The deflationary problem - page 10. | Bitcointalksearch.org

drawingthesun

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Quote from: Sweft on March 09, 2013, 11:19:33 AM

I will posit this explanation of a Sweft attack.

Once there's no longer inflation, the network is prone to deflation. Theoretically, bitcoins can deflate to 0, which would mean that every bitcoin mined would be lost. If a rogue miner solely mines transactions to remove the reward, given the miner has enough hash, he would eventually remove all bitcoins in circulation.

This is not possible with inflation, unless said miner has 100% of network hash.

Inflation in real world and bitcoin are not akin. Gold miners could stop mining and the gold they created still exists. If bitcoin miners stopped mining all bitcoins ever mined would become valueless.

I'm really really tired at the moment, but this seems genius. Because i'm invested in Bitcoin I have tried to consider all possible attack vectors to the fundamentals.

The things that I think about include the blockchain issues and a way to allow people with limited bandwidth participate as a fraction of a full node (swarm nodes I call them) instead of dumb lite clients only.

But, the sweft attack is amazing. Like I said i'm tired and may have missed a flaw in your argument, but right now it seems sound.

A person wants to destroy Bitcoin, they mine away and send all the transaction fee reward into oblivion. On a long enough time line this will destroy Bitcoin, with a absolute cap at 21 million this is a viable attack.

akspecs

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But it's very impractical to say "if all bitcoin miners stop mining" - is it not?

On a different note:
I think people are over estimating their confidence by forgetting that this is still technically an experiment. No one has ever seen a deflationary currency like bitcoin - and therefore I don't think anyone can easily write off any theory provided with reason.

Sweft

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I will posit this explanation of a Sweft attack.

Once there's no longer inflation, the network is prone to deflation. Theoretically, bitcoins can deflate to 0, which would mean that every bitcoin mined would be lost. If a rogue miner solely mines transactions to remove the reward, given the miner has enough hash, he would eventually remove all bitcoins in circulation.

This is not possible with inflation, unless said miner has 100% of network hash.

Inflation in real world and bitcoin are not akin. Gold miners could stop mining and the gold they created still exists. If bitcoin miners stopped mining all bitcoins ever mined would become valueless.

Sweft

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I will describe another flaw that can be exploited in a deflationary cryptocurrency. It will be known as a Sweft attack and is described below.

Sweft attack: A prolonged deflationary attack on a cryptocurrency network describing a situation in which a rogue miner processes transactions solely for the purpose of removing the fee of said transaction from circulation. A necessary precondition for said attack is that the average transaction fee must exceeds the average rate of cryptocurrency inflation.

the joint

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Does your girlfriend have a Sweft point?

Edit: Thanks for the comedy gold on a sleepless night.

Sweft

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There's 10,800,000 coins right now.
1,280,000 will be mined this year.

The inflation rate this year is 12%.

In December of 2016 block reward will be halved.

There will be 15,350,000 coins.
640,000 coins will be mined a year.

The inflation rate will be 4%.

In December of 2020 block reward will be halved.

There will be 17,900,000 coins.
320,000 coins will be mined each year.

The inflation rate will be 1.9%. This is the point that my protocol would redesign block reward to generate a 3% inflation.

I envision a problem around 2020 or even before where miners no longer profit at rate they did before, the hashrate remains stagnant or increases but does not comply with Sweft's Law, and thus the price of BTC is negatively impacted because the network is less secure.

Sweft

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Quote from: ?? on ??

Quote from: Sweft on March 08, 2013, 09:33:28 PM

I will introduce a law which i believe is the fundamental law of securing the network of a cryptocurrency. This law will be known as Sweft's Law and is described below.

Sweft's Law: The network hashrate of a cryptocurrency must rise at a rate at least equal to that of the rate of Moore's Law to ensure minimum network security.

So are you still saying that Bitcoin is doomed to failure or are you just declaring this law here? I can understand what you are saying regarding the increasing need for network security with the advance of technology, but my first thought is I'm wondering why it would mean a failure for Bitcoin? Surely if Bitcoin becomes so widely adopted and important to the world economy we'd find a solution. Groups of wealthy individuals/corporations would most definitely have an interest in paying miners for security.

Yes, I believe that deflation is a flaw so fundamentally dangerous that BTC will fail once it becomes deflationary. I believe most of the protocol is sound, other than the 21,000,000 coins maximum. If there was an alt coin designed with 3% inflation, i believe that such a coin could exist for a longer period and avoid the deflationary doom that will make mining unprofitable.

BTW every year 1.5% of the total gold ever mined is mined, or 2500 tonnes. That's hardly insignificant. In the past total mined gold a year was in the range or 2-3% of total gold ever mined.

A 3% inflationary coin would satisfy miners and secure the network.

Sweft

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Quote from: Killdozer on March 08, 2013, 09:40:39 PM

Quote

This is just absurd. And this thread is non-sense. Transaction fees will be enough to guarantee mining activity. If you don't agree or if you believe differently, then don't use bitcoin, and stop writing such useless/irrational things.

Absurd.... Or... Genius? Cheesy

Quote

Sweft's Law: The network hashrate of a cryptocurrency must rise at a rate at least equal to that of the rate of Moore's Law to ensure minimum network security.

You have written this already 2 years ago, and in all that time you still don't see how this is utter rubbish? This still makes perfect sense to you, doesn't it? Amazing...

No, it makes perfect sense, especially considering Sweft's Law and diminishing mining profit.

Killdozer

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Quote

This is just absurd. And this thread is non-sense. Transaction fees will be enough to guarantee mining activity. If you don't agree or if you believe differently, then don't use bitcoin, and stop writing such useless/irrational things.

Absurd.... Or... Genius? Cheesy

Quote

Sweft's Law: The network hashrate of a cryptocurrency must rise at a rate at least equal to that of the rate of Moore's Law to ensure minimum network security.

You have written this already 2 years ago, and in all that time you still don't see how this is utter rubbish? This still makes perfect sense to you, doesn't it? Amazing...

Sweft

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I will introduce a law which i believe is the fundamental law of securing the network of a cryptocurrency. This law will be known as Sweft's Law and is described below.

Sweft's Law: The network hashrate of a cryptocurrency must rise at a rate at least equal to that of the rate of Moore's Law to ensure minimum network security.

Sweft

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Quote from: ?? on ??

Quote from: Sweft on March 08, 2013, 08:53:05 PM

That's why the price goes up, in accordance to network hash, which secures the network.

I don't believe you.

Miners don't think, "Hey let's secure this worthless coin so the value goes up and people will buy it from us."

Miners think, "Hey, people are buying this valuable coin, lets get paid for securing the network."

If all it took to make a coin valuable was hashing power, all of the alt coins would be wildly successful as well. Coins which can be merged mined would be as valuable as Bitcoin. Yet they aren't. Why not? Because difficulty doesn't drive price.

Quote from: Sweft on March 08, 2013, 08:53:05 PM

This can all be prevented with an inflationary cryptocurrency. I'm not a programmer so i don't really know how to develope an inflationary alt coin, but if i knew, surely i would.

Inflationary coins exist already. Enjoy.

BTC is worth ZERO without a secure network.

Does hash secure the network? Yes.
Does a more secure network increase demand? Yes.
Does increase demand drive prices up? Yes.

There are various reasons why other alt currencies are valueless. They can be undervalued. The distributions of coins might make it less attractive. They may not have the developer ability bitcoin has.

First and foremost, though, before any other factors are considered in price, the strength (hash) of the network must be considered.

Sweft

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Quote from: agath on March 08, 2013, 08:58:32 PM

Quote from: Sweft on March 08, 2013, 08:53:05 PM

When more bitcoins are lost than created, reaching the 'Sweft point', bitcoin will become deflationary.
Somewhere around the 'Sweft point' bitcoins value will approach 0 and become worthless.
This can all be prevented with an inflationary cryptocurrency. I'm not a programmer so i don't really know how to develope an inflationary alt coin, but if i knew, surely i would.

This is just absurd. And this thread is non-sense. Transaction fees will be enough to guarantee mining activity. If you don't agree or if you believe differently, then don't use bitcoin, and stop writing such useless/irrational things.

The guarantee of mining activity is irrelevant. If you read my posts you would understand that mining must continuously increase to secure the network. If hash doesn't keep up with Moore's Law then the network will be prone to attack.

agath

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Quote from: Sweft on March 08, 2013, 08:53:05 PM

When more bitcoins are lost than created, reaching the 'Sweft point', bitcoin will become deflationary.
Somewhere around the 'Sweft point' bitcoins value will approach 0 and become worthless.
This can all be prevented with an inflationary cryptocurrency. I'm not a programmer so i don't really know how to develope an inflationary alt coin, but if i knew, surely i would.

This is just absurd. And this thread is non-sense. Transaction fees will be enough to guarantee mining activity. If you don't agree or if you believe differently, then don't use bitcoin, and stop writing such useless/irrational things.

Sweft

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Quote from: Elwar on March 08, 2013, 08:35:13 PM

I agree with the many suggestions to go create your own alt coin and not to use Bitcoin.

Do you often spend time on forums of technology that you do not wish to ever use to tell them why their technology is flawed?

Does Litecoin have a forum? Have you critiqued them yet?

I was a GPU miner of bitcoin, which is no longer economically feasible.

I'm trying to educate people on these forums so that we can produce a cryptocurrency that will be resilient.

What people don't realize is that bitcoin is currently inflationary. That's why the price goes up, in accordance to network hash, which secures the network.

When more bitcoins are lost than created, reaching the 'Sweft point', bitcoin will become deflationary.

Somewhere around the 'Sweft point' bitcoins value will approach 0 and become worthless.

This can all be prevented with an inflationary cryptocurrency. I'm not a programmer so i don't really know how to develope an inflationary alt coin, but if i knew, surely i would.

Elwar

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Viva Ut Vivas

I agree with the many suggestions to go create your own alt coin and not to use Bitcoin.

Do you often spend time on forums of technology that you do not wish to ever use to tell them why their technology is flawed?

Does Litecoin have a forum? Have you critiqued them yet?

Piper67

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Quote from: MoonShadow on March 08, 2013, 08:24:41 PM

Quote from: ?? on ??

Guys, I know the uninformed newbies and their incessant protestations of "OMGZ the network has a FATAL ERROR!!" are annoying, but please, try responding as if you aren't 5 years old.

Yeah, you keep up that mature perspective for another four years of seeing this BS at least once each week.

We shall see how agreeable to it you are in a couple years.

Exactly. Sleft has learned very little since this thread was started. That's pretty close to wilful ignorance, if you ask me.

MoonShadow

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Quote from: ?? on ??

Guys, I know the uninformed newbies and their incessant protestations of "OMGZ the network has a FATAL ERROR!!" are annoying, but please, try responding as if you aren't 5 years old.

Yeah, you keep up that mature perspective for another four years of seeing this BS at least once each week.

We shall see how agreeable to it you are in a couple years.

MoonShadow

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Quote from: Sweft on March 08, 2013, 06:55:20 PM

Quote from: markm on March 08, 2013, 06:10:59 PM

Quote from: marhjan on March 08, 2013, 06:06:11 PM

Quote from: Sweft on March 08, 2013, 05:47:39 PM

Make an alt currency with a cap minimum 3% inflation. This will satisfy the profits of the miners and hash of the network.

Wow... please just go and do this, and don't bother your pretty little head about bitcoin ever again. It's truly staggering how little you understand, and how utterly unaware you are of your lack of understanding. But seriously, please go design your alt-chain, I wish you luck with it.

At least two altcoins already keep issuing the same number of coins per block forever, which is a big step in the "desired" direction, so how about go promote those for now as the best so far and maybe as you become a major investor in those their makers might listen to your arguments that even that is not enough and a coin must be made that increases the nubmer of coins issued per block...

-MarkM-

I don't believe that will provide the necessary level of inflation necessary to keep increasing hash. The inflation rate will continuously decrease.

My proposal is a constant block reward until that rate of inflation approaches 3%, then you adjust block reward to annually create 3% inflation.

Whoever implements this and adopts this will be rich because I am certain that at some point BTC will fail.

Go for it. There is notihing stopping you from doing it yourself.

Killdozer

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Quote

The amount of gold in the universe is almost infinite.

What does that have to do with anything? What is important is how much gold there is to be mined in realistic time on earth, and that is definitely not infinite.
Also, what kind of term is "almost infinite" is 10 an "almost infinite" number? 1000? What about 21 million? Because there you go, that's how many bitcoins there are in the universe, almost infinite.

Quote

Every year more gold is discovered yet hardly anybody would claim that gold was inflationary.

Very little gold is mined every year, compared to the existing amount.

Quote

In fact, most people claim that gold protects against inflation. Why? Because it takes work to produce gold, just like it does to mine bitcoins.

No. It's because gold is scarce, so is Bitcoin. Most gold that is actually used does not take any work to produce, because it is already mined and available.

Quote

If all the gold on earth was mined in 20 years, gold would be valueless.

This is just nonsense. Let's say no more gold is mined after today. Just in what way is it going to become valueless?

markm

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Well maybe you just don't understand people, if there aren't enough variant altcoins out there yet for you to empirically watch which do best by all means offer some bounties to have more made to empirically test your theories / serve to empirically teach you about people.

Unthinkingbit managed to get help building DeVCoins by offering a mere 100 bitcoins in bounty, who knows maybe you might even be able to some help making your perfect coin for less now that bitcoins trade at a higher exchange rate than they did back then.

-MarkM-

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