Topic: How to profitably create Bitcoin forks without causing economic chaos (Read 5212 times)

Forks are special thing that could bring benefits and I am sure that your article is useful but not for everybody as I can see. But I am not against of them.

I don't support this doing at all because I believe that crypto must increase in its own and any correction and human-made thing will destroy it so much.

Next big step to make money in this bear market apart from creating money from thin air by doing fork is airdrop.

There's another way to accomlish the same thing.And well, for the ones that expand at the same rate, any way.

It turns out that one of the currencies someone had me help develop is "devcoin", specifically aimed at funding open source development and with development of bitcoin relatively high up on the list of open source things to develop.

I do not see multiple currencies as competing, rather they are enriching the landscape.

Obviously trading between various currencies is osmething various people find appealing, fun, interesting, for some maybe even profitable. But dealing with fiat is a massive pain. So having a whole bunch of currencies that use the same API could open up the currency exchange field wonderfully by letting people do it without having to deal with fiat at all unless for some reason they like to, wish to, feel compelled to, or are compelled to.

I put Nemo in scare-quotes to indicate I didn't literally mean the character Nemo from the Jules Verne novel but, rather, more generically no-one (or was it sexist back then, no man?)

-MarkM- (As in no one would use...)

Say the existing developers wanted to roll out some awesome protocol upgrade they thought would greatly improve Bitcoin's worth - say they estimate by ten times - but want to avoid the delay of having to roll it out gradually, getting everyone to upgrade, and including legacy code in the new system in perpetuity in order to maintain backward compatibility.  They could use the method I've proposed here, charge a 2% conversion fee, and earn around $14M (roughly accounting for lost coins) at today's exchange rate to fund future development, if nearly everyone makes the transition.  This would pay 50 full-time developers $70,000/year for 4 years - around the time the next upgrade needs to be rolled out.

People obviously like and trust the developers, and I'm sure would be happy to pay a conversion fee, as it means further development which would likely continue to add value to their coins.

To make everybody happy, they could continue to support the legacy code for a few more years, and waive the conversion fee after say, a year, for anyone who hasn't made the transition.  That way they can avoid having this be seen as a money grab - people would only convert quickly if they were happy to pay the developers, or if the upgrade was really necessary or beneficial to them.

Do you want to try this again when you are fully awake, and after you've read the thread?

P.S.  Who is "Nemo"?

Mark,

I agree that this looks all too familiar.  Your elf/orc comment definitely made me think "ring of power".  But "it'll be different this time around!"

Now we have on-demand public auditability.  We have the ability to spread trust around in an cryptographically enforceable way.  And there are no laws compelling one cryptocurrency over another.

And it's exactly like you say: if you don't trust the new coins' central bank, yet they offer something really valuable that bitcoins don't, then only hang onto them as long as you need to, and keep your value stored in bitcoins.  If they break their 1-1 backing, call shenanigans, and GTFO.  If they stop redemption in violation of their constitution, dump their coins on the market ASAP.  And the short sellers would no doubt always be on the prowl.

Basically, I think it boils down to this: If the political/financial establishment decided to loosen its grip tomorrow and allow a relatively distributed group of trusted organizations to act as a central bank, creating a Bitcoin clone fully backed by, say USD, then what do you think the market would choose: Bitcoin with its wild volatility, or USDcoin that introduces no practical risks, other than the underlying backing?  Even if the goal is an unbacked, decentralized currency, piggybacking off the USD value metric and then gradually shedding the backing is likely a much better way to get it than what Bitcoin is being forced to go through.

I don't ever see this happening, but down the road I do see new cryptocurrency startups that offer tangible benefits over Bitcoin wanting to piggyback off the existing BTC value metric.  Remember, they'd otherwise have to solve the damn hard nuts to crack of 1) initial distribution, and 2) finding a stable valuation through establishment.  I don't see any other quick fix to 1 and 2.

And if something like forkcoin happens sooner than later, I'd like to see the competition happen in a synergistic way, rather than rivalrous.  We're not only trying to create a new currency here with Bitcoin, but a new value metric as well.  That seems to be the truly difficult problem!  But it's made easier by competing currencies reinforcing the same value metric.

Edit: Added thought: If a precedent for introducing new cryptocurrencies this way were set, it would give people a lot of confidence that they are a safe store of value that they don't have to babysit, and would increase overall adoption.

So don't trust it, "Nemo". Set up a cron job that will sell back to it any of its coins that manage to somehow come into it's reach that will sell them back to the politburo or developer or promoter or cult or whatever that claims they are worth something.

You can tell how much they think they're worth by how much they'll buy them for, that is how markets work, isn't it?

Do you believe World of Warcraft (or Diablo 3 or whatever) actually plans to buy back WoW-Gold (Or diabloons or whatever) for anywhere near the number of dollars people (or even they themselves) sell it for?

If not, then how close to the amount they sell it for will they buy it for? (What is their "spread"?)

Does anyone trust them to buy it back?

Does anyone buy it at all? Even at less than a dollar for a million coins?

Do you trust Berspank / the Fed? If no, then you won't be buying or accepting any federal reserve notes, hmm?

Etc.

I thought I read somewhere once upon a time about trust having to be,,, uh,,, something... uh... uhn... uhn'd?

I wonder if that was anywhere near the place where I read something about the predictive power of the past...

-MarkM- (Do you people trust pyramid schemes to pay off for them? Do they buy into them?)

P.S. Notice that many of the "new" blockchains are not yet open to the public, specifically due to concerns about the expense of mining compared to the relative strength of potential "enemy miners". Once all their coins are minted, or maybe before, more access to the blockchain might well seem more economically viable than it does during startup periods in which they might feel relatively vulnerable to predatory miners.

But if the exchanger is merely holding onto the bitcoins, no one will trust it.

Redeeming? I thought we were talking about a one-way bitcoins->forkcoins system. Are you suggesting there should be some way to go from forkcoins->bitcoins? Where would the bitcoins come from?

Yeah, my thought was that as long as people are using it, to not burn the bridge.  Further, all newly created forkcoins must come into existence through the central bank; otherwise it can't ensure the 1-1 mapping of BTC in its reserves, to forkcoins it has released into circulation.

I agree about burning bridges, and how it's probably not a good idea.    However, I'll journey down this thought experiment a little more:  The BTC destruction script mentioned in (1) could include a list of transaction IDs/hashes of the forkcoins that are taking their place.  If forkcoin is anything like BTC, the forkcoin minting process (even if completely different than BTC) should still have uniquely identifiable coinbase/creation transactions where currency units are injected into the system.  Then you can easily get a 1-1 mapping of BTC destroyed to forkcoins created.

Except that #2 requires that the entire network follow the new chain, plus the old bitcoin chain so they can verify that creations match destructions.  And that the two points together form a trap door that essentially causes the same faith problem that this entire proposal was intended to solve.

The way to get people to commit to the a new system is not by having them make an irreversible decision to burn their bridges back to the old system.

Neither of these are problems:

(1) Coins can be verifiably "destroyed" by creating a transaction script that can't ever evaluate to true.  This transaction enters the network and becomes public.  Everyone can see it, and see that the PkScript is impossible to satisfy, ever.  That's pretty good "proof".   And since it's a custom script anyway, they could even include a message in the script which explains exactly the source and purpose (and signature) so that there is no confusion about whose coins were destroyed and why.

(2)  If the new currency is anything like BTC, then similarly, the currency is all public information.  Unless we're talking about non-decentralized currencies... all units of the currency should be traceable, both in time and quantity.  If it's not, I don't see how this currency can really "compete" with BTC, since centralization and closed-ness would pretty much make the "fork" a non-fork.

mark,

Due to the hostility of the current political/financial establishment, I don't think Bitcoin had any other choice to be SpeculatorCoin.  Ideally it would have bootstrapped itself onto other dominant measures of value, and then possibly shed its backing after getting established, but it did not have this luxury so it made due with what it had: hype.

And up until now it's worked.  I think Bitcoin needs a kick in the ass at this point, though, in order to regain its momentum, and to elevate it above the status of a novelty among the general public, that they don't use.

Don't get scared by the prospect of "destroying coins", or at least removing them from circulation - it's necessary to create a much bigger symbiosis of many different varieties of cryptocurrencies.  I only proposed destroying them after the central bank eventually dissolved itself, but I actually don't see why it couldn't remain in existence as long as there was demand for it to - all the while collecting fees that would ideally go toward further development.  This way having a cryptocurrency-symbiosis would be completely non-disruptive, economically; peoples' value could flow frictionlessly into and out of the different ones in perpetuity.

Think of it this way: there's about 7M BTC in circulation now.  No matter how many various new symbiotic cryptocurrencies get created, this proposal ensures that there will remain 7M (and still growing at 50/10min) total coins in circulation afterward.  The value stored in each individual cryptocurrency is then directly proporitonal to the number of coins it has in circulation, and is determined completely by user preference.

Note that a symbiosis is only appropriate for currencies that create coins at the same rate that Bitcoin does (or those like it) so this could be seen more as a means to enable Bitcoin itself to develop more rapidly and with more variety, and not as a way to fork its "essence", i.e. it's ledger of who owns how many "coins", where "coins" is now meant in a more general sense than BTC.

As it seems to be Bitcoin that is the one speculators flock to, I guess "speculatorcoin" here means Bitcoin, and, yes, it therefore is the case that "speculatorcoin" developed the software that some "stablecoin" or other might choose to use.

I find the idea of destroying bitcoins that are spent to buy "stablecoins" very weird though, because I imagine that being able to "back" one's newfangled "stablecoins" with Bitcoins might be rather useful.

It is rather a pity that it is Bitcoin that has so far filled the role of being a "speculatorcoin", I wonder if it is almost inevitable that whichever coin "the masses" are most aware of will fall into that role? I had often imagined that real bitcoins might be or become far more valuable than the various pocket-change coins used by kids for pocketmoney and by consumers for day to day out of pocket spending. It even seemed that the more "complicated" and "mysterious" real bitcoins are the more the common masses would drift away to pocket change coins of various kinds, leaving the truly valuable "actual bitcoins" to the major pillars of the financial world, the big edifices that "back" the various pocketmoney systems.

If the people who had hundreds of thousands, or millions, of Bitcoins choose to "cash out" to fiat and walk away, they would basically be treating the whole system as a ponzi scheme instead of truly demonstrating by their own actions of "backing" it using such fiat that they are able to get for it that they were and are serious about supporting it as a real currency, the currency of the people who minted it, sold it for fiat, and thus now have huge hoards of fiat with which to "back" it.

Alternatives would seem to me to look a little more serious if they retained any bitcoin they aquired to hold in trust as "backing" for their new coin than if they destroyed bitcoins they aquired.

Most of the players who seem serious about the various new currencies they have had me working on for them seem to agree that they want to aquire plenty of any blockchain based coins they can, so as to have a nicely variegated treasury with which to "back" their favourite type(s) of coin.

Indeed part of why they do not like the types of markets that Bitcoin seems to regard as standard or normal is such markets deprive them of the ability to choose who they buy from or sell to. Not just for prejudices along the lines of "We are the Elves, Orcs are enemies, therefore we will not sell Elfincoin to Orcs nor trade Elfcoin for Orccoin" but also things like "we see no evidence that you have been retaining the fiat you have been aquiring and putting it back into the system therefore we do not want to sell you any more fiat".

-MarkM-

I guess this discussion would probably be rendered moot by market forces, anyway.

Say someone developed an awesome new protocol change, and rolled out the new currency in the way that I've described.  There's no way anyone would accept if if the source was closed, so this leaves open the opportunity for a competitor to turn around and immediately release the peg-free, floating version.

I think regardless of how it went about solving the initial adopter problem in a reasonable timeframe (probably a blockchain fork), it would be a battle in the public arena between SpeculatorCoin and StableCoin.  Sure SpeculatorCoin could destabilize StableCoin just by proving to be a worthy competitor, but I hope people would see that they're being unnecessarily punished financially simply because they weren't quick enough to upgrade their damn software, and would boycott SpeculatorCoin, and vilify its adopters.    And it would surely only get one attempt before people got fed up with the unnecessary instability IMO.

StableCoin also has going for it the fact that it developed and is maintaining the damn software, and SpeculatorCoin is just a dirty thief.  

Then again, the roles could be reversed, and SpeculatorCoin developed the software that StableCoin is trying to use...

Like I said, trust in the central bank can be distributed among arbitrarily many individuals and organizations using the CHECKMULTISIG opcode.  And it only has to function securely, temporarily.

It can't destroy any bitcoins until it dissolves, since there might be an exodus from the new currency at some point.  It can eventually destroy them, and any remaining forkcoins it has, by sending them to some eater address(es) for which obviously nobody holds the key.  There was a funny one in the block explorer that I can't find now.  Something like 1BitCoinEaterAddressDontSend.

At any time it can prove its reserves by signing messages with its private keys.

A successful fork will draw value away from Bitcoin, yes, but it won't diminish the value of a bitcoin at all!  It will increase it!

Don't you think that the adopters of a new crypto-currency would be disproportionately Bitcoin users?  Do you think they might feel like they now have to choose how to split their crypto-currency holdings between BTC and the new one?

There's a hell of a lot more to a crypto-currency than it's exchange rate to another one.  The protocol could be changed in all sorts of noticeable ways, that would distinguish it from the other.  For example, say you had one that could be used for extreme micro transactions, small enough to pay for each of the individual packets going over the Internet?  Do you think that would be enough to cause an exodus from Bitcoin, despite exchange rates remaining at parity?  Here's the idea of how this might be possible: https://bitcointalksearch.org/topic/m.325839.

Then suppose Bitcoin eventually got around to implementing this, finally got its users to upgrade their software so that it worked, and eventually wrestled most of its original users back.  Well in the meantime these users got to move seamlessly to a kickass new crypto-currency that did so much more for them than the old one, and at the same time their movements led to a ton of innovation.  And notice that the new currency issuers are incentivised to innovate by being able to turn a profit!  This allows for fierce competition and stability at the same time!

Besides, people stampeding from crypto-currency to crypto-currency fucks over those who don't want to have struggle all the time to stay on top of "the game".  It's not a fucking game to most people.  They can't reasonably be blamed for "not being sensitive enough to the winds of change".  It doesn't help confidence in the stability of crypto-currencies in general to introduce such uncertainty - unnecessarily - as I believe I've shown here.

I hope these fears aren't knee jerk reactions to my use of the words, "peg" and "central bank".  First of all, they're temporary (if you want).  Secondly, the trust in the central bank can be distributed over an arbitrary number of independent people and organizations.  And third, if you analyze this carefully, you'll see that there is never any redistribution of purchasing power until the peg is gradually lifted.