Thoughts on modifying the bitcoin codebase to implement a complementary currency

[nereer]

Hi Guys

I am basically only a  hobbyist coder, and I am interested if anyone who knows the codebase comment on the following:

Bitcoin provides the following:

a) A secure peer-to-peer digital currency with no central server
b) Controlled and predictable algorithmic growth in the money supply asymptotically approaching a known maximum
c) Floating exchanges to and from bitcoin
d) A potentially high degree of anonymity
e) A mechanism for making and validating transactions without a central authority

From a Complementary Currency (CC) point of view, we want everything here except b & d. (b) is a problem because in a CC system you need a central issuing authority, with the ability to control the money supply to some extent (my thoughts in this below). (d) is problematic, but perhaps not a deal-breaker, because we want to inspire confidence in the system and avoid accusations of illegal activity.

(b) Would it be possible to change the money creation element of bitcoin so that a central authority could create credit as well as that created by mining? In this scenario the monetary authority would create credit for specific projects, and also run a mining operation to resolve transactions on the network, with the payout for mining being tuned so that it covers the cost of running the hardware (or slightly more than that). This would discourage profiteering but allow enthusiasts to take part if they are motivated to do so.

(d) I presume it would be relatively easy to assign names to wallet addresses; I suppose the issue would be around making sure this was done in an honest manner. Perhaps making the issuing authority the only ones who can create addresses? This has the negative element of not allowing one user of the system to 'recruit' a new user without recourse to the issuing authority. An invite system for trusted users?

(c) exchanges between BTC and CC are not a priority until the CC finds a value

Any thoughts, esp with reference to the code, would be appreciated. thanks

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[1714927872]

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[codemojo]

Why would I trust this central authority of your new system?

[Garrett Burgwardt]

This is something you are more than free to implement on your own and see if it takes off- good luck

But not something to modify the stock bitcoin protocol for.

[nereer]

This is something you are more than free to implement on your own and see if it takes off- good luck

But not something to modify the stock bitcoin protocol for.

of course not!
this idea runs contradictory to most of the principles of bitcoin. it is different entirely and will be developed separately. I am just wondering what parts of bitcoin would need to be modified, how difficult would this be? etc.

[Gavin Andresen]

If I were going to implement it...  hmm...

I think I'd just special-case the genesis block, so it has a value out of, oh, I dunno, 20 million CompleCoins.  Then maybe fix the mining reward to something small and constant (say 0.001 CompleCoin per block, forever-- or whatever you like).

The central authority would create the genesis block, and so would have 20 million CompleCoins that it could issue (aka spend) however it pleased.

The risk would be the central issuer ever losing control of its wallet/private key.  That risk could be mitigated a little bit by occasionally changing the key by spending all of the non-issued coins to a new address in a new, secure wallet somewhere and waiting a few blocks for confirmation.

I'm having lunch today with somebody else who is interested in using bitcoin tech for a centrally issued alternative currency, so I've been thinking a bit about it...

[nereer]

If I were going to implement it...  hmm...

I think I'd just special-case the genesis block, so it has a value out of, oh, I dunno, 20 million CompleCoins.  Then maybe fix the mining reward to something small and constant (say 0.001 CompleCoin per block, forever-- or whatever you like).

The central authority would create the genesis block, and so would have 20 million CompleCoins that it could issue (aka spend) however it pleased.

The risk would be the central issuer ever losing control of its wallet/private key.  That risk could be mitigated a little bit by occasionally changing the key by spending all of the non-issued coins to a new address in a new, secure wallet somewhere and waiting a few blocks for confirmation.

Yes, this all sounds feasible enough.

What about the danger of other miners spoofing/manipulating the network? If the value of CompCoins is really low it would be a disincentive to attack but perhaps they could run a different client and change some of the core parameters, because they will have the majority of the peers?

I am worried about the implications of having a p2p currency that will only be used by perhaps thousands of people. The processing power to support transactions on a network that size would be fairly cheap, but if you ended up competing with huge miners/botnets, what would happen then?
 

I'm having lunch today with somebody else who is interested in using bitcoin tech for a centrally issued alternative currency, so I've been thinking a bit about it...

I would be very interested to hear what you come up with!

[Mike Hearn]

I guess I don't see the point. If you want a central bank issued currency with strongly identified participants, you can just use a database (or dollars). The complexity of BitCoin is just obfuscation at that point. It doesn't really make sense that you'd trust a central bank to issue the currency and trusted identities but not track who owns what.

[nereer]

I guess I don't see the point. If you want a central bank issued currency with strongly identified participants, you can just use a database (or dollars). The complexity of BitCoin is just obfuscation at that point.

have you read up on LETS or Complementary Currencies? It's not quite a central bank, more of an issuing authority. There are other software implementations of these systems out there, but they have never been proven to work, whereas bitcoin does work, and this will make a big difference in trying to convince those who are sceptical.  Added to that the fact that there is a lot of innovation in the bitcoin area, and some of these advances could be very useful to a system that was similarly designed.

It doesn't really make sense that you'd trust a central bank to issue the currency and trusted identities but not track who owns what.

actually the transactions would have to be tracked. all transactions would have to be public. that is one of the technical issues I am talking about (see above)

at the moment I would like to find out how it would be possible and not get bogged down in doctrinaire debates

[nereer]

Gavin did you come up with anything at your lunch the other day?

I think the money creation aspect is at least provisionally answered, but what about identifying users of the network?

One of the rules of the proposed complementary currency is that the users are not anonymous. I think having users centrally registered is pretty cumbersome but I don't think that can be avoided; would it be possible to allow anyone to register a new account/wallet but not be able to make transactions over a certain amount/week until fully registered? This would allow a user to pay for something relatively small with CompCoin and then register fully later. This would help adoption since the user wouldn't have to go through a cumbersome process of filling out forms before seeing the benefit of the system first hand.

[dacoinminster]

If you want to make a complementary currency, here's one for you: StableCoin.

Bitcoin is awesome if you want to speculate on the future of bitcoin, but that volatility makes the currency less useful for the everyday transactions it was designed for.

Stablecoin could be pegged to the USD, but backed by bitcoin and bitcoin speculation. For instance, I want to buy and sell S&P 500 futures using digital currency, but my profits and losses are obliterated by the wild bitcoin fluctuations. So I buy some stablecoins, which I do my business in, then cash out with my 2% winnings without worrying about what bitcoin values might do in the meantime.

A Stablecoin would just be an enforceable contract between me and a bitcoin speculator. The contract would be an agreement for me to sell bitcoins to the speculator at a set price in the future. I owe the bitcoins, and the speculator owes USD. I get protection from price swings, the speculator gets to profit from bitcoin price increases.

This contract could be settled entirely in bitcoins. For instance, the contract could be that I give the speculator 1 bitcoin on July 1st. The speculator agrees to give me $100 worth of bitcoins on July 1st. I now have a bitcoin which is worth $100, no matter what bitcoin prices do in the future. If the price on July 1st is $50, the speculator owes me 2 BTC. If the price is $1000, the speculator only owes me 0.1 BTC.

I really don't have any idea what protocol would be required to do this, enforce the contracts, etc, but I believe there will be a lot of demand for something like this in the future.

[nereer]

If you want to make a complementary currency, here's one for you: StableCoin.

Bitcoin is awesome if you want to speculate on the future of bitcoin, but that volatility makes the currency less useful for the everyday transactions it was designed for.

Stablecoin could be pegged to the USD, but backed by bitcoin and bitcoin speculation. For instance, I want to buy and sell S&P 500 futures using digital currency, but my profits and losses are obliterated by the wild bitcoin fluctuations. So I buy some stablecoins, which I do my business in, then cash out with my 2% winnings without worrying about what bitcoin values might do in the meantime.

A Stablecoin would just be an enforceable contract between me and a bitcoin speculator. The contract would be an agreement for me to sell bitcoins to the speculator at a set price in the future. I owe the bitcoins, and the speculator owes USD. I get protection from price swings, the speculator gets to profit from bitcoin price increases.

This contract could be settled entirely in bitcoins. For instance, the contract could be that I give the speculator 1 bitcoin on July 1st. The speculator agrees to give me $100 worth of bitcoins on July 1st. I now have a bitcoin which is worth $100, no matter what bitcoin prices do in the future. If the price on July 1st is $50, the speculator owes me 2 BTC. If the price is $1000, the speculator only owes me 0.1 BTC.

I really don't have any idea what protocol would be required to do this, enforce the contracts, etc, but I believe there will be a lot of demand for something like this in the future.

a very interesting idea -

/tries to re-rail the thread

my main question atm is about identity on the network:

One of the rules of the proposed complementary currency is that the users are not anonymous. I think having users centrally registered is pretty cumbersome but I don't think that can be avoided; would it be possible to allow anyone to register a new account/wallet but not be able to make transactions over a certain amount/week until fully registered? This would allow a user to pay for something relatively small with CompCoin and then register fully later. This would help adoption since the user wouldn't have to go through a cumbersome process of filling out forms before seeing the benefit of the system first hand.

[FooDSt4mP]

Regarding identity: Why not just create a web service to handle mapping an email address to a bitcoin address?  Then, you can add a little code to the GUI to query the webservice for the bitcoin address when the user puts in an email address.

[nereer]

Regarding identity: Why not just create a web service to handle mapping an email address to a bitcoin address?  Then, you can add a little code to the GUI to query the webservice for the bitcoin address when the user puts in an email address.

Sure that works, but it won't be able to make sure that everyone on the system is identified, since a user can create as many addresses as they want.

What kind of scope is there for managing address/wallet creation?

[Gavin Andresen]

What kind of scope is there for managing address/wallet creation?

If you're willing to muck with the transaction processing code, you could only allow transactions to addresses that have been created and blessed by the Central Authority.  You'd have to also teach the wallet code not to create lots of addresses, but if you're going to require users to register and not be anonymous you might as well centrally create and issue them their wallets.

You then need a mechanism to broadcast new, blessed public keys to the entire network, but that might be as simple as generating a transaction from a baked-in blessed address (owed by the Central Authority) to the newly created blessed address.

Implementing and debugging would be a lot of work, and I'd be nervous about neglecting some little detail and leaving the system open to hacks (Bitcoin is nice because so many people are extremely motivated to find any chink in the system and either exploit it or patch it-- a small complementary currency wouldn't have that advantage).  But it could be done.

[marcus_of_augustus]

Central issuing authority. Central tracking ... what's the point? We already have facist money and we know it doesn't work.

Fungibility is an essential quality of money. If you make tokens traceable then you lose fungibility since some tokens become 'more equal' than others.

What you are proposing is a poor man's money for the oppressed. (Removing politics from the technology of monetary systems is not an option.) Fine hobby you got there, but if that's what drives you .... who are we?

[nereer]

Central issuing authority. Central tracking ... what's the point? We already have facist money and we know it doesn't work.

Fungibility is an essential quality of money. If you make tokens traceable then you lose fungibility since some tokens become 'more equal' than others.

What you are proposing is a poor man's money for the oppressed. (Removing politics from the technology of monetary systems is not an option.) Fine hobby you got there, but if that's what drives you .... who are we?

I am talking about a LETS or Complementary Currency system, which is not government issued or backed. The main benefit of these systems over bitcoin or government issued fiat is that you can create liquidity for no cost. There has never been an example of a country with a state-run LETS/Complementary Currency. This is most certainly *not* fascist money - these ideas are nearly exclusively promoted by left wing groups.

Perhaps you misunderstand the workings of these systems?

[marcus_of_augustus]

Central issuing authority. Central tracking ... what's the point? We already have facist money and we know it doesn't work.

Fungibility is an essential quality of money. If you make tokens traceable then you lose fungibility since some tokens become 'more equal' than others.

What you are proposing is a poor man's money for the oppressed. (Removing politics from the technology of monetary systems is not an option.) Fine hobby you got there, but if that's what drives you .... who are we?

I am talking about a LETS or Complementary Currency system, which is not government issued or backed. The main benefit of these systems over bitcoin or government issued fiat is that you can create liquidity for no cost. There has never been an example of a country with a state-run LETS/Complementary Currency. This is most certainly *not* fascist money - these ideas are nearly exclusively promoted by left wing groups.

Perhaps you misunderstand the workings of these systems?

Perhaps, but I don't think so. Left wing groups love centralising things ... the only problem is that when you have a big pot of centralised power/money the facists show up soon after and co-opt the whole thing to stifle liberty. How are you going to stop that from happening?

For salient examples, think Federal Reserve, Fannie Mae, Freddie Mac, Social Security, Govt. pension funds, state insurance, the list is nearly endless.

The main benefit of these systems over bitcoin or government issued fiat is that you can create liquidity for no cost

Colour me skeptical, money costs, no free lunch.

[nereer]

Central issuing authority. Central tracking ... what's the point? We already have facist money and we know it doesn't work.

Fungibility is an essential quality of money. If you make tokens traceable then you lose fungibility since some tokens become 'more equal' than others.

What you are proposing is a poor man's money for the oppressed. (Removing politics from the technology of monetary systems is not an option.) Fine hobby you got there, but if that's what drives you .... who are we?

I am talking about a LETS or Complementary Currency system, which is not government issued or backed. The main benefit of these systems over bitcoin or government issued fiat is that you can create liquidity for no cost. There has never been an example of a country with a state-run LETS/Complementary Currency. This is most certainly *not* fascist money - these ideas are nearly exclusively promoted by left wing groups.

Perhaps you misunderstand the workings of these systems?

Perhaps, but I don't think so. Left wing groups love centralising things ... the only problem is that when you have a big pot of centralised power/money the facists show up soon after and co-opt the whole thing to stifle liberty. How are you going to stop that from happening?

For salient examples, think Federal Reserve, Fannie Mae, Freddie Mac, Social Security, Govt. pension funds, state insurance, the list is nearly endless.

The main benefit of these systems over bitcoin or government issued fiat is that you can create liquidity for no cost

Colour me skeptical, money costs, no free lunch.

I am beginning to suspect that you don't know anything about LETS / CC systems.

If you are an anarchist that does not believe that any man-made systems can benefit society as a whole, then that is your ultimate view and there really is no point debating the details. OTOH if you want to go ahead and read up on LETS/CC systems, I would appreciate your informed opinion.

[marcus_of_augustus]

If you are an anarchist that does not believe that any man-made systems can benefit society as a whole, then that is your ultimate view and there really is no point debating the details. OTOH if you want to go ahead and read up on LETS/CC systems, I would appreciate your informed opinion.

I'm getting pretty fed up with people telling what I am and am not and what I believe and what I don't. I'll keep my informed opinion to myself for now, thanks.

PS: anything the UN has touched has been a disaster, "you shall know them by their fruits", comes to mind.

[Vering]

@topic

Bitcoins blockchain stuff is only necessary because it doesn't have a central authority.
You might want to change the p2p aspect to just connect to the central issuing server, which will create new blocks when new transactions come in.
This will give lower transaction times and lower (nonexistent) mining costs and full control over inflation, with no overtaking from others possible.
On the downside, you are probably a little more vulnerable against ddos attacks.
You can also keep the p2p aspect, but then you practically loose protection against double spending.