Topic: rpietila Altcoin Observer - page 246. (Read 387556 times)

Maybe, but so far as I can tell, he is not wrong. Side chains are right around the corner, so I guess we will find out if he is right soon enough.

I just had an interesting idea for a new mining algorithm (e.g., for a Cryptonote-based spin-off).  Actually, I think this is Greg Maxwell's idea, but the significance of it just hit me.

What if the new mining algorithm is somehow to produce and/or verify ECDSA signatures?  I'm not sure this would be possible, but the idea would be to reward those who can sign/verify most efficiently.  

If the spin-off is successful and people eventually develop and commodify ASICs for ECDSA sign/verify, then these chips would also be useful for the cryptocurrency community beyond spin-off mining.  Efficient and secure ASICs for ECDSA would be one step towards vastly increasing the bandwidth (transactions / second) of blockchain-based payment networks in general.  

This quote looks like something written by a dictator or king talking to his peasants and laughing at them while he sits on a pile of gold bars.  This is another reason Bitcoin always needs a non-zero minimum block reward.

I think you are both wrong because you are not considering the benefit the developer would have in terms of information asymmetry.  

If you are the one driving your spin-off, then you get to tweak the parameters and you get to decide when to launch it.  Consider a spin-off based on the currently-fashionable Cryptonote ring-signature technology.  You could launch the spin-off, but since you got to define the mining algorithm, you could choose one that gives you an initial advantage.  As long as your choices are reasonable and your actions are transparent, I don't think the market would care.  You could probably mine a good portion of the new coin supply until either (a) the market agrees your coin has value and mining becomes highly competitive, or (b) the market agrees that your coin has no value in which case you just lose the products of a few weeks/months of mining.  

Sure you won't be able to mine 50% of the coin supply like some alts, but I bet with a well-executed plan and possibly by purchasing cheaply-dumped coins, you could collect between 0.1 - 1% of the money supply for a fairly low cost (but a lot of work).  

"Protocol" was a bad word choice.  We¹ are (slowly) working towards establishing best practices for launching spin-offs, and we hope to develop some software tools for making this easier for developers.  I've received a handful of generous donation offers in comments and by PM, but so far I have not accepted any, mostly because I don't want to be the "central point of failure."  Perhaps we could create a 2-of-3 wallet that people could donate to, where the three keys are held by three trustees.  These funds could be used to pay out bounties to encourage work to get done.  I would match Andrian-X's offer and contribute 1,000,000 bits (1 BTC).   

(The technology may not be advanced enough yet, but it might be useful if donators received colored coins [e.g., using the new coinprism wallet] in proportion to their donations, that would allow them to vote on how the funds are spent.)

¹By "we" I mean interested people in the community.  Hopefully we can include "you" as part it!

What if the coin running the Main Ledger has a problem? Is it wrong to have resilience through diversification of options? Even in financial terms, there is the hedging necessity of alts.

Because I don't believe bitcoin is a technology.  Bitcoin contains technology but the $7.3 billion market cap is not a measure of that.  Bitcoin is money, and money is memory.  Money represents a shared agreement between the individuals who voluntarily use it.  Our shared agreement is that spots on The Blockchain represent value and one transfers his value by signing a message with his private key (e.g., in exchange for goods or services). 

Forget about bitcoin the protocol, and even bitcoin the payment network (nodes + miners), and focus on bitcoin as a shared agreement that the distribution of wealth encoded by the blockchain is efficient and legitimate.  If it wasn't efficient, large holders would sell, and small holders would buy.  If it wasn't legitimate, people wouldn't be willing to trade their time in exchange for bitcoins, and bitcoin would have collapsed. 

So the value of money (e.g., bitcoin) primarily comes from the legitimacy of its ledger.  The legitimacy of this ledger increases as more people adopt this form of money, and as time proves that it's not a passing fad. 

Viewed through this lens, it becomes clear that even a superior technology (although I question if one exists) would unlikely de-throne bitcoin the ledger, for the new technology would simple be adopted by the ledger as the new payment system. 

In my mind, the only thing that could dethrone bitcoin would be a more legitimate ledger.  But I don't see how it is possible to create one.   

This.

Regarding the bolded part: we don't really know this until we try out, do we?

Oh.. well this is awkward.

I've only just realized you were excluding Bitcoin from Proof of Scam.

bitcoin the protocol is of course a protocol.

BITCOIN the brand has ample PoS , I'm sure i don't need to list them for you?

No what i was saying is i wont buy MRO now but long term the EQ reward and other features such as adopted from Quark will surpass these system, as eventually fundamental matter. I will buy MRO just as I've brought Quark low.

Both appear superior systems. MRO is QRK with a longer disto and ring sigs.

Great design.

You're not wrong.  The spinoff idea as a way to give "free stuff" to existing Bitcoin holders is fundamentally broken since it just rewards laziness and stifles innovation.  The market doesn't and won't accept that model.  This is why I said the best use of spinoffs is an insurance mechanism for Bitcoin so you can get experimental chains up and running that might take over from Bitcoin itself should things like transaction fee only block rewards fail.  You can have a 1% annual inflation coin running to take over.

Also, though Peter touched on this already, what would likely happen whenever a promising new spin-off were launched is that a bunch of people would sell their stake right away for easy money. If you got a stake in a Dogecoin spin-off and you could make a quick $100 or $1000 by just selling your share, would you? What about for Quark? Mazacoin? XC? Darkcoin? Ripple??

All a dev would have to do to make a lot of money would be to launch under the radar without hype, while simply letting people know the spin-off existed. The incentive moves toward informing everyone and having people investigate, but away from hyping it - so that you as the devs, the ones who believe in it the most and who most determine its fate - can buy up more. You as a dev or early adopter basically want to de-hype your alt so that people will sell it! Then later everyone who dismissed it without investigation will lose, and those who did their research and had the foresight will gain - and everyone who didn't care either way will remain wealth-neutral. It's really quite genius if you think about it.

As far as I can tell the idea doesn't have anything to do with fairness or any other moral concept. It is about efficiency and preference. If a new coin is created (let's say Monero as in your example) and very soon a spin-off based on the Bitcoin blockchain is created as well, the chances are high that the spin-off will take off instead of the original because of the wider dispersion of coins and the resulting network effect. I believe Peter R has done a rather thorough analysis on this aspect.

I understand your frustration as a developer not being rewarded by a lions share of whatever it is you're developing. Maybe this scheme would add more incentive for a "tipping culture" to spring up - something I have been advocating as a necessity for a long time. In that way developers don't make money by pre-mining, scamming or relying on some shady foundation but by reporting their work and relying on the users to show their gratitude.

One benefit I've found to the spin-off idea is that it might facilitate the much dreamed of price stability in Bitcoin. If the idea catches on and we see spin-offs being generated and claimed, people will presumably rush to build up a position in Bitcoin, bidding up the price, creating a higher market capitalization and having more incentive to hold - all this should work towards a more stable price.

I don't think it's possible to fully understand the spin-off mechanism while thinking in terms of "coins."

The story is simpler: the world needed a global ledger. One global ledger. Now we have one, but it isn't Bitcoin. Bitcoin is just the (somewhat oddly named) protocol for maintaining that ledger. The very fact that spin-offs are possible (almost*) completely dissolves the idea of "coins" or "Bitcoin vs. altcoins." Bitcoin holders never need to worry about having their wealth disappear, because they aren't really Bitcoin holders; they are people who have a claim to a certain portion of the global ledger - THE global ledger of civilization.

I'll leave aside the arguments on why the ledger currently known as the Bitcoin Blockchain Ledger is the one that is far and away most likely to last and become the world's ledger, as I regard that to be more or less obvious - some common objections notwithstanding - to anyone who understands economics and network effects.

However, in light of the points above, that doesn't mean Bitcoin will be the global ledger. That's just the point: it's not about coins, it's about the ledger. If an unquestionably better system for updating/maintaining that ledger, which would be known in present-day terms as a vastly superior "spin-off altcoin," were to come onto the scene, "Bitcoin" would fall away but the ledger, yes with the legacy of Bitcoin's historical distribution, would not. All "Bitcoin holders" would maintain their wealth by default, automatically. If you "have 2100 Bitcoins," you are not a Bitcoin holder, you are a 0.1% stakeholder in the ledger that is by far the most likely to become the global ledger of planet Earth. Whether that ledger is maintained by the Bitcoin protocol or another protocol makes no difference to your stake and your wealth.*

If we learn to think and speak in this way, the situation becomes much clearer.

Up to now, altcoins have been done the wrong way: as alt-ledgers rather than as competing systems for maintaining THE ledger. Seeking early-adopter wealth, founders have deliberately hobbled themselves by not taking advantage of the network effects of the Main Ledger. Eventually this get-rich-quick, pump-and-dump mentality grew into the fairy tale that "we need the new ledger (maybe even with premine) for funding the devs, because of satoshi's coins, or because Bitcoin is unfair." All these notions stem from economic ignorance, and since economic ignorance is widespread and persistent, these notions will persist until the market makes believing them too painful for most people, at which point the old way of launching alts (alternative ledger maintenance protocols) will be forgotten.


*Technically a spin-off could change the "coin issuance" (i.e., stake dilution) schedule from that block forward, but I doubt it would succeed in the market, unless perhaps if the total end-stake was the same as Bitcoin's. I think the stake dilution schedule of a ledger will come to be thought of as essentially intrinsic to that ledger, part and parcel with it, so the term "ledger" will simply be understood to include the schedule of stake dilution in its meaning. The same applies for things like automatic stake dilution through demurrage. These can most usefully be thought of a characteristics of the ledger itself.

Well I'm not sold on the spin off idea.

If a team of people launch and build a genuinely good alt, such as monero. Why would they even consider using the bitcoin blockchain as a genisis?

It would mean the developers and early adopters have little to gain if it takes off and the bitcoin rich will take all the gains.

I intend to spend mos of my holiday after semester helping with the Monero QT wallet and perhaps the website. But I wouldn't bother if it was a bitcoin blockchain genisis because I would own 0.00001% of the circulation but bring far more to the table than that is worth. Whilst a rich bitcoiner would reap all the rewards whilst doing nothing.

Can you please educate me why I am wrong?

By "spin-off protocol" do you mean something akin to coingen, where you just input your specifications (or the code of the protocol you want to spin-off) and it produces the resulting protocol including initial coin distribution according to a specified BTC block? So that like it is easy to start your own coin right now, it would become easy to do a spin-off?


This is why the idea of spin-offs is so great in my eyes. Personally I think a protocol with built-in demurrage of coins is a pretty bad idea. But I more than welcome a spin-off which incorporates it - just to see my suspicion proven right or wrong. It also gives people more choice how to express their economic preference. Furthermore the copying of the initial coin distribution from the Bitcoin blockchain makes for almost ceteris paribus conditions which might yield very interesting comparative results between original chain and spin-off. It is like a laboratory for testing different parameters of blockchains - a much more exact and telling one compared to alt-coins today.

I would classify people who don't think Bitcoin can be dethroned as mentally insane.  As it stands right now, all Litecoin has to do is "not die" and it will eventually reach all the same or similar exchange platforms, USD outlets, etc.  After that occurs, even people who prefer Bitcoin will utilize Litecoin for sending payments and then convert back to BTC after it hits an exchange.  The LTC liquidity would just keep growing and growing until the two coins came much closer in market cap.  Many people already do things like this to arbitrage now and it will only increase in the future.

Glad to see some senior bitcoin holders kindle interesting and substantive discussions on altcoins. Especially thanks to rpietila and Peter R for their insights.

Regarding the The Alt-coin Narrative Cycle, which by the way was a very interesting read, I was wondering, since you disagree bitcoin is a technology which can be de-throned by better technology, on what do you base you belief and what do you think bitcoin is?

They can mine the new coin mining starts at block 0. Also buy it cheep if they believe it valuable when others dump it.

There may also be incentives like high transaction fees with low difficulty to incentives mining and reduce the flood of liquidity.

Alt coin mining is quite profitable at the moment reportedly it has been like this since April 15 of this year. So not a long time.
It is an indication of this sector growing when one looks at the profitability of mining Bitcoin and the relative hardware investment.

The idea of a market cap representing a percentage of value is falce, value is a function of the market liquidity and velocity of the coin. So while the alt market cap has grown I don't know if it has grown in value as it isn't easy to liquidate that value.

So I don't think one can assume alts are growing faster than Bitcoin by looking at the market cap most alts actually trade for Bitcoin thus growing the Bitcoin network.