I was thinking about that too, but maybe it's not a big deal that sometimes there will exist 'shortcuts'?

Most weaknesses in algorithms are discovered by humans, and if a human can find a flaw within the 10-minute blocktime, that's no problem at all, because human PoW beats every other distribution scheme, so they deserve the block-reward.

But even if that analysis could be automated: it becomes PoW on itself. Miners still have to choose between how much CPU power (and time) they spend on analyzing it first, as all the 'dumb' miners already started mining that block. Maybe that would cause some kind of race between the two, and as long as that race lasts 10 minutes on average, all will be fine.



If the choice for the algorithm depends on the hash of the previous block, I cannot see how anyone could steer the next function?

Suppose a coin switches its hashing algorithm each time a new block is found. Also suppose that new algorithm itself is randomly generated, and the previous block contains the instructions on how to perform it.

Would that coin be ASIC-proof?

I understand that if there are  X different algorithms, miners can still buy X different types of ASICs (one for each algorithm). But if X is large, or even unlimited, it seems completely infeasible to have specialized equipment?

Would be nice to have an extra column on the frontpage which shows the total amount of XMR for each block (just like you already show the size in KB).

Every coin would need some form of subsidy, else there would be no way to distribute the initial coins.

But it would be nice to see a coin where this subsidy doesn't go to the miners, but to random users for example. Normally alt-coins attract a lot of miners, and almost no users. This coin would attract a lot of users, and almost no miners, so the opposite. But since a lot of users means a lot fees, in the long run those fees would attract miners anyway. So I agree, it would be a interesting experiment.

So if blockrewards are a subsidy for transaction costs, isn't it true that that same subsidy is whats causing the transaction/mining costs to be so high in the first place? That seems like a vicious circle to me? Even if the subsidy was doubled, the hashrate would double too, so the profitability would stay the same for miners, and all it does is increasing the tax (average transaction cost) for end-users even more. So that subsidy seems to be completely counter-productive, except for making sure the hashrate stays above an artifical baseline, whose level seems like overkill these days.

Is there any proof or logic that predicts the baseline that would be achieved by rewarding miners only with fees, would be too low for a secure network? Im just trying to wrap my around it.


You may just have answered my question above. Indeed, this may be the logic behind behind the 'fixed' reward every block, to reduce miner variance.

Bitcoin transactions seem to have cheap fees, because everybody forgets that the block rewards currently act as subsidy to keep them low. On average, a transaction costs between $30 and $40 if you do take them in account, and thats way higher than most banks charge, and way too high for micro-transactions.

Now suppose that Bitcoin had no block rewards right now (like it will in the future), there can only be two possible outcomes: either that the hash-rate would drop to much lower levels, and the fees would stay the same. Or that the fees would rise to about $40 per transaction, and that the hash-rate would stay the same.

My gut feeling would say that even with a massive drop of hashrate, Bitcoin would still be secure, because the current hashrate seems like overkill to me. But in my previous topic (Alternative initial distribution of coins) various Bitcoin-veterans (like DeathAndTaxes) stated exactly the opposite: that Bitcoin wouldnt be able to survive if miners received just the fees and no additional rewards. So the expert opinion seems to be that the network would be unusable.

The other alternative (higher fees) also seem to make the network unusable, except for high-value transactions, which are a minority.

So if both are true, is it safe to say that block rewards are just a subsidy for Bitcoin's ridiculously high transaction costs?

There is a good chance they wouldn't have to increase the tx costs, or lower their profits. In the situation where they actually started doing this, people might use their creditcard more often and using the extra profit this generates, Visa would be able to pay out prizes. They don't gain anything by doing it, but they wouldn't make a loss out of it either.

But your main point is 'the money has to come from somewhere', and for a crypto-currency that's not really relevant, unless you can explain where Bitcoin's 21 million coins come from?


Ofcourse, this must be prevented. I already suggested a couple of fixes for this (like requiring them to broadcast transactions to the network before including them), but if it turns out no solution for this is possible, then this coin cannot exist. But even in that case, I'm still curious about the philosophical/economical implications of such a network, since I wasn't planning on actually developing it anyway.

Would it be a bad thing for you if they did?


I'm familar with Proof-of-Stake, but it does the opposite. It doesnt reward any real participation, it rewards hoarding (instead of making transactions). Also, it makes the rich even richer, and thats just what Im trying to avoid here. With PoS you have more chance based on the amount of coins you own, while with this your chance does not depend on how much you already have.

As for Lucky Coin, I just took a look at it and prizes are awarded only to the miners, not to the general public, so not not really comparable except for the lottery element.

Maybe the network could wait for multiple blocks within a certain timeframe, and select the block that is valid and contains the most transactions of them all. Another option would be that the network only allows blocks to have between 90 and 110 percent of the transactions of the previous block (just like difficulty scales), no matter how long that takes to reach.


I'm not trying to come up with a network that discourages mining, that should be rewarded as much as possible. I was just thinking how I could encourage some actual usage too.

It would be nice for people to be able to earn some coins, without expensive hardware, just by participating and some luck. There was a time Bitcoin had lots of faucets for that purpose, but that was just giving away free money to anyone who asked, causing lots of fraud. While my automated approach only gives it to the people that deserve it (those who make actual transactions and paying the fees for that). The end result is that the coins are more evenly distributed across the world population, and you can't possibly be against that?

Yes, this will be the most difficult challenge to solve. You could make the lottery-reward decrease exponentially with the number of transactions in the block, making it unprofitable for miners to add extra fake transactions. Since they will have the chance to loose all the high fees for a slim chance on a small reward. In other words: each extra fake transaction will mean they pay more to win less.

Another solution could be that the network rejects blocks of which a certain percentage of the transactions is not in their memory pool. That means the miner has to broadcast those TX's first, and if another miner mines the block, the miner who created the fake TX's looses a lot of money.

This is a very good point. I expected the fees to be somewhat higher than in Bitcoin, but if they are so high that it makes transactions almost impossible, the network is useless. I should do some calculations on that. But dont forget: the lottery gives all the fees back in the reward, so even very high fees dont matter that much, since it will also mean the subsidy for making a transaction will increase, cancelling eachother out.


It will not be 25 BTC fixed, it will vary depending on the fees. And the lottery is not ment to prevent sybil attacks, since it doesnt replace mining. And the selection of the random addresses can be done using the blockhash fairly simple. If you want I can give you a technical implementation of it, but it goes out of the scope of the topic I guess.

Does that automaticly make it a bad idea?


The fees should be incentive enough, if they couldn't serve that purpose Bitcoin will have a problem in the future too


They are going to a random address in the last block, and I already explained how one could prevent users from creating dummy transactions to gain an advantage, so 'mining addresses' will be useless.

You will get enough fees to cover those costs, and still make a profit. What more do you need?


Please read my idea more careful, because it explicitly states it will be equal (or less).


They will only be punished if you compare this hypothetical coin to how Bitcoin works. But Bitcoin punishes a much larger group: the actual users, people without mining rigs. They also invest their time and effort (for example in promoting it), you want to punish them?


My view of fair is random distribution among the largest group of people, while still letting miners make a profit. Yours (as a miner) might be a bit different, thats no surprise.

They would mine for the fees.

Satoshi decided to distribute new coins to the miners, and back then that was a fair method to pick a random stranger, so I understand the logic behind it. But nowadays these block rewards don't go to random users anymore, they go to the people who are wealthy enough to own a significant share of the hashing power. Essentially it's making the rich people richer, and that's the exact opposite of what he originally envisioned I suppose?

Wouldn't it be much more fair to give miners only the TX-fees, and pay a reward to some random stranger (transaction) in that block? That way the initial distribution of coins is garantueed to be fair for everyone, since the coins are going to the actual users of the network (which includes also 'the poor'), instead of the big guys.

The way this could work is that the random tx is picked based on the block hash (similar to how the dice sites work). So a miner never has influence on who receives the reward, unless they withhold valid blocks to influence the outcome, which gives them a major disadvantage compared to competing miners (who will publish the first block they find).

And to discourage users from spamming the chain with dummy transactions, the reward should be equal (or lower) than the total amount of fees paid in the block. This causes their EV (expected value) to stay the same, rendering spam useless. This also discourages miners from including only transactions from friends, since the benefit of sharing the reward will be lower than the profit they could have gained from the extra fees.  

At first sight such a scheme would be very simple to implement, and much more fair. The only downside I can think of right now is that the coins will be distributed more slowly than Bitcoin does right now. And to bootstrap the network there have to be one (or a couple) of empty blocks where the miner gets a reward. No big deal.

Could something like this work in practice? I have a feeling Im overlooking something fundamental, because it sounds to good (and simple) to be true, but I cant figure out where the problem lies in this approach.

I need a lot of SHA256 hashing power, and since there are a lot of miners who stopped GPU mining because it's not profitable anymore, I wondered if anyone would be interested in renting me their GPU rig for a few weeks? The only requirements are that the cards are high-end, support OpenCL, and I have SSH access.

I will pay at least THREE times the amount of BTC you would have earned from mining during that period, in advance. Please contact me if you are interested.

I really like the research you do, and everytime you manage to stumble upon another mystery Besides the question why Satoshis nonces have a weird distribution, it would also be interesting to see if this 'fingerprint' can be used to look for other blocks or transactions done using that same PC, it could give us a clue to his identity.

Every investor had (as far as I know) the possibility to login to btcst.com to view their account balance and interest rates, so even though he initially might started off using Excel, he eventually moved to an automated system.

If he would have run the server from his basement (for example) its IP address would have revealed his location and home address easily, so there are drawbacks to that too.

I'm not so sure about that, for such a low-traffic site its much more likely he used shared-hosting (or a VPS) instead of his own dedicated server, and every hosting provider holds backups of its customers data. So even if he quickly deleted everything, that company would be able to provide the SEC with a recent backup.