Topic: Adapting to the release of Zerocoin (Read 7104 times)

It seems you hear what you want to hear, translating other peoples messages etc...
Once again:
Is a wrong statement. It has basic deficiencies in understanding what money laundering or crimes are. That's all my post was about.


Now, since you have now brought up that other stuff, just some notes about it: PRISM and similar programs in other countries (like it was unknown before Snowden that governments were spying on their citizens) don't really have anything to do with tax information. The tax information about your legitimate income is already known to the governments, they don't have to spy for it. In some countries this information is even public (well at least the statistcs of your taxes, not individual transactions, deals etc...) and accessible to everyone. This is how it already works and while some people may think it's pain in the ass to have their incomes public, it doesn't seem to cause any real problems.

You had allegations that since your taxes are known to the government, this could somehow leak secret information to your competitors that is essential to stay secret for your business model? Do you have any examples when this is an issue? It's very far-fetched that this is ever a problem. Your income is not "trade secrets", it's not patented technologies or business choices, or addresses of your partners, etc...

Also, by your definition, your competitors' information could be leaked to you as well (since the government has their information as well), so it should be fair play for everybody?

If you are NOT a criminal money laundering is NOT a crime!

Did I say I like PRISM or US spying on everybody?

If all your money sources are legit and taxed, you can't or will want to launder the money, you will just use it and nobody will have any problems with it.

Really?! It is the same old mantra: if you are not a criminal you don't have to be afraid of our ... PRISM.
But I have a problem with it and most people do. It is called asymmetric information!

I don't like the idea of random assholes with proper equipment and government connections to monitor my business dealings. Haven't you heard about commercial secrets? Why do you deny me the right of having commercial secrets? We all know that information is power. Absolute information is absolute power. Absolute power is absolute corruption. All those people that today put my business under surveillance tomorrow will be my competitors, or after they retire, or their sons and daughters, or their mistresses. They use my taxes to compete with me. I don't see any reason why should I agree with that. This is why I want 100% privacy for my money. It is not a question of crime or not. It is a question of unauthorized and unlimited power!

I'm not sure why people are so afraid when money laundering is mentioned? If you are NOT a criminal money laundering is NOT a crime!

If you are not a criminal, it's not called money laundering. If all your money sources are legit and taxed, you can't or will want to launder the money, you will just use it and nobody will have any problems with it. Earning money and not paying tax on it, while still living in the country that needs those taxes and using the services it provides for those taxes is a crime though.

Customers would compete much more for space in blockchain, not less

If all your money sources are legit and taxed, you can't or will want to launder the money, you will just use it and nobody will have any problems with it.

But this is good not bad because that is exactly what bitcoin needs. This will improve the economics of bitcoin as a monetary system. Current situation is unsustainable. Every service that is offered for free sooner or later will be abused in every imaginable way. This is exactly what is happening now and "spam" on the blockchain is increasing. Customers have to compete for space in the blockchain!

I'm not sure why people are so afraid when money laundering is mentioned? If you are NOT a criminal money laundering is NOT a crime!

Imagine how long loading the blockchain will take if the millions of transactions we have so far, are monsters like that. A node could verify 1 transaction per second, not thousands. The blockchain would be 320GB, not 8GB. Imagine how nobody would mine your transaction for 1ct. We would already compete for space in the block chain and certainly the fees would be at least $1 per transaction. Maybe rather $10.

Make both the risks and incentives known to miners. List them out. List out how the good guys and bad guys can use Zerocoin. But do not expect the media to get this right. The community must explain this to the media properly with a press kit.

Satoshi relies on this to happen at some point. And so do those hackers that have closely watched wallets.

The Zerocoin people are going to release a library in a couple days that any Bitcoin protocol-based currency can implement.  The problem with Bitcoin implementing it directly is that it's very cumbersome - transactions are large and verifying them is CPU intensive.  The result would be that Bitcoin would have a much harder time staying decentralized while it scales up.  However, alt-coins will undoubtedly implement it, and compete with Bitcoin for market share.  In anticipation of this, I'd like to describe a way that a Zerocoin alt-chain could be implemented that would reinforce Bitcoin, rather than destabilize it, as well as the incentives that the existence of Zerocoin alt-chains creates for Bitcoin miners.

Symbiotic Zerocoin alt-chain:

Zerocoin could be implemented on an alt-chain that's merge-mined on the Bitcoin blockchain, where new currency units are allowed to be created (perhaps at a limited rate) by anyone who has provably destroyed an equivalent number of bitcoins (using OP_RETURN), and mining the Zerocoin chain is incentivized by transaction fees and the value that a strong symbiotic Zerocoin chain would add to Bitcoin.  The market would determine the amount of bitcoins that move over to the Zerocoin chain; if the value of a zerocoin rises much beyond that of a bitcoin, then people would tend to turn bitcoins into zerocoins and profit off of the difference.

By functioning symbiotically, the bitcoin unit of account would be reinforced instead of destabilized - the Zerocoin chain would act like "a rising tide that lifts all boats" instead of only its own at the expense of bitcoiners'.  Zerocoin mining revenues would go toward strengthening the combined mining network.  Users wouldn't have to speculate on how many of their bitcoins they need to trade for zerocoins, and at what price, in order to retain their purchasing power.  If Zerocoin turns out to have seriously damaging bugs or scalability issues, then conservative users that keep their long-term value parked on the Bitcoin chain won't have to worry about going down with the ship.  This would also set a nice precedent that new coins can be adopted without threatening the stability of their predecessors.

Incentives faced by Bitcoin miners:

If the demand for a Zerocoin chain is large, then Bitcoin miners collectively have an equally large incentive to provide one in order to avoid losing market share, and they are in a position to provide by far the most secure one.  They could mine an alt-chain that competes with Bitcoin, but I hope they see that the correct collective strategy (https://en.wikipedia.org/wiki/Nash_equilibrium) is to mine a symbiotic one like I described above, and only that one.  By mining a competing one, a miner might earn more immediate inflation revenues (though profitability will in any case be driven down to a minimum in the long run due to stiff mining competition), but they would do so by reducing the utility of Bitcoin as a store of value, and thus cryptocurrencies in general: if the flagship one can't preserve this functionality in the face of new innovations, then people will recognize that likely none of them will be able to.  In turn they would detract from the future value of their own hardware.

To get a sense of the incentive of a miner to preserve the store of value function, consider that a single person storing $100,000 in value for a year contributes to the overall valuation of the currency during that time as much as a thousand people that casually use it for transactions and only keep on average $100 stored in it at any given time.  It thus strikes me as potentially important enough of an issue in some cases for miners to actively discourage the merged-mining of alt-chains that detract from Bitcoin's store of value functionality, by refusing to build on blocks that do this, and by merged-mining symbiotic alternatives.

Also, shouldn't this be moved to alt-currencies?

I fail to see why would anyone be willing to do that? What's the idea behind of turning real anonymous cash into pseudo anonymous one?

Yes, but you can't turn "Zerocoin Bitcoins" back into real Bitcoin unless you find someone willing to exchange them.

Few Qs from watching the presentation:
How important is the original trusted authority in the establishing of the accumulator? How bad would it be if it were corrupted/breached?
Tacking on Zerocoin on top of Bitcoin seem to add a layer which can be hacked: the coin itself appear no longer backed by the block chain but by the encryption chosen (RSA XYZ) while being carried on the chain. It seems to be adding a point of failure to me: am I getting it right?

I searched and could not find a Zerocoin thread on those forums, please let me know if I should be somewhere else with those questions.

ZeroCoin is not merge-able not because it would create a much harder time staying decentralised. It's unmerge-able because the performance is so poor it would break things completely.

It's worth reading the original paper very carefully before forming any opinions on ZeroCoin. When I read it I discovered a serious error in their analysis but it was too late for the paper to be fixed. Namely that they thought that because blocks are created every 10 minutes, if it takes 10 minutes to verify a block then that's ok. Not correct! You need to be able to verify a block within seconds, not minutes. Otherwise the whole consensus algorithm just fails.

The maths behind ZeroCoin is fascinating, but unless they made dramatic improvements we're getting way ahead of ourselves talking about alt coins and implementations. This isn't some kind of finely nuanced tradeoff on which reasonable people can disagree. ZeroCoin is just not usable in its current form in any coin, alt or no.

And that's ignoring the issue of how you initialise the system in a trustworthy manner, which is still an open research problem. If you don't solve that then you're back to having a central banker which rather defeats the point of crypto-currencies.