Monetary economics of merged mining, aux blockchains. (inflation by proxy?) - page 2.

phelix

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Quote from: marcus_of_augustus on July 16, 2011, 06:41:42 PM

[...]
An auxiliary chain with a difficulty nearly equal to bitcoin clearly has a cost-to-mine also nearly equal to bitcoin. [...]
[...]

I'd say the cost is almost 0 --> auxiliary coin value --> 0

marcus_of_augustus

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Eadem mutata resurgo

Quote

but a namecoin does not buy what a bitcoin will buy.

It is nothing like the same as an IPO .... locking mining together will mean they will cost the same to produce.

It is like mining silver as a by-product to gold mining ... except the number of possible by-product "minerals" in this case is infinite.

koin

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Quote from: marcus_of_augustus on July 16, 2011, 06:41:42 PM

Isn't this introducing a mechanism for doubling the number of *coins hooked onto the bitcoin hash power, i.e. inflation by proxy?

just like how an ipo on the stock market competes for the same pool of monies from that market, namecoin could pull some funds that would otherwise have gone into bitcoin.

but a namecoin does not buy what a bitcoin will buy.

marcus_of_augustus

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The namecoin blockchain is testing/implementing a change to hook itself into the mining hashpower of bitcoin, so-called merged mining or shared work.

https://forum.bitcoin.org/index.php?topic=29074.0

http://dot-bit.org/forum/viewtopic.php?f=5&t=217&start=10#p1242

https://github.com/vinced/namecoin/blob/mergedmine/doc/README_merged-mining.md

It is clear that the economic incentives for miners will be to adopt this since there is limited cost with the added benefit of solving lesser difficulty chain blocks as a "by-product" to bitcoin mining. The obvious medium to longer term outcome of this is to raise the difficulty of the auxiliary chain to close to that of bitcoin.

An auxiliary chain with a difficulty nearly equal to bitcoin clearly has a cost-to-mine also nearly equal to bitcoin. So we would have another blockchain, with 21 million units, closely locked into bitcoin valuation economics via the cost of production.

Isn't this introducing a mechanism for ultimately doubling the number of *coins hooked onto the bitcoin hash power, i.e. inflation by proxy?

Topic: Monetary economics of merged mining, aux blockchains. (inflation by proxy?) - page 2. (Read 2972 times)