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I haven't read the whole thread, but it appears you want to stabilize the price of a bitcoin with the dollar, based on the estimated number of CPUs mining. This has 3 major problems, imo: 1) it doesn't protect against dollar inflation (which isn't terrible, but if the fed prints more dollars so does bitcoin), 2) estimating the number of CPUs is difficult if not impossible with the bitcoin proof-of-work design, 3) the security/continuity/dependability of the network still relies on massive amounts of hashing power, and always will. Bitcoin also has terrible scalability issues.
I wasn't trying to tie it to the dollar per se, that was just an example for the initial stabilization phase. The coin's price will essentially be tied to the global average electricity cost. So if global electricity suddenly got 10% cheaper (eg. new invention) all coins will lose 10% of their value and be worth, for example, 90 cents each (and vice-versa). I find that a very reasonable drawback though, not to mention unavoidable. But if the fed prints a trillion dollars tomorrow that will make the dollar cheaper, so it'll cost people more cents per Kilowatt worldwide, so the coins remain essentially unchanged.Although it's not in the proposal yet, I did mention somewhere in this thread I came up with a very reasonable solution to not require hashing power at all: let merchants put their money on the line to secure the network, and in return, refund most or all of their mandatory transaction fees. So if the economy is completely stable, no hashing power is necessary.
But who will the merchants pay their money for to acquire bitcoin credit? How will it be decentralized? My suggestion keeps everything in the current design intact except for the number of coins each new block will contain. That's why I believe it requires very simple modification to the current code, plus it will be just as familiar to the existing audience.Etlase, the EnCoin concept seems very promising! It's what I've been hoping for since I started my infamous thread almost two years ago. You're welcome to read the initial post and kick some skeptic butts if you feel like as I revived it again today after the hacking of Bitcoin7. I believe the instability of prices is making users vulnerable to exchangers as they need to keep their "bitcoiny" wealth in fiat form to avoid price fluctuations, which defies the whole point as puts us back to square one.
I don't address any security issues or drastic changes like you do here though. The whole premise is about the economic necessity and the practical plan to tie bitcoin's price to electricity.
It'd be very sad if you had to go through publicity and advertising from scratch for EnCoin though. I was hoping the Bitcoin's developers would listen to the sound of reason and introduce these changes to the original client instead. If no steps are taken to ensure the coin's price stability it will never go mainstream. It'll be regarded as a very risky investment almost like gambling instead of being a friendly medium of exchange which everybody can use to escape the control of big corporations and big brothers.
I don't address any security issues or drastic changes like you do here though. The whole premise is about the economic necessity and the practical plan to tie bitcoin's price to electricity.
It'd be very sad if you had to go through publicity and advertising from scratch for EnCoin though. I was hoping the Bitcoin's developers would listen to the sound of reason and introduce these changes to the original client instead. If no steps are taken to ensure the coin's price stability it will never go mainstream. It'll be regarded as a very risky investment almost like gambling instead of being a friendly medium of exchange which everybody can use to escape the control of big corporations and big brothers.
We now have a new management
September 25th new management comes, October 5th site supposedly gets hacked and the money gets stolen. Coincidence?Let's hope that person gets around to participating in this thread soon.
.. and that they won't bullshit us with well-written formal words that don't actually convey any meaning.
The thing is, I HAVE provided all the personal information that mtgox requested, and my account is still blocked for withdrawals.
I'm trying to reduce my exposure to mtgox, but they've beat me to the punch.
I'm trying to reduce my exposure to mtgox, but they've beat me to the punch.
Am I the only one who thinks providing personal information to a relatively unknown company whose whole database was breached 3 months ago was a bad idea?
Only a gigantic troll or a complete idiot would say that a company complying with anti-money-laundering regulations "raises a red flag." Sure it's inconvenient, but you're placing the blame at the wrong doorstep. This is one of the problems that Bitcoin solves very well, which makes every use of an exchange to obtain USD or some other fiat currency terribly ironic.
Dude, what the hell are you doing here as a moderator? They've got job openings at the NSA. Oh wait you're already working for them, PR department. My bad.
I wonder if Mt. Gox is running short of cash when something like this happens.
Just like the police always foils a new "terrorist plot" when it's time for elections.The exchanges have repeatedly had problems with having their accounts containing user funds closed or frozen.
Any exchanges other than Gox?I've also had a very nasty frozen account issue with MtGox as they dealt with this whole issue very unprofessionally. You don't impose new defacto Terms of Service on your clients unilaterally before letting anyone realize what's going on much less agree to them. I got almost sick because of worrying and lack of sleep (I had a large $um of money with them) and I'm running with my cash and coins forever as soon as I get a chance.
As a sad general observation, I think the Bitcoin economy is quickly transforming into a traditional banking one, and that within a few months it'll be hard to buy or sell coins without handling personal information. Even MtGox which is technically a Japanese company clearly caved in to major banks and/or US government bullying. This could ultimately lead to the project's failure just like e-gold and others failed when the American government cracked on them. A new wave of price dropping has already started.
That's just excellent work. I'm surprised it generated so little buzz and isn't adopted into the official client until now.
On a separate note, Suggester suggests a Redistribute coins button, an option which moves all your funds to a chosen number of new wallets with the desired proportion of your current coins assigned for each. A user would then be able to consolidate his wealth from all his, say, 17 addresses into just 3 new ones, with the first one containing 49% of his coins, the second one 26%, and the third 25% (he will be able to assign those %'s arbitrarily using a simple interface). Similarly, he might want to break up his single wallet into, say, 4 different wallets, using them for 4 different purposes. When the transactions clear after 10 minutes, it'll be harder for anyone to prove that this user still owns the coins previously associated with his identity.
For the suggestion to be practical for anonymity purposes though, I strongly recommend another adjustable option where the user chooses how much time to assign for the whole operation. For example, choosing "63.2 hours" would move random chunks of the coins into their new distribution over that period of time (the client would have to be connected for the whole duration). That would make plausible deniability much stronger because you usually don't have 17 people simultaneously sending all their coins to 3 new addresses! If done correctly, it will be virtually impossible after that for anyone to prove that he still owns the coins. We're essentially simulating a change-of-ownership.
This can all be currently done using windows explorer and separate wallet files, but it'll be a big pain in the butt.
On a separate note, Suggester suggests a Redistribute coins button, an option which moves all your funds to a chosen number of new wallets with the desired proportion of your current coins assigned for each. A user would then be able to consolidate his wealth from all his, say, 17 addresses into just 3 new ones, with the first one containing 49% of his coins, the second one 26%, and the third 25% (he will be able to assign those %'s arbitrarily using a simple interface). Similarly, he might want to break up his single wallet into, say, 4 different wallets, using them for 4 different purposes. When the transactions clear after 10 minutes, it'll be harder for anyone to prove that this user still owns the coins previously associated with his identity.
For the suggestion to be practical for anonymity purposes though, I strongly recommend another adjustable option where the user chooses how much time to assign for the whole operation. For example, choosing "63.2 hours" would move random chunks of the coins into their new distribution over that period of time (the client would have to be connected for the whole duration). That would make plausible deniability much stronger because you usually don't have 17 people simultaneously sending all their coins to 3 new addresses! If done correctly, it will be virtually impossible after that for anyone to prove that he still owns the coins. We're essentially simulating a change-of-ownership.
This can all be currently done using windows explorer and separate wallet files, but it'll be a big pain in the butt.
Re: "If we're required to track payments coming in or out of Silk Road,we'll comply"
This is obvious and unimportant.
Of course companies dealing with bitcoins could be required to give information to law enforcement.
Of course companies dealing with bitcoins could be required to give information to law enforcement.
It's a jurisdiction issue here. Why would a Japanese company be "required" to give info to the American government? My guess is that they're ready to sell their clients to avoid a US crackdown (frozen bank accounts, bogus terrorism and money laundry charges, etc).
"If we're required to track payments coming in or out of Silk Road,we'll comply"
That was Tibanne's (Mt Gox's owner) CEO, Mark Karpeles speaking. It's part of an article titled Bitcoin exchanges offer anti- money-laundering aid.
Just in case you didn't know, Silk Road is the name of a tor's hidden service that anonymously sells illegal drugs using bitcoins.
Though I never purchased illegal drugs and probably never will, that announcement disappointed me. What's the point of having an anonymous p2p currency if the money trail in and out of the system will be tracked by the intermediaries? They might as well have registered their exchange in Fort Meade instead of Japan.
On the technical side, however, I don't see how's this feasible. The drug dealer can simply send his new funds to another wallet daily and change its address whenever he sells some coins on the exchange. If I understand the system correctly, this will render him indistinguishable from any other normal Mt Gox trader.
Just in case you didn't know, Silk Road is the name of a tor's hidden service that anonymously sells illegal drugs using bitcoins.
Though I never purchased illegal drugs and probably never will, that announcement disappointed me. What's the point of having an anonymous p2p currency if the money trail in and out of the system will be tracked by the intermediaries? They might as well have registered their exchange in Fort Meade instead of Japan.
On the technical side, however, I don't see how's this feasible. The drug dealer can simply send his new funds to another wallet daily and change its address whenever he sells some coins on the exchange. If I understand the system correctly, this will render him indistinguishable from any other normal Mt Gox trader.
"Military action" and "prosecution" isn't needed to ruin the project folks. Bitcoin is as strong as its users' collective computer power. In other words: NSA > Bitcoiners
Of course, this (unlikely) scenario is part of the motivation for regular blockchain benchmarks being encoded into the source code of new releases. So your attacker would still have to come up with a fake blockchain that not only matched those benchmarks precisely without violating any of the other valid block rules on any of his fake blocks and have such a blockchain ready that was at least as long as the benchmark shipped in the latest version before the standing network would receive it.
I think we can all agree that the NSA already has its fake chain ready to launch at any moment if they deemed Bitcoin a serious danger to the US economy. They probably started working on it from day one, even. It would be identical to the real one except that it's a couple of blocks longer. Those couple of blocks rip everyone from their coins. End of story.And if any copy of the real blockchain were to be reintroduced to the network before the fake one could develop a greater total proof-of-work, the real blockchain would force a network split that would eventually destroy the fake one.
Only if the real one posses more total computer power than the fake one, which is not the case with the NSA.he's new to this and he asked whether its a bubble waiting to burst? I dont know how to respond as so far its all been taken nicely!
Tell him there's no bubble so he would come and buy some of my over-priced coins and later sell his over-over-priced coins to someone else. If we told everyone there's no bubble things will continue to be fine, just as in a pyramid scheme.
i've mostly ignored all the discussions of deflation because i think the whole thing's a red herring, but it seems like many people are making the same kind of mistake. neither inflation nor deflation of a voluntarily chosen instrument matters on its own, theoretically; the expected inflation or deflation will be factored into the price of the commodity. what matter are unexpected inflation and deflation.
if i sell you a device that i advertise as inflationary, it's just the inverse of seignorage (ex post reduction in value rather than an ex ante payment). if i sell you a device that i advertise as deflationary, presumably you're willing to pay more for it, which thus makes it more expensive than the inflationary commodity for those who haven't yet bought it.
bitcoin's strength in this regard is that it has fixed rules, at least as long as it remains secure and as long as the network participants don't change the rules. whether it's inflationary or deflationary doesn't matter fundamentally. it may matter as a component of marketing, of course, and it may of course affect the distribution of the seignorage or its equivalents. (e.g., one model can encourage and enrich early adopters while another might not. as another example, 'there are only a limited number; get them while they last' can fuel psychological demand, but that may be either helpful or misleading depending on context.) deflation is neither a strength nor a weakness otherwise, any more than the number 21,000,000 is a strength or a weakness compared to ten times that amount. conceptually that may be hard to understand, but it's exactly analogous technically.
(if it's still conceptually hard, consider the following thought experiment: functionally and economically, what are the differences between bitcoin and a system just like it except for two differences: (1) the block subsidy never halves, but (2) the block chain itself pays 'interest' for all holders of bitcoins each block, computed to make up for the difference between deflation in bitcoin and the moderate inflation in the hypothetical alternative?)
Tell me, how much are you willing to pay for..if i sell you a device that i advertise as inflationary, it's just the inverse of seignorage (ex post reduction in value rather than an ex ante payment). if i sell you a device that i advertise as deflationary, presumably you're willing to pay more for it, which thus makes it more expensive than the inflationary commodity for those who haven't yet bought it.
bitcoin's strength in this regard is that it has fixed rules, at least as long as it remains secure and as long as the network participants don't change the rules. whether it's inflationary or deflationary doesn't matter fundamentally. it may matter as a component of marketing, of course, and it may of course affect the distribution of the seignorage or its equivalents. (e.g., one model can encourage and enrich early adopters while another might not. as another example, 'there are only a limited number; get them while they last' can fuel psychological demand, but that may be either helpful or misleading depending on context.) deflation is neither a strength nor a weakness otherwise, any more than the number 21,000,000 is a strength or a weakness compared to ten times that amount. conceptually that may be hard to understand, but it's exactly analogous technically.
(if it's still conceptually hard, consider the following thought experiment: functionally and economically, what are the differences between bitcoin and a system just like it except for two differences: (1) the block subsidy never halves, but (2) the block chain itself pays 'interest' for all holders of bitcoins each block, computed to make up for the difference between deflation in bitcoin and the moderate inflation in the hypothetical alternative?)
1. A magical dollar which pops 30 cents each year?
2. As if that wasn't difficult enough, how much are you willing to pay for it if it pops anywhere between 20>infinity cents each year?
3. I see you're getting irritated. That's why I'll add a notion that there's a possibility of it malfunctioning all of a sudden without a warning.
4. And to make things worse, I'm offering this magical dollar for everyone on the market, which has led to people like you speculating and investing in it.
Now it's totally impossible to accurately and objectively price it, right?
That's bitcoin.
Now compare that to selling a normal, boring dollar and you'll immediately realize which one makes life much easier.
Correct. I couldn't have gotten into Bitcoins, where it not for somebody who got out at $10. But then maybe he started mining when it was easy or got in when they were selling kBTC at $2.50
All the same. I'm kicking myself in the butt now for stopping mining too early last year when I was getting 200 coins/day. I thought back then (and still do) that Bitcoin has no future and that the bubble will pop sooner or later because the system has a built-in perpetual deflation. That doesn't mean pyramid schemes can't be useful if you jump out before they burst 
. My wrong decision made somebody else rich now. It's all the same.If bitcoin's money supply provided a stable value currency (neither inflationary nor deflationary), I think it would grow into something in the long term. Given the current algorithm, I give it under 3 months. After the bubble burst, I think interest in bitcoin will fade away.
You look like someone who might like to check out my thread and vote Yes then
All of today I have been very sad because just last week I sold my 38 Bitcoins for $7.8 each and now it's $18 each
Your sadness made someone else very happy. This speculation game is a zero-sum.I am now wondering if I should buy coins now with the $330 I have in my Mt. Gox account or should I wait for the bubble to pop?
Assuming we know the right answer: If we give you a good advice we benefit you, but we hurt the person who would've acquired your profits. If we give you a bad advice we benefit that person, but hurt you. Again, it doesn't really matter wow crap, I sold a bunch at 17.5 yesterday,
should I buy back now?
should I buy back now?
It gets on my nerves whenever this otherwise excellent project is (rightfully) seen as a gambling speculation rather than as a medium of exchange. Apparently the folks opposing my anti-deflationary proposal, who are the majority, think it's a nice game where you can double your money within 24 hours and run away. Sigh
My suggestion for keeping the value of bitcoins stable is to change the number of bitcoins generated per block dynamically and link it to some average of the number of transactions that took place.
Plagiarism!Just kidding. Please repost that in my thread, and vote "Yes".
What do you refer to when you say 19% deflation per annum? The decreasing rate of currency introduction?
He was referring to my infamous threadI wonder how Satoshi came up with his magical number of 19% deflation p.a. Did he study some secret economics to arrive at his absurd "insight"? I guess he just set this value because he thought 19% would be a nice annual increase of his fortune.
I know. I repeated this over and over again. Satoshi (not is real name, which is unknown) is definitely not stupid. He probably designed the system specifically for that reason so he could profit as a "risk-taking early adopter" and run with the money before the system collapses. He had a chance to produce the whole 144 daily blocks (7200 coins/day) for quite some time before anyone else joined the network. He's almost definitely a millionaire now with quite a bit of coins stashed on the side in case it reaches $100 or more.Other "early adopters" defend the current design for the same reason. My proposal removes the "early adopter" advantage albeit it doesn't negate the already attained profits.
You should either accept built-in deflation or leave bitcoin economy, that's my advice.
OR he can lobby in an attempt to prevent some hard-headed people from ruining such a beautiful concept just because they believe they can get free money forever.I actually think that it will stabilize when the number of people using it stabilizes for a long time. Perhaps that will happen after some bubble bursts.
And perhaps it will never happen. Given that the number of computer and internet users hasn't "stabilized" until now and is not expected to stabilize in the foreseeable future, what makes think the number of bitcoin users will stabilize anytime soon, if ever? And even if it stabilizes, we still have the 19% deflation problem!This example was to show you, with data to support it, that the behavior you're expecting in a deflationary market just isn't happening.
And I explained that what I "expected" wasn't a lack of transactions. It's about the purpose of those transactions. And even if all those transactions were genuinely for consumption (which is impossible because consumption doesn't increase the price ten-fold in a month), why isn't a stable currency a better idea anyway?Are you trying to say people won't buy food, lodging, clothes, transportation, energy and god knows what else because they're on a deflationary currency?
No, but they won't buy those things using a deflationary currency. They will simply use another medium while saving the deflationary currency under the mattress for a rainy day (or until they feel the price might drop soon and exit the market safely, only to sell the money to a new hoarder)Why exactly do you want more transactions as the unique result from an economic model as opposed to natural market levels.
Because the "natural" market levels is based on perpetual built-in deflation. That's a natural pyramid scheme not a natural stable medium of exchange.
Besides that it is unfeasible and no one would use such currency? Nothing.
Elaborate please.This is your stance. Then you relay to the trade history on MtGox to maintain that stance. Yet that same trade history shows that since mid April, pretty much since the price spiked above $2, that MtGox has been experience a 30d volume consistently within 900,000 to 1 Million BTC, and now the price is on its way beyond $15. The 30d expected inflation through mining is anywhere between 200,000 and 300,000 BTC. This means that on a month and half span, about 1.5 millions "old" BTCs have changed hands (without accounting for the freshly mined coins in that period), which is over 1/4th of the total "old" BTC supply. According to your hoarding theory, this is impossible. Now I suggest you reflect on your stance.
It's not impossible. Hoarding doesn't mean "nobody exchanges coins". It simply means that in case coins were exchanged, there's a high probability that the buyer is buying for the sole purpose of later profiting. And the seller is selling because he either needs money immediately or he's afraid the price will drop and had enough profit, so he exits the market safely. By the way those two reasons are exactly why I plan to liquidate some of my own coins soon.I never denied there were real transactions either, but I said there would be more of those if the price was stable. People won't have to worry about spending coins because they're afraid the price would spike soon after they spend them, nor would they worry about a price drop after earning a coin so they won't have to rush and liquidate them. What exactly is your problem with a stable price system?
Well then I hope you learn that an economy is not proportional to the number of transactions.
Would replacing "number" with "volume" make you happy? You people got nothing to say to address the real issue so you worry about silly definitions. I'm still waiting for a decent rebuttal against my proposal.No, you're just completely blind to the fact that even though the price of Bitcoin is 15 times what it was in early March, we're still seeing lots of days with high volume. Trade history on Gox directly contradicts your wishful thinking.
Are you saying that stabilizing the price wouldn't increase the number of transactions and/or the percentage of real transactions (i.e the ones not aimed at hoarding and speculation)?It's not deflation what is rising $/BTC right now.
BTC deflation has a 20% rate, not a 10000% rate. What is bullying the market is especulation.
And deflation. That 20% (19% to be exact) is built into the system assuming the number of users stays constant. If the number of users double, the demand doubles, and the price skyrockets. That's called deflation. My proposal was to increase supply with demand to prevent that.BTC deflation has a 20% rate, not a 10000% rate. What is bullying the market is especulation.
More and more people think that it could be possible that this currency is going to get mainstream. They especulate about it.
That's also true. Which is why a flexible-supply system beats a fixed-supply one. The flexible supply doesn't give speculators any incentive because the price is constant anyway.If we just had discovered gold, wouldn't that happen too? I'm just saying. Right now BTC is a small very modest commodity that can be used to pay some things. Will BTC suceed as currency? We'll see. If it suceeds, it won't be without bumps on the road.
Gold is a total different story. Had humanity run out of gold within 16 years of its discovery there would have been perpetual deflation. Nobody would've spent their gold except for emergencies. They would've used silver or seashells or grain while carefully keeping their gold under the mattress.I mean, what if in 2-4 years Bitcoin is worth 10 billion dollars maintaining the actual price/difficulty rate? what if it moves then more than 80 millions each day? Would you start to take it seriously? I would, for sure. And because I think it's possible, I'm willing to put my money where my mouth is.
Bitcoin isn't useless. But currently it's only good for "hit and run" transactions. You can't wait for too long (too long being about 12+ hours!) before liquidating your received coins lest the price dives down. You'd also be worried if you spent them now lest the price doubles in a month. What sort of currency is this? We need stability. Why do some people have a problem with that?I hope you understand that an economy is not proportional to the number of people in it.
On average, it is. Sure, maybe 20% of users control 80% of transactions, but if the number of users double then on average the number of transactions will double accordingly with another 20/80.