Topic: Viability of centrally issued P2P Cryptocurrency - best answers tipped! (Read 5636 times)

Okay, having read the first four six (im drunk) posts...
/thread. it really should have ended there. Especially with the attitude the op has.

CryptoCurrencies have LOTS of nice features.

If you wanted to use one for your country, there would be lots of benefits.

Let's say, in this thought experiment, that a small country that used it's own currency, wanted to use this wonderful technology. Why? Well..

1) You can send money at any time. To anyone. Anywhere. Almost instantly.

2) No-one can fake a transaction from you to a third party. The cryptography makes sure of that. No counterfeiting.

3) No-one can charge back a transaction. Once the miners have accepted it.

4) In the case of a Brain Wallet, unless someone 'beats' it out of you (let's hope THAT never happens..), your coins can't be stolen. Very secure. And your private key, in the normal case, can be encrypted also.

5) The Open Ledger would make accounting easy, and the possibility of financial fraud hard. If not impossible, for both the citizens of the state AND the Government. They would be forced to comply, or at least be discovered in their treachery.

As the Government of the country your role would be simple. The Government would pre-mine ALL the initial coins. Say 1 Billion coins - or a number that would be large enough for the economy to be sustainable.

Then you would go to the country's exchange, and put a MASSIVE sell order for 1 Billion(All the coins) coins at 1 unit of your currency. Any citizen could use the exchange.

Then you would let the currency, go. You'd also have something no other coin has managed. Price Stability.

After a while there would be none of the original 'paper' currency left. Everyone would be using the crypto coin.

The mining would be left to the Market, with fees being the only incentive. Yes - the government would also do this, and probably in a very large way. To make sure that the 51% attack was never going to happen. You could even regulate who was allowed to mine. Maybe some kind of license. They may not even need to tax it's citizens if the fees proved enough?

No - this would not be a decentralised unregulated crypto coin, like the 'Bitcoin' we all love. But it would be JUST AS GOOD as whatever currency the Government was peddling before, and in fact, quite obviously, better.
 
Yes you would have to trust your government. But you all ready have to do that.

Most of them are now adopted, as well as a large portion of the other ideas I presented - in a form or another by the 2nd Generation centrally distributed cryptocurrencies such as NXT, eMunie and Mastercoin.

I was early and I was right.

Every single one of these premises is completely absurd.

Nobody gives them. Funds would be received through purchases from third party operators who provide services and packages for their audience and public - services created by the governing organizations and second level operators, to which access is allowed against purchase of the currency.

It has just come to our attention that there are at least three major cryptocurrency endeavors currently going on utilizing the central issuance model:

- eMunie
- Mastercoin
- Nxt

It seems all of these are relatively large projects in already advanced phase. We are happy to notice the support these models receive, despite the neglect from the traditional ponzicoin crowd. It validates our proposition that the central issuance model is viable to operate a centrally issued cryptocurrency on a national level.

Central issuance reasoning was addressed in the opening post:

there are a handful (ideally <10) of organizations that in co-operation control the release of currency to public, arrange basic income / new currency adoption rewards for citizens, grant bounties for companies to motorize development of both technical and systemic reforms etc. These organizations not only regulate the release of tokens to benevolently oversee the adoption process, they also require mass funds converted to old world currency to continuously to keep the ball rolling.

- there are supposedly hundreds of second level operators who receive grants with limited release rights: To promote, facilitate adoption and development

- mining is supposed to remain tightly distributed: To combat disproportional accumulation of coins to mining conglomerates or early adopters

There you have it. All of these require an uncertain amount of premine (=central issuance) to work more effectively than a system born "fairly distributed" from square one.

I agree; why make it inferior with centralization?

I was wondering where that random Recieve came from. Thank you.

Am still considering things. It are what I do. 

Does not need to be? Well, p2p cryptocurrencies are just about the best form of digital cash available. Centralized or not, why make it inferior?

The comparison to some aspects of USD is valid, but on many fronts USD stinks and a quota bound cryptocurrency would make away these, like most of the uncontrolled money supply problems plaguing fiat since the beginning of their times.

A centrally-issued currency does not need to be either P2P- or cyptography-based, because you've already assumed the counterparty risk of central control that P2P or crypto cannot solve.

The US dollar already exists in this form when it comes to open market operations at the Fed.

Although the thread failed to concretely address most issues we would have hoped, some valid ideas were presented. Rogue5pawn, you have been paid 0.012 BTC for your contribution. Thanks! (You may still reply  )

Had to think on this for a while before responding.

First, in response question posed in the thread topic itself, I have come to the current position that anyone publishing a cryptocurrency is technically the "centrally issuing" party. However, as the question was expanded upon in the OP, the question seems to be relative to a central government of some kind being the issuing party. Could this be viable? In the most general use of terms, the only answer is, "Yes." I think the more relevant question, and the one you were aiming at, is: Without outlawing all other forms of currency, would the populace at large come to use this government created cryptocurrency as the preferred medium of exchange? And what could be done to make it the preferred medium of exchange? How would pre-mining affect its popularity? These all assume, I think, the standard cryptocurrency model (Bitcoin) as the template.

I think any issuing government could pre-mine as much as they needed if the coin had no max production cap, and as much as 20% if there is a max production cap. However, they could only use these pre-mined coins for self-funding, not as a direct means of inflation/deflation control: they could only add large sums of currency to the economy (decreasing purchasing power), but not remove large sums from the economy (increasing purchasing power). Of course, part of (or all of) the inherent transaction fees/taxes could be directed to a central wallet as a means of temporarily extracting currency from the economy, but this trickle effect wouldn't have the necessary impact during a time that needed an immediate adjustment.

In order to have the power to immediately remove large sums of a cryptocurrency from the economy, they would have to be able to directly change features of the blockchain, the minting algorithm, and/or any other features whenever they wanted/needed to..... effectively negating the very principles of being a cryptocurrency and, instead, making it nothing more  than a digital fiat currency.

In summary: A government could publish digital currency can call it a cryptocurrency, buy no one would be able to fully trust the issuing government or put their full faith behind the currency itself for the reasons explained above.

And just in case I won 
BTC: 1EMj11KZKQYryLwksQrURLANjME2F9WA1e
LTC: LZrtsbuttz1wVM5b4936hLCPeFAP5uc7Wy

You are thinking of the number of coins as mostly the crucial factor against the 51% attack. I'm inclined to leave the risk of attack to less emphasis (especially with PoW and dedicated attack mitigation team). I'm inclined to think The relative ownership and distribution proportions of coins - or rather everyday payment units, in case one unit is 0.00001 coins as often is - is the defining aspect in the formation of success. For this adjusting the various parameters you mentioned is imperative.

We could probably use your math professor friends' skills for rate projections etc. if we just find out what sort of derivations they'd need to calculate... game theory anyone?

I'll have a word on your thread later, it's a good thread and not so far from this one.

Ok, governments don't mine. I actually prefer that. With POS and the gvt holding/receiving a portion of every transaction fee (and the remainder destroyed) and the "interest earned" on their Reserve Balance, as well as the usual taxation practices already in place, I think they could easily stay well ahead of the curve. (Reminder: In order to manage a 51% Attack under a POW /w POS system, the attacker would have to have both 51% of all coins in circulation and 51% of the network hashrate.)

As for keeping the circulation amount stable, I think it would have to do with how the blockchain's algorithms were laid out. Just as difficulty is adjusted every so many blocks, the fee/tax rate could easily fluctuate higher or lower as the system required in order to maintain a relatively steady rate of growth, and the POS Interest could also fluctuate as needed even to the point of demurrage (use it or lose kind of thing) if it's held in reserve too long. Also, some of the current altcoins already have a variable block reward (PPC has had a historical low of, I think, 7 coins from a block and as high as 1010). Some of these variables could rely on such information as: quantity in reserve balances, value/volume of all transaction over a period of time, target block time vs actual block time, and figuring out how many coins have simply gone MIA due to human error (accidentally reformatted hard drive and lost all backup wallet.dat files, for example). It is actually the human error side of permanently lost coins that causes me to suggest no max limit to mined coins. If Mr. Pirate really does have 600k BTC that the kind people at the FBI are holding for him, then that's 600k absolutely missing and gone from circulation forever, 21,000,000 - 600,000 = 20,400,000 BTC to ever be seen in circulation, not to mention all the uncounted lost coins from other human practices and error.

I'm not a programmer by any means and have no idea how any or all of this could be implemented within the blockchain info and mining algorithms, but I do love my math and spreadsheets and mathematics professor friends. In the end, it's a just a program, and programs can be made to do whatever we want them to do.
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As for that 49% thing, I'm helping a friend decide if it's worth buying four of those 2Th/s January pre-order Cointerras. At 8Th/s on a network of 3000Th/s, if one were to Solo Mine, 8/(3000+your h/s) = 0.2659% of the total network h/s... and so it is foolish to Solo Mine. But with that same 8Th/s on a coin that is currently at 10Th/s, then you would have 8/18ths of the network h/s, or 44.444% of the network h/s and so you would average to find 44% of the blocks over a period of time. I understand this over simplifies things, but it's an effective way to get numbers across to people that don't have a head for such things. Cases in Point: BTC Guild holds around 32% of the total network h/s and finds blocks at about that rate, while BitMinter only has around 16% of the total h/s and finds blocks at that as an average rate. (Nice Pie Chart here: http://bitcoincharts.com/bitcoin/)

Perhaps we can have this discussion on two threads, as I had started a similar thread posing the question:  What would the Perfect Altcoin be?
Unfortunately I cannot offer a prize due to lack of funds. (I started day trading on Cryptsy about 2 weeks ago, and have gone from 0.00079625 BTC to a whopping 0.07283193 BTC via Cryptsy's mini-money market... *brags* a whole factor of 8000)(hope that's something to brag about, because I really have no reference points) https://bitcointalksearch.org/topic/perfect-altcoin-315835

Please, take a look at that and see if it qualifies as part of this discussion.... or just check it out and let me know what you think over there.

In the mean time, I will carefully consider your reply and get back to you soon. Cheers

Not necessary. Government has other routes for profit (tax and production primarily).

Would not happen, regulation is not feasible.

See above.

The state will need to have resources to thwart any 51% attacks occurring from uneven hashrate distribution on the free market.

Correct, PoS would be important to prevent the 51% attack. I have an intuitive feeling partial PoW would still be good to have like PPCoin.

Interesting idea, deflation is indeed desired in the upswing. Nonstopping coinage doesn't feel right, but I can't put my finger on it why it wouldn't be just perfect to keep the max amount stable by destroying fees and minting coins continuously. Would it perhaps be difficult to keep the circulated amount stable?

Government doesn't mine, so most of these calculations doesn't apply. What's the basis of your figures, constant income from mining?


There are no other serious contenders at this phase


The bank does not ask for money, it almost exclusively gives money (coins) out. In my opinion that's a competitive way to earn trust.

Pot, meet kettle.

What about using the Obamacare website for distributing the currency? We could give a certain amount of OCC (ObamacareCoin) to people who bought heath insurance (I hope there is nobody from the government reading this, or they may take it seriously).

Well.... seeing as this a thought experiment game AND there is a reward for the best thinker... Hmm... lets see....

Let's assume that the government is also going to be mining the currency after publication/distribution of the blockchain, for both profit and regulatory purposes, and only the citizens of that country will be allowed to participate in the mining process (how this can be legislated and enforced is one for the programmers, likely special wallets and machines limited to the regions IP range). In order to prevent a 51% attack, the government should regulate the distribution of the mining equipment and themselves so that the citizens as a collective will maintain 51% of the hashrate. Also, Proof-of-Stake could be used in the design along with other mechanisms that encourage spending rather than hoarding. Include a few deflationary measures, such as a variable ranged fee per transaction that is destroyed, and there would be no need to put a cap on the ultimate number if coins to be created. This is just a quick thought on what the coins and their creation could entail.

As for Premine: given no maximum coin creation number, a % of Premine based on the max coin count could not be determined. However, knowing the expected time to block (10-20 minutes?), the block reward (50-100? people like round numbers and multiples of 5 :-P ), the government's expected rate of income from mining, and what the network hashrate will be soon after release... I think these numbers could indicate how much to Premine. The % could be figured according to, say, keep the government ahead of the curve. Without sitting down to do the math, and knowing that the government's chance to find a block will be a near constant of not more than 49%, they could Premine somewhere between the first 1000 and 5000 blocks. Using my min/max numbers, that would give them 50k/500k coins to start.

Even with a predetermined max coin count and the government participating in the mining process as already mentioned, I would guesstimate a mere 10% of the grand total would be advisable to mine because they would still continue to have 49% of the hashrate and be generating blocks at a much faster rate than any other Pool

Thanks for letting me play, Hope I win!

Not mandatory. No regulation policies. All regulation happens technically through the central issuance.

 That's impossible without violent revolution. Preferably discarded.

I disagree about being late. Bitcoin is far from being adopted in mass scale in numerous semi-closed environments. There is fair chance it is surpassed by another more user friendly system before becoming de facto. A better money can be deployed leaving Bitcoin in the shadows, by strong central operators with relative theoretical ease. Even Bitcoin could, but we'd rather see a technically superior cryptocurrency be the one that large societal resources are allocated to.

I would hate to have my children wait 10 minutes for every transaction to clear for the next 200 years before the next value token reform.