Topic: [white paper] Purely P2P Crypto-Currency With Finite Mini-Blockchain - page 4. (Read 24202 times)

Anonymint.

First I agree in degrees there is nothing wrong with an expansion of the money supply , to fit the normal balance of trade and production of the citizens therein. 

Where I think you misunderstand is the relationship between "interest" and debt.

You make a blanket assumption that all currency must expand because of the principal of interest ?

This is not the case , and its important that we dont confuse this basic principle , interest can be a justification for risk on an investment , this is just a transfer mechanism , nothing to do with net currency expansion .

The reason all economic activity is grinding to a halt is of course because all currency is  issued as debt , then by extension expanded with " credit creation" .

There is more debt than currency , understand ?

This by extension and purpose filters , energy productive capacity back towards the top of that pyramid friend .

If citizens humans for examples,  stopped getting into debt , and stopped borrowing further into debt , nearly all currency velocity would freeze and the world would grind to a halt .

This would be called a deflationary spiral.  This is what everyone fears .

Of course BTC is fantastically centralized , they are relying in that very thin principal of paying off the right people , I dont think its a viable economic infrastructural design.

But roll with it while its working .

The reason the fed balance sheet is tbe number it is , is due to the fear that people individual and businesses are at thier debt limit.

Thus all currency velocity can freeze .

bitfreak! I want to apologize for crashing in on your thread. I think the Mini-blockchain is absolutely required for a Bitcoin future that isn't dominated by cartels doing the mining (but it is not alone sufficient to prevent the cartels).

Let me summarize where this ended up for me.

1. Mini-blockchain by itself is not sufficient to drive adoption a new altcoin. Users get more excited about features that put coins in their pocket, than solving future scaling problems.

2. Economics of debasement (i.e. money supply inflation) is not well understood. However, without perpetual debasement, the mining of PoW will end up with cartels. However, many will disagree on these points, so it is very difficult to get any sort of consensus agreement.

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The key to understanding the economics of debasement is that money supply inflation always goes to workers salaries[1], so it is not a problem. The theft that occurs with fractional reserve banking is mainly by periodically confiscating the capital of the population with an economic implosion and a reset of the currency, e.g. bank failures in a fractional reserve system or the coming bail-ins and retirement account nationalizations for G7 nations. And without perpetual debasement, you must have fractional reserve banking, because of the logic Etlase2 and I discussed upthread.

An economy can't run properly without perpetual debasement because then capital never has to move (because it never rots), it can just sit in a hole forever. Nothing in the universe is forever, so to structure capital to be forever introduces abnormality that can't be.

[1] A more direct link to the math, https://bitcointalksearch.org/topic/m.2895021

No money has a constant value unless everyone uses it as their unit-of-account and thus no exchange-value needs to be considered:

http://armstrongeconomics.com/2013/08/24/14007/

Thus maintaining a constant money supply doesn't guarantee deflation, unless it is everyone's unit-of-account, but in that case deflation leads to repulsion to investment, because why should I risk my capital when it is always increasing in value if I just bury it in a hole. But then production declines due to lack of investment and you get stagflation with deflation of production. Then why should I invest if the economy is declining. Sound familiar? (it is happening right now) It is a downward spiral that can lead to a Dark Age, if society doesn't confiscate the gold and create inflation (by devaluing gold) as FDR did to save us from a Dark Age. That is not to say I like the outcome of the New Deal socialism, but I am saying that if rational (Arlyn Rand self-interested) capitalists have their way, we end up in Dark Age.

It is really the high tech sector that always saves society from ruin. We always invest our brains, because we are bored otherwise.

(note wrote the above very sleepy, so may not make complete sense)

Btw, I am considering quitting and exiting Bitcointalk.org. I have been thinking lately, it is time for me to make a decision and stop wasting time. Either I do the project, or I move on to other software projects that are less thankless and dangerous. The following link has my logic on why:

https://bitcointalksearch.org/topic/m.3354194

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Disagree, because the math also applies to the fact that larger capital can't do what smaller capital can. Any way, we agree on the point and we are arguing only semantics.


I trust human ingenuity and the fact that smaller capital can do things which larger capital can't.

I think the main problem is the central bank (actually the triumvirate) which erases the gains smaller capital make against larger capital. Right now, the G20 is collecting data on all the millionaires so it can destroy them. Bitcoin is probably a honeypot helping them to do this.


I know how to implement what was proposed in this thread within probably 3 to 6 months. You would be well served to implement, and not talk.

And I am about done with talking. Decision time.

Mathematically correct. It is an often misunderstood concept and conflating the reasons for the necessity of an expanding supply is not helpful to your line of argument.


This presumes that hydropower streams are somehow the end-all be-all for efficient energy production. It also ignores the very significant hardware aspect of the equation. Square peg, round hole.


Yes.

Edit: I had written about all of this in more detail in August:

https://bitcointalksearch.org/topic/m.3014282

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Happy to see someone understands why currency exists (in terms of unit-of-exchange, not just store-of-value). This is essentially what I wrote upthread about "velocity of trade (money)" and society entrusting savings because it expects you to generate more trade and excess production, as well what I wrote in the following linked No Money Exists Without the Majority, where I mentioned the purpose of currency (unit-of-exchange) is to obtain the maximum division-of-labor.

https://bitcointalksearch.org/topic/no-money-exists-without-the-majority-226033


Velocity of money is what brought us out of the last Dark Age. Unbanning usury was one factor, as well as the creation of the world's first central bank in Europe.

If goldbugs had their way, we would sink into another Dark Age. (I was a goldbug before sigh)


I am again happy to see someone besides me understands this on the Bitcointalk forum.


Sadly I agree with you. And "Satoshi" (which is probably the same triumvirate, disagree?) has the psychology of these naive goldbugs wrapped around his million BTC finger.


Pedantically correct yet also incorrect as you admit. But as you say below and as I had noted also, interest flows to those who have amassed so much capital that they can no longer spend it nor invest it well. Thus my statement was correct in reality. Thus they turn to Olsen capture and parasitism. Controlling credit is a way to suck blood from a turnip. The controllers of the triumvirate don't even need to issue the loans, they control those who do.


Exactly.

Perpetual debasement is one method of decaying that misdirected power. But not really effective, yet what other alternative do we have? And perpetual debasement at least helps us to keep mining more decentralized away from complete control of cartels.


I thought of one way it will:

https://bitcointalksearch.org/topic/m.3090924

The large wealth can't seek out those little hydropower streams all over the world, because the economy-of-scale is too small for them.

This is analogous to my point upthread about how a guy selling mineral water on a hot day can double or triple his investment, but Warren Buffett can't do that in a day with $billions.

So redistribution can occur,and not just in mining but in general that "smaller things grow faster, seedlings grow to saplings in months, saplings grow to oak trees in years, but oaks trees never grow to the moon". This is why central banks are so evil, because it enables the bastards to reset the system and destroy all the gains the little guys have accumulated since the last reset. Central banking is the way the bastards kill everything periodically in order to maintain their percentage of power. Grotesque!

So the solution is we need a coin that can't be centralized, then human ingenuity will take care of the rest. This is why the mini-blockchain and perpetual debasement are a natural fit. But unfortunately the mini-blockchain designer can't see it (yet) due to some delusion he learned when becoming a goldbug. (sorry for the personal attack, but how else can I say I am frustrated that the designer of something so good can't see the big picture)

Do you have a better solution that is tied to the effort and ingenuity of humans and not just a Marxist redistribution scheme?


I think you missed that revelation I had on hydropower since the last time we were debating.

You are a smart guy and I wish we could get on the same page.

Not in the spirit of bitcoin. Your argument about stealing is pretty funny, considering you are talking about being entitled to an increase in your wealth by the mere virtue of other people demanding to use the currency that you happen to use. Wealth is not created this way, wealth is redistributed. Wealth is created by the trading lubricant provided by money in lieu of barter. I've argued in the past that I think FRB was a key part in creating the merchant/middle class. Do I think FRB would have been the best way? Of course not, it created other types of empires and enslavement, but coincidentally or not, it does have a correlation with humanity moving away from feudalism and into a much more free society.

With a fairly objective perspective, one could argue that the US sees a much higher standard of living than it deserves, merely because of the property that its currency is the world reserve currency. The US government/fed/banking system triumvirate thoroughly enrich themselves by "printing" valueless bills in return for real goods and services and real power in the world. This, if not precisely, closely parallels how value is absorbed into the bitcoin ecosystem--by funneling it through the top. It is much more difficult to objectively see that when you (the general you) might be close to the top that this is a problem.



This is mathematically false. Interest does not require an ever-increasing money supply, it only requires that those who earn the interest spend it. However, there is very little incentive to actually consume wealth when it very easily buys power, and power tends to beget more power and wealth. The problem, my dear AnonyMint, with perpetual fixed debasement in a bitcoin-like blockchain design, is that competition to waste resources in pursuit of some-percentage-inflation means that little to no power will actually ever be distributed in that design. It is also a square peg in a round hole treatment that tries to address the fact that "something must be done" but "I really have no idea what." Comparing it to "this is sort of how it works today" is not particularly convincing, considering that it is the system that is trying to be fixed.

I had written much about this already in No Money Exists Without The Majority:

https://bitcointalksearch.org/topic/no-money-exists-without-the-majority-226033

What I want to know now, is what the Bitcoiners here really think about debasement, gold, and the lack of debasement in Bitcoin after 2024, especially 2033.

So I will start another thread to ask for them to express their opinions, while I will try to shut up and listen to what all have to say.

https://bitcointalksearch.org/topic/should-altcoins-model-gold-are-we-all-goldbugs-312649 (that thread)

Because I don't want to get very excited about doing something good for the world, only to find out later that the market doesn't understand and is caught up in a gold delusion. If the market just wants to be fooled by their delusion into allowing mining cartels as Satoshi appears to have done to manipulate their psychology, then I need to know that, because it impacts how I should approach this. Generally speaking I am most excited to work when I feel I am doing something good for society and making money at the same time. I am sure it is the same for most of you all. Yet if you all think that gold as a strict currency is good for society, then we are doomed.

Not everyone has to agree, I just need to determine what is the real mindset of the majority of Bitcoiners. So I will start another thread to try to find out.

P.S. The probability that Satoshi was one person is slim and none:

http://ianso.blogspot.be/2013/10/bitcoin-as-law-enforcementnatsec.html

You still haven't addressed how to stop cartelization of mining if you remove debasement?

You want a cartelized coin?


Currency is what you can trade for goods & services in society. Don't conflate with assets which are what you can trade to investors.

No where in any normally functioning country can gold be directly traded for goods & services.

Gold standard failed in the USA due to very frequent bank runs and depressions due to private banks running fractional reserves of loans in gold receipts. Strict money systems fail because society will not agree to not use loans. And mathematically loans require more money supply every year due to the interest rate. So if you only have gold, then you have no choice but to cheat and debase it with fractional reserves.

How was it working?

Goldbugs have elaborate illusions that sustain their delusion. Breaking them out of the dream-like state is not easy. I was quite ashamed with myself (having thought I was rational) when I fell out of it finally and returned to rationality. It caused me to doubt whether I will always be rational. My excuse is I was going through some severe personal issues at the time (e.g. sister was murder by her husband, loss of my marriage, got influenced by a guy named Jason Hommel, etc). I also went off on a God delusion during that period too   All of that caused me to change from a worldclass productive entrepreneur and programmer into a loser. But I should blame it on myself only (take responsibility).


One reason (see bold text below for other reason) perpetual debasement exists is because society will always use loans and loans pay an interest rate, thus the demand for money increases compounded every year. If you don't have the money to pay the interest rates, then society will create it somehow which means for example creating fractional receipts (IOUs) for Bitcoins.

There is no such thing as a stable value of anything in the universe. Everything is measured relative to everything else. Please study my The Universe blog article. Do you realize that even measurements change depending on relative speeds?

http://unheresy.com/The%20Universe.html

Nothing the in universe is at a fixed position. You have a layman's incorrect comprehension of what it means "to exist".


Rothschild family for example.


Currencies don't have exchange price demand, you are talking about an asset, e.g. Bitcoin is not primarily a currency.

Currencies have a demand based on the velocity of trade (money) in the economy but since they are the unit-of-account for all gooods and services, they don't have an exchange demand. In other words, most Americans don't care what the fluctuations in the exchange value of the dollar to other currencies or gold is, because everything they spend on it is priced in dollars. Now the relatively large influence of foreign exchange ingress and egress is why small countries are beholden to the dollar, they don't really have independent currencies.

Persistent monetary deflation in a true currency (not an asset) only occurs either in a dark age where hoarders thus destroy all the production (by failing to invest in production due to hoarding currency or assets) or in situation where the gold standard is being fractionally debased but hasn't defaulted yet, so there is an illusion that gold's value is rising persistently. Yet as we saw in the 1800s, the fractional reserves of gold certificates by the private banks in the 1800s eventually lead to total collapse where JP Morgan had to bailout the USA and in turn probably obtained the control to implement the Federal Reserve system in 1913, as documented in The creature from Jekyll Island and Bill Still's video The Money Masters.

So you can have an illusion about asset being a currency and pretend to yourself that persistent deflation is a demand for a currency (which is actually demand for that asset not a true currency), but that is not reality.


No I specifically said the debasement rate should not be too high (sometimes not higher than the prevailing bond rates), because saving for lean times is important, as is the concept of delaying gratification to save. Yet we want that savings to be invested in productive activities. What is savings? It is society saying that you generated excess production in the past and it now trusts you to continue to do that, thus it allows you to decide which investments to do.

It is not a license to sit on that talent, and expect to leech off the others who are increasing production. Society won't tolerate that. The Bible (taken as a book of knowledge about realities of life) specifically talks about this in the Parable of the Talents.

Debasement also exists to force you to invest, and not allow you to cheat the implicit contract society has made with you.


Please if you are not going to admit when you are wrong, then that is disingenuous. I always do when I am wrong. A 20 foot basketball rim is a limit too, yet you will never dunk on it.


Moving the goal posts in a soccer game is not allowed. Many people have said things were impossible, that later become very possible. Seems to happen regularly. That is what technology is all about.

I said Branson was talking about mining asteroids as they pass nearby earth.


Wow the greed. Getting something for nothing. Great virtues of every boom and bust.

And yeah he made sure he got most of the coins in the first years. Yet you are concerned about a small premine for this coin.


The data I have (it is buried on one of my threads), is the average debasement for society is consistently about 5% for normalcy. This goes back to the 1800s in the USA.

You can't change what is normal, just because you think it would be neat. Society will route around you as if you are parasite that needs to be eradicated.

You are equating "50+% attack" with what it means in Bitcoin. The secret chain attack doesn't exist in Bitcoin. Whereas I am saying any attack that requires possessing 50+% of the PoW resources, is a 50+% attack. The secret chain attack requires being able to outpace the creation of PoW solutions, thus it is a 50+% attack.


I am thinking it depends how far back in the history the attacker can go, i.e. what percent of the PoW difficulty they have.

If the nodes online only have a year of transaction history, but the attacker can go back further and create transaction history that matches the proof chain, then we need evidence from before that to decide which is the valid chain. You might want to add this to the wiki if I am correct.


I am also concerned about time-to-implement, and I won't take on something I can't implement in reasonable time. If I am correct that we can't add the mix-net later (as we discussed in the implementation thread), then what choice do we have but to implement now?

If I could convince you to argue for a 3 - 5% debasement, I would gain an important ally. And it would show that it is possible to convince goldbugs. And you would know what point actually made it click in your mind.

Hope you saw this, I added it after posting:

That is some what true, but I would argue that gold is still used a currency in some places even to this day and the only reason we got rid of the gold standard in the past was to replace it with a fiat system, not necessarily because a gold standard wasn't working.

Even if you are correct it's still an impossibly difficult task to algorithmically implement the correct level of debasement over long periods of time. The only logical reason for perpetual debasement is to keep the value of the coins stable, but it is extremely difficult to achieve this because the value of the coin isn't just a function of the total money supply.

I would like to know who has 600 years to sit on idle savings for a start. There is nothing selfish about deflation, it is the natural consequence of a currency which experiences increased demand and no one should have the ability to steal that extra value from the currency. What you are basically saying is that people shouldn't be allowed to save their money and hope it goes up in value, which is obviously not the spirit of cryptocurrency.

Just because the limit is large doesn't change the fact there is a limit. Plus if you calculate the cost of recovering gold even from the nearest planet in our solar system, it works out the the cost of the transportation is more than the value of the gold.

Yes, but by 2033 when it becomes extremely hard to mine even small amounts of bitcoin, the value of each bitcoin will be much higher. The creation of new bitcoins drops off exponentially for a reason, Satoshi wasn't an idiot. He designed it that way for a reason and it seems to be working well thus far.

The whole concept of a "reasonable level of debasement" is completely subjective in the first place, thus impossible to implement algorithmically in a fair and consistent manner. Being able to re-mine lost coins doesn't offer any level of debasement, it simply ensures that the money supply wont get perpetually smaller and cause perpetual inflation in that way. If the value of the coin goes up it will be purely due to an increase in demand and other natural economic forces.

And the probability becomes astronomically unlikely to sustain that for 6 blocks with less than 50%, based on the random walk calculation in Satoshi's whitepaper. I know you knew that.

To be very pedantic, u can do the attack even with 42%. Depends on luck.

Every single currency has died, including gold currencies. We had gold currency in the 1800s. We don't now.

In fact, everything in the universe dies, and other things are born. This is the process of LIFE.


What you believe has no relevance in science. In science we trust what we measure. Making things up out of thin air is for fairy tales.

Mises's crack up boom is occurring now, so I am not saying all Austrian economics is out-of-touch with reality. I am saying you are misinterpreting it. It never said money supplies must be constant. Mises wasn't into telling fairy tales.

http://en.wikipedia.org/wiki/Austrian_School#Inflation


The two surveys say that "create coins forever" is popular and 5% is the most popular rate thus far in the poll.

I am pleasantly surprised to the see members here are astute about this issue.


Apparently not. See the graph of the 50 - 100% increases lately from Fed. Apparently people here are reasonable and understand that we need to prevent cartels, and a small rate is normal and natural. We prevent it from rising to 50% because there is no Fed to control it.

It would be much better to protect that with a natural rate, then to lose it because we are selfish deflationists who want to steal from producers by sitting on idle savings for 600 years and create dark ages.


You must compare the relative mass of the earth to the total supply of gold to see that your fear is unfounded. As in several orders-of-magnitude beyond impossible. If you were a scientist, you would be ashamed of making that assertion, but I am not trying to embarrass you because I know you are not a scientist. You are just trying to help create a better coin and I appreciate that. I hope you will respect those who are more mathematical and knowledgeable than you are and try to learn rather than irrationally resist. That is not to say that I won't learn from you too. I already did from your excellent design of the mini-blockchain.


I had made a rough table of the planned Bitcoin debasement in the past. Let me reconstruct it, since I can't find it quickly.


2009 - 2012 0  10,500,000
2013 - 2016 5,250,000 15,750,000 11%
2017 - 2020 2,625,000 18,375,000 4%
2021 - 2024 1,312,500 19,687,500 1.7%
2025 - 2028   656,250 20,343,750 0.8%
2029 - 2032   328,125 20,671,875 0.4%
2033 - 2036   164,065 20,835,940 0.2%
2037 - 2040    82,033 20,917,973 0.1%


As of 2033, there isn't much debasement. Even a decade before that it has dropped below 1%. So my original statement was correct.

Bitcoin stops working for obtaining anonymous coins from mining, right when we will really need at the world goes into the SHTF mode and capital controls will be every where. That is highly suspicious to me.


See the surveys I mentioned above.


I added that as an write-in option to the poll.

Yet that is only miniscule. The lost coins only gradually take the money supply towards 0 over decades. It can't substitute for a reasonable level of debasement.

Thus you have not addressed my point that cartels can take over mining otherwise.

That is true, yes.

It's very similar to a 50+% attack but a little bit different because it can only be pulled off by generating the fake chain in secret. A 50+% attack is not as drastic, it would only allow the attacker to alter recent transactions, and the older a block was, the harder it would be to alter. Pretty much like a 50+% attack with Bitcoin, which has yet to happen btw. But the main point is that historic "super nodes" are not absolutely necessary, even without any such super nodes there is still a very minute chance that a secret chain attack could be pulled off successfully if the attacker is unable to recruit new nodes.

No need to worry, I am a very thick skinned person and I can appreciate a bit of healthy criticism and debate. Life would be boring if we all agreed with each other. I can also respect your desire for increased anonymity, I'm just saying that it's a very complicated thing to do and perhaps best left to future efforts. I just really want to see some of these concepts implemented and if we wait around trying to develop the perfect system we might not ever get anything done.

Every single unlimited fiat currency in history has died, so your science isn't exactly based on an unbiased set of observations. The simple fact is that most people who believe in Bitcoin-type technology also believe in Austrian principles. If you want to put so much stock into surveys then you must accept the fact that most of us prefer a limited money supply.

That's like asking me and other members of this forum whether we would prefer Bitcoin or Federal Reserve notes. The answer is plainly obvious.

What is that even supposed to mean? How can you deny the fact that the mass of the Earth can only be increased to a certain degree?

The last Bitcoin block will be mined in 2140.


The survey says people want anonymity, not perpetual debasement. I think they have experienced enough of that as it is.

That is the point of re-mining lost coins, it ensures that miners will always have something to mine other than transaction fees and also ensures that the money supply will remain stable, instead of increasing or decreasing perpetually, which I personally think is the most logical and rational option.

To be pedantic, technically the term "51%" is incorrect. From Satoshi's whitepaper, it only takes infinitesimally more than 50%, which is why I write 50+%.

If I am not mistaken this secret chain attack is still a 50+% attack, because the attacker must be able to generate new PoW solutions (at same or greater difficulty) faster than the cooperating, honest peers.

The centralizing aspect is we depend on those super nodes (peers) to provide the historical evidence to help resolve the attack, or we wait for checkpoint to come from community. Both are not perfectly decentralized methods of resolution, but I don't think this presents a major problem, as I argued to Etlase2.  As far as I can see, Bitcoin has the analogous centralized resolution to a 50+% attack, because light clients can't resolve these issues without trusting the full nodes. Bitcoin must trust the full nodes for mining, verifying transactions, etc, so it is much more centralizing in real-time in normal scenarios. Thus conceptually the mini-blockchain is superior (we have to prove it in real world though).

P.S. my argumentative style is intended to make sure the effort succeeds in the market place. I am not disrespecting you. I appreciate of course what you have designed.

AnonyMint try to make a thorium coin instead of a gold or silver one (Bitcoin/Litecoin).
Probably it would do the trick (debasement, scarcity etc).

Just my out of the box thought..

Readers please make your opinions known by at least voting on the polls at following links:

Features:
https://bitcointalksearch.org/topic/poll-ranking-new-features-for-decentralized-currencies-279340

Rate of debasement:
https://bitcointalksearch.org/topic/poll-preferred-rate-of-creating-new-coins-for-an-altcoin-311668

Remember that coins are perpetually lost (ditto in Bitcoin) so without creating new coins forever, the system will eventually have 0 coins.


Okay then how about we look at this from the objectivity of making the coin work correctly?

One potential attack vector is that as debasement ends, then miners must depend on transaction fees. But a cartel could offer to process transactions for 0 tx fees (or even negative tx fees...by sending a refund tx), thus bankrupting the other miners (users would see they can send 0 tx fee txs), thus allowing them to own the coin. This is another reason I think we should set tx fees with the protocol (see my other reason upthread). Setting a tx fee could replace debasement, but it is not consistently the same for each block and cartels might not relay all transactions (and they might be able to siphon them to them with their marketing, e.g. Amazon offering a Bitcoin client). So potentially independent miners could still be driven bankrupt. This was debated exhaustively in my Bitcoin : The Digital Kill Switch thread, and no one was able to refute it.

Without debasement, there is no way to get non-tainted virgin coins (every coin will have a history possibly all passing through illegal activity at some point). Taint is a real-world issue:

http://www.nestmann.com/civil-forfeiture-of-cash-it-could-happen-to-you


With a cartel above, then no way to get coins anonymously from mining any more.

So what is wrong with a 3 or 5% per year debasement?

What you really want to avoid is the following, i.e. 50 - 100% per year:

http://armstrongeconomics.com/2013/10/16/fed-balance-sheet-lack-of-oversight/