Topic: Flaw in the reward structure of Bitcoin and other cryptocurrencies? - page 2. (Read 4020 times)

hahahaha  

thats what everyone wants atm  



 

You didn't factor in the equation the fact that Joe Early could actually be Joe Banker or Joe Government who has a vested interest in seeing Bitcoin fail. They can crash the price to nearly nothing, then buy even more cheap coins in the aftermath. And if the coin still refuses to die, do it all over again a couple of years later. It's not rocket science, and people do it all the time for personal gain with smaller amounts (which is what causes the mini crashes).

Actually if Bitcoin were to fail because of this, Litecoin would fail as well because its generation curve is the same. It's a business problem, not a technical one.

There is something that can be done, play the system and see what happens.

Bitcoin isn't a one shot deal.  It can easily fail, and a new phoenix grow out of the ashes. Let's see what breaks as things start to scale and remember where it all goes wrong! Eventually, it might get so broken that it can't continue.  At that point, we start again with something like Litecoin - safe in the knowledge that we won't make the same mistakes again.

Eventually, the problems will no longer be technical and the role of the geek in the bitcoin project will dwindle to very little.  That will upset a few people too!

The question is, if this is a real problem or not, and if it is it a technical one or a business one?

You truly are clueless about what drives value. Please stay away from replying to things you don't have the mental capacity to understand.

In a real economy the population and adoption doesn't increase at the rate it does in a new economy/currency that becomes successful. Inflation in Bitcoin, for the short to medium term actually makes sense and is desirable. 100 people with 100 coins is the same as 1 million people with 1 million coins - it is not inflation. In a fiat inflationary economy, the number of coins arbitrarily increases without major population changes, the billion people with a gajillion dollars today are the billion people with two gajillion dollars tomorrow..

The way the wealth was distributed is plain wrong and leads to people controlling the market extremely easily. It could be argued that it's just an honest mistake however, Satoshi only had one shot at getting this right.

The flaw is that: You only need a few thousand coins to initiate a crash, have everyone else panic sell then buy back in at lower prices, essentially growing your portfolio every time and gaining more and more control. Basic economics and this is exactly what happened last night. A steady supply of new coins as adoption increases would have prevented that.

Regarding havoc in 21 years when the limit hit, there wouldn't be any - you fail at doing the math again. Assuming a generous 7200 coins generated per day and hundred of millions of users (at the very least), that's less than 0.000072 new coins per person per day being generated at that time.

You have to be extremely closed minded to not see the wealth distribution as a big problem for the foreseeable future, in regards to trading and market stability. I ensure you that I'm not crying here that I didn't buy in early, perhaps I did and am holding a sizable amount of coins - perhaps I didn't, that's not the point.

If there's one big flaw that has the potential of destroying Bitcoin's credibility and hinder its long term success, it's this. People control the market way too easily. Is there anything that can be done now about it? Probably not, which is the scary part.

The way I see it is if the inverse had occurred. With tiny amounts first, then ever greater amounts, this can easily be construed as a classic example of the already existing inflationary cycle in existing finance. It disincentivises adoption. Ask yourself this, why acquire and use a currency that will be at least guaranteed to be worth half it's value in 4 years as the subsidy doubling kicks in. And imagine the havoc 100+ years down the track when the doubling hit the 21mil limit. What then?

A doubling system of this nature, at every step, disincentivises risk taking, early adoption, and use in general. Bitcoin is already pushing against several hundred years of financial tradition, suspicion, and entrenched reasoning, when it attempted to create a completely new system of value exchange. It needed some huge carrots to get it going. Yes, I guess you could say some early adopters were "lucky", but they are also the evangelists that had a vested incentive because they wanted to not just spread their discovery, they were financially inclined to work for Bitcoin, so Bitcoin could work for them.

Selfish and selfserving? Absolutely.

A brilliant way to bootstrap a totally untested, brand new disruptive currency from nothing for the good of all that adopted it? Absolutely.

Punishing early adopters with this halfbaked, communist-like asshattery makes me feel like you guys are taking crazy pills.

I think D&T has it sewn up as usual, and since it pretty much mirrors my own feelings on the subject, I'm reposting it here because I think codro has cateracts or something. And codro, I've enjoyed your trolling, now please go back to the beginning of your own thread and reread all the explanations for why you are wrong. I have, and your asinine (thanks for the choice of words D&T) reasoning is going to give you a stroke if you continue to claim you can walk through walls with your own personalised form of logic.

The mining nodes can decide whatever they want but they still rely on the rest of the network to propagate the blocks they create.

I don't think you understand how mining and feature adoption works. You might want to look at things like P2SH and its voting process before you post. https://bitcointalksearch.org/topic/miners-dont-even-know-they-can-vote-on-p2sh-60829

I don't think you quite understand how mining works.  Go ahead and start your own block chain and show us how well it will work.  I'll be surprised if the price doesn't take a dive before your reward doubling event. 

That's entirely false, there are a few mining pools which have the majority of the power right now. They decide exclusively what protocol changes are adopted, not the actual end-users.

That's not working as intended, Satoshi intended for everyone to have equal voting rights, instead of delegating them to a few super powers (the pools).

The network is secure enough, and having a few hundred CPU's mining as well would not help on bit.  The mining structure is working very well.  I was worried that the hashrate would half when the reward halved.  That did not happen in fact, the network much more secure today then it has ever been.  The reward structure was genius the way it was set up.  It's a shame that you don't see that beautiful fact. 

The burden of proof is on you, surely?

-MarkM-

There are various things at play in making something truly successful. Associating with the right people, bringing awareness and sometimes novelty factor is the most important, execution barely matters most of the time. (Not saying Bitcoin is badly executed.)

Regarding what is going to happen in the long term, we'll have to wait and see, in a decreasing reward system the market is easily manipulated, in an increasing reward system, the market is much more stable. That's all I'm saying. Conceptually, it's the right thing to do, and I'm waiting for someone to prove this wrong.

At least two chains already made a compromise, they put out the same number of coins per block forever.

That is a step in the direction the OP wants, yet it does not seem to have caused those chains to be widely adopted instead of the "flawed" chains that produce less coins over time.

-MarkM-

Oh, gosh, what an astonishing idea! If only someone had come up with it before... 

Well, it should be possible to write a script that checks the blockchain for bitcoins that were not touched at all in the past 2 years (atomically). Since they're traceable to their genesis, we should be able to find out exactly how many are in circulation and how many are being hoarded.

This is just a major flaw, I didn't say it's a critical deathblow.

If however Bitcoin2 was made today from stuff we learned from Bitcoin, I think it makes a lot more sense to have a reversed reward structure - please try to debate on that.

To everyone else being offtopic here, your air of superiority just makes you look dumb.

Don't let reason interfere with a good story DeathandTaxes... cordo knows, and Kurt Cobain is really cool 

It is like 2011 all over again with everybody thinking they found the "critical deathblow" to Bitcoin.  Why is it rational discussion and USD price are inversely correlated?

To OP simple version is:
There aren't more than a handful of people with hundreds of thousands of BTC, and they have a vested interest in not destroying their own wealth.  Even if they act irrationally they can only do so once.

Personally I think the number of imaginary multi hundred thousands BTC early adopters is probably close to zero but let say he/she exists and for some asinine reason decides to tank the market.  Ok.  A drop from $32 to $2 didn't kill Bitcoin.  A drop from $50 to $1 won't either. The value is in what Bitcoin can DO not it's current price.

Still even if such adopter exists one would have to suspend disbelief that he/she would act so irrationally.  He mined them over the course of a year for fun.  Then suddenly they were worth a $1.  $311K for something fun.  Yet Joe Early doesn't sell.  He watches the price climb to $32 making him a millionaire ten times over but doesn't sell.  Why?  Maybe he believe BTC is worth a lot more.  The price crashes and he doesn't sell on the way down.   He doesn't sell at the bottom despite seeing the paper value evaporate.   Over the next two years the price slowly rises and he COULD have sold a thousand or so coins a week without affecting the price and pocketed millions of dollars if that was his goal.  However 4 years later he hasn't done any of that.  Why?  Really the only plausible scenario is that he is a diehard true believer, "A bitcoin will change the world as we know it" type.

So Joe Early is now Joe the Apostle.  Yet for some reason he decides to cripple adoption (at least in the short term) by crashing the market.  Hurting his own net worth, hurting his credibility, and hurting the thing he is a diehard believer in.   Does that even sound close to plausible?

Still time will solve even this non-problem.  I remember the same "doomsday scenarios" except at one time it was tens of thousands of BTC, then a hundred thousand BTC.  Now it is a beyond silly hundreds of thousands of BTC, someday it will be "well if someone accumulated over a million BTC they could crash the market below $100".

nwbitcoin: Have a tip, because Kurt Cobain and because you're probably the only one with an open mind around here.

Note to everyone: I'm very much into Bitcoin myself, and would love to see it succeed, but everyone should be at least a little worried that if an evil entity (government?) had millions of coins from the early days they could easily send the price back to $1 again, with a lot of people losing a lot of money.

However, I don't want to go into this debate again, we're strictly talking about the reward structure here.