Topic: Whitepaper: Decentralized Monetary Policy for Crytographic Currencies - page 2. (Read 4275 times)

If having yet another currency that can be debased is so important, why not just create another altcoin and let the market decide which one they prefer?

You are absolutely right that because the development of Bitcoin is more or less centralized, there is perhaps more centralized control than we might like to see, but as a whole the network does function in a decentralized manner and, in my opinion, does have a life of it's own. If the Bitcoin development team disappeared and no one provided updates, the network would continue to work without human intervention until a vulnerability was discovered or a scale-ability problem occurred.

A node is entirely different from a miner since most nodes don't mine anymore. The idea in my paper is that instead of having miners control the process, actual nodes would, and by randomly selecting a relatively small number of nodes, the threat of an attacker flooding the network with malicious nodes or coordinating to manipulate the network is mitigated.

Thank you for your advice. I'll try to find some time to make edits soon.

Hi there,

Firstly, I like the paper, and think it adds value to the crypto-currency concept.

A comment:

"benefits of cryptographic virtual currencies such as Bitcoin [1] is the lack of a central
authority"

Original paper has no limit to the number of bitcoins produced but now there is a soft limit of 21 million coins.

A hard fork was rectified by developers after an agreement was made between "people" not as per the original paper which says votes would be made per CPU.

Bitcoin is still experimental and is said to have bugs, which need to be fixed.

If SHA-256 is ever broken a new algorithm will be used by the developers.

If the developers are not the central authority then who has changed or can change the above?  What form of consensus is required to change the above?  Who decided on 21 million...and did they do it by themselves?  The hard ford because of software versions seemed to be a human based decision with block rewards being distributed between both forks if I understand correctly (could be wrong).

I think the failure of previous digital currencies which had offices and CEOs which have in some cases been prosecuted, and the relative anonymity of Bitcoin has led to a speculation that there is no central authority as it is know in the physical world like we have with fiat currencies.  But Bitcoin as a virtual crypto-currency does not have a life of its own.  Perhaps a virtual distributed authority which operates differently to a central authority in lieu of the differences between fiat and virtual currencies.

And a question:

What is a node?  With pool mining, does the network even know that an individual miner exists?  Could a pool tell all its miners to choose the same value if the network can see individual miners?

In the original paper:  Nodes work all at once with little coordination.

Is this true for today? With pools I think there is plenty coordination, but could be wrong.

Other than that, I like the paper....though if you are seriously looking to publish it, your commodities of rice and bacon are funny and could detract from the idea you are trying to put across, and perhaps point to similar research that shows game theory has achieved the desired results you are looking for.  As I am a university student and deal with people talking about publishing all the time, my lecturer would suggest never referencing to wikipedia.

My 2 cents

CK

Noel, compare the colors of the bands with the colors of the labels on the left side. The larger the band the more bitcoins are of that age. So as recently as 2010 most coins were older than 24 hours (age refers to the time since they were last spent), but by 2011, most coins were under 24 hours old.

I believe that only spent coins as opposed to all coins are counted.

So for instance the coins I sent earlier would be included if this chart was made today, but Satoshi's coins, which are untouched, would not be included.


I'm glad you liked it.

I have been trying to comprehend this graph but the picture's just not clear.

Highly expository exchange of intellectualism.Your views are noted,thank you.

Elwar, it has nothing to do with people not spending, but everything to do with people spending less. Deflation really does reduce spending because people see their money as an investment. I spend more dollars and less bitcoin today because I know my dollars are falling in value while I anticipate my bitcoin will rise over time.

It's not a perfect analogy, but people put off purchases of computers because they know that they will pay less for the same computer next year. It's human nature to reduce spending now in order to take advantage of lower expected prices in the future.

This is a central tenet of micro-economics. If a TV manufacturer expects higher prices next month, he may choose to sell less now in order to take advantage of higher prices later. It works the same with money, and has been demonstrated in the real world. Deflation has been serious problem in Japan for around two decades.

Furthermore, although it is one of the main ideas in my paper, preventing deflation is not the only one. Another potential use (although this may be difficult to accomplish) is creating a currency which could be "pegged" to a commodity such as gold, coffee or bacon.

I'm not suggesting that this system be implemented in Bitcoin. I like its deflationary nature for my own use and I am happy to spend it as well (although I always re-buy what I spend). I am merely suggesting ideas for the future as virtual currencies continue to innovate and advance.

EDIT: I don't dispute that chart, but one thing to consider is that many Bitcoin owners transfer bitcoin between addresses fairly often.

All based on the false premise promoted by so called economists who would never begin to "get" bitcoin. Also the false premise that people will not spend their virtual currency. The numbers prove such a premise wrong...so very very wrong...

I wrote this paper in a few hours after getting one of the key ideas from anon012012, so it's not yet proofread and I haven't worked too hard at spotting problems and logical errors yet. I welcome constructive criticism but please keep in mind that this is a very rough draft describing rough ideas.

Abstract

Among the many benefits of cryptographic virtual currencies such as Bitcoin [1] is the lack of a central authority to abuse the power of printing new units of currency. Although a hard cap on the number of currency units is a step in the right direction, the next logical step is to have balanced monetary policy undertaken by the network in a decentralized nature based on hard-coded rules. Although few people enjoy seeing the value of their currency erode over time, the opposite case is also harmful in a less-obvious way. As many economists have pointed out, hard-capped currencies are an excellent store of value but not so great as a medium of exchange. This is because like an inflationary currency, a deflationary currency changes behaviors and distorts market signals, sometimes even causing a deflationary spiral. An important attribute of an optimal currency is a stable, relatively fixed value relative to goods and services in the market.

Read the rest here:
https://www.dropbox.com/s/9h28rejw8718ppy/auto_mp_whitepaper_vs1.2.blocksigned.pdf?dl=0

Please let me know if you are developing an alt-coin based on this idea.