I'm finally out of newbie status and able to post. Here's the discussion that's been going on over on the
freicoin forums (I've just copied over my posts, I hope it's still readable):
Well, I believe this is the opportune time for me to announce that my startup is working on an alternative full* bitcoin client. We will support a block chain with demurrage from day one, and we would like very much to work with you to get your support in making this the “official” freicoin block chain on freicoin.org.
(*To clarify, it's a implementation of the bitcoin protocol, as defined in the original bitcoin whitepaper, on top of a different peer-to-peer overlay network. It is intended for new alternative block chains, and it's not bit-compatible with the mainline bitcoin block chain or network protocol.)
We will be implementing our own general currency for exchange, and we expect a general currency should incentivize spending, discourage hoarding, and maintain stable, fixed prices. Naturally your freicoin proposal fits the bill, and to my eyes at least it does so better than anything else (and in the past few weeks I think I've read every other alternative block chain proposal out there).
It will *not* be merge-mining capable, however. Merge mining requires inter-dependence between the associated block chains, which is simply unacceptable from a technical perspective and with regards to the long-term security of the network.
As a working schedule--keeping in mind that this *will* change--we'll probably have a version for internal testing by the end of September/early October, and a public beta in the November/December timeframe. If everything goes well, the beta will be become the freicoin testnet, and a new freicoin block chain generated for the official release in early 2012.
Here's the breakdown of how our demurrage block chain will differ from bitcoin:
1. 10 second blocks (EDIT: we've changed back to 10-minute blocks!)
2. 10bn freicoins (1e18 monetary units) total circulation
3. 2 hour difficulty retarget (every 720 blocks)
- Up to +10% adjustment up (EDIT: this is back to the standard 4x.. I shouldn't have lendt any credence to solidcoin)
- Up to -400% adjustment down
4. 1% demurrage per annum (but calculated per-block) (EDIT: this has been adjusted to 4%)
5. 32 freicoins issued per block
Some notes on why these numbers are chosen:
1) This may seem out of left field, but we also have to consider building a protocol that will survive humanities expansion into space, where the speed of light becomes a limiting concern. Round-trip to the moon is just under 3 seconds. Round-trip time to L4/L5 is on the order of about 17 minutes, and RTT to the orbit of Mars, Mars' moons, and NEOs is similar, albeit fluctuating. Anything further out would of course take longer. Current bitcoin network performance shows that round times on the order of a second could work. Choosing 10 seconds per block allows for a crypto-currency that comfortably includes all of cislunar space, provides a 60x improvement in verification time over bitcoin, and is within an order of magnitude of the best the current bitcoin network can do.
2) Comparisons were made with the per-capita size of the USD monetary pool, then extrapolated to an estimated 20bn residents of cislunar space in the mid 22nd century.
3) I'll simply point to solidcoin for this. I'd be curious to know if anyone has done some research on what the optimal numbers for this should be.
4) Roberto M. Billi & George A. Kahn, 2008. "What is the optimal inflation rate?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 5-28.
The authors estimate that between 0.7% and 1.4% is ideal. 1% is comfortably in the middle and easy to work with. The demurrage will be paid as mandatory transaction fees (transactions will not be accepted unless the transaction fee meets or exceeds the required demurrage).
5) That this coincides with solidcoin's choice is pure coincidence. With 1% demurrage per annum, one can expect roughly 32 freicoins of demurrage per block in the steady-state. While freicoins are still being mined, the yield (new coins + demurrage + tx fees) will be between 32 and 64 freicoins, on average.