Topic: Viability of centrally issued P2P Cryptocurrency - best answers tipped! - page 2. (Read 5636 times)

It's too late. Bitcoin is.

I agree with everything you say, except that; Centralizing issuance in short and medium term is used to circumvent the near impossible adoption for the current government.

The central authorities of the new currency are not the state now, however they stand chances of becoming one after the large structural transitions in society - including the monetary reform by the initiating non-state operators - are through.

Yes, I mentioned that in the opening, it has many similarities but fails on many fronts which my concept has addressed.

Ripple?

Theoretically a government could declare a crypto-currency they issue as the new legal tender and offer an official conversion rate for people to exchange their old currency. The problem with getting this system implemented would be political rather than technical however. The current fiat system gives government total control over the money supply already, and cash has zero transaction fees (unless you send it electronically). Moreover the inefficiencies of the current system (ie the transaction fees) prop up a network of bankers that is highly intertwined within the governments of the world. Money and political power are never far from each other. Just look at how easily the bank bailout was passed in the US.

Adopting crypto-currency as the official currency of a country is therefore highly unappealing to governments because they already have the system that gives them the maximum of power over money and greatly benefits the most politically influential people of the world. The US can literally print its way out of massive amounts of debt over time. It can also acquire that debt at an insanely low rate through things like QE. And all the people who make money off of this system basically have the Congress and Senate in their pockets ready to write a check whenever they are in trouble. What makes crypto-currency uniquely useful is the fact that it can circumvent the traditional money system without the need for a centralized authority (read Satoshi's whitepaper).

Centralizing crypto-currency is trying to reinvent the wheel as a square and expecting it to work better.

Decentralized transactioning is not slavery. The more sinister half of the concept: mostly centralized issuance, is admittedly hard to swallow for the Bitcoin ultra-libertarians but is not so for the general public. They will view carefully authorized & distributed fair, eventually decentralized money as a great step towards freedom, which is appropriate.

Short term plutocracy is required to bootstrap the system past harsh competition. The parties controlling issuance are provably benevolent and prudent, and will be giving up excess control by the continuous distribution. Only monies necessary to handle commons are retained. In addition, there will be the 5% to 50% of freely minted coins.

Transition from the current sick and twisted fractional reserve system to centrally overseen P2P-transacted fair money, is in closed ecosystems more doable than technically intensive switch to market minted cryptocurrency. But my intent is to discuss the practical implementation rather than defend the principles behind the concept.

I don't need you. Less arrogant people who are capable of taking the presented model seriously can step in. I'm not sure such are using this forum any more though.

Yeah, no.

I trust math.  I don't trust the state.  Failure could mean many things, including flooding the market with their premined coins.  But keep gloating about being so clever.  It really makes me want to take you seriously.

Either you didn't read my post or didn't understand it. Part of the currency storage is centralized - nothing else, so users will be better off if that point fails completely. Until it fails, it means more robust cryptocurrency compared to completely non-centralized minting such as everything on the market.

Hah!

"Will someone help me design a better slave restraint system? Things have been working out well for a while, but ever since this neighbouring town opened up that doesn't recognize slavery a lot of mine are escaping. This is getting to be a problem for plantation operations, so I need someone to help me build stronger restraints. All help is appreciated."

Centralization means single point of failure.  Why would I want a less robust cryptocurrency?

This may have been sidelined here a few times. I need help of the bright thinkers!

Say you want to develop a cryptocurrency for semi-closed environment that, to unknown extent, is planned to replace the national currency during many years ahead. Yeah grand thoughts, don't worry about that (note unknown extent)! You may consider this as a thought experiment.

Management, PR, valuation mechanisms, even technology are well planned and going to be in good hands. A major issue is the economic experience that we not only lack, but realize to be largely nonexistent. Formulating the best course of action for a p2p currency for with centralized issuance is in no books. But maybe some economic theories can be put into use here.

Theoretically, the currency is going to be majorly controlled by "the state" - whatever it means in the future (face it, the state is the single most powerful entity using and holding the bulk of funds in a nation).

The mode of minting the currency needs to be different from the start-from-scratch-and-let-everyone-mine-their-own-coins model. This is because:

- 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

- mining is supposed to remain tightly distributed - no ASIC not even GPU miners unless very sophisticated software is impemented

Now, the obvious solution for the above is PREMINE. [Let's omit the fact that has become a curse word in the pyramid crypto games. We are talking about a completely different scenario where centralizing the bulk of coins serves a purpose other than the storage guards becoming rich.]

The obvious remaining question is: How much premine?

The crypto needs to be fully issued in approx. 10, say max 15 years. This coin is not the final solution, but an important step towards eventually more healthy value transfer systems of unknown type.

We want the crypto to be relatively scarce. This with the time span sets the range for the block time, rewards, final # of coins etc. that need to be adjusted according to the level of premine eventually decided.

Having put in quite hard thinking already, I simply can't see even a ballpark figure of the premine % to start with! On the other hand the reputation of large premine puts us off, although there are valid points above that would make 90% or even 95%+ premine feasible.

Naturally, we need a healthy portion unmined to keep the incentive for p2p network to solve blocks for the 10+ years to come. What proportion would be healthy? Remember the centrally held premined millions are not to be partied with. They are held as reserve and to propel productivity. Thus, for being scarce (although mined, but unavailable), the coins should be well desirable.

50% would just be a "nice" symmetric figure as well. But I don't see great benefits with that. It only dilutes the circulating money and puts the rate at risk. We want a deflationary currency initially, like Bitcoin. Deflation brings along desirability and pulverizes many otherwise impossible obstacles for adoption. Receiving 10 coins a day out of 5 million (eg. 5% of 100M) available-to-mine-coins sounds actually more thrilling than receiving 10 coins out of 50 million (eg. 50% of 100M) available coins when you turn your head around that a bit.

Is it sufficient to arrange the required level of trust for 95% "premine", or is it doomed to fail like Ripple seems to have gone with their premine? XRP didn't handle it quite well from the beginning, which may turn out to be the crux of their likely failure. But can you still see some inherent economic problems with the large proportion central depository? Fractional banking is out of question, so this would still be fair money, just not to the extent where fair is understood as complete creation by the markets.