain"? I've never heard anything referred to as that. Does it just mean: Define a minimum balance, and let miners reap dust? Can your garbage-collection proposal where most of the block chain is eliminated be compatible with side chains?

I have nothing useful on side-chains yet.  It is in my todo queue.

By garbage collecting the chain I mean eliminating all of the historical transaction data, and distilling the information content down to the minimum that is required to operate the coin:  The association between controllers and the summed outputs which they control.  Currently, almost no one is mixing, and the chain is growing about 2.3 gb/year.  If it were transacting actively and mixing was in heavy use,  I can see Moore's law running out of runway long before Monero ceased to be important.  Definitely in my lifetime.

[kneim]

Some promises have value, while others do not.

Yes, my promise has a value.

Which are which will vary over time.

Excuse me, I'm Dagobert Duck and want to change my Gold into certificates. Where can I do this?

[Johnny Mnemonic]

I should clarify... what I meant to say is:

High volume trade is certainly possible with a long-term value storage vehicle, but very unlikely because the properties of such an entity actively discourage it. This is why bitcoin has such a small circulating supply relative to the total available coins... nobody wants to spend their bitcoins when they can just accumulate them and watch the price go up. This is why I don't think bitcoin will ever be a "spending currency" so to speak.

A great currency for trade is one that is both easy to get and easy to spend, and this quality is acheived by deteriorating its long-term value integrity. Bitcoins are neither easy to get nor easy to spend, as the PoW increasingly favors the privileged, and the coin's deflationary qualities force you to fight logic to spend it.

Gold certificates are actually a great example of deteriorating value to achieve volume. Goldsmiths learned very early that they could print many more certificates than they actually had gold to back up, because such few people ever bothered to redeem them. This kind of debasement was an early form of fractional reserve banking, and one of the first steps toward ultra-high volume trade.

Regarding anonymous value storage, I'm saying it's useless because all you really need is anonymous currency. You can use that currency to purchase bitcoins or anything you want with anonymity. "Unnecessary" is probably a much better choice of word.