Topic: competing bitcoins (Read 20792 times)

Credit existed under the gold standard as well.  As the division of labor exploded during the gold standard the need for localized liquidity arose that the physical movement of metal could not keep up with; hence bank notes and credit forms of currency which traded at some discount to physical gold.  To say that credit was invented after gold is only true insofar as we go back to the beginning of humans using any form of exchange medium.

Credit has always existed.  Fractional reserve banking existed under the gold standard, locally.  They will exist under any potential bitcoin standard as well.  The issue with fiat currency is the consequence of the liquidity is can produce because of the incentive to produce money by those who issue it for their own purpose, ie. a theft of property by devaluing the currency units previously in circulation.

If communications technology had exploded at the same rate as the demands for money, digital gold currencies would have arisen and solved the liquidity problem by increasing the clearing rate of transactions.  They didn't, of course, and for a variety of reasons the system we have now was implemented.  Now that technology has caught up with the opportunity exists to swing the monetary pendulum back.

=P I'm quite aware of local-maxima phenomenon.  I was simply defending the current system as not "arbitrarily difficult".  Each aspect of the solution has a purpose.  Whether said solution is the best was not what I was debating.  If you've got an alternative, feel free to share.

You need to be careful about being too attached to the first solution presented. To use a math analogy, it runs the risk of finding a local maximum - deviating from the solution presented a slight ways is of course bad, but if you went further, you might find something better.


I'll probably make a new thread with my proposal and see if there is interest.

I reacted poorly to what I deemed to be an arrogant attitude.  If that was not your intention, I apologize for being so quick to bristle.  Arrogance (even just perceived arrogance) is not something I deal well with. >_>

As for securely transferring a number, this is done with efficiency.  However, in order to guard against duplicate announcements, desynchronized clocks, verifiable history, and specifically malicious users (which, in any computer system, you must assume there will be no end to the malicious attacks), you have to have a stronger framework than simply "transferring a number securely and announcing it."

Right, but there are other ways to guarantee distributed integrity of currency generation. The current process is intensely wasteful.


I wasn't referring to satoshi's specifc method in that sentence, I was referring to the concept of securely verifying a transaction.


Claiming I know nothing about "how mathematics and security works", calling me "Holier-than-thou", making insinuations about my purpose here, and telling me to go away in the same sentence speaks volumes on its own.

I am here because I agree with the basic premise - a distributed solution to our flawed financial system - but disagree with its structural foundation - using computing power as the baseline.

I am not interested in dueling character assassination attempts.

It was just as arbitrary for the people who would follow gold rushes.  Some would strike a huge vein, others would spend months without finding so much as a gold flake.  Granted, this could be increased by putting more effort into it, or cooperating and splitting the dividends.  Which you can do in bitcoin.


This quote in particular demonstrates you're not aware of the reasoning behind satoshi's choices.

Take some time to learn how mathematics and security works, get rid of the Holier-than-thou, "I'm just here for shits and giggles" attitude, then come back.

Each coin will be allocated in this arbitrary way exactly one time. Every future allocation will be based on voluntary transfer, usually gifts or in exchange for value.

Yeah, the initial distribution is arbitrary. To me it is vastly better than someone saying "This is the money you all must use; only I can create it and I can create as much as I want."

The initial distribution will end up being unimportant. If BitCoin succeeds it will be the people who provide value who are the BitCoin rich.

If it ends up being a fail and is rarely used for trade then the generators will have most of the Coins, but they won't be worth much.

Correct. Transferring a number securely and announcing a new number to take its place requires rather little in the way of computational resources.


It seems to be a scheme for coordinating a large number of in between transactions? At least it intends to handle real value, though. It would require their cooperation.


Every time a block is generated, everyone who lost tosses all of their work, correct?

The overall security of a single transaction does not and should not require the dedicated resources of a single computer. It is intensely wasteful.


The decision to make this game about who has the most processing power is plenty arbitrary.

How much do you actually understand about the system, Some Mouse?  Calling it a "giant rube goldberg machine" demonstrates a very poor understanding of the mathematics and verification that the system uses.  It's not just some "arbitrary crunching of numbers".  As for the 10 minutes vs 1 minute, lowering said limit exponentially increases the ease by which someone can invalidate the system.  Satoshi simply chose 10 minutes to strike a balance between unreasonable transaction confirmation times and unreasonable instability and spoof-ability.

why?

These two paragraphs seem contradictory to me. In the first the problem is that there is too much excess computing power required to get the stamp. In the second the problem is that you only need 1mhash/sec to give false stamps.

The beautiful thing about it imo is that as incentive to list false transactions increases the difficulty  will rise right along with it. If we had static difficulty you could certainly say "Geez, we're burning so much to accomplish such a trivial thing" after a while with more interest it might be about right, but then as it grows more and the difficulty of sending false blocks does not increase you could say "It takes hardly anything to tip this beast over" But in the current model this doesn't happen because the difficulty is linked to the most recent observation of power being dedicated.

I read it, it looks like it would require far too much cooperation from financial institutions.

It does give me an idea for a way for people to trade security for privacy in a transaction, however.

Some Mouse, I'm inclined to agree.

Decentralised credit clearing is however fundamental to a free private money system - and I think bitcoin makes some useful progress towards this goal, if not the final word.

Are you familiar with the ripplepay concept?

I'm having a hard time figuring out a way to do them all. Privacy, security (including the reliability of the overall structure), and simplicity seem to operate on the typical triangle graph - you can maximize two of them at the cost of the third.

You can have pseudonymity, though, in place of pure privacy.


No, it's a giant Rube Goldberg device with that as its superficial aim, wasting an enormous amount of computing power in order to do so. You are literally burning coal, discarding most of the waste, and stamping the remainder with a seal of authenticity to use as a vehicle of trade. Even worse, you have no idea how much you will burn - but you know how much waste you will be using.

There is also the war of computing resources aspect - right now anyone with more than ~1mhash/second of computing power can co-opt the system. When I - relatively poor - am doing 5khash/second, that does not instill in me a great deal of confidence.

Once all of the bitcoins are used up, the only reason to compute blocks any longer will be to grab transaction fees. This also runs the risk of destabilizing the overall system

There is no incentive whatsoever to trade, outside of novelty. It is only worth as much as you believe in it. If you believe, as I do, that it is a naturally deflationary currency, then your only incentive to spend it will be to cash out before it peaks and collapses.

The ten minute resolution time on these things seems quite arbitrary. Why should it take any longer than a minute, at most?

To me and I suspect others, bitcoin is nothing more than an interesting proof of concept. Followers of the Austrian school of economics will probably eat it up, making it worthwhile to at least toss a toe into the ring.

Well, it's resolution that matters, not quantity. We have enough gold in the world. With modern technology, there is no reason you couldn't own part of an ounce of gold or transfer parts of a gram of gold around, and you can indeed do this today.

you CAN trade confederate dollars for something of worth.  You can trade reichmarks for thinks of worth too.  Not because these things are money anymore, they aren't, they are collectible commodities.

That's exactly where the bitcoins come from.  Solving a block "verifies" transactions, making the community as a whole confident in the system.  Thus, you are awarded 50 bitcoins in exchange for, effectively, the "confidence" you just "sold".

.. and presumably, value also comes  from the privacy aspect. privacy, security and simple realiable automated transactions - what you'd expect from a crypto currency!

Which is basically why I was thinking of creating a competitor that gave out its currency based on maintaining accurate accounting for transactions. The value is then derived from the integrity of the transaction itself.

hopefully!

I think bitcoin is pretty cool, and my issue is mainly as to the exact nature of the value proposition it provides. That it provides value, I have no doubt, the question is where.


that's the rub for me. A bitcoin has no value in itself that I can see. I wouldn't want to own them for themselves, and judging by the level of debate neither do many others. What it can do though, if a bitcoin can be redeemed later for a little bit of gold, is to allow transactions in gold (or whatever) to be cleared between two parties without the need to contact the clearing house. So I would like to be able to take my bitcoins and at some later date be able to exchange them for a previously agreed quantity of gold or dollars.

Bitcoins give us a non centralised double-spend database that is maintained by the community. That does raise for me some issues of how these people would be comensated for their CPU cycles if they are not actually minting the coins tho...