Hashcash with the implementation of proof-of-work was the model to follow for a cryptocurrency like Bitcoin.
Thanks my friend.
In bitcoin we trust
Author
Satoshi Nakamoto https://github.com/SatoshiNT0
Owner
[email protected](Whitepaper)
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I am
Satoshi Nakamoto
Owner
Whitepaper Bitcoin
[email protected]
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Topic: could you be Satoshi - #2 did it occur to you hashcash was like virtual gold (Read 1580 times)
September 10, 2024, 06:28:34 PM
December 29, 2014, 08:27:45 AM
BTW., I don't want to say that Bitcoin isn't well designed. I like how it is designed. All I am saying is that you should be more careful with real-world comparisons.
It is totally fine to say: “Bitcoin is scarce just like gold, that makes it a secure asset.” But that is basically all you can say, you can not go any further. The way and reasons how and why Bitcoin is scarce is totally different from the way and reasons how and why gold is scarce.
It is totally fine to say: “Bitcoin is scarce just like gold, that makes it a secure asset.” But that is basically all you can say, you can not go any further. The way and reasons how and why Bitcoin is scarce is totally different from the way and reasons how and why gold is scarce.
Yes thats true. The hypothetical what-if/question is - is the positive (stabalising) feedback loop between price and gold production useful to mimic also. I argue that dual difficulty retargetting may go towards achieving that (see the other thread)
https://bitcointalksearch.org/topic/m.9973992
Bitcoin already includes some damping measures: eg difficulty retarget is capped at 4x up or 4x down.
This is another hypothetical damping measure, depending on the parameters. You could eg split the retargetting 50:50 (geometrically) between reward and difficulty.
As such that doesnt affect miners as the net-effect is the same: lets say difficulty was about to go up by the maximum 4x, then geometric mean is 2x difficulty and 1/2 supply. To a miner its net neutral if they get 6.25 coins at difficult 1 trillion vs vs 12.5 coins at difficulty 2 trillion. However it adjusts the supply reactive to rapid difficulty adjustments which damps price swings (volatility). And that is good for miners if miners like predictability.
As it is bitcoin mining is a kind of derivative on bitcoin price: its sort of slim-to-mildly profitable for the various efficiency operators, so there is a sort of keep the mine operating maintenance mode, and then if bitcoin price spikes by 2x and sustains, then it takes a three months for new equipment to be produced. Old equipment could be turned back on if the price change makes it break-even again, and longer term that could be a good thing for stability, but currently moore's law catchup is too fast so that old equipment becomes quite obsolete within a year perhaps.
This is another hypothetical damping measure, depending on the parameters. You could eg split the retargetting 50:50 (geometrically) between reward and difficulty.
As such that doesnt affect miners as the net-effect is the same: lets say difficulty was about to go up by the maximum 4x, then geometric mean is 2x difficulty and 1/2 supply. To a miner its net neutral if they get 6.25 coins at difficult 1 trillion vs vs 12.5 coins at difficulty 2 trillion. However it adjusts the supply reactive to rapid difficulty adjustments which damps price swings (volatility). And that is good for miners if miners like predictability.
As it is bitcoin mining is a kind of derivative on bitcoin price: its sort of slim-to-mildly profitable for the various efficiency operators, so there is a sort of keep the mine operating maintenance mode, and then if bitcoin price spikes by 2x and sustains, then it takes a three months for new equipment to be produced. Old equipment could be turned back on if the price change makes it break-even again, and longer term that could be a good thing for stability, but currently moore's law catchup is too fast so that old equipment becomes quite obsolete within a year perhaps.
Adam
December 29, 2014, 03:02:16 AM
BTW., I don't want to say that Bitcoin isn't well designed. I like how it is designed. All I am saying is that you should be more careful with real-world comparisons.
It is totally fine to say: “Bitcoin is scarce just like gold, that makes it a secure asset.” But that is basically all you can say, you can not go any further. The way and reasons how and why Bitcoin is scarce is totally different from the way and reasons how and why gold is scarce.
I still like the term “mining” for block generation though.
It is totally fine to say: “Bitcoin is scarce just like gold, that makes it a secure asset.” But that is basically all you can say, you can not go any further. The way and reasons how and why Bitcoin is scarce is totally different from the way and reasons how and why gold is scarce.
I still like the term “mining” for block generation though.
December 29, 2014, 02:34:00 AM
Of course that would be possible. You could just say that one Bitcoin to mine costs a difficulty of x, and the difficulty rises (doubles) in a certain (block) time interval. But Bitcoin does not do it. (Maybe some Altcoin does.)
The hard limit of 21 million BTC does not really resemble the gold scarcity. Gold is not scarce because people have mined all the gold on earth. There is still a huge amount of gold, and mining levels are increasing, not decreasing. And people who believe that mineral prices can only go up should look what happened to the oil price recently. They are deluded by the peak oil myth. As prices go higher, miners will invest more money in innovation and capacity to increase mining rate.
For gold for example, most gold is in the inner core of the earth. Of course it is unrealistic for us to think about how to mine that, but it is not a hard limit like the 21M limit.
Gold production according to Wikipedia:
The hard limit of 21 million BTC does not really resemble the gold scarcity. Gold is not scarce because people have mined all the gold on earth. There is still a huge amount of gold, and mining levels are increasing, not decreasing. And people who believe that mineral prices can only go up should look what happened to the oil price recently. They are deluded by the peak oil myth. As prices go higher, miners will invest more money in innovation and capacity to increase mining rate.
For gold for example, most gold is in the inner core of the earth. Of course it is unrealistic for us to think about how to mine that, but it is not a hard limit like the 21M limit.
Gold production according to Wikipedia:
December 28, 2014, 07:25:50 PM
The gold mining analogy sucks because of the following dynamic:
When the market price for gold is going up, extraction of gold is more attractive and more tons gold will get extracted per day by miners. When market price for gold is going down, mining activity is going down as well, some hard-to-mine source will even be totally unprofitable to mine.
With Bitcoin, it is different. With market price, hashing power is going up and down. But it is always a fixed independent number of BTC that are being mined (right now 150 BTC per hour). The number of Bitcoins is limited, but it is independent from the market price.
When the market price for gold is going up, extraction of gold is more attractive and more tons gold will get extracted per day by miners. When market price for gold is going down, mining activity is going down as well, some hard-to-mine source will even be totally unprofitable to mine.
With Bitcoin, it is different. With market price, hashing power is going up and down. But it is always a fixed independent number of BTC that are being mined (right now 150 BTC per hour). The number of Bitcoins is limited, but it is independent from the market price.
the lack of that supply fedback could be engineered into bitcoin somewhat (though bitcoin cant measure price as thats external, it can measure other indicators, like rate of difficulty increase/decrease, and also more slowly and manually adapt supply to community super-majority consensus), see: https://bitcointalksearch.org/topic/m.9969697
(I had been meaning to post those two topics and your comment reminded me but I started it in a separate thread).
Adam
December 28, 2014, 06:19:36 PM
The gold mining analogy sucks because of the following dynamic:
When the market price for gold is going up, extraction of gold is more attractive and more tons gold will get extracted per day by miners. When market price for gold is going down, mining activity is going down as well, some hard-to-mine source will even be totally unprofitable to mine.
With Bitcoin, it is different. With market price, hashing power is going up and down. But it is always a fixed independent number of BTC that are being mined (right now 150 BTC per hour). The number of Bitcoins is limited, but it is independent from the market price.
The gold value analogy make more sense though, because both are valued by people because they are limited. But that has nothing to do with mining or hashing. (Let alone that the oil price is just telling us a lesson that limited resources are not as limited as we often think. When price rises and technology advances, there may always be new ways to mine more of the stuff.)
When the market price for gold is going up, extraction of gold is more attractive and more tons gold will get extracted per day by miners. When market price for gold is going down, mining activity is going down as well, some hard-to-mine source will even be totally unprofitable to mine.
With Bitcoin, it is different. With market price, hashing power is going up and down. But it is always a fixed independent number of BTC that are being mined (right now 150 BTC per hour). The number of Bitcoins is limited, but it is independent from the market price.
The gold value analogy make more sense though, because both are valued by people because they are limited. But that has nothing to do with mining or hashing. (Let alone that the oil price is just telling us a lesson that limited resources are not as limited as we often think. When price rises and technology advances, there may always be new ways to mine more of the stuff.)
And this in a nutshell is why the gold analogy is so very misleading
December 28, 2014, 06:06:48 PM
The gold mining analogy sucks because of the following dynamic:
When the market price for gold is going up, extraction of gold is more attractive and more tons gold will get extracted per day by miners. When market price for gold is going down, mining activity is going down as well, some hard-to-mine source will even be totally unprofitable to mine.
With Bitcoin, it is different. With market price, hashing power is going up and down. But it is always a fixed independent number of BTC that are being mined (right now 150 BTC per hour). The number of Bitcoins is limited, but it is independent from the market price.
The gold value analogy make more sense though, because both are valued by people because they are limited. But that has nothing to do with mining or hashing. (Let alone that the oil price is just telling us a lesson that limited resources are not as limited as we often think. When price rises and technology advances, there may always be new ways to mine more of the stuff.)
When the market price for gold is going up, extraction of gold is more attractive and more tons gold will get extracted per day by miners. When market price for gold is going down, mining activity is going down as well, some hard-to-mine source will even be totally unprofitable to mine.
With Bitcoin, it is different. With market price, hashing power is going up and down. But it is always a fixed independent number of BTC that are being mined (right now 150 BTC per hour). The number of Bitcoins is limited, but it is independent from the market price.
The gold value analogy make more sense though, because both are valued by people because they are limited. But that has nothing to do with mining or hashing. (Let alone that the oil price is just telling us a lesson that limited resources are not as limited as we often think. When price rises and technology advances, there may always be new ways to mine more of the stuff.)
December 28, 2014, 10:38:23 AM
the idea that PoW is some kind of virtual gold and it would be useful to figure out how to control inflation to make it respendable seem to have been ideas that immediately reached out and grabbed many people. Or thats my claim!
More early bitcoin-like what-ifs:
http://cypherpunks.venona.com/date/1997/07/msg01268.html
Quote
can we actually base an entirely net based currency on trading of these resources [bandwidth, storage, CPU]. What would the architecture for such a payment system look like? Design goals would be that it should be:
- a distributed system
- not involve trusted banks
- be immediately exchangeable for any currency
- be outside the influence of governments and banks
- be immune to government hidden taxations such as printing
new money as a form of tax
- be immune from government taxation
- be a stable form of cash (in the face of rapidly
depreciating assets like Mb/years of storage as mass storage
devices continue their price plumet.)
- a distributed system
- not involve trusted banks
- be immediately exchangeable for any currency
- be outside the influence of governments and banks
- be immune to government hidden taxations such as printing
new money as a form of tax
- be immune from government taxation
- be a stable form of cash (in the face of rapidly
depreciating assets like Mb/years of storage as mass storage
devices continue their price plumet.)
Adam
December 28, 2014, 10:11:26 AM
This is quite hard to answer, and easy to be biased as well. I think the word "gold" may be a bit confusing.
I mean, "cash" is already in the title so some variant of "hmm it's virtual cash" was in the mind of everyone who read it. Probably a clearer would be "did it cross your mind that hashcash has an advantage over actual cash, which is in its decentralized issuance."
Then I'd answer "no," because I don't remember thinking about problems with fiat currencies at that time. (I did know about hashcash before bitcoin though.)
I mean, "cash" is already in the title so some variant of "hmm it's virtual cash" was in the mind of everyone who read it. Probably a clearer would be "did it cross your mind that hashcash has an advantage over actual cash, which is in its decentralized issuance."
Then I'd answer "no," because I don't remember thinking about problems with fiat currencies at that time. (I did know about hashcash before bitcoin though.)
I mean did it occur to you that it might be possible to have digital scarcity (and perhaps that this was interesting towards having a deployed ecash system). The closest physical analog in terms of usage being gold.
Adam
December 28, 2014, 10:08:24 AM
Anyway I claim the hard part about bitcoin is the decentralised secure inflation control (and sybil resistant byzantine generals solution.) But the idea that PoW is some kind of virtual gold and it would be useful to figure out how to control inflation to make it respendable seem to have been ideas that immediately reached out and grabbed many people. Or thats my claim!
Here's some apr 2007 stuff on decentralised ecash requirements and using hashcash (pre b-money).
http://cypherpunks.venona.com/date/1997/04/msg00822.html
Quote
How about this, rather than interface your ecash system with US
dollars yourself through credit cards/ debit cards/ cheques / cash,
just set up an entirely disconnected system.
[...]
The cryptographic requirements for a system such as this would be:
1) anonymous (privacy preserving, payee and payer anonymous
2) distributed (to make it hard to shut down)
3) have some built in scarcity
4) require no trust of any one individual
5) preferably offline (difficult to do with pure software)
6) reusable
My ideas so far are hashcash (where the scarcity is related to your
processing power).
dollars yourself through credit cards/ debit cards/ cheques / cash,
just set up an entirely disconnected system.
[...]
The cryptographic requirements for a system such as this would be:
1) anonymous (privacy preserving, payee and payer anonymous
2) distributed (to make it hard to shut down)
3) have some built in scarcity
4) require no trust of any one individual
5) preferably offline (difficult to do with pure software)
6) reusable
My ideas so far are hashcash (where the scarcity is related to your
processing power).
(there's more read the link). Sounds like b-money/bit-gold line of thinking.
Adam
December 28, 2014, 10:04:58 AM
This is quite hard to answer, and easy to be biased as well. I think the word "gold" may be a bit confusing.
I mean, "cash" is already in the title so some variant of "hmm it's virtual cash" was in the mind of everyone who read it. Probably a clearer would be "did it cross your mind that hashcash has an advantage over actual cash, which is in its decentralized issuance."
Then I'd answer "no," because I don't remember thinking about problems with fiat currencies at that time. (I did know about hashcash before bitcoin though.)
I mean, "cash" is already in the title so some variant of "hmm it's virtual cash" was in the mind of everyone who read it. Probably a clearer would be "did it cross your mind that hashcash has an advantage over actual cash, which is in its decentralized issuance."
Then I'd answer "no," because I don't remember thinking about problems with fiat currencies at that time. (I did know about hashcash before bitcoin though.)
December 28, 2014, 08:44:09 AM
See also (continuing from) https://bitcointalksearch.org/topic/m.9965116 first poll question #1 did you learn about hashcash before bitcoin?
There is an implied secondary assumption about oh but who would think of using hashcash for electronic cash. Well actually hashcash was proposed as a form of electronic cash and the announce itself compares features with Chaum's ecash http://hashcash.org/papers/announce.txt. Also at the time of hashcash initial announce multiple people independently commented immediately that hashcash was like digital gold (and punned about bits) and then a number of people explored (unsuccessfully) how to control inflation which would run at moore's law etc. The idea of trying to control inflation wasnt new either (but succeeding is!) I discussed some hierarchical variant to control inflation (eg a group of people could benchmark equipment and push out a new difficulty level via DNS), however that was unsatisfying as that would make them the central-bank. In the end I opted to leave that to recipient policy (recipients would gradually increase their minimum stamp size over time so there was a decentralised consensus on what is appropriate to curtail spam). This was possible because hashcash was mainly used to increase the non-spam score - lower required was fuzzy so you'd still receive the email with a lower than required (if it was relatively non-spammy).
Wei's b-money relates to that in proposing to make hashcash respendable and one of the inflation control proposals and Nick Szabo's bit-gold has a different inflation control proposal.
Anyway I claim the hard part about bitcoin is the decentralised secure inflation control (and sybil resistant byzantine generals solution.) But the idea that PoW is some kind of virtual gold and it would be useful to figure out how to control inflation to make it respendable seem to have been ideas that immediately reached out and grabbed many people. Or thats my claim!
What do you think, what do you recall your thought process being if you heard about hashcash before bitcoin.
Adam
There is an implied secondary assumption about oh but who would think of using hashcash for electronic cash. Well actually hashcash was proposed as a form of electronic cash and the announce itself compares features with Chaum's ecash http://hashcash.org/papers/announce.txt. Also at the time of hashcash initial announce multiple people independently commented immediately that hashcash was like digital gold (and punned about bits) and then a number of people explored (unsuccessfully) how to control inflation which would run at moore's law etc. The idea of trying to control inflation wasnt new either (but succeeding is!) I discussed some hierarchical variant to control inflation (eg a group of people could benchmark equipment and push out a new difficulty level via DNS), however that was unsatisfying as that would make them the central-bank. In the end I opted to leave that to recipient policy (recipients would gradually increase their minimum stamp size over time so there was a decentralised consensus on what is appropriate to curtail spam). This was possible because hashcash was mainly used to increase the non-spam score - lower required was fuzzy so you'd still receive the email with a lower than required (if it was relatively non-spammy).
Wei's b-money relates to that in proposing to make hashcash respendable and one of the inflation control proposals and Nick Szabo's bit-gold has a different inflation control proposal.
Anyway I claim the hard part about bitcoin is the decentralised secure inflation control (and sybil resistant byzantine generals solution.) But the idea that PoW is some kind of virtual gold and it would be useful to figure out how to control inflation to make it respendable seem to have been ideas that immediately reached out and grabbed many people. Or thats my claim!
What do you think, what do you recall your thought process being if you heard about hashcash before bitcoin.
Adam
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