Topic: Decrits Proposal: Solution for an unbound, energy-related, stable value currency (Read 8210 times)

I think this sounds great. Please don't let skeptics keep you from giving it a shot.

Oh, so there IS someone who thought this well before me 

The topic is really of actuality right now... any news?

Well, I don't really see why you would get a more thought-provoking discussion by using minor modifications to bitcoin as a discussion point.


B-money did not solve the consensus problem even though he had written about using a system like bitcoin's money creation system to create money, he did not link the two together. It's a big black hole of a problem in his design where Satoshi filled the void.


Well perhaps you'll be happy to know that Decrits, at least, solves block chain storage and checkpoint sync.


The share system is for securing the network. The money creation system is a separate entity. Both systems can easily provide for an early adoption benefit, though it would be nowhere near on the same order as bitcoin's. But there's no point in pretending that bitcoin's characteristics will ever work again--we've already got that currency.


Proof of work is provided by the currency you need to create via minting in order to buy a share. Do something detrimental to the network and you will either instantly or eventually lose your share depending on the transgression. Anyone who doesn't agree on these protocol transgressions will also lose their share in the eyes of the clients, the honest cloudnet, and the honest shareholders. There is no 51% attack against this system, there is really even no 99% attack. The worst anyone can do without losing their stake is delay some transactions, and I'm working on making sure this is penalized as well. It's a bit delicate though and these are some of the deepest intricacies that I am trying to make rock-solid even though their impact is small unless a very big portion of the shareholders are intent on causing disruption. But the disruption they are able to cause is far less damaging than a 51% attack on bitcoin.


The shareholder system does have a big caveat that shareholders will need to exist at the start of the system, but this I plan to resolve by having a community effort in designing and creating the software and awarding shares to people that have an interest in seeing the system succeed. This poses no adoption benefit over early adopters, just a bit of free money. I also plan on requiring that these free shares require at least 6 years of service before being able to be cashed out. Anyone else is free to create money (at the accelerated early adoption rate) and buy a share as well (at the reduced early adoption rate). The system could start out by using proof of work to reach consensus and wait until a minimum number of people have purchased shares before starting the shareholder system, but it will be a lot of extra code for something that isn't strictly necessary. I would never take real money from people for shares, I only used USD as an equivalent value par exemple.


Well hey maybe I can convince you that I'm pretty far along in the ideating process and that you should make these ideas part of your own.

I'm replying here from the deflation thread since we were not talking about deflation at all.


It wasn't a post about my goals. I don't know why people would be interested in a post about my goals, being pseudonymously here. I think particular, concrete issues are more interesting for most people to contribute their thoughts and ideas.

In an earlier post you said nobody thought about a system like bitcoin before bitcoin, and I showed you how actually a number of people had very clear ideas about it. They just didn't put all the elements in place in a sensible system like Satoshi did. So yeah, implementation is a big, BIG part of the deal. Which is why, while I'm willing to listen to everybody, it will take some convincing to get me working in a system several times more complex than bitcoin. Bitcoin itself is far from "solved" (we still struggle to improve blockchain storage, checkpoint sync, etc and we still find new pros and cons and possible attacks to this day).


By counter-productive I meant in this particular instance that it would hinder adoption. That's the general impression I get. I've thought of similar schemes but these will need to be thoroughly tested.


I have no way to know whether you are capable or not of devising these attacks. If security is not provided by proof of work in some sense (doesn't need to be SHA cracking) you'd have to tell me what and how does the system stop someone from faking a big number of early users of varying characteristics. If you come up with a good answer to this I'd be a lot more interested. Note that bootstrapping the system is a very delicate part of the process, if you tell me that I need to pay someone in US$ to enter the network then I can only assume that it will fail miserably. Not going to happen. The alternative is basically proof of work of some sort.


I can only devote so much time to reading and debating other people's ideas instead of working in my own stuff.

Just in a general sense. Depending on how the final consensus mechanism ends up working, they may actually only need to be online for very short periods of time when they have to create a transaction block or sign someone else's transaction block. But the best that will do is be something like "you must be monitoring the network at 6am GMT" etc., so it will usually just be more convenient to remain online, though not strictly necessary.

Shareholders will also be allowed to sign off of the network for extended periods, but this can't be an instant process as the rest of the network needs to come to a consensus on it. The total network reputation that is online cannot be allowed to go too low though, so there have to be limits on this. Some of this is detailed in the consciousness stream linked in the OP. There will be a system of penalty points that, when accrued, prevent you from gaining your share of the tx fee profits for a certain amount of time (like 1 point = 1 day that you must be signed into the network and perform your duties for the point to disappear). There will also be a kind of "three strike rule" where if you miss your required duties too many times or stay signed out of the network for too long within a 1 year period, you will be kicked out of the shareholders, lose your reputation, and be refunded only 75% of your share value (the rest will be destroyed).

These mechanics also tie in to what happens if there is a network split.

What is the least uptime allowed? 99%? 95%? Noone can remain online 100% of time.

http://www.indiegogo.com/freicoin
Ok, it is time to raise money for development :-)

To transfer it to a future, better cryptocurrency, if such a thing could possibly exist. The only reason I brought that up was because of the issue you had with the energy waste. A future cryptocurrency could use essentially zero energy by not allowing currency creation and only bringing in currency over from destroyed Decrits currency. That is if the economy ever got to a reasonable steady state. I think it still would bring back the issue of manipulation, but perhaps at that point we'll have a Star Trekkian utopia. I don't really want to go off on a tangent about it. Yes energy gets used, the same is true for every currency and everything in production. It can't be avoided without introducing some kind of central authority that distributes the currency--and of course even then you go back to security, etc. ad nauseum. The argument compared to bitcoin and traditional fiat is moot. Decrits will be far more energy efficient.

Who would do this? This sound like exchanging it against USD.
The central bank must buy back money to get it out of circulation. No private person would do it just because of patriotism [ok, some, but this is not Your model].

The point was to move value to another currency if one so desired--there is no actual destruction of value. Bitcoin can accomplish the same thing with an address like 1111 or whatever like you said, but this was just a way to sanction it as well as remove the record of that currency from existence instead of leaving it sitting around in an inaccessible account.


In earlier versions of the Encoin proposals such a thing existed--destroying unrefunded transaction fees. However, Red originally brought up the idea of arbitrage, killerstorm mentioned it in this thread, and I think it makes sense. If the trade value of the currency is typically below its cost to produce, it presents an opportunity for arbitrage. People will want the currency simply because they know it would cost more to create it than they can buy it for. This is something bitcoin cannot defend against, because there is no mechanism for finding the true cost to create currency. In effect, I am willing to wager that bitcoin is more likely to experience extended periods of gross inflation than decrits. Like say, 1600% in a few months.

Now if there is a collapse of credibility, that is a different story and one that cannot be solved by destroying currency or whatever else. Every currency can suffer from this problem. Every single one. There isn't much you can do to fix it except hope that it rarely happens (or isn't permanent) by making the foundation for the currency solid. If the cryptography behind bitcoin or decrits is broken, that's it, game over. Destroying currency won't help.

to get the inflation back :-)

Until someone forks the client and removes those ads...

burned decrits did belong to somebody. Somebody would have to pay for burning it. Defending the currency against inflation [or collapse of credibility] is more difficult than against deflation.

You would have to implement ways to add value to the currency by giving away something for burning decrits.

Take for example my ad idea :-) If somebody wants to display an ad on all bitcoin clients during the next block he has to pay (burn!) 1BTC [or some value based on the best bidder]. The display can be implemented easily in the client and you get an appreciation of the value by selling the attention of all bitcoin enthusiasts :-). You can easily extend this idea to bitcoin browsers ... but we left this tangent :-)

The burning is trivial to implement. Either You define a transaction that gives always false or You send it to the account 11111..... [or some other fancy value] and than you have an interesting race to discover the private key to this address :-)

The instability of other currencies did not cause the gold spike in the late 70s, speculation of the instability of other currencies did. As it turned out, the sky was not falling.


This is exactly the situation that Decrits can handle so easily though. "Decrits is so stable while all this other crap sucks! BUY ALL THE DECRITS!" And then currency production ramps up and keeps the price/value relatively stable, at least over time. What would eventually happen is that Decrits would become worth more vs. fiat currencies because nobody wants fiat anymore, but this would not affect the price of a loaf of bread in Decrits.


Many people make the argument that bitcoin is not energy-inefficient because of all the energy wasted storing, transferring, securing fiat. I don't really buy it, but the same argument applies here but divided by 10 for creating currency, and divided by almost zero in securing the currency. I think Friedman estimated that gold production at one point was around 0.5% of the US's GDP. If the world economy can ever reach a steady state (which might be a lot more likely with a stable currency), then very little energy is needed. Efficiency gains in old products can cause natural deflation while new products soak up the difference and allow everyone to be wealthier.

In my consciousness stream notes I mention a special transaction that destroys currency so this can be used as proof to transfer it to a new currency. The new currency could accept Decrits destruction for some time, but then eventually sever ties. This new currency could be without any form of money creation at all.

The reasons for gold value fluctuations are in the instability of other currencies though. If You have a stable currency than You risk destabilization because people will trade other unstable currencies against You. You would have to have a total value much bigger than gold to be resistant.
Remember the problem of Switzerland ? :-)
http://www.theweek.co.uk/business/2433/swiss-national-bank-pegs-franc-euro [just a top hit from ggle]

Some instability can not be avoided. Also pegging to energy transfers the effort of the community to energy suppliers [and increases energy consumption, imagine green peace demonstrations against BTC-like currencies :-)]. You wrote, You want to avoid this ... I have to read about this (scary) multiplier concept :-)

This is a semi-valid argument. The top and bottom lines on the gold graph are inflation-adjusted values though. The problem with "inflation-adjusted" is that this is based on the consumer price index (CPI) which many people will argue is a flawed way to measure the inflation rate, but it's really the only thing we've got, and it is accurate enough.


This leads to the currency being a poor store of value. I want Decrits to be both a fantastic transaction medium as well as a great store of value. Bitcoin is a great store of value, but not such a great transaction medium.

Of course the value of BTC would follow energy costs better if there would be no network wide difficulty changes and miners would just mine faster to meet the demand.
The improvement in hardware would cause inflation as you get more hashes / joule. To keep the value more or less constant the hardware effect would have to be be evaluated / compensated, but I could imagine an inflation rate that corresponds to hash/joule. there would be little hoarding but the currency would be still a valuable transaction medium.

And this was probably a reply to Your post number 1000? What a moron ... [sorry :-)]

The total value of gold is US$10.1 trillion [http://en.wikipedia.org/wiki/Gold_reserve]
The total value of cash dollars is US$800 billion [http://en.wikipedia.org/wiki/Gold_reserve] (maybe there is more ... but I can not find a good source of info on that)

Now You probably wanted to show that gold is prone to large value fluctuations. Maybe it is not gold, maybe it is the dollar :-)

This was my question about stability. How do You define it ... what is the reference standard. Only after this we can check if the system you propose will deliver the expected stability.

You wanted relation to energy costs [energy as reference]. Don't You have this in BTC ? The halving will now change the exchange rate BTC~Energy by 100%.


You get these stupid posts only because Your model is too complicated and average people can not follow :-)

Never has a more rage-inducing sentence been written. Block rewards that don't halve would be an example of disinflation, which will almost certainly still lead to price deflation or general instability in price levels.


This is not historically correct. If we want to take gold, for example:

http://upload.wikimedia.org/wikipedia/commons/thumb/9/9c/Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg/800px-Gold_Spot_Price_per_Gram_from_Jan_1971_to_Jan_2012.svg.png

There are many more factors at play than just having a large total value. And that is just speculative change--that doesn't address actual, economic change. Like, for example, the business cycle. Something that is oft-argued by bitcoin proponents to be something that bitcoin will address, which I wholeheartedly disagree with. I've used the term "BitStreet" to describe the manipulation that I think will absolutely occur has already occurred with a limited commodity currency. Without the ability to create new currency as needed, banks will hold disproportionate power over the economy. Power = Wealth² rather than simply Power = Wealth. Wealth, value, and productivity will once again trickle up the chain and there will be nothing that the people can do about it (except ditch bitcoin in bitcoin's case). Begin economic depression, wealth buys up durable goods, middle and poor lose years of productivity; rinse repeat same scenario as modern fiat.


The process doesn't need to be sped up, the process needs to react to economic activity in a sane manner. Drastic currency appreciation is not a sane route because it incentivizes manipulation and runaway deflation until powerful actors decide they can't pass up the opportunity to flood the market either via lending (rinse, repeat) or via fiat exchange; either way causing currency depreciation. A cycle, if you will, rather than anything close to an orderly expansion. And this cycle will happen every time the bitcoin market expands--there isn't even the potential for a gold rush as that possibility has come and gone and increasing production towards currency creation bears no fruit other than increasing currency appreciation even more.

The Decrits proposal, economically, is not anything remotely close to the same thing as BTC without the award halve.

Absolutely. But it is also essentially the same as BTC without block halving.

To gain stability [resistance against speculative changes] the currency must be just large [total value of all coins]. BTC will also converge to stability with time, when the value of all bitcoins becomes large. If You want to speed up this process You must generate value [burn energy] faster. This can be achieved by keeping a larger profit margin [incentive to burn energy :-)].