Topic: How about a currency which is pool-proof? (Read 2751 times)

Why does it matter if I do it for profit or to protect the network? My miner rigs protect the bitcoin network regardless of my intent.

And when mining becomes (even) less profitable, you will have less miners competing for the same reward, but not none. Hashrate will drop, like it has been, but difficulty drops accordingly, increasing the revenue per miner. Its simple supply and demand. The supply in bitcoins is fixed (for now, ignoring transaction fees), the hashrate simply adapts to it.

Its only when bitcoins become useless that mining would stop. Its an elegant, smart system.

I read Satoshis paper, it is short.   I think the goal of mining need not be to obtain a reward or a transaction fee.  The goal of mining should be to protect the network, to preserve the coins you already have.  By making a reward you create a system where a miner might obtain 1000s of gpu especially with fpga, for the sole purpose to mine and sell, and not protect the network.  Yes, everything is hunky dory, until the point when mining becomes unprofitable, and the miner decides to leave or worse become sinister.

In Satoshis paper a node was suppose to be a cpu.  But with bot-nets I don't know if that will protect a cpu based network.

But, the main point is people with large amounts of bitcoin have the vested interest to protect the network.  Thus a node with a large wallet could protect the network without all this mining nonsense.  You broadcast the amount of coin you own before your IP is allowed to add a block.

Inflation comes from mining rewards 50 a block for bitcoin or 300 per hour or $900 per hour.  Big price to pay to keep system up.  Each block use to be 4 mb in size, today it is less than 2 mb in size.  People like an appreciating currency, they want those.  If bitcoin started as a deflationary currency it would be priced over $100 by now and be taking over the world.

Sadly it isn't unrelated.  There is a person in the thread that believes the inflation in Bitcoin comes from pools.  That somehow if people didn't use pools there would be no inflation.

Sorry guys, but why are you starting unrelated discussion from a one line post with : "pools destroy Bitcoin" as a subject.

Just say : "FAIL!, WRONG, huh ?, or WTF ... " and move on!

The OP did not even bother replying and went hiding of shame.

Not completely.  The highest cost (least efficient) miners do stop but some portion of the network remains.  That lowers difficulty making the remaining miners receive higher compensation.  An equilibrium is reached at slightly above average cost for the network.

It is better to look at it in reverse.  Higher compensation results in more mining/hashing which means a stronger network which is a benefit to everyone using the currency.  BTC @ 12TH/s is far more secure than @ 1 TH/s.  The same applies to other block chains (although different block chains have different base difficulty thus hashrates can't be directly compared).

If the cost of electricity exceeds the price of BTC, the mining stops anyways.

Like DeathAndTaxes said above, solo mining or pool mining does not change the fundamental properties of the coin and its economics. The distributed pool idea is not mine. My idea is to put it into the client so everyone can easily mine using the distributed pool so that a large pool no longer becomes the target of a 51% attack.

Because there are still people with talent that can devise a deflationary system.  I think Coblee might have solved it above with one large mining pool.

Furthermore, looking at the bitcoin graph what makes anyone think the bitcoin network will be large enough to protect the network in 20 years, should that not be automatic.

Nodes that hash blocks are called miners. 

Verifying transactions is useful to ensure the person sending coins is the owner but they don't prevent a double spend.  The creation of the block chain is what prevents a double spend.  This requires significant resources to ensure an attacker doesn't have more computing power than the rest of the "good network".  The larger the network is the more difficult it would be for an attacker to amass enough computing power to make a "false" blockchain longer and thus accepted by the network.

That network has a cost.  It isn't free.  It requires computing resources, bandwidth, and electricity.  The more powerful the network the safer every participant in the network is.  Someday transaction fees will be able to support the network but today block rewards (subsidies) pay for the network and at the same time provide an initial distribution of the monetary supply.

I thought you said you were done?

I read the 5 -minute article.  It says nodes, not miners.  In a bittorrent network, is anyone connected to the network.  To protect their coins, people will keep their client open to verify transactions.  Mining is needed to prevent sybil attacks.  I mine you buy.

There is no risk of a double spend in bitorrent network.  Bitcoin isn't based on bitorrent.  The bitorrent network would provide no security for financial transactions. 

There is no "owner" of bitcoin.  The network provides security.  I mean you really have 200+ posts and have no concept of how bitcoin works? 

Here 5 minutes would have made you significantly more educated
http://en.wikipedia.org/wiki/Bitcoin

If you really want to learn:
http://bitcoin.org/bitcoin.pdf

If you can come up with a better system which can prevent duplicating coins or double spending them as well as fairly distribute the initial coins all without a powerful network well go for it.  The issue of distributed networks without requiring a 3rd party for trust isn't a trivial one.

Because it was suppose to be based on bittorrent.  If bittorrent is protected with no mining fees and no transaction fees, why can't bitcoin.   I will mine and start new chains to make money and will not hold.    What will cause the network to grow is deflation.  Zimbabwe is an example of an economy that did not grow with inflation even though gdp rose every year by 100%.

Well I have been out when I sold my BTC at $20, and put it in a stock that doubled.  Looking for a deflationary currency to invest and build businesses in.

the owners of coin should protect the system, not rely on miners that care less about the system.

Then what are you doing here?  All block chains require subsidies.  The network needs to be large enough to survive an attack even when transaction volume is low.  If you don't think transaction volume will grow to support the network without subsidies you SHOULD leave.

I am curious how you can have >200 posts and no clue how blockchains work, the need for block subsidies, the effect of slowing subsidies on the economy, how the size of bitcoin economy affect the price of a bitcoin, etc.

Honestly not joking... you probably you "be out".

I have a bitcoin business  I sell socks I sell a pair of socks for 100 btc.  I take that money and exchange it for $.  1 year later I sell a pair of socks for 1000 btc.   I take that money and sell it for $.   How does the gdp have any impact on the currency value?  The currency can only have value if I work and earn 100 btc.  If I think btc is going up or retain value I will keep it, otherwise I will sell it.  Why should i save money so the miners can spend it.

If the present bitcoin system has to have 20% transaction fee to protect it, I am out!

So how would you distribute the initial currency?  Just give all 21M to Satoshi and people could buy it from him?  That likely wouldn't work.  How do you fund the network to ensure the currency remains safe while transaction volume is low?  Without block rewards to have a 10TH/s network and current transaction volume would require fees of roughly 20%.  Who would use a payment system if it required a 20% fee every-time you traded funds.  However in 20 years if transaction volume is 50x as high it would only take 0.4% fee to create the same revenue per block.  If it is 100x as high it would only require 0.2% fee.

Block rewards (better named "block subsidies") solve two problems:
1) A fair methods to distribute the initial coins.  Anyone can get one they just need to mine for it
2) Subsidize the cost of a large secure network.  If the network was continually hacked in the early years it would never make it to the later years.

This isn't a Bitcoin thing, this is a P2P currency thing.  There is only strength in computing power and that computing power has a real world cost.


The combination of block subsidies + fees must be sufficient to pay for the network.  As usage grows there is less need for subsidies.  Eventually the usage/volume will be high enough to support the cost of the network completely with fees.

There isn't 10% monetary inflation because markets are always forward looking.  The rate of coin generation is both known and predictible.  People can anticipate monetary supply growth slowing and eventually stopping.  There is significant potential for deflation in Bitcoin and any similar blockchain.

Of course once again none of this has anything to do with pools.

If in 20 years it will be 0%, why not just jump ahead 20 years and use the mining/transaction fee formula for that era.  The economy can only grow if the currency is strong.  Why would anyone want to take part in an economy with 10% monetary inflation (unless they are forced to).  Yes, you might own a business, but why would you save?  No thanks I will take gold, where the currency has strength.

That isn't inflation rate.  Inflation is the persistent and general rise in price of goods and services.  It is caused by the money supply growing faster than the underlying economy.

If money supply grows 10% and economy grows 10% then inflation is 0%.
If money supply grows 10% and economy grows 5% then inflation is 5%.
If money supply grows 5% and economy grows 10% then DEFLATION is 5%.

Still even Bitcoin's money supply growth is continually slowing down as block rewards approach 0.  In a year Bitcon money supply will be growing by closed to 7% annually.  In 5 years it will be closer to 5% annually.  In 10 years it will be closer to 3%.  In 20 years it will be 0%.



That also doesn't include coins lost forever.  Once lost a coin can never be replaced so actual monetary supply growth is somewhat lower.

So
1) block rewards are essentially to support transaction network while economies grows to a point where transaction FEES can replace block rewards
2) the growth in monetary base is continually declining.
3) inflation is not the rise in monetary base.  If it is the difference between growth in economy and growth in the money supply.

Lastly NONE OF THIS HAS ANYTHING TO DO WITH POOLS.  The amount of Bitcoins (or Litecoins, or SolidCoins) will grow regardless of if everyone is mining solo, mining in pools, mining distributed pool, or all mining in one giant pool.  Your share of block rewards doesn't change.  If you have 0.01% of network hashing power your share is 0.01% of rewards and/or fees regardless.

The number mined a year / total number of coin in existence is the inflation rate.  I don't have an understanding of how a blockchain works.  But, if you need to mine at a 10% inflation rate to protect it, it is worthless.

What 10% inflation?  I think you don't have any understanding how Bitcoin or any block chain works.