Decrits Proposal: Solution for an unbound, energy-related, stable value currency

[tytus]

The initial post is too big to read it.

You also start with something

Decrits is a continuation of my proposals for Encoin, a proposal for a currency that attempts to keep a stable value over time. I've mostly ditched that idea in favor of one that acts in a sort of equal but opposite manner to bitcoin where instead of coin value rising to meet demand, new coins are given freely to those that save and transact on the network.

that is probably hidden somewhere in the overall goals but it does not seem to be a primary goal.

OVERALL GOALS
* To require far less data than Bitcoin in terms of both bandwidth and disk space.
* To require energy only to verify transactions or to create a small percentage of new currency with the rest being given freely and fairly.
* To ensure direct developer intervention is not required to adapt the currency to future, unforeseen events. This will exist via both the voting system as well as a highly modular network that allows for the insertion of new protocols or algorithms with relative ease.
* To ensure that transactions are secure from double/bad spend attacks within seconds.
* To enable the users of the currency to create new currency quickly in response to increased demand to avoid both price shocks and manipulation of the currency via "credit crises."
* To ensure a reasonable, base demand for money via the proof-of-share profit system as well as the benefits of the coin multiplier during periods of high demand (with save, spend, and receive behavior all being rewarded).
* To incentivize being a transmitting node for the health of the network.
* To ensure that being a transmitting node is always within the reach of an everyday (power) user.

It would be easier for newbies to understand the proposal if it has an abstract with a table where You have a structure like this:
1. what problem of BTC You want to solve
2. how You want to solve it
... preferably ordered by decreasing priority

some other comments

OVERALL GOALS
* To require far less data than Bitcoin in terms of both bandwidth and disk space.

this is probably not a driving force to start a new currency [to low priority to be on the top of the list

* To require energy only to verify transactions or to create a small percentage of new currency with the rest being given freely and fairly.

here, there are two goals right ? ... reduce work AND give coins freely [the second may scare people so it has to be explained]

* To ensure direct developer intervention is not required to adapt the currency to future, unforeseen events. This will exist via both the voting system as well as a highly modular network that allows for the insertion of new protocols or algorithms with relative ease.

how does this relate to BTC?

* To ensure that transactions are secure from double/bad spend attacks within seconds.

cool, it makes paying at a physical store easier.

* To enable the users of the currency to create new currency quickly in response to increased demand to avoid both price shocks and manipulation of the currency via "credit crises."

are price shocks (high fluctuations) expected?

* To ensure a reasonable, base demand for money via the proof-of-share profit system as well as the benefits of the coin multiplier during periods of high demand (with save, spend, and receive behavior all being rewarded).

coin multiplier sounds scary again :-(

* To incentivize being a transmitting node for the health of the network.

BTC can exist with only very few nodes up, right?

* To ensure that being a transmitting node is always within the reach of an everyday (power) user.

Are so many transmitting nodes needed?

Ignore my post if I ask to many stupid questions. An abstract would help also other though.

[Etlase2]

It would be easier for newbies to understand the proposal if it has an abstract with a table where You have a structure like this:
1. what problem of BTC You want to solve
2. how You want to solve it
... preferably ordered by decreasing priority

You are right, and the reason why it isn't here is because I went over and over this stuff with the Encoin proposals. That's not an excuse, but I got tired of repeating myself and get into the habit of feeling that bitcoin's major problems are self-evident.

* To require energy only to verify transactions or to create a small percentage of new currency with the rest being given freely and fairly.

here, there are two goals right ? ... reduce work AND give coins freely [the second may scare people so it has to be explained]

The "how" is explained under the money creation section, though some of the "whys" are probably not that clear.

* To ensure direct developer intervention is not required to adapt the currency to future, unforeseen events. This will exist via both the voting system as well as a highly modular network that allows for the insertion of new protocols or algorithms with relative ease.

how does this relate to BTC?

BTC's only mechanism for changing the protocol is in the hands of relatively few mining pool operators. Google the BIP16/BIP17 fiasco if you're curious. Plus many changes will take a year or more to be realized, while this system can quickly resolve protocol issues.

* To enable the users of the currency to create new currency quickly in response to increased demand to avoid both price shocks and manipulation of the currency via "credit crises."

are price shocks (high fluctuations) expected?

No, contrary to bitcoin. But if someone does attempt to manipulate the currency, or if banks decide to stop lending to cause a credit crisis (which gives them the opportunity to buy up durable goods at highly deflated prices--see the ongoing mortgage crisis), the people can create new currency and effectively diminish the power of the banks or manipulators. This is a powerful, powerful idea that is absolutely necessary, imo, to get rid of the business cycle and the constant siphoning of wealth and productivity from the people to the banks.

* To ensure a reasonable, base demand for money via the proof-of-share profit system as well as the benefits of the coin multiplier during periods of high demand (with save, spend, and receive behavior all being rewarded).

coin multiplier sounds scary again :-(

It serves several aspects: 1) you don't need to mine to get new money, so any monopoly over mining is powerless; 2) if the market expands rapidly, the price will be much less volatile as 10x the currency is created for every 1x mined--this is great for new business opportunities and will entice entrepreneurs rather than scare them off; 3) existing accounts receive new money and people who transact receive new money--incentives for saving and spending (and receiving!) in a growing economy, not massively hoarding. Instead of just increasing the value of the coin, more coins are created instead. But people who have faith in the currency should be and are rewarded, just like bitcoin. But bitcoin only rewards those who hold many coins. There is little incentive for new adopters (except to hope that there are more adopters after them) and there is little incentive to actually transact. This changes that.

* To incentivize being a transmitting node for the health of the network.

BTC can exist with only very few nodes up, right?

Yes, but it puts the power in the hands of a few people; hardly decentralized. Because of the bandwidth and storage costs, it even makes sense for this to happen with bitcoin which is why reducing storage and bandwidth dramatically was a big part of the encoin proposals. So that the everyman can be a part of the network. In Decrits, you will actually get paid just for being a transmitting node too!

* To ensure that being a transmitting node is always within the reach of an everyday (power) user.

Are so many transmitting nodes needed?

The more the network can support the better. It makes it harder to attempt a denial of service, it makes it harder for "evil entities" to destroy the network, etc. Because decrits is based on shareholders rather than proof of work, a potential but costly attack on the network would be to try to take control of the majority of the network reputation and start dropping valid transactions or ignoring honest shareholders transaction blocks in an attempt to get them removed. The transmitting nodes will be the defense against that. You can't fool all the people all the time, but if there's only a few people to fool...

Ignore my post if I ask to many stupid questions. An abstract would help also other though.

There are no stupid questions. I posted this so people could question and comment. Like I said though, I have a habit of leaving stuff out because of so much discussion that has gone into this proposal prior to this thread. There is a lot of stuff. I have literally spent hundreds of hours coming to this point where I think I have done a seriously solid job of proposing what could be a very successful alternative currency to bitcoin. I'll work on an abstract.

[tytus]

You did not criticize me for ignoring the point on disk space :-) maybe contrary to my previous comment this is a driving force for changes. I managed to install bitcoin on debian only after some parameter changes in the database. I also have a problem explaining others why they have to wait 2 days for the client to be up to date :-) If You go for the mobile market a leaner currency system is better.
Also if You put an effort on network health maybe in addition to financial transactions You could use the system to fight e-mail spam by implementing a proof-of-work header in emails. Maybe after some time email clients will notice and verify such headers and You would have a potential market to start the currency.
In any case the coin can only be launched if it has features that attract people "exponentially". A btc fork is probably easier to implement.

[Etlase2]

In any case the coin can only be launched if it has features that attract people "exponentially".

I would expect a slow adoption of the currency and it doesn't bother me. Why? Because bitcoin is doomed to fail. The idea is absolutely ingenious; the execution fatally flawed. Businesses are not interested in bitcoin as is anyway. It boils down to a speculative digital pet rock, nothing more.

A btc fork is probably easier to implement.

And a complete waste of time in the grand scheme of things. Too many things need to change; why just build another stepping stone instead of going for it all?

[tytus]

In any case the coin can only be launched if it has features that attract people "exponentially".

I would expect a slow adoption of the currency and it doesn't bother me. Why? Because bitcoin is doomed to fail. The idea is absolutely ingenious; the execution fatally flawed. Businesses are not interested in bitcoin as is anyway. It boils down to a speculative digital pet rock, nothing more.

BTC solved some important problems.
1) very small international transaction fees [not sufficient to survive / evolve]
2) anonymous accounts good for drug deals, black mail etc [yes(!) this is innovative and made the success possible]
3) it is easy to creating "home banking" with this, it is open source, it is not controlled by authorities ... [yes, I like all this, but the (2) point was probably more important]

to launch a new currency You have to solve an important NEW problem that has not been solved. You can also rely on BTC breaking because after 2 years nobody can keep track of all BTC transactions any more, but there, You will have competition :-) ... and You have to develop the code for the currency.

BTC will defend itself. It will adopt changes if it starts taking competition seriously. If it is possible to solve some of the problems You mentions with small modifications in the BTC code then You risk a lot :-) ... You risk because people who start with the new currency invest their time in it and they don't want to fail after 2 years.

[tytus]

I forgot ... I think an additional problem is that bitcoins are stolen to easily :-) this is also a problem that should be addressed in the new currency.

[Etlase2]

to launch a new currency You have to solve an important NEW problem that has not been solved. You can also rely on BTC breaking because after 2 years nobody can keep track of all BTC transactions any more, but there, You will have competition :-)

The new problem that has not been solved is simple: bitcoin is a commodity, decrits will be a currency.

... and You have to develop the code for the currency.

This is a big, unaddressed issue. I can code, but I'm no professional. I think I'm going to start coding portions of it to get people interested and see if I can get a few more on board. Unfortunately network protocol programming is way beyond my abilities, so I will definitely need help with that.

BTC will defend itself. It will adopt changes if it starts taking competition seriously. If it is possible to solve some of the problems You mentions with small modifications in the BTC code then You risk a lot :-) ... You risk because people who start with the new currency invest their time in it and they don't want to fail after 2 years.

The money supply of BTC is set in stone, so the problems that arise from that will never be fixed.

I forgot ... I think an additional problem is that bitcoins are stolen to easily :-) this is also a problem that should be addressed in the new currency.

In the consciousness stream linked in the OP I talk about an account restrictions block where people could put restrictions on what an account can do without the master key or whatever. Early stage of ideas, but it will happen and no one should be foolhardy enough to trust a site that won't identify its cold wallet and the restrictions on it.

[tytus]

to launch a new currency You have to solve an important NEW problem that has not been solved. You can also rely on BTC breaking because after 2 years nobody can keep track of all BTC transactions any more, but there, You will have competition :-)

The new problem that has not been solved is simple: bitcoin is a commodity, decrits will be a currency.

You have me, but this is not enough :-)

[Etlase2]

Tytus, I revised the OP per your suggestion. I also changed the title as I think I was unconsciously trolling by calling it inflationary. We'll see how this one goes.

[markm]

I have seen similar ideas posted by you for a long time now but I do not think I have yet seen any specification of it precise enough to permit actually coding it. Is there an implementation-specifics details document yet or is this all just pie in the sky handwaving?

-MarkM-

[Etlase2]

I have seen similar ideas posted by you for a long time now but I do not think I have yet seen any specification of it precise enough to permit actually coding it. Is there an implementation-specifics details document yet or is this all just pie in the sky handwaving?

-MarkM-

It is an iterative process. Especially since when I began ideating this project I had only a small understanding of cryptography and what would be feasible for a p2p protocol. Some of the original ideas look absolutely atrocious to me now. But I am extremely confident at this point that the guts of everything I've proposed is feasible and there are numerous blueprints in my head. I would not have wanted to begin coding until I felt that way. Some things may eventually not work exactly as described, but that will come out in testing, and something that doesn't work as intended is just an opportunity to make it work better than intended, imo.

I post this stuff here though so people can give me new ideas or better ideas or whatever though. Red was insanely, extremely helpful in that regard. It's a shame he didn't stick around.

When will I start coding some portions? Soon™

[tytus]

Shit :-) I spend half an hour to write a post and then it just disappeared :-) I will try to do it again but shorter (if it happens again I will reply with 6 posts instead of one)

The text with the abstract is much better than without it.

=> ignore all my points :-) You need comments from many more people to optimize the proposal

- who is your target ? probably early adopters. write something that catches their attention.
- I am not your primary target. I am interested in a secure, more theft-protected currency, not in making profits with it, so I see the proposal from a different angel. But you can use me as an example of a reader.

for me the title could be just "solution for stable crypto-currency" , it is shorter and tells me what i want to find.

•   Decrits will work to keep a relatively stable value over time by having an unbounded coin production that is related to the time, hardware, and energy costs required to produce new currency.

- btc is "related to the time, hardware, and energy costs required to produce new currency" (miners stop mining if the value is too low)
- it suggests fixing the value of decrits to costs of energy etc. but You don't want to do this.

•   During periods of instability due to market expansion or technological leaps, Decrits will create new currency freely based on what is being minted for cost and distribute it to existing account holders and those who transact on the network to quickly bring back stability. This has the beneficial side effect of giving profits to the people that use the currency rather than wasting it on hardware manufacturers and electric companies.

- you scare people by forseeing instability ... but you don't really expect instability.
- you want to fight instability with giving away decrits for free ... this is at least confusing

•   Decrits will use a proof-of-share system for network security entirely in lieu of proof-of-work. No energy is required to secure the network other than transaction verification. Proof-of-work is only used to create new currency. Transaction fees are paid to shareholders.

- no proof-of-work but in the last sentence you use proof-of-work
- here you say "no relation to energy"

•   Decrits will ensure that transactions are typically secure from double- or bad-spends within seconds.

- how ? need 3 words explanation

•   Decrits will use an account ledger rather than a transaction ledger for keeping track of balances. This will result in a standard transaction being about one-third the size of the smallest common Bitcoin transaction, and 5-10x+ less than Bitcoin transactions with many inputs. It also means that the entire history of the network need not be stored or pruned as it is already in a compact format.

- you probably need to keep a short transaction history in the client
- you probably need some nodes to keep the history for accounting / security / analysis reasons
... you did not mention that this solves a problem : 1) client on mobile devices 2) installing the client faster than in 2 days

•   Decrits will ensure direct developer intervention is not required to adapt the currency to future, unforeseen events or bugs. This is accomplished via an in-network voting system.

- developers will not fix bugs ? who will ?

•   Decrits will reward early adopters by giving away multiples of minted currency, such as 5x or 10x what would normally be minted. Early adopters will also be in the position to benefit for some time off of early purchase of shares as described in the Security section. While the project is in development, coins may be pre-awarded to people who make large and small contributions to its development.

- you need to attract early adopters so you probably must avoid words like "may be". the benefits must be clear and simple.

•   Decrits will incentivize being a transmitting node for the network by paying a small portion of the network transaction fees for the service.

- you probably need a section that tells early adopters what are the benefits, a section like this is not easy to locate

=> i did not find a clear answer how you introduce stability. I would now scan the rest for the text to find a paragraph on that ... you have the word in the title. In fact the offer of stability is extremely complected to achieve :-) You have to define how you understand stability.

the proposal has a target. Try to think like the person that you want to attract and make it easy for him to find answers.

1) what are the advantages over btc
- stability (how)
- less energy consumption (how)
- less disk space (... this you have)
- other benefits?
2) what are the benefits for adopters
- i would make the benefits based on distribution of transactions fees but this maybe not sufficient to start the currency
... the benefits are a crucial part of your 'business plan' , this requires probably an additional post :-)

[Etlase2]

=> ignore all my points :-)

How about I just ignore this one?

- who is your target ? probably early adopters. write something that catches their attention.
- I am not your primary target. I am interested in a secure, more theft-protected currency, not in making profits with it, so I see the proposal from a different angel. But you can use me as an example of a reader.

I more specifically addressed the early adopter thing in response to this post claiming I was anti-free market. Not everyone thinks the same as you and I, and they need a motive better than "improving humanity as a whole."

•   Decrits will work to keep a relatively stable value over time by having an unbounded coin production that is related to the time, hardware, and energy costs required to produce new currency.

- btc is "related to the time, hardware, and energy costs required to produce new currency" (miners stop mining if the value is too low)
- it suggests fixing the value of decrits to costs of energy etc. but You don't want to do this.

Well I can write a book for an abstract or I can try to keep it abstract. I suppose the key difference between it and bitcoin is the word "unbounded." There is a reason why I created a wiki for encoin, there is too much information to put into a single post, and a wiki is much more easy and natural to navigate for people looking for specific information. Unfortunately I just don't have time to do that again at the moment.

•   During periods of instability due to market expansion or technological leaps, Decrits will create new currency freely based on what is being minted for cost and distribute it to existing account holders and those who transact on the network to quickly bring back stability. This has the beneficial side effect of giving profits to the people that use the currency rather than wasting it on hardware manufacturers and electric companies.

- you scare people by forseeing instability ... but you don't really expect instability.
- you want to fight instability with giving away decrits for free ... this is at least confusing

:sigh:

•   Decrits will use a proof-of-share system for network security entirely in lieu of proof-of-work. No energy is required to secure the network other than transaction verification. Proof-of-work is only used to create new currency. Transaction fees are paid to shareholders.

- no proof-of-work but in the last sentence you use proof-of-work
- here you say "no relation to energy"

Proof of work is not required for network security, it is still required to make coins. I think that was clear enough. In a steady state, no energy is required to secure the network from attack, whereas bitcoin requires 51% of the computing power in the universe.

•   Decrits will ensure that transactions are typically secure from double- or bad-spends within seconds.

- how ? need 3 words explanation

This one I can work on.

•   Decrits will use an account ledger rather than a transaction ledger for keeping track of balances. This will result in a standard transaction being about one-third the size of the smallest common Bitcoin transaction, and 5-10x+ less than Bitcoin transactions with many inputs. It also means that the entire history of the network need not be stored or pruned as it is already in a compact format.

- you probably need to keep a short transaction history in the client
- you probably need some nodes to keep the history for accounting / security / analysis reasons

These are details that are beyond the scope of the OP let alone the abstract. I think I mentioned at the bottom in the tech details that the transaction log would be kept for 90 days or so. Important information such as voting records and shareholder activity history would likely be kept for 10 years as that is not very data heavy.

... you did not mention that this solves a problem : 1) client on mobile devices 2) installing the client faster than in 2 days

Noted.

•   Decrits will ensure direct developer intervention is not required to adapt the currency to future, unforeseen events or bugs. This is accomplished via an in-network voting system.

- developers will not fix bugs ? who will ?

I should probably just leave this out of the abstract.

•   Decrits will reward early adopters by giving away multiples of minted currency, such as 5x or 10x what would normally be minted. Early adopters will also be in the position to benefit for some time off of early purchase of shares as described in the Security section. While the project is in development, coins may be pre-awarded to people who make large and small contributions to its development.

- you need to attract early adopters so you probably must avoid words like "may be". the benefits must be clear and simple.

I haven't decided at all on how this should work, and this boils down to the "needs to be publicly discussed" section after the abstract.

=> i did not find a clear answer how you introduce stability. I would now scan the rest for the text to find a paragraph on that ... you have the word in the title. In fact the offer of stability is extremely complected to achieve :-) You have to define how you understand stability.

BUT IT'S SELF-EVIDENT! I think I will make a separate section on how I believe it will work.

[tytus]

BUT IT'S SELF-EVIDENT! I think I will make a separate section on how I believe it will work.

:-) you have many options to define stability:
= average of other major currencies [they have inflation but this would be quite a success to achieve this]
= gold [as a reference ... not a good choice of course]
= value of 1h of work of a person in USA ? [you don't have the hated inflation then :-)]

... this is absolutely not trivial.

[tytus]

:-) you have many options to define stability:
= average of other major currencies [they have inflation but this would be quite a success to achieve this]
= gold [as a reference ... not a good choice of course]
= value of 1h of work of a person in USA ? [you don't have the hated inflation then :-)]

quoting myself :-) actually cost of energy is a relatively good choice. the currency would be deflationary [would help to acquire early adopters] but would not be as extremely deflationary as BTC. But it would have to be really related to energy with no cheating options [ASICs :-)].

[Sunny King]

Pegging currency value to energy cost sounds nice on the surface, but if you are losing value against Bitcoin capital would like to flow to Bitcoin. Assuming the benefit would be that merchants don't need to reprice products daily but market has been developing solutions to this by having computers automatically adjust price based on exchange rate, so the advantage there would be rather limited.

Not to mention properly pegging value is a daunting task without some form of centralization, demonstrated by the attempt of solidcoin. It's likely going to end up still with fairly volatile exchange rate.

[Etlase2]

It is not pegged to the cost of energy, more like derived from it as well as hardware costs and time costs. I hesitated to even bring it up again because it was non-stop in the encoin threads about how this wasn't possible, "you can't force the market", blah blah. But it's important to get a sense of how the value of a coin could be derived. With encoin I came up with a tongue-in-cheek phrase that "1 enc costs about 1 enc to produce." Meaning that, long-term, whatever the coin is worth is about what it will cost you to make one.

This can vary when demand outstrips supply in the case of a network expansion, or supply outstrips demand in the case of panic selling or loss of confidence or what have you. But when demand outstrips supply, as the currency production is unbounded, the people can quickly create new currency to return it to the equilibrium level. If supply outstrips demand, an opportunity for arbitrage arises. So, long term, the price should simply oscillate around a common cost to produce.

But this does not directly take into account the many factors that go into this such as the general price of world electricity changing and efficiency gains in hardware, but that is where the ingenuity of the encoin and decrits proposals come in. This was an important, though slightly flawed, step to bringing the possibility of a stable value currency to reality based only on competition between miners.

Code:

The current difficulty for creating coins is a value of 100 which causes the average coin to be produced in 50 coin-hours.

 The Network originally had 100% of computers producing coins using 150W of electricity to produce a coin in 50 coin-hours, 50 * 150W or 7.5kWh per coin.

 50% of the computers producing coins now use 125W of electricity while 50% continue to use 150W, while both produce coins at the same rate.

...

 When the block award returns to 6 coins, the difficulty will be 108.5, or 54.25 coin-hours to make the same coin as before. 54.25 * 137.5W ~ 7.5kWh.

But it was not ideal for several reasons that do not apply to Decrits and I don't want to go off on that tangent.


SO, I will go point by point through the money creation section to explain why everything is the way I proposed it.

• Money creation starts with a big block of coins available to be minted based on the amount transaction fees over the last year (with a large minimum amount), divided by 12 to get a base line.

This is so that network GDP plays a factor in how difficult it is to begin a new mint block and how much must be mined before the coins are awarded. Because transaction fees are a percentage, this will scale smoothly as the network activity increases.

• To begin minting coins, minters must put their name into the coin minting queue which must include a proof of work equal to 10% of the standard coin award's value (e.g. if each user is assigned to mint 2 coins, he must give a solution equal to 0.2 coins to join the queue).

This reduces spam to join the mint queue, gives proof that you are capable of finding solutions, gives proof to the network that a lot of hashing power is ready to create coins, and involves a slight risk. It is possible, though unlikely, that you may never get to mint coins for this block. (Bought a fancy ASIC? whoops!)

• Once enough minters have joined the queue, minting can begin (this formula will be based on the total number of coins available to be minted for this block).

This will likely be when there are enough minters in queue to be assigned 20% of the total coins in the block.

• When minting begins, the cost of the solution to join the queue will drop to 7.5%, and after a significant portion of the coins have been mined (25% or so), the cost to join will drop to 5%.

This adds to the risk of being among the first to join the queue. It also makes less powerful systems able to join more easily and slow down the production of hyper-efficient minters.

• When the block begins, only 50% of the queued users will be selected to create coins.

Adds to the risk. The other 50% essentially lost the a battle of luck because now everyone can join for 7.5% instead of 10%.

• While each minter creates coins individually, they are assigned together with a group of 39 other minters with which they compete. The first 10 users in each group will receive a slight bonus to their award,

The bonus is to encourage increasing the difficulty when it makes sense. If your rig is very efficient, reap the rewards of running at a mh/s that is 10% greater than the network average or so.

• and once the 10th solution is given, all 10 users will be assigned to new groups to create more coins.

This mitigates risk to the network. You can buy that fancy 1GH/s ASIC, but if you only get ten coins from each block, it is so insanely ridiculously not worth it. In the mean time you spend a lot of time waiting around doing nothing.

• This process continues for each set of 10 except that the 3rd and the 4th set of 10 are only added back to the queue and not immediately given a new group.

Again encourages increasing the difficulty via competition when it makes sense.

• Go really slow (over 3 standard deviations or whatever testing seems fair) and you will be booted out of the queue and lose your 0.2 coin investment.

This means an investment like FPGA will have to be large to keep up with the "average" system of GPUs. 1 FPGA won't be enough to keep up, you'll need 10, for example. High startup, zero other utility, encourages using standard PCs and status quo hardware and only upgrading when it is for standard computer upgrading reasons. This reduces the hardware tax on the economy significantly.

• Coins will not be deposited into the minting accounts until after the entire block of coins has been minted and they will be awarded over time based on the days that the coins were mined

Mitigates risk to the network.

• The difficulty will be adjusted after each block and given a weighted adjustment based on the last 10(?) difficulty changes.

Mitigates risk by making it very difficult to maliciously increase the difficulty. After 1 mint block of much higher than normal difficulty, everyone will be aware that the difficulty is being manipulated and can join the next queue to de-manipulate it before permanent damage is done. This is because of the next sentence: "Difficulty only goes up, never down."

• E.g. a 10% increase in difficulty means that a 2.0 coin award would be reduced to about 1.818 coins (100/110% * 2.0)

Mitigates risk, immediately prices in some portion of new hardware efficiency gains, meaning it is less profitable to upgrade hardware for the sole purpose of being better at creating money--reducing/removing the hardware tax again. It is worth discussing whether or not the coin multipliers in the next two sections are reduced by the same amount, meet in the middle, or equal the original coin awards (I like meet in the middle).

• After the bootstrapping period is over, by default each coin block will be multiplied by 5x to all existing accounts

Mitigates risk in holding currency. Even if new hardware comes out that is 500% more efficient and super cheap etc etc but has the same MH/s output as GPUs, existing holders of currency do not have to run out and buy this hardware just to compensate for the reducing value of their holdings. A new value of the currency will be established (stable long term but chaotic because of unforeseen present conditions), but no one will lose actual value because the more new currency created, the more existing currency is rewarded. It is a balance and it is another hardware tax--you don't get the new coin pie all to yourself. Additionally, it is possible to mitigate the value change of the currency by forcing an increased difficulty after so many mint blocks are created in a row with low difficulty increases and not much prior increase in transaction activity. If, for example, coins were worth about $3 and the new hardware can produce them for $1, rather than tripling everyone's coins over time until a new level was reached, the difficulty could be forced upwards so that maybe it only drops to $2.50 and everyone only gets a 20% increase in coins or so. It would be a form of disinflation I suppose. Something worth discussing, but it does have the potential to be abused. This scenario is also pretty unlikely.

Either way, while this would temporarily upset the economy, once it is accounted for it won't have any lasting effects, and a situation like this should be quite rare.

• and by 5x as a lottery to transactions

Encourages trade, gets more money in circulation when demand is high

• What this does is reduce the actual amount of energy spent in creating new money so that the people using the money profit instead of the electric company.

This is significant. Instead of it costing X energy and hardware to create Y amount of currency, it costs X/10 to create the same value in Y currency. This allows for a very quick, very cheap expansion of the money supply to coincide with an expansion in demand for money. It seriously reduces the energy and hardware tax on the network.


I can't type anymore at the moment. I said good day!

[markm]

How do you prevent a super-machine (ASIC, whatever, something extra-powerful) from presenting itself to the network as a whole bunch of normal consumer grade machines in appearance?

Seems like one could get a bunch of IP addresses and share your hashing power out over them to appear to be many individual users, maybe even an entire mining-group of forty users for example?

-MarkM-

[Etlase2]

IP addresses are not needed or used for minting under the Decrits proposal. I dropped the "supplynet group" concept of Encoin that worked similarly to p2pool because I felt it would be an avenue for a denial of service attack against creating new money. Part of that idea reduced the effectiveness of things like ASICs because the payouts would not be proportional to hashing power (see: http://justinbporter.com/encoin/doku.php?id=mint_blocks). However, it is possible that idea could be re-discussed down the road as it is less data-intensive than the Decrits proposal which is nice (but requires direct communication between group peers, which is not so elegant), but I think in general the 10x coin multiplier obviates the need for non-proportional payouts. Plus it feels like socialism.

Anyways, there is nothing preventing an ASIC from presenting itself as many consumer grade machines. I even mentioned in the OP that one user could join the queue multiple times, but it is risky because they may be selected more than once at the same time and they may lose their initial solution investments if they cannot find solutions within the allotted time frame. Obviously this is not very risky for an ASIC.

There are two avenues for using an ASIC on the network:

1) Playing nice and blending in with an individual queue hash rate along the lines with the rest of the network. Depending on the size and circumstances of the network, this will only be effective as long as it is profitable for the community at large to mine because of the large initial mint block start up cost. One of the risks that I failed to mention in the money creation section was that queued solutions will only be valid for so long and will eventually expire unless a mint block begins within a certain time frame. So if they play nice and whatever, they will make a much better profit than everyone else, but because of the 10x coin multiplier and restrictions on timing and such, the profit is very unlikely to be significant compared to the unsunk costs of purchasing and/or developing the ASIC. Once supply and demand meet, everyone else will drop out and the ASIC will not have enough power to maintain the entire minting process on its own.

Unless the ASIC is an order of magnitude more powerful, which has apparently been proved-in-concept by BFL with a 1TH/s miner. If the network's GDP is large and healthy, even a miner with an order of magnitude more power should still pale in comparison to the amount of work needed to begin a mint block. If the network is small, with the 10x coin multiplier and such it is unlikely to ever see a return on investment, so that brings me to...

2) the possibility that it could be used as an attack on the network to intentionally increase the difficulty, bring up the cost of creating coins and cut out everyone else from being able mine (though probably including itself). I came up with a solution for this though that I recently added to my consciousness stream notes:

ASIC etc. protection: Provide a minimum amount of time to join the mint queue (based on the 10% fee and typical time to create coins). This way even if an ASIC shows up and gets the mint queue full to start a new block immediately, there will be a waiting period where even more can join and thus thwart an insane currency production or increased difficulty by the ASIC user(s) being the only ones in the queue when production begins. I guess this timer will start when the first minter is queued. This does leave the possibility of an ASIC miner just putting one in the queue, waiting for the timer to expire, then mass producing minters. So a slightly more subtle method is required. (Either way, they will only be able to get away with it for one block, after that everyone can get a warning that someone is fucking with the difficulty and join up with the next block to keep things in check by being a big portion of the initial minters.)

Additionally, ASICs are stupid machines. There are tens or hundreds of ways that the hashing algorithm could be slightly modified to render all ASIC designs moot while causing only a slight hiccup to GPU mining. Because of the voting protocol, this could happen transparently and publicly, and the fact that this option exists may simply deter anyone from even trying. I am also thinking of doing a three-way algorithm between SHA2, SHA3, and scrypt, XORed together or something. (this has the additional bonus of completely nullifying any future vulnerability in one of the algorithms.) With the addition of scrypt, from what I understand this will significantly increase the cost of producing ASICs as they will require onboard memory or will have severe hashing penalties.

PS - the groups of forty will be determined at random

[Gavin Andresen]

Is Decrits meant to be a decentralized solution?

How is the coin minting queue managed? E.g. you say "Once enough minters have joined the queue..."  :  what if there is disagreement about which miners are in the queue or if there are "enough"?