Topic: Transactions as Proof of Stake White Paper (Read 6601 times)
It sounds like everybody is going to be waiting for the instant when the amount they personally can spend puts the transaction fee total over the top, and then releasing blocks all at once. Sorting it out ought to be fun.
hi
i noticed you deleted you telegram account recently
why?
i am still waiting the letter and when it arrives how can i contact you?
please contact me at @AmbrogioOrfeu on telegram
i noticed you deleted you telegram account recently
why?
i am still waiting the letter and when it arrives how can i contact you?
please contact me at @AmbrogioOrfeu on telegram
This proposal appears to be flawed, unless I am missing something. I have only read the first 4 pages thus far.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
3. You claim to defeat my Transactions Withholding Attack, by blacklisting those who send blocks with transactions that were not recently seen by all miners. I retorted against this recently. This centralizes the network (all for one and one for all outcome) by requiring every miner to be responsible for the incoming network connectivity of other miners. And it centralizes the network in other ways, such it can't tolerate a temporary partitioning of the network due to connectivity outages.
P.S. By coin-days-destroyed, I assume you mean coin value x days, otherwise you would motivate proliferation of dust.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
3. You claim to defeat my Transactions Withholding Attack, by blacklisting those who send blocks with transactions that were not recently seen by all miners. I retorted against this recently. This centralizes the network (all for one and one for all outcome) by requiring every miner to be responsible for the incoming network connectivity of other miners. And it centralizes the network in other ways, such it can't tolerate a temporary partitioning of the network due to connectivity outages.
P.S. By coin-days-destroyed, I assume you mean coin value x days, otherwise you would motivate proliferation of dust.
After some consideration I have decided to replace proof-of-work all together and use transaction fees to regulate block production. A new block is produced once enough transaction fees have been accumulated. The node that generates the transaction with sufficient fees broadcasts it. Ultimately all that matters is that the network reaches consensus and orphans are no issue. Nodes in the network can even stop propagating new blocks for a couple of minutes after the previous block. If transactions are coming to quickly I simply up the transaction fee like you would adjust the difficulty in BTC. These fees are then destroyed to pay dividends rather than paid to a miner.
As a result it doesn't matter how much hash power you have because you must *pay* to submit a block and the best-fit block is the one with the most coin-days destroyed so even if you pay to submit a block with no transactions, it will be rejected.
3. Does not centralize the network, it is a local calculation performed by all nodes relative to their peers.
Yes, coin value * days.
Quoting this very important historical event, so it can't be deleted.
Would everyone on the network be able to predict which user will create the next block? If individuals can predict when they will create a block then they can cause a bit of trouble. Users can't single handedly create an alternate chain, but if they had a small group of individuals buy almost the same amount of coins at the same time (to start timer), they would potentially create blocks in order. This could allow a small group of individuals to create their own malicious chain to take advantage of the system.
There is a very high chance I don't understand your paper well enough to comment, but the above is something I was thinking about and wanted to share.
There is a very high chance I don't understand your paper well enough to comment, but the above is something I was thinking about and wanted to share.
2) To select the node that gets to broadcast the block, pick the input with the greatest coin-days-destroyed to sign the block and broadcast
There are some logic gaps here that I'm sure anonymint will be quick to point out.
Please fill me in on the gaps?
Etlase2, why don't you help him. He seems open to your sort of design. He is an excellent programmer.
He has funding. You could work more full-time perhaps.
He has funding. You could work more full-time perhaps.
2) To select the node that gets to broadcast the block, pick the input with the greatest coin-days-destroyed to sign the block and broadcast
There are some logic gaps here that I'm sure anonymint will be quick to point out.
Missing from the white paper but what I have figured out since is the following:
1) Eliminate all mining at all because any mining leads to control in a proof-of-stake system.
2) To select the node that gets to broadcast the block, pick the input with the greatest coin-days-destroyed to sign the block and broadcast
3) Pay a percentage of transaction fees proportional to the percent of coin-days-destroyed represented by that input
4) Adjust minimum transaction fees per block to control block production rate.
The cost to attack bitcoin today with a double-spend-attack: 6 * 25,000 in electricity consumed in 1 hour + cost of capital.
The cost to attack bitcoin under proof-of-stake: 6 * 12 Billion / 50,000 $1,440,000 held for 1 year.
Resources waisted by Bitcoin: 1.3 billion in electric costs once difficulty catches up with the recent price rise.
1) Eliminate all mining at all because any mining leads to control in a proof-of-stake system.
2) To select the node that gets to broadcast the block, pick the input with the greatest coin-days-destroyed to sign the block and broadcast
3) Pay a percentage of transaction fees proportional to the percent of coin-days-destroyed represented by that input
4) Adjust minimum transaction fees per block to control block production rate.
The cost to attack bitcoin today with a double-spend-attack: 6 * 25,000 in electricity consumed in 1 hour + cost of capital.
The cost to attack bitcoin under proof-of-stake: 6 * 12 Billion / 50,000 $1,440,000 held for 1 year.
Resources waisted by Bitcoin: 1.3 billion in electric costs once difficulty catches up with the recent price rise.
If this proves workable it will solve some substantial problems for new coins. Well done!
I described negative, not zero, transaction fees as a subsidy. Please re-read my upthread posts more carefully. Where I referred to zero transaction fees upthread, I said they were already a sufficient motivation to use the coin (a gift) as compared to Bitcoin and Freicoin that charge a transactions tax. I did not write that zero transaction fees are a subsidy. I clearly made a line-in-the-sand demarcation distinction between negative and zero transaction fees.
Negative transaction fees would indeed be a subsidy to both the buyer and the seller.
No where did I write the subsidy was exclusive to the spender aka buyer. Perhaps you thought I implied it because I did not mention the seller whereas I felt that implied subsidizing transactions benefits also the seller.
My last post remains valid that if we want to subsidize transactions in a chosen balance with security, I now see a way to do it although the variability on mining rewards block-to-block limits that chosen balance to a small factor.
Negative transaction fees would indeed be a subsidy to both the buyer and the seller.
No where did I write the subsidy was exclusive to the spender aka buyer. Perhaps you thought I implied it because I did not mention the seller whereas I felt that implied subsidizing transactions benefits also the seller.
My last post remains valid that if we want to subsidize transactions in a chosen balance with security, I now see a way to do it although the variability on mining rewards block-to-block limits that chosen balance to a small factor.
Then I was in error, sorry about that, a negative transaction fee would indeed be an unjustified subsidy and economically disastrous (not least of which because users could generate huge numbers of transactions to milk it).
This proposal appears to be flawed, unless I am missing something. I have only read the first 4 pages thus far.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
3. You claim to defeat my Transactions Withholding Attack, by blacklisting those who send blocks with transactions that were not recently seen by all miners. I retorted against this recently. This centralizes the network (all for one and one for all outcome) by requiring every miner to be responsible for the incoming network connectivity of other miners. And it centralizes the network in other ways, such it can't tolerate a temporary partitioning of the network due to connectivity outages.
P.S. By coin-days-destroyed, I assume you mean coin value x days, otherwise you would motivate proliferation of dust.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
3. You claim to defeat my Transactions Withholding Attack, by blacklisting those who send blocks with transactions that were not recently seen by all miners. I retorted against this recently. This centralizes the network (all for one and one for all outcome) by requiring every miner to be responsible for the incoming network connectivity of other miners. And it centralizes the network in other ways, such it can't tolerate a temporary partitioning of the network due to connectivity outages.
P.S. By coin-days-destroyed, I assume you mean coin value x days, otherwise you would motivate proliferation of dust.
After some consideration I have decided to replace proof-of-work all together and use transaction fees to regulate block production. A new block is produced once enough transaction fees have been accumulated. The node that generates the transaction with sufficient fees broadcasts it.
As far as I can see, the problem will always remain the preimageable entropy because you are relying on factors that can be adjusted deterministically by the participants, e.g. propagation, transaction fee amounts and timings. For example, there is no way to converge to consensus over conflicts over who was first in this design.
It is rationally better for you have critical feedback sooner than later.
3. Does not centralize the network, it is a local calculation performed by all nodes relative to their peers.
There is no way to escape the fact that senders of data can't be responsible for the receipt of data. Nor can the recipients of data be responsible for the senders of data to send.
The genius of proof-of-work is that it eliminates those impossible responsibilities.
I'm very hopeful that this solution proves workable as I would like to see it used in Freicoin. I will bring it to the attention of our lead programmer maaku and possibly Luke-Jr too. We have long desired a solid PoS system which would allow for a decentralized distribution of the demurrage fee, but we have always been stymied by possible PoW attack vectors that our designs were vulnerable too.
How is demurrage different from inflation? In the case of bitcoin, there is 12% inflation per year that is masked by appreciation. Demurrage would just make the inflation more obvious, but if Bitcoin were to switch to using 'PERCENT OF MONEY SUPPLY' as the basic unit of account then Bitcoin would technically be implementing demurrage. All you are achieving with your coin is to make it more obvious.
Conflating inflation with M in the Quantity Theory of Money is a fundamental error.
You can also see the following linked discussion between Impaler, CoinCube, and myself:
https://bitcointalksearch.org/topic/m.3788782
https://bitcointalksearch.org/topic/m.3789022
Also you can see that Bitcoin can not agree with Austrian economics definition of money:
Gary North who is allied with Ron Paul, Lew Rockwell, the Mises Institute, and Austrian economics, says Bitcoins: The Second Biggest Ponzi Scheme in History.
Follow-on discussion of that:
https://bitcointalksearch.org/topic/m.3781517
https://bitcointalksearch.org/topic/m.3788271
Mint: I'm disappointed in you, you have clearly failed to do your research on Freicoin and have completely misunderstood our demurrage system.
I only followed some of your early forum posts describing your coin (or planned coin at that time) and for me reading those in April when I was building up understanding of everything.
The Transaction volume of the user has ZERO effect on their demurrage costs, their are the normal transaction fees of the BTC system in each transaction yes, but we have these only for the prevention of spamming attacks not as a meaningful source of revenue for miners and are independent of demurrage. Users can not increase or decrease their demurrage costs by transactions, only the amount of coins held and the time they are held determine demurrage.
Demurrage in FRC is deducted every block regardless of if a coin is spent or not, as soon as a coin moves the new holder begins paying the demurrage on that coin. Behind the scenes the TECHNICAL implementation is to shave coins when they are moved proportional to the coin-blocks (not days) destroyed, but the protocol mandates this such that we can always consider a wallets spendable sum to be declining every block in predictable manor.
Demurrage in FRC is deducted every block regardless of if a coin is spent or not, as soon as a coin moves the new holder begins paying the demurrage on that coin. Behind the scenes the TECHNICAL implementation is to shave coins when they are moved proportional to the coin-blocks (not days) destroyed, but the protocol mandates this such that we can always consider a wallets spendable sum to be declining every block in predictable manor.
I have a more holistic view of all the options available. I put all the variables which can be tweaked into my mind and consider the range of possible altcoin designs. So my taxonomy for demurrage as distinct from debasement is that user balances decline. I apologize for confusing your confusing explanation of the deduction w.r.t. coin-days-destroyed only at time of transaction. Now I understand you are obscuring and delaying the balance deductions until the next transaction. So all coin holders receive the same proportional reductions in their balances, and these are recorded in the block chain implicitly and then explicitly on next transaction. Thanks for the clarification.
Miners receive newly created coins that are mathematically equal to the totality of all demurrage payments. But we do this by knowing the total monetary base and the demurrage rate rather then attempting to tabulate the demurrage paid by individual users.
I see. Makes sense since we wouldn't want different mining blocks to have different rewards based on the level of transactions since that could be highly variable block-to-block. That of course would have become obvious to me had I actually focused on the possible demurrage designs for a short-time.
Lastly I am very disappointed that you would make such basic economic errors as describing low or zero-transaction fees as a subsidy to the BUYER and a source of possible over-investment. Basic economics show that transaction fees hit the BUYER AND SELLER equally and are a pure drag on the economy. Transaction that the buyer and seller would otherwise find mutually fruitful are prevented by high transaction fees. No economic school calls low transaction fees the source of over-investment, it is rather 'artificially' low interest rates that the Austrian school claims cause this.
I described negative, not zero, transaction fees as a subsidy. Please re-read my upthread posts more carefully. Where I referred to zero transaction fees upthread, I said they were already a sufficient motivation to use the coin (a gift) as compared to Bitcoin and Freicoin that charge a transactions tax. I did not write that zero transaction fees are a subsidy. I clearly made a line-in-the-sand demarcation distinction between negative and zero transaction fees.
Negative transaction fees would indeed be a subsidy to both the buyer and the seller.
No where did I write the subsidy was exclusive to the spender aka buyer. Perhaps you thought I implied it because I did not mention the seller whereas I felt that implied subsidizing transactions benefits also the seller.
My last post remains valid that if we want to subsidize transactions in a chosen balance with security, I now see a way to do it although the variability on mining rewards block-to-block limits that chosen balance to a small factor.
After some consideration I have decided to replace proof-of-work all together and use transaction fees to regulate block production. A new block is produced once enough transaction fees have been accumulated. The node that generates the transaction with sufficient fees broadcasts it. Ultimately all that matters is that the network reaches consensus and orphans are no issue. Nodes in the network can even stop propagating new blocks for a couple of minutes after the previous block. If transactions are coming to quickly I simply up the transaction fee like you would adjust the difficulty in BTC. These fees are then destroyed to pay dividends rather than paid to a miner.
As a result it doesn't matter how much hash power you have because you must *pay* to submit a block and the best-fit block is the one with the most coin-days destroyed so even if you pay to submit a block with no transactions, it will be rejected.
If the node that will transmit the winning block get zero rewards for doing so then it will need to be virtually cost-less to create and send it. But if it is cost-less then every node in existence if acting in good-faith and trying to support the system will try to transmit a block virtually simultaneously as the transaction list reaches the threshold. Mass chain forking will result as every competing block will be equally valid as they contain the full transaction list. I think in focusing only on blocking an attacker you've rendered the honest network unable to reach a consensus.
Some methodology of 'culling' the honest nodes willingness or ability to create a block is needed so they don't all try to transmit a thousand competing blocks. It may be some kind of semi-random selection rather then a PoW solution, and it needs to be adjustable such that this culling factor can adjust to keep block times stable. I would NOT try to adjust transaction fees, that's a commerce killer and a terrible idea.
Lastly, what are these dividends (from transaction fees) you speak of and who are they being paid too? If your paying them to the node that creates the winning block then you DO have a mining prize and standard BTC terminology would refer to your winning node as a miner, your just trying to skip to the end phase of BTC when it is 'transaction fee supported'.
I did not want to get into Freicoin on your thread but it seems to have confused people so I will explain it again.
In Freicoin you nominal coins decrease every block such that your annualized rate of loss is 5%. Simultaneously each block an amount equal to the amount lost from all wallets is awarded to the miner. Thus each year miners mine an amount equal to 5% of the money supply. The money supply itself never grows or shrinks.
Based on your statement that BTC is 'inflating' at 12% I see that you confuse Inflation with change in money supply. Inflation and Deflation mean change in prices, not the change in money Supply. You can not begin to have a rational discussion if you continue to use these terms incorrectly no matter how common it is for people to do so on these forums.
Now ultimately we want to see 0% inflation OR deflation in Freicoin, aka a hamburger will cost the same number of coins now as next year and the year after. This may or may not actually happen under the fixed supply we have programmed, it was largely a technical hold-over from BTC and lack of a dynamic response mechanism that lead us to keep the fixed supply. In any case while we wish that nominal prices of goods will not change the user will because of demurrage experience a decline in how much then purchase IF they HOARD. This is as it should be, 5% is the cost of removing money from circulation because hoarded money is liquid and liquidity has a value that the user should pay for. People will preserve their purchasing power by lending money at a 0% interest rate, giving the liquidity and the demurrage cost to the borrower.
Now I don't expect you to agree with this as your clearly weeded to the Goldbug belief that people should be able to sit on money indefinitely and enjoy the liquidity of it free of charge. While this might seem fair for some Rip-Van-Winkle who was asleep and wasted his liquidity, in the real world liquidity value will always be rented out to other people, resulting in positive interest rates that allow the lender to amass ever larger sums of money, aka they become a bank. But even if you reject this argument their are still benefits over the use of a comparable 5% growth in money supply each year and a 5% targeted inflation rate.
First money supply growth can easily disappear into miners pockets and fail to cause actual inflation in the short term (this is particularly likely during a speculative bubble making increased money supply very ineffective at halting such a bubble). Because actual inflation is caused only by circulating money that gradually bids up prices new money which is in a deep freeze can fail to cause inflation. Demurrage on the other hand is stable and instantly transmitted to the user so the incentive to circulate money dose not occur in unpredictable stop and go manner.
And naturally their is the long term price stability, which while not guaranteed under Demurrage, is by definition impossible under Inflation. Prices are of paramount importance in a Free-Market because they are the main information that we rely on to make our economic decisions, changing prices destroy the ability to make informed choices. In Hyper-inflation or Hyper-deflation its so bad as to crash the economy, but even slow changes are bad because they require us to constantly re-send and re-learn information every year and this obscures the real underlying cost changes that may be occurring over the course of decades.
In Freicoin you nominal coins decrease every block such that your annualized rate of loss is 5%. Simultaneously each block an amount equal to the amount lost from all wallets is awarded to the miner. Thus each year miners mine an amount equal to 5% of the money supply. The money supply itself never grows or shrinks.
Based on your statement that BTC is 'inflating' at 12% I see that you confuse Inflation with change in money supply. Inflation and Deflation mean change in prices, not the change in money Supply. You can not begin to have a rational discussion if you continue to use these terms incorrectly no matter how common it is for people to do so on these forums.
Now ultimately we want to see 0% inflation OR deflation in Freicoin, aka a hamburger will cost the same number of coins now as next year and the year after. This may or may not actually happen under the fixed supply we have programmed, it was largely a technical hold-over from BTC and lack of a dynamic response mechanism that lead us to keep the fixed supply. In any case while we wish that nominal prices of goods will not change the user will because of demurrage experience a decline in how much then purchase IF they HOARD. This is as it should be, 5% is the cost of removing money from circulation because hoarded money is liquid and liquidity has a value that the user should pay for. People will preserve their purchasing power by lending money at a 0% interest rate, giving the liquidity and the demurrage cost to the borrower.
Now I don't expect you to agree with this as your clearly weeded to the Goldbug belief that people should be able to sit on money indefinitely and enjoy the liquidity of it free of charge. While this might seem fair for some Rip-Van-Winkle who was asleep and wasted his liquidity, in the real world liquidity value will always be rented out to other people, resulting in positive interest rates that allow the lender to amass ever larger sums of money, aka they become a bank. But even if you reject this argument their are still benefits over the use of a comparable 5% growth in money supply each year and a 5% targeted inflation rate.
First money supply growth can easily disappear into miners pockets and fail to cause actual inflation in the short term (this is particularly likely during a speculative bubble making increased money supply very ineffective at halting such a bubble). Because actual inflation is caused only by circulating money that gradually bids up prices new money which is in a deep freeze can fail to cause inflation. Demurrage on the other hand is stable and instantly transmitted to the user so the incentive to circulate money dose not occur in unpredictable stop and go manner.
And naturally their is the long term price stability, which while not guaranteed under Demurrage, is by definition impossible under Inflation. Prices are of paramount importance in a Free-Market because they are the main information that we rely on to make our economic decisions, changing prices destroy the ability to make informed choices. In Hyper-inflation or Hyper-deflation its so bad as to crash the economy, but even slow changes are bad because they require us to constantly re-send and re-learn information every year and this obscures the real underlying cost changes that may be occurring over the course of decades.
I'm very hopeful that this solution proves workable as I would like to see it used in Freicoin. I will bring it to the attention of our lead programmer maaku and possibly Luke-Jr too. We have long desired a solid PoS system which would allow for a decentralized distribution of the demurrage fee, but we have always been stymied by possible PoW attack vectors that our designs were vulnerable too.
How is demurrage different from inflation? In the case of bitcoin, there is 12% inflation per year that is masked by appreciation. Demurrage would just make the inflation more obvious, but if Bitcoin were to switch to using 'PERCENT OF MONEY SUPPLY' as the basic unit of account then Bitcoin would technically be implementing demurrage. All you are achieving with your coin is to make it more obvious.
The most significant flaw of any proof-of-stake system and any system that diminishes coin rewards, is it can't distribute currency from the hoarders to the users of the currency, thus it will end up with the hoarders (the banksters) accumulating all the coin and the currency usage dying.
This is because the wealthy spend a much lower % of their net worth than the masses do.
Freicoin if I am not mistaken, sends the demurrage into the ether, so those who transact more often see their coin balances decline less fast, thus it effectively redistributes relative coin value to the users of the currency. That could in theory be combined with a proof-of-stake system. The problem is correctly as Impaler described it, how to secure the public ledger.
Although I admire how demurrage distributes directly to those who transact the most, it suffers from the fact that spenders are not necessarily doing anything to secure the coin (except perhaps increasing its long-term value, thus value of mining if coin rewards do not diminish). Spending can even be wasteful and misallocation of capital. Indiscriminately subsidizing spending (or anything) is not good economics. Zero transaction fees would already be a significant gift to spenders. Demurrage also reduces the balances of holders, I find it difficult to conceive how it will be popular. Whereas coin rewards do nothing to balances, and also apparently nothing to coin value since Bitcoin is rising in price while the debasement is currently 12.5% new coins in the money supply this year.
Whereas those who actually mine are proactively using their time, ingenuity, initiative and capital to secure the network, thus it seems more capitalistic they should receive the redistribution from the hoarders. Besides it may be the only viable way to secure the public ledger.
This is because the wealthy spend a much lower % of their net worth than the masses do.
Freicoin if I am not mistaken, sends the demurrage into the ether, so those who transact more often see their coin balances decline less fast, thus it effectively redistributes relative coin value to the users of the currency. That could in theory be combined with a proof-of-stake system. The problem is correctly as Impaler described it, how to secure the public ledger.
Although I admire how demurrage distributes directly to those who transact the most, it suffers from the fact that spenders are not necessarily doing anything to secure the coin (except perhaps increasing its long-term value, thus value of mining if coin rewards do not diminish). Spending can even be wasteful and misallocation of capital. Indiscriminately subsidizing spending (or anything) is not good economics. Zero transaction fees would already be a significant gift to spenders. Demurrage also reduces the balances of holders, I find it difficult to conceive how it will be popular. Whereas coin rewards do nothing to balances, and also apparently nothing to coin value since Bitcoin is rising in price while the debasement is currently 12.5% new coins in the money supply this year.
Whereas those who actually mine are proactively using their time, ingenuity, initiative and capital to secure the network, thus it seems more capitalistic they should receive the redistribution from the hoarders. Besides it may be the only viable way to secure the public ledger.
Actually, I eliminate coin rewards by design to eliminate inflation (aka) demurrage. Your economics against hoarding are unfounded and we will have to agree to disagree here. Mining is waisting electricity and always concentrates power in those with economies of scale.
This proposal appears to be flawed, unless I am missing something. I have only read the first 4 pages thus far.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
3. You claim to defeat my Transactions Withholding Attack, by blacklisting those who send blocks with transactions that were not recently seen by all miners. I retorted against this recently. This centralizes the network (all for one and one for all outcome) by requiring every miner to be responsible for the incoming network connectivity of other miners. And it centralizes the network in other ways, such it can't tolerate a temporary partitioning of the network due to connectivity outages.
P.S. By coin-days-destroyed, I assume you mean coin value x days, otherwise you would motivate proliferation of dust.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
3. You claim to defeat my Transactions Withholding Attack, by blacklisting those who send blocks with transactions that were not recently seen by all miners. I retorted against this recently. This centralizes the network (all for one and one for all outcome) by requiring every miner to be responsible for the incoming network connectivity of other miners. And it centralizes the network in other ways, such it can't tolerate a temporary partitioning of the network due to connectivity outages.
P.S. By coin-days-destroyed, I assume you mean coin value x days, otherwise you would motivate proliferation of dust.
After some consideration I have decided to replace proof-of-work all together and use transaction fees to regulate block production. A new block is produced once enough transaction fees have been accumulated. The node that generates the transaction with sufficient fees broadcasts it. Ultimately all that matters is that the network reaches consensus and orphans are no issue. Nodes in the network can even stop propagating new blocks for a couple of minutes after the previous block. If transactions are coming to quickly I simply up the transaction fee like you would adjust the difficulty in BTC. These fees are then destroyed to pay dividends rather than paid to a miner.
As a result it doesn't matter how much hash power you have because you must *pay* to submit a block and the best-fit block is the one with the most coin-days destroyed so even if you pay to submit a block with no transactions, it will be rejected.
3. Does not centralize the network, it is a local calculation performed by all nodes relative to their peers.
Yes, coin value * days.
Mint: I'm disappointed in you, you have clearly failed to do your research on Freicoin and have completely misunderstood our demurrage system.
The Transaction volume of the user has ZERO effect on their demurrage costs, their are the normal transaction fees of the BTC system in each transaction yes, but we have these only for the prevention of spamming attacks not as a meaningful source of revenue for miners and are independent of demurrage. Users can not increase or decrease their demurrage costs by transactions, only the amount of coins held and the time they are held determine demurrage.
Demurrage in FRC is deducted every block regardless of if a coin is spent or not, as soon as a coin moves the new holder begins paying the demurrage on that coin. Behind the scenes the TECHNICAL implementation is to shave coins when they are moved proportional to the coin-blocks (not days) destroyed, but the protocol mandates this such that we can always consider a wallets spendable sum to be declining every block in predictable manor.
Miners receive newly created coins that are mathematically equal to the totality of all demurrage payments. But we do this by knowing the total monetary base and the demurrage rate rather then attempting to tabulate the demurrage paid by individual users.
Lastly I am very disappointed that you would make such basic economic errors as describing low or zero-transaction fees as a subsidy to the BUYER and a source of possible over-investment. Basic economics show that transaction fees hit the BUYER AND SELLER equally and are a pure drag on the economy. Transaction that the buyer and seller would otherwise find mutually fruitful are prevented by high transaction fees. No economic school calls low transaction fees the source of over-investment, it is rather 'artificially' low interest rates that the Austrian school claims cause this.
The Transaction volume of the user has ZERO effect on their demurrage costs, their are the normal transaction fees of the BTC system in each transaction yes, but we have these only for the prevention of spamming attacks not as a meaningful source of revenue for miners and are independent of demurrage. Users can not increase or decrease their demurrage costs by transactions, only the amount of coins held and the time they are held determine demurrage.
Demurrage in FRC is deducted every block regardless of if a coin is spent or not, as soon as a coin moves the new holder begins paying the demurrage on that coin. Behind the scenes the TECHNICAL implementation is to shave coins when they are moved proportional to the coin-blocks (not days) destroyed, but the protocol mandates this such that we can always consider a wallets spendable sum to be declining every block in predictable manor.
Miners receive newly created coins that are mathematically equal to the totality of all demurrage payments. But we do this by knowing the total monetary base and the demurrage rate rather then attempting to tabulate the demurrage paid by individual users.
Lastly I am very disappointed that you would make such basic economic errors as describing low or zero-transaction fees as a subsidy to the BUYER and a source of possible over-investment. Basic economics show that transaction fees hit the BUYER AND SELLER equally and are a pure drag on the economy. Transaction that the buyer and seller would otherwise find mutually fruitful are prevented by high transaction fees. No economic school calls low transaction fees the source of over-investment, it is rather 'artificially' low interest rates that the Austrian school claims cause this.
Freicoin if I am not mistaken, sends the demurrage into the ether, so those who transact more often see their coin balances decline less fast, thus it effectively redistributes relative coin value to the users of the currency. That could in theory be combined with a proof-of-stake system. The problem is correctly as Impaler described it, how to secure the public ledger.
Although I admire how demurrage distributes directly to those who transact the most, it suffers from the fact that spenders are not necessarily doing anything to secure the coin (except perhaps increasing its long-term value, thus value of mining if coin rewards do not diminish). Spending can even be wasteful and misallocation of capital. Indiscriminately subsidizing spending (or anything) is not good economics. Zero transaction fees would already be a significant gift to spenders. Demurrage also reduces the balances of holders, I find it difficult to conceive how it will be popular. Whereas coin rewards do nothing to balances, and also apparently nothing to coin value since Bitcoin is rising in price while the debasement is currently 12.5% new coins in the money supply this year.
Whereas those who actually mine are proactively using their time, ingenuity, initiative and capital to secure the network, thus it seems more capitalistic they should receive the redistribution from the hoarders. Besides it may be the only viable way to secure the public ledger.
Although I admire how demurrage distributes directly to those who transact the most, it suffers from the fact that spenders are not necessarily doing anything to secure the coin (except perhaps increasing its long-term value, thus value of mining if coin rewards do not diminish). Spending can even be wasteful and misallocation of capital. Indiscriminately subsidizing spending (or anything) is not good economics. Zero transaction fees would already be a significant gift to spenders. Demurrage also reduces the balances of holders, I find it difficult to conceive how it will be popular. Whereas coin rewards do nothing to balances, and also apparently nothing to coin value since Bitcoin is rising in price while the debasement is currently 12.5% new coins in the money supply this year.
Whereas those who actually mine are proactively using their time, ingenuity, initiative and capital to secure the network, thus it seems more capitalistic they should receive the redistribution from the hoarders. Besides it may be the only viable way to secure the public ledger.
Add if demurrage was paid out as negative transaction fees instead, the problem is this encourages transaction spam (sending to yourself). However the design required to allow zero transaction fees solves this.
So it would be possible to offer a balance between demurrage and perpetual coins. I don't know what the best balance is.
I am actually excited to realize this, and I think Impaler will be too.
The most significant flaw of any proof-of-stake system and any system that diminishes coin rewards, is it can't distribute currency from the hoarders to the users of the currency, thus it will end up with the hoarders (the banksters) accumulating all the coin and the currency usage dying.
This is because the wealthy spend a much lower % of their net worth than the masses do.
This is because the wealthy spend a much lower % of their net worth than the masses do.
This I disagree with. Do you think bitcoin is flawed in this regard as well? It also has diminishing rewards.
I very much do. Rather than repeat my past 2 weeks of posts, I will just refer you to click my name and then Show Posts.
Even if it didn't, the coin rewards go to people who can afford mining hardware.
ASICs are not fungible.
ASICs scale too well and result in centralization of mining:
http://www.kotaku.com.au/2013/11/bitcoin-mining-is-getting-out-of-control/
Even freicoin's demurrage goes straight back to the miners.
I didn't know that. I thought it went to ether and there were separate coin rewards. Indeed that makes sense.
Poor people that spend most of their income on consumption aren't going to be saving up for ASICs, so their is not necessarily distribution of currency from the hoarders to the users as you describe.
That is one of the problems with ASICs.
Precious metals have this characteristic as well.
All hard money is horrible for all of us. Impaler and I have been agreeing on this.
I don't think a large amount of hoarding necessarily leads to the currency usage dying, just as gold and bitcoin haven't died. Where a currency has advantages over other mediums of exchange, its use has value..
Gold has died as a base money. And it has never been a hard currency.
This proposal appears to be flawed, unless I am missing something. I have only read the first 4 pages thus far.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.
2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.
#2 seems like an important concern. And I'm still a bit confused as to how difficulty/block rewards are calculated, an example would be helpful with that.
The most significant flaw of any proof-of-stake system and any system that diminishes coin rewards, is it can't distribute currency from the hoarders to the users of the currency, thus it will end up with the hoarders (the banksters) accumulating all the coin and the currency usage dying.
This is because the wealthy spend a much lower % of their net worth than the masses do.
This is because the wealthy spend a much lower % of their net worth than the masses do.
This I disagree with. Do you think bitcoin is flawed in this regard as well? It also has diminishing rewards. Even if it didn't, the coin rewards go to people who can afford mining hardware. Even freicoin's demurrage goes straight back to the miners. Poor people that spend most of their income on consumption aren't going to be saving up for ASICs, so their is not necessarily distribution of currency from the hoarders to the users as you describe. Precious metals have this characteristic as well.
I don't think a large amount of hoarding necessarily leads to the currency usage dying, just as gold and bitcoin haven't died. Where a currency has advantages over other mediums of exchange, its use has value..
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