Topic: Cryptocurrency with the best distribution? - page 6. (Read 9490 times)

bitcoin is best

darkcoin is second choice

As a followup to my previous post. This is the matter that's prohibited me from investing in altcoins before. Of course I don't like the "unfairness" of the premine, but in a free world anyone is free to premine as much as they want (if there is no lying involved). But the issue is that a premine generates an unworkable ownership structure.

We are now concentrating in the First Class. Here is a table on how much the top of the top First Class members should own, to allow an economically functional distribution in the lower classes also (with the most important being the Business Class, the highest 3% minus the First Class):


Coins controlled by one entity count as one. If the dev also holds coins in a trust, foundation, etc. they are added to his stash for the purposes of this. The functional limits are quite wide, though. I'd say the distribution itself does not present a problem if it is in 50%-150% in the optimum value presented above. Most coins probably fail even then.

Then we come to the quality of the owners. In the outside world at large, being in the First Class, or TOP-0.1% of anything, we are talking about people who have a net worth in millions of dollars, with homes in 3 continents, several people in their direct pay, etc. The USD TOP-0.1% consists of almost exclusively this kind of people. Having several such people in an altcoin's TOP-10 largest owners is a real asset. Lack of having even one is as real a liability.

lots of responses thanks.

I will get back to each in time, now that I wrote that previous explanation I won't have to reply in such a long winded manner.


1. Definition of "fully distributed" = in this case was the mathematical fact that that the primary distribution occurred  in that 6 months period, so unless we are questioning the viability of the block-chain then we can't "assume" its a mathematical fact.

2. "gain new users" is an economic term all you are talking about is "wealth transfer" do these humans think our energy token is more viable at this time than this or that other energy token. (fiat paper included)

and example is Joe says he has lots of paper money he goes and sees bob the financial manager; rates are zero everywhere stock markets are topped, Joe is worried about his paper money (energy token) so he diversifies into some number of "fixed" assets he's not looking for dividends he is looking for first a hedge then a wealth transfer.

3. "starting over"  nothing, look around, but there is a complex set of rules that have to come together, they are not just mathematical rules, but human perception and sociological also.

totally disagree, re your "pre-mine" comment you are thinking very narrowly, in a very small narrow way, most real investors don't know or care what a "premine" is they just want to know that 15 guys don't own all the units above them, this is what Quark can provide.

you intrinsically believe that crypto will stay a tiny little Tech market of a few users that made wealth gains from Bitcoin (soon to be gone) and other crypto need to in some way pander to that base.

this is incorrect, the Quark base of holders does not care about Bitcoin holders, you can do what you want with that factually flawed system, but if you want to preserve your gains you can hedge or move to paper. ( or something else)

but what i'm saying is lets say you move a lot of BItcoin to Monero I'm claiming Quark is a better "reserve" base becasue i know the Monero base of investors is tiny.

so really you will just be living in the hope that the few large investors (you are likely one) don't cash out of your investment

with Quark that is patently not the case, there are undoubtedly large investors, but our distribution grows better each day i know this for a fact, our breakdown looks something like this:

Quark:

1. Speculators and Crypto tech savvy
2. Small paper investors (the long term winners)
3. Wealth movers, the people shifting wealth (few but growing)

Monero has:

1. The owners (the creators)
2. a few Bitcoin holders (yourself) that moved Bitcoin to it.      

Fairness in crypto is measured my equality when true fairness means people get out of something they are willing to risk on.


The fairest distribution was Qora. Simply have an open BTC address and proportional to how much you invest you have that level of risk.

Giving people free stakes on FB is not anymore fair than anything.

I have further developed the theory of optimal distribution. The general rule is that distribution should be as close to the power law + lognormal economic standard distribution as possible. The free market naturally tends to that outcome, so it is only a part of the optimality. The other part is quality.

Quality means that the large owners should be more established in other spheres of life also than small owners. A coin with large owners who are rich also outside the coin, hold positions of power in the old world, have connections, education and experience, has a much better future than a coin whose large owners are nothing and hold nothing except a large position in the coin in question.

If a coin's majority ownership consists of fanatics who have invested all their savings in the coin, this is not good. Such people cannot, for example, provide buy support to the coin in times of trouble because they are all-in already. Strong hands whose majority of assets is elsewhere, can easily buffer the fluctuations in the coin's value because they are not out of cash and not need to panic.

If a coin does not have sufficient trust and legitimacy, or is too illiquid, it may be that people who otherwise are in good positions, don't want to / cannot easily invest a meaningful amount. This leads to these otherwise valuable investors taking a suboptimal too small position, which does not allow them to do research, leading them to be weak hands, similar as the fanatics.

I believe that in altcoin investing, the best breed of investors every coin should try to attract, are the ones who invest at least 5% but not more than 30% of their net worth. These take the time to really learn about and support the coin, yet have also other resources that enhance their financial solidity. Smaller investors should of course be encouraged, because that is the typical way of becoming a large investor. Larger investments should imo be discouraged, except in case of people who have very little to invest and can easily recoup the losses even if they lost it all.


Then follows the 4 classes of coin owners, by quantity, but keep in mind the quality aspect when reading. The classes are fixed in number/percentage of people, and given an optimal % of total coins. The possible problems if the # of coins is greatly off the optimum are discussed.


First Class  - a few owners - optimum 30% of coins

In a coin with 1,000 total owners, the first class consists of 5 largest owners. For 10,000 total owners, the first class is the TOP-13 largest holders. For 100,000 owners, it is TOP-39, for 1,000,000 owners, it is TOP-116. The formula, derived from power law directly, is: [0.1798*(total owners)^0.4682]

Too much coins:
If this class owns too many coins, the problem of centralization is apparent. It is good to try to analyze the ownership from the beneficial owner pov - it may be even more concentrated. There should not be one entity or collective that can rule over the exchange rate, because if there is, the rate is most likely rigged in their favor.

From the economic side, having too large a stash concentrated at the very top, correlates with diminished activity at the lower levels. There is hardly a way to develop a decentralized economy if this is the condition.

My thesis is that this is the problem with most altcoins.

Too little coins:
This is also a problem, although I don't believe there is practically any examples of it in coins (Monero's problems of raising money even for basic development may be indication of this). If the coin lacks large owners, it lacks the leadership and backer of last resort. The backing of course assumes that the large owners have non-coin resources to back it.


Business Class  - 3% of owners - optimum 30% of coins

Too much coins:
Is not really a problem. The more coins the "lower nobility" holds, usually the better.

Too little coins:
This is a very serious problem because it indicates that there is lacking rich people / investor / business / speculator interest in the coin. This group of people is capable in developing infrastructure and services around the coin, so without this group or if it is deficient/inoperational, not much will happen.


Middle Class - 17% of owners - optimum 30% of coins

Too much coins:
That the middle class owns many coins is not a problem, rather an indication of widespread interest, but if excessive, it means that the upper classes may own relatively too little, cf. them.

Too little coins:
The lacking middle class is an indication that the coin does not have enough adoption, support or even speculation. I would say this is the worst problem, because the middle class is (among others) a very important testimony of community support, source of additional buys, and a marketing backbone. Also whether the middle class is apathetic (bagholders), passive (speculators) or enthusiastic (activists) is a great way to forecast the future of a coin.


Lower Class - 80% of owners - optimum 10% of coins

Too much coins:
Is a symptom of middle-classization (part of the people classified here as "lower class" actually belong to the middle class). In itself is not a problem.

Too little coins:
Indicates that many of the coin owners are in it with such a small stake that it cannot be counted as real adoption or support. This situation may arise eg. as a result of a giveaway distribution model. Does not really matter to the good or bad, but if this is the case, it would be good to rerun the analysis with cutting off a percentage of the dust holders to see a more accurate picture on how the actual ecomony is constructed.

MYR certainly deserves a place amongst the most well distributed coins. There was no premine and the coin has been free of scandals/scams/shadiness in general. It's easier to mine now than ever, and anyone with a PC could be mining significant quanities. And yes, it's very cheap now.
The downside seems to be a lack of direction and leadership. The devs are all competent enough, but it seems like each one is just working on his own pet project.

If Bryce Weiner pulls through on the Liberdade end, this coin could potentially explode. I think it's worth holding some just for that.

The good distribution:

For the first few months, the mining reward is low, give people enough time to be familiar with the coin. The miner can be optimised to reduce the advantage of the owner of privately optimised early miners.

Then a linear emission of the coins, say fixed reward, for the rest of life of the coin. If we think the coin will be used in 100 years, then the annual inflation at that time is just 1%. Which can catch up with the economy growth and compensate for the lost coins.

This, and another thought concerning replacing PoW (burning of electricity) in the initial distribution part only, for the amount of emission that is larger that what is needed for network security. Now we have a lot of choices, and which one we should take is a matter of implementation rather than closed thinking.

- Proof-of-Burn (BTC). This has been tried, and afaik the result was not at all bad. A provable number of BTC was converted to XCP. The impact in the perceived value of XCP has definitely been very assuring. The impact on BTC, superficially as BTC was destroyed, the remaining BTC should be worth more. Actually may be the opposite - if XCP rose as a result, the market collective shifted some of the total cryptomarketcap to XCP from BTC and all the other BTC-holders suffered a loss. But if the advent of XCP was generally a strengthening, positive matter to all, it may be that both gained.

- Homework. How would the previous have been different if the Proof-of-Burn was digital or physical USD instead of BTC?

- IPO. We have a long history of IPO's and I don't like what I see. If we don't discard the premise (which I have done in the past based on my principles) but keep the mind open, there are ways to make the IPO legitimate and supporting the coin's future. (Largest problem with most IPOs so far is that the coin was chosen to be IPOed because that is the surest way for a dev to profit himself.)

For example there could be an incremental emission where money (practically: BTC) can to be sent to a certain address, and the coins are emitted daily and distributed in proportion to the money received to that address. The money can be used by the devs, burned, or given to charities that are not connected to the developers. This would very much resemble mining, but without any of the hassle, and everybody could participate, all the skill part would be reduced to zero etc. (I repeat that there would still be mining from day 1 to forever, but that would be only a percentage of that day's coincount, enough to maintain the network, but the actual "needlessly wasted electricity" would not happen, and the value created could be put to profitable use by this 2-way emission scheme).

- Proof-of-Desperation (PoD). I mention this as an example only that coins can in theory be distributed based on proof of anything of value, anything that comes with an opportunity cost. Such as sometimes people go to shops when there is a sale. That makes the shop become full of people, and it takes time and suffering to buy the things you need. The benefit is a lower price, and the economic calculation is in the savings relative to the costs, as usual.

What if we set up a coin where some part of the daily emission was credited equally to people who come to gather in an open space, with them having no access to electronic equipment? So all they could do is to chat with each other, eat their foods, visit toilet, and then in the end of the day the emission was divided to as many people who provably made it. From an economic standpoint this is similar waste of resources as mining with graphics cards, but this way we could make (some of) the coins go to desperate people instead, since the two ways of generating coins would hardly overlap.

I did not yet write the theory about the 3 classes of coinholders, but this would apply to the low class, whereas all CPU-only coins have failed this task, despite the best intentions.

When the 6 months of mining had ended, Quark's marketcap was $40k. If we believe this to be the rock-bottom value, it would mean that $222 worth of Quark was produced per day. Since it is difficult to mine a CPU coin and get less than $1/day, and you also mentioned "large miners" and "dumping", I deduce that the Quark community at that time numbered about 30-50.

Once this was pumped up to $70M marketcap, these people who were not qualified to handle such sudden wealth, started selling. The price has gone down ever since.

I don't have the volume data. XMR turnaround time is about 20 days, so it can be said that the stock revolves quickly. I believe if you show from exchange records that all QRK have changed owners many times. But without proof this does not sound credible. The graph looks exactly the same as any pumpcoin. I don't hold anything against you (don't know if you were the pumper, and it's not the issue, buyers beware).

My point is that the community potency is way different if it consists of forward-looking bitcoin whales buying their way into the top-3% holders (XMR) or nouveau-riche-and-then-poor-again idealists, and bagholders from the latest pump (QRK). The former wants to overcome all obstacles to make things happen, the latter is apathic.

All the money ever invested in QRK was the initial $40k in mining. Thus the current marketcap still contains plenty of air network value.

The current stack of Monero existing has cost $4M to produce. The network value in absolute terms is comparable to QRK.

You sound like a weirdo, which is not a good thing when I consider introducing anyone to your coin.

Can you imagine - they have said that to me!


I checked that blockchain is hardcoded after 8 minutes. Have you thought that there might be connection problems much longer than that and your approach causes a permanent fork which is hard to amend. How is the capability of your designers?

I have long wanted links about research, how much inflation is needed to keep the blockchain secure (PoW).

Intuitively it seems that a fixed percentage is the way to go, becuase then the hashing (that protects against the attack) scales with the value stored (that encourages the attack). So as long as it's this simple, we should just find the percentage, and make the PoW supply that much but not more.

The "more" portion is the portion that the Coin's marketcap grows due to its network value. For example in Monero, many miners have received some revenue from their work, but the owners in general, haven't. The price is now the same as the all-time-average.

As I said previously, I don't believe PoW can be dethroned from its network-honesty keeping function. In my understanding, the NaS attack still lives on, and the abolishing of outside source of trust is what the cryptocurrency is fundamentally for.

But PoW might not be the optimal way for initial distribution, for the portion that it is not needed for blockchain security. It has just been adopted for this double-role.

OK. Let's assume the system is in fact fully distributed (the distribution agrees with my natural/optimal curve derived in the previous posts).

It still has to gain new users if the aim is to make it more usable (more users also increase the price, which people generally regard as good).

How can it gain more users when it is fully mined. Where is the incentive?

(I don't mean that such incentive theoretically couldn't exist, and I acknowledge your explanation about the technical expediency. I just want to know what it is.)

If this is found so good, what is the impediment for starting it over, since from the standpoint of a new entrant it is 100% premined?

(Everybody calculates premine as something happening before the thing got his attention.)

Maybe free giveaway to those who make contribution to this coin?

unfortunately rpietila there is more learning to be experienced ....

i was going to add this basics of this next bit to a blog but decided it was just too technical for any practical use.

i'm using general terms as i'm just going to summarize:


- the Quark protocol is universally decentralized in a neutral robust way.

- it is difficulty reversible. (very important) because Bitcoin and other monopoly are likely not.


So when and now as the difficulty hash increases in "work" and runs up on Bitcoin, this means practically resources are going to work with a future aim.

They are competing for a monopoly that's the prize,  the winner takes all in the monopoly contest.

So you see the (Three) factors here:

1. The initial monopoly.
2. The long distribution
3. The "flaw" in the algorithm conducive of specialization

(3rd) point is of little impact, there was no market at the start anyhow so its mostly 1 and 2.

These factors have meant that the prize is the control of the Bitcoin monopoly, but what happens if the market starts to work?

This is inevitable let me show you why:

1 monopoly + 1 competing monopoly = a market force.

so lets reverse the hash and difficulty, and then run that though "deep blue" and forward project what happens.

not good things rpietila.
not happy times.

if price collapses (the market)  many smaller private even medium miners lose faith.
but by this time they and the large holders have a lot of units they are sitting on.
They also have 60 70 - even 80% of the hash rate.
Some of them start to think about hedging, they start to move "BTC" to others systems fiat and alts. things get zany.

ultimately Bitcoin can survive that, because at the bottom there, the market will start to work as the smaller miners will come in when all hope is perhaps lost, they will be able to mine again the large miner will likely not disrupt this process (because it is to their advantage) and then they will attempt to slowly sell out, this means "base money" (Version one) for bitcoin.


contrast:


what happens if Quark rises in price, more miners come in and the network gets decentralized, but the EQ really holds no incentive for the market to try to monopolize it, and as it is that way now, the psychology of the market is a market, how do i explain this?

if Max said tomorrow we are going to fork Quark and try to make it even better for CPU and GPU, who wouldn't want to do that? see the market is made up of CPU and GPU.

of course out paid "disruptors" but they matter little, what matters is when BTC38 changes the wallet and the most of the clients holders and miners.

so you see Quark hash can rise and fall, it can fork and innovate, do you see that flexibility?

this all comes form full distribution, EQ reward and letting the market work.  

I hope this has been educational.

indeed and i cover this, roughly the "first half" was a complete monopoly, you know this and anyone can prove it, then that "agreement" of price has lead to this situation which i would call a "stand off" in which large (mostly Chinese) manufacturers and private interests are call the bluff on "how important" Bitcoin is you the first monopoly.

so this is the breakdown in the monopoly if you go the the discussions page i'm referring to it in "humorous" terms all the time.

so you should understand (as you well do) this is the breakdown of the monopoly.

unless the first half now wants to buy the second half at the price it pretty much determined.

in which case, the price will hang steady like this as millions will have to go into it, (very unlikely)  considering that after that point the new monopoly still has all the power.

so this could be akin to throwing wealth away if at or near say 2 more halving one Chinese private interest owns 70 or 80% of the mining market.

thats a big flaw.  



Please trust me when i say i knew you were going to say this, so let me define that,  A single retail saver can not manipulate the price of money to their advantage, and if they can its a broken system, so we are talking about two broken systems.

Treasury bonds held by a state authority is a different thing of course.

but that comes back to the "monopoly" aspect.


Really? well there you go, I just assumed you understood and were trolling like all the others,  so you really don't understand the metric economic differences?

wow ok , well you should find them simple.

lets go though the points:

1.  Quark was distributed fairly quickly (6 months) and also listed fairly quickly on a lot of exchanges, but upon listing was quickly sold as there was no "trust" no monopoly, there was simply no available time for there to be one, why?

2. Because "Max" produced an algorithm that is still today innovative, it's not just the 6 hashes, but the 3 random functions, you see how quickly X11 was adopted to FPGA and ASIC.

so note this:

3. There was a imperative time factor, the random 6 hash + (6 months distribution) + the underdevelopment of ASIC hardware infrastructure at that time.

(lets summarize these 3 steps and see if you agree or disagree, then I will move forward)

-------------------------------------------

summary

The net result was an algorithm that could not be "cornered" by a few,  rather it was the domain of "Robots" and CPUs and maybe a few GPU's (but very unlikely), the reason for even the lack of GPU was again a time factor, by the time the Robots and CPUs had mined the early blocks they were furiously dumping it on the exchanges, (a beautiful thing to watch if you know what you are looking at)

So this even inhibited the development of a GPU miner there was simply no "incentive" at that time as the price was constantly dropping. ( the market working)

Then....

-------------------------------------------

4. We moved to a point of inflection where the price had been dumped quite a lot the price was near zero, large miners had dumped and buyers were buying, selling and generally a lot of the market was ignoring Quark.

5. Quark had reached its "base money' (version one), this is not "great distribution" but better than anything Bitcoin etc had even at this stage.

6. then I brought a moderate amount, this is just fact, and even if I had of brought a lot , it doesn't matter as it was a factor of the market I purchased it and paid market price, one can't supposedly believe in the free market and say "but you purchased them so low !" ( you see where i'm going with that?)  but alas i did get a moderate amount as I had absolutely no idea if Bill Still would introduce the second market to the entity.

7. He did and they started to buy, then hype and exuberance got high some in part as Max K got involved but not totally, some of it was due to large "interests" buying back in, people with large amounts of BTC.

8 This kind of  "damaged" the free market and it had to re-balance, but i was stuck i couldn't talk it down, only call for a bit of pause.

9 I sold almost none of my Quark ( a tiny amount) I actually gave much more away. ( because i still see it as a buy far below where it will go)


Summary.

now you have a fully distributed system that was dumped to zero at market, purchased got exuberant , dumped back down by the market, bottomed and now is returning to mean.

that is all fact provable.

the dumps you see on the monopoly crypto are "manufactured"  this is fact provable, if mining is controlled by a small entity they can dump, buy back wait, dump, buy back so on.

I can see how one can be confused, but the way to tell the difference is, look at the Quark chart, it trends, and also these movements will from now on smooth out, (this has all happened)

I hope you now know more than you did.

I don't "pump" because i know the economics, I don't care who buys this, it has long term fundamentals and I see the risks they are tiny, its not always the "technically best" or "biggest that survives"  

also the intensive trolling is very bullish, we have had these guys hired to pose first as "developers" then "core members" it's really great.

No not really. I've been doing this for 14 years now.



Despite reading your paper, I cannot describe Bitcoin's situation as a "monopoly on mining". All I know is that it is a ruthless competition of high-tech capital intensive ventures, with small profit margins for most except the best, and being the best is not cemented. As is the case in PCB industry in general.


Actually it does, and also in gold era it did. The difference is the relative size of the market.  We don't normally treat fiat currencies as something that we can hold several % of the issuance. If we did, we would command the corresponding power. Just refer to the rumors about China buying or dumping its hoar of U.S. treasuries.


I read it all, I was left wondering why Quark would be an answer to any of the problems (even if we suppose that the problems were identified correctly). All I know about Quark is that it was a hidden 100% premine and the following pump when it was published, just as the supply side had been heavily curtailed, and the resulting slide into oblivion. This has happened so many times that you'll really have to enlighten me concerning what is special about Quark.

Best distribution way is POW -- mining with GPU or CPU .

Provide the link that works with my computer, please.

A guy named Pareto found the 80-20 rule. In many kinds of distributions, 20% of instances account for 80% of mass.

The distribution I generated for test purposes was a bit too fat in the middle. 20% richest hold only 69% of the coins. In the real life 20% richest (the 1.5 billion richest people) hold pretty much all the wealth. Especially considering that some have negative wealth, it may be that the 20% holds more than 100% of the wealth.

In cryptocurrencies, I posit that the actual percentage that the richest 20% owns, is 90-95%.