Topic: The deflationary problem - page 2. (Read 32501 times)

I do think that supporting a  full block chain node (with accompanying bandwidth) does add value, it could be possible that a node who maintains the block chain is reworded with proof of stake (mining options) like the current reword, but to mine you need to convert proof of stake into proof of work to earn BTC.

This would allow South and Northern hemispheres to take a break from mining in the summer months without missing out on opportunity, thus maximising the utility of the heat generated by mining by limiting it to winter months. It would make an attack harder too, as an attacker would need to support strengthen the existing network in order to allow it to even attempt a 51% brute force attack.

How terrible that people should profit from doing something useful.

We need a new coin that automatically allocates profit to those that claim to represent the useless.  That will keep academics and politicians busy so they don't smell their end coming.

Ah-yup. I think we have at least a 2nd gen and 3rd gen before the whole space of what is possible has been explored and optimised.

I mine to protect my investment in BTC, earning BTC from mining is a bonus, and so it will be with ASICMiner too they Mined to earn BTC, but they will eventually mine to protect the BTC they have saved Mined.   

If a trustless, anonymous, authorityless cryptocurrency could be developed that did not require proof-of-work; and be credible, it would overtake Bitcoin in no time. (assuming bitcoiners were unwiling to modify bitcoin's running protocol to match)  This is the primary motivation for alt-coins that attempt to use proof-of-stake and hybrid POW/POS systems to create the timestamping ledger/blockchain.  It's just that they are all so complicated; it's either difficult or impossible to prove that they are successful in this goal, and otherwise do not introduce new attack vectors.  In the several POS alt-coins I've seen, they either break anonimity, authorityless-ness, or provablely introduce new attack vectors. (for example, teh problem with trustless POS is that often the mining with that POS can build trust/stake until they are functionally supernodes, and then turn malicious at that point)

Proof-of-work is (relatively) simple.

Agreed, that's why I see promise in Bitcoin, apart from the initial distribution problem once that has passed, the money will be owned by the labour that saves it (and inflation and deflation will be the measure the value of the labour that produced the work that earned the money that was saved.)

Fractional Reserve Banking is by definition theft, I am grateful for it as it is what broke the Feudal class, who had a monopoly on the land which is the source of prosperity, and enslaved the 99%, FRB gave birth to a new Capital class who now have a monopoly on the prosperity of labour and innovation. The time has come to end the Capital class the owners of money.

The new enlightenment will result when: 1) you own your productivity and 2) the Property rights evolve to mitigate monopoly.
Fixed quantity p2p Cryptocurrency is the first step in achieving 1)

If you feel there is better way to solve the double-spend problem than the block-chain we are all ears ... pub-priv key pairs can not do this as far as I'm aware?

Isn't it ironic that we have this great cryptographic system public-private keys and such and yet we still seem to need to pay through the nose for security.  Could it be that BTC 'mining' is embraced not because it's really necessary but because a whole group of people make profits from it.

HA! I said I'd call it quits and yet here I am..

This really is it though, on this topic.. too much code to write..


Careful - you get the right shoulder action going, you can throw a coin pretty far..

On a serious note - I don't like alt-coins.. Well not the ones that have been produced so far. They're all just Bitcoin with some parameters changed.. except maybe PPC coin, but I don't like the POS system.. Though I do like seeing how the different strategies play out..

IF I did write a coin, which I have considered, it's going to be COMPLETELY different.. from the ground up. THAT I would like to see. Something truly new and dare I say it, original ?.

BUT [cough].. I'll probably have some kind of low fixed fee built in..   

I hope I can show it to you someday. You never know..

And yet, as you point out, the important fact is not what is important for some of us, but what most of us are willing to pay for.  What you may want, or I, is irrelevant.


Go for it.  Make our own alt-coin if you have the skills.  I wouldn't trust it as far as I could throw it, personally.


Neither of us will likely  live to see the endgame.  Again, that's not even going to happen for another 115+ years.

Fractional Reserve came about because metalsmiths realized people dumped the useless precious-metal junk off with them because they couldn't be bothered with the loathsome tasks of dragging it around with them, protecting, hiding and defending it.

Pontifex Maximus JULIUS CAESAR in 48 BC took fractional reserve counterfeiting away from the private bankstering class and coined the first ALL PUBLICLY OWNED (and rented-out) "central reserve bank" money-tokens. This invention enabled him to build vast public works projects and obsolete taxation (for Romans in Rome), since the Republic profited sp handsomely from the correct growth of the public's Medium of Labour-Resource Exchange. He was assassinated by the private banksters (over his overwhelming popularity) for this, and his new calendar.

You silly "hard currency" morons totally confuse a "wealth" (too much of some garbage or rarer COMMODITY)  with a "money" (the universal "fractional" token of the PRIME RESOURCE of the values of all labours).

Any mere "commodity", no matter how rare, can and will become easily monopolized by any "economic winner". This is how Joseph enabled Pharaoh to enslave his people (because of their rare, limited and finite "fools-gold" money) during the famine in Egypt. It is exactly what the Rothschilds (and their global bankstering proxies) did ALL OVER AGAIN with the Private Federal Reserve Act in 1913.

Making some stupid rare "commodity" equal to the value of all human labour makes humans a damned "commodity"!

Gold was obsolete in the 1700's. Right now there is less than one ounce of gold per person on earth. This means that (as an average "Producer") all that you could ever do in your entire lifetime could never be worth (paid in-profit, savings or excess) more than a lifetime-maximum of 28 grams of gold. (or you'd have somebody else's, who's entire life's labours would have to be worth less).

The way gold wealth is currently distributed people would have to work weeks for some minute dust-fragment of gold.


Fine art, antiques, collectables and rare gems are "Mediums of Savings" (rare wealths who's values ever increase) generic metals and diamonds are only 2nd or 3rd rate (monopolized) Mediums of Savings, the price/demand for which are solely determined by how much monopolists are willing to pay for "more of their junk".

All other "commodities" are better or worse "Mediums of Investment" depending upon just about everything.

A "money" is (usually) a (national) economies' people's Medium of Labour-Resource Exchange that represents only the "current" sum total values of the fruits of all of their (exportable) PRIME LABOUR RESOURCES. It need not also be something (or anything) else that it is not.

WHAT IT IS IS WHAT IT IS, IT NEED NEVER ALSO BE ANYTHING ELSE (EASILY MONOPOLIZED) THAT IT IS NOT!


This is why an independently owned (by it's bearers and acquirer counter-parties alone)  Bitcoin Credit Swap OTC Derivative  is an ideal form of Labour-Resource Exchange "currency".

The power to print and own a "money" is the power to either free and liberate, or the power to enslave and own, an entire "human resource" of people.  All of these questions have nothing to do with what fiat money simply always must and has to be, they all have EVERYTHING to do with WHO OWNS IT.

This doesn't take into account that security is the MOST important part for some of us.. I wouldn't switch because i would want my coins kept in the most secure network. Not the cheapest.


True, true.. and yet..

Well, actually as I'm sure you know, in April 2013, 1 billion dollars (in bitcoins) was sent over the network.. At 0.1% that would have paid the miners 1 million dollars just in TXN fees..

Would that make the network MORE or LESS secure ? Would miners be MORE or LESS interested in being part of that network.. ? Surely it will incentivise the miners in the right way ?

OK - I can see we are not going to agree :-) BUT i just want it known, that for many of us, a HIGHER hashrate, better networking, and a more secure network, is really important.. not trying to squeeze out the cheapest transactions possible. A coin that did have a fixed fee, and rewarded it's miners in a MORE predictable way, would be a feature for me.

There is a lot of talk about what should/might/may happen, when the TXN fees ALONE (basically) will need to pay for the network, and I hope that happens, but does a little push in the right direction really hurt SO MUCH..
 
I'm going to call it quits now..
 

It's closer to giving your kids a dollar, and telling them to pick out their own candy at the store.  If you've ever seen a six year old deliberate over the selection for an hour, clutching that dollar in his hand, you've just seen the principles of Praxeology in play.  Particularly "opprotunity cost calculation".  Giving kids candy is a real 'tragedy of the commons'.

Those who need to understand will learn.  It's a fairly easy concept that free transactions can take a long time, so if you need speedy, pay the fee.


Probably; unless the confirm times average over a week, which they eventually will.  Again, there are other ways to pay miners for support off network.  On network is retail.  Free transactions must be possible for off network solutions to develop.


Most, maybe.  Until they learn that Litecoin permits free transactions.


How much?  Can your quantify it, or you just guessing?  Obviously, that was retorical, I know your honest answer.  You must make many assumptions about how much network "health" (a very subjective metric to start with) would be lost, and how mch is enough.  These things are unknowable.  Let the market decide.

The individuals don't need to be well informed for the 'market' as a whole to be well informed.  Look at intrade.com. 

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

― Friedrich von Hayek

I'm pretty confident that over the next century, the market will learn what the correct price for a block is to maintain the hashpower to secure the network.

Fizzy-Cola-Bottle anyone ?

I'm feeling a bit queasy.. eaten too many sweets..

Like predicting the weather based on the assumption that only the temperature will change.

He keep using 'mining reward' wrong.  What he is talking about is actually the subsidy, which will gradually taper off and end, but the subsidy is only part of the mining reward.  He doesn't seem to be unaware of this distinction, but his misuse of the terms suggests muddled thinking, and he would probably benefit greatly from cleanly dividing the concepts in his mind.

I'm not sure that delving deeper into this is a good use of my time.  He seems to be making an awful lot of assumptions, some of which are going to be tricky to expose.  The most obvious is that the competition is for block space, which is already not true today.*  One more subtle is that the mining reward needs to pay for new hash power at roughly the current rate, which seems incredibly unlikely.**

It looks like a very static analysis.  He picked one thing that he knows is going to change, and figured out the ramifications by assuming that everything else was going to stay constant.  Such thinking usually goes horribly wrong when incorrectly applied to complex systems.

*  The competition is for miner attention.  Blocks are rarely full, and yet transactions, even some with fees, are waiting.

** It didn't take many GPUs to make overtake the entire CPU network.  It likewise didn't take many ASICs to overtake the entire GPU network.  But ASICs are the end of that road; now all we can do is make better ASICs.  There may be one or two more generational changes still coming as ASICs start to approach mass-market efficiency, but after that, improvements will be incremental rather than revolutionary.  This means that the furious pace of hardware turnover will slow dramatically.  Thus, mining rewards will only need to pay for operational costs and (relatively) modest upkeep and replacement, plus commodity-level profits.  By contrast, prior to winning the hashpower race, the mining reward has to pay that much, plus finance very rapid growth.

hello.. sorry.. just one more thing..

I quote some guy - http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be

'I read that the market will find the equilibrium how much these transaction fees will be.

It will not. This is perhaps the biggest flaw in Bitcoin at the moment: once mining rewards end there is no direct linkage between the amount of hashpower needed to secure the network and the incentive to mine.

True, there is a limit on the blocksize, so if the transaction volume in a block window (approximately 10 minutes) exceeds the block size you can expect a miniature "auction" where transactions fight for space in the block by bidding up the minimum transaction fee needed to get in. However this isn't really a closed-loop adjustment: the maximum blocksize is an arbitrarily chosen number, and there's no reason to believe the maximum blocksize is small enough to ensure that transaction fees are high enough to incent enough miners to mine to keep the system secure. Unlike the difficulty and the USD/BTC exchange rate it does not respond to market activity. It also has the negative side effect of capping the worldwide Bitcoin transaction throughput since other parts of the protocol rely on the assumption that blocks are created -- in the long run -- no more than once every ten minutes.

As the mining reward is reduced this "direct coupling" between the network's need for security and the incentive to mine becomes progressively more diluted.

I worry a lot about what will happen to Bitcoin once we decouple those two forces. I think the developers ought to at least come up with a story on how this will be solved so people can start testing it.
'

I think he makes a valid point, better than I made it..  and I wanted to point out that this issue is far from clear/certain/set-in-stone to everyone.

Thanks for listening.

Now, where's that bag of sweets...

I think you're starting to get it.

HA! Ok.. Children eating too many sweets and being sick it is!

They'll learn the hard way. Just as we will. Maybe that is the only way there is.