Topic: Alternative distribution of initial coins (Read 1646 times)

Look into a CPU based coin.  That way everyone can mine and get a "fair" reward.  Honestly, I think there are room for a few cryptos....and probably the best CPU mining coin will survive...it's just which one?  Could be the coin that's best suited for micro payments as well.

My main point is indeed the money has to come from somewhere. If Visa gets more customers because of the lottery part, the value comes from those that previously used Mastercard (lets say there are only those 2). So Mastercard would react and do the same to get the lost customers back. Maybe up the ante and increase the chance a little or some other marketing nonsense. Now we face the same problem as before. Where does the added money come from?
I undetstand that you want to redistribute money. I understand why you consider this fair. But thats not what a currency is about imho. Thats what a social state does. It spends taxes to help those in need. I dont see a way for a currency to handle this intrinsically. Hell even welfare states cant do this properly.

There is a good chance they wouldn't have to increase the tx costs, or lower their profits. In the situation where they actually started doing this, people might use their creditcard more often and using the extra profit this generates, Visa would be able to pay out prizes. They don't gain anything by doing it, but they wouldn't make a loss out of it either.

But your main point is 'the money has to come from somewhere', and for a crypto-currency that's not really relevant, unless you can explain where Bitcoin's 21 million coins come from?


Ofcourse, this must be prevented. I already suggested a couple of fixes for this (like requiring them to broadcast transactions to the network before including them), but if it turns out no solution for this is possible, then this coin cannot exist. But even in that case, I'm still curious about the philosophical/economical implications of such a network, since I wasn't planning on actually developing it anyway.

Yes. The money visa gives away has to come from somewhere. Same as with your coin btw but lets stay with the visa example. Where could visa get the money from?
- increase tx cost
- lower profit

If you increase the tx cost everyone pays for the lucky ones. Now some have a little more from time to time but you have an overal increase of prices. I think its more fair if the overal prices stay low. This idea sounds like a very bad tax to me. If everyone is giving a little to help the few. Shouldnt those few be those that really need it and not someone random?

Lowering the profit will not happen. Youd have to enforce this by law. But thats out of your reach.

Miners will fill block with their own transactions (transferring bitcoins from left pocket to right) to increase their "profits" (chance to win reward).
This causes death of network very soon.

Just go ahead and make your transaction coin.  Or If you want I could probably program it up for you for about 5 BTC, though I'd only make a linux client.

check out freicoin... it has a 5% annual holding fee.

Would it be a bad thing for you if they did?


I'm familar with Proof-of-Stake, but it does the opposite. It doesnt reward any real participation, it rewards hoarding (instead of making transactions). Also, it makes the rich even richer, and thats just what Im trying to avoid here. With PoS you have more chance based on the amount of coins you own, while with this your chance does not depend on how much you already have.

As for Lucky Coin, I just took a look at it and prizes are awarded only to the miners, not to the general public, so not not really comparable except for the lottery element.

There are many alt coins that have lottery functions (lucky coin) and other proof of stake coins that reward you for "participating".  You should check them out.  Also look into X11 algo which gets people back to CPU mining.

The ship has already sailed for Bitcoin and its fundamental nature /distribution mechanism isn't going to change so if it's Bitcoin you want to affect, you need to find another way to give out coins (cool contests, etc)

Does Visa randomly give away a bunch of money every 10 minutes to those that made a purchase in the previous 10 minutes? 

Maybe the network could wait for multiple blocks within a certain timeframe, and select the block that is valid and contains the most transactions of them all. Another option would be that the network only allows blocks to have between 90 and 110 percent of the transactions of the previous block (just like difficulty scales), no matter how long that takes to reach.


I'm not trying to come up with a network that discourages mining, that should be rewarded as much as possible. I was just thinking how I could encourage some actual usage too.

It would be nice for people to be able to earn some coins, without expensive hardware, just by participating and some luck. There was a time Bitcoin had lots of faucets for that purpose, but that was just giving away free money to anyone who asked, causing lots of fraud. While my automated approach only gives it to the people that deserve it (those who make actual transactions and paying the fees for that). The end result is that the coins are more evenly distributed across the world population, and you can't possibly be against that?

The miner could add just a single high fee transaction and be guaranteed the lottery.  In game theory this would be the optimal choice unless the fees were worth more than that.  So it puts a minimum economical fee on tx at higher than what a miner can simply game for himself.  The higher the fee the lower the utility of the network.


This is a non-starter.  It is an unsolved problem on a non-deterministic system.  It is fairly easy for attackers to game in order to orphan blocks of legit miners.  Still lets assume you succeed and the system can't be gamed in any way.   New coins subsidies users not miners and miners receive only tx fees of legit transactions.  The network remains far less secure or tx fees need to be excessively high.  Neither of which would make the network attractive relative to Bitcoin.   What problem are you trying to solve other than "I don't mine so I don't like it that other people get subsidized coins"?  The primary purpose of mining is to secure the network.  Any system that discourages mining is working against the basic interests of the network.  A network that is more secured is worth more than one which has inferior security.  

The new coins are a subsidy.  The purpose of a subsidy is to encourage a specific activity.  In the case of Bitcoin that activity is securing the network. 

This is the chicken and egg scenario Satoshi attempted to resolve by "bootstrapping" the network via the subsidy.  The end game is always the same all coins are distributed and network relies on tx fees.   The question is how to get there.  There are two problems with a network consisting of just a single node and a genesis block.  The first problem is how to fairly perform the initial distribution (key word is initial as the current distribution and future distribution has little in common with the initial distribution).  The second is how to subsidize the cost of the network until such time (tens of millions of users, millions of merchants, billions of transactions annually) as the network is self sufficient.  Satoshi attempted to kill two birds with one stone.

Call it "proof of use" and make an alt based on it.  

Good luck motivating miners to secure the network before the transaction volume skyrockets.  Oh, and don't expect transactions to skyrocket without a network secured by miners.  See the point?

Yes, this will be the most difficult challenge to solve. You could make the lottery-reward decrease exponentially with the number of transactions in the block, making it unprofitable for miners to add extra fake transactions. Since they will have the chance to loose all the high fees for a slim chance on a small reward. In other words: each extra fake transaction will mean they pay more to win less.

Another solution could be that the network rejects blocks of which a certain percentage of the transactions is not in their memory pool. That means the miner has to broadcast those TX's first, and if another miner mines the block, the miner who created the fake TX's looses a lot of money.

The blockchain would be spammed with transactions.  Sure, in theory if it is -EV to send a transaction just to get a ticket to the reward lottery then people wouldn't do that with only that purpose.  But, how many people buy mining hardware even though they know they won't have a +ROI?  Each block would be maxed with transactions and it'd be unusable.

The miners will just game this by filling blocks with txs back to themselves with high fees.  If the tx in the block are 99.9% belonging to the miner then they have a 99.9% chance of winning the lottery.   If anything you just created a disincentive for a miner to ever include a legit tx unless it has an extremely high fee (as it would serve no purpose except to lower the miners chance of winning).  Since miners recover the fees paid on their own spam, there is no cost to the miner and they can make the block reward as large as they want.   This will put upward pressure of fees such that blocks will be mostly filled with miner spam and crowd out legitimate tx volume.  It is a minor issue but it would also greater incentivise selfish mining as optimally a miner would want to be 1 block ahead of the network to ensure it doesn't lose fees paid to itself in the event of losing a race.

This is a very good point. I expected the fees to be somewhat higher than in Bitcoin, but if they are so high that it makes transactions almost impossible, the network is useless. I should do some calculations on that. But dont forget: the lottery gives all the fees back in the reward, so even very high fees dont matter that much, since it will also mean the subsidy for making a transaction will increase, cancelling eachother out.


It will not be 25 BTC fixed, it will vary depending on the fees. And the lottery is not ment to prevent sybil attacks, since it doesnt replace mining. And the selection of the random addresses can be done using the blockhash fairly simple. If you want I can give you a technical implementation of it, but it goes out of the scope of the topic I guess.

Yes, you are.  Namely, the fact that coin rewards incentivize miners to secure the network, as others have described in more detail here.

This makes no sense. While rereading this I noticed the reply by DeathAndTaxes. I will quote the part I think is most important:


Ofc I compare your idea you posted in the Bitcoin-section to Bitcoin. If you want to discuss altcoins you picked the wrong place.

The actual user is using the network, nothing else. Where is the promotion when I do a transaction? You assume a certain user here. I assume (yes I do this as well) that the majority of the users, do nothing. The majority is most likely not even reading this board. But neither of us will be able to tell which assumption is correct, so this leads nowhere.
Thus the only people that are provably contributing are the miners.


I dont mine. Suprised? Random is not fair, its random. Fair is when I work hard and invest a lot I get a lot. Some can or are willing to invest more than others, but thats a totaly different discussion.