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Re: if the number of transactions doesn't pick up by 8/16 miners will have to quit
The endgame for Bitcoin is either rise to power or dive into oblivion. The former ensures high enough fees by virtue of its design.
Genius.Re: if the number of transactions doesn't pick up by 8/16 miners will have to quit
I'm confident that if the network doesn't double in hash once it matures every year aka grow in accordance to Moore's law, then the network will become insecure and miners will abandon it for other, more miner friendly, PoW currencies.
How do you figure? the network is supposedly already more powerful than the world's top 500 supercomputers combined. If it shrinks a little bit,
it's still plenty secure.
What do you mean by "miner friendly"
Re: if the number of transactions doesn't pick up by 8/16 miners will have to quit
There are several aspects to consider, but is likely to be profitable forever.
Just two out of many:
- ASIC miner companies price per GH/s is based on BTC market price.( Which is abusive practice IMO ) That's why they sell it to you instead of mining, they decide how much you may profit if anything at all. The actual manufacturing cost is very low in comparison to street price, so there is a big margin to be reduced.
- Difficult should adjust with people giving up.
Just two out of many:
- ASIC miner companies price per GH/s is based on BTC market price.( Which is abusive practice IMO ) That's why they sell it to you instead of mining, they decide how much you may profit if anything at all. The actual manufacturing cost is very low in comparison to street price, so there is a big margin to be reduced.
- Difficult should adjust with people giving up.
PoW cryptocurrencies cannot rely on a decrease in hashrate to increase mining profitability because the security of the network is derived from the hashrate.
Re: if the number of transactions doesn't pick up by 8/16 miners will have to quit
Sweft's Law: The network hashrate of a proof of work cryptocurrency must rise at a rate at least equal to that of Moore's Law to provide minimal network security.
Moore's law is about the number of transistors on a processor. Processor speed is generally a byproduct, but hasn't kept up in percentage terms for quite a while now.The security of Bitcoin's network is that it's always more profitable to play by the rules than to break them.
I don't know what you mean by it's more profitable to play by the rules than to break them. Who is it more profitable for? This generalization is vague and has hardly any evidence supporting it and even if it was sound it's reasonable to assume that people would sacrifice profit to destroy competition. So the premise is irrelevant.
I'm confident that if the network doesn't double in hash once it matures every year aka grow in accordance to Moore's law, then the network will become insecure and miners will abandon it for other, more miner friendly, PoW currencies.
Re: if the number of transactions doesn't pick up by 8/16 miners will have to quit
This is a well known problem I described back in 2011 and extensively wrote about it. I created a law for all proof of work crypto currencies that is known as Sweft's law.
Sweft's Law: The network hashrate of a proof of work cryptocurrency must rise at a rate at least equal to that of Moore's Law to provide minimal network security.
The thread is here of anyone wants to read it.
https://bitcointalk.org/index.php?topic=12109
Sweft's Law: The network hashrate of a proof of work cryptocurrency must rise at a rate at least equal to that of Moore's Law to provide minimal network security.
The thread is here of anyone wants to read it.
https://bitcointalk.org/index.php?topic=12109
Sweft: I think you over estimate the depth of thought of your opposition
If anything, he under estimates it. For the most part, his opposition isn't interested in convincing him of anythin, most who post here are just trolling him. In the long run, not only are we all dead, our grandchildren will receive the benefits of our foresights. If Sweft is correct, and he actually does something about it beyond arguing about it with people on the Internet, then his grandchildren will benefit and they will be thankful for it. If we are correct, our grandchildren will be thankful. In the near term; however, there is no point in us arguing about it, since Bitcoin is presently, and will continue to be for long after my natural life span, a rather inflationary currency.
I think the inflation people have a trouble with is fiat fractional reserve lending.
Why?
Because if you fractionally lend money, that original money that was lent should in theory be distinguished from debt by having some essence. The issue is with fiat the original money and the debt become indistinguishable when they monetize the debt by printing money.
If you lend based on gold, that original loan is still owed to you, so by default every loan that was fractionally created from gold is still the very same original gold. Therefore the money is distinguished from the debt because it must be returned to the lender since you cannot counterfeit it (print).
The same applies with bitcoin fractional lending as does with gold. Pre-programmed inflation in bitcoin should behave nothing like fiat inflation, because the debt cannot be monetized. The debt must be returned to the lender.
And if you notice throughout history gold has inflated and will continue to inflate, but since gold mining requires energy, as bitcoin mining does, the inflation is beneficial to its value because it allows for a larger adoption base and solves the first adopter problem.
Inflation is not the enemy of bitcoin.
Why?
Because if you fractionally lend money, that original money that was lent should in theory be distinguished from debt by having some essence. The issue is with fiat the original money and the debt become indistinguishable when they monetize the debt by printing money.
If you lend based on gold, that original loan is still owed to you, so by default every loan that was fractionally created from gold is still the very same original gold. Therefore the money is distinguished from the debt because it must be returned to the lender since you cannot counterfeit it (print).
The same applies with bitcoin fractional lending as does with gold. Pre-programmed inflation in bitcoin should behave nothing like fiat inflation, because the debt cannot be monetized. The debt must be returned to the lender.
And if you notice throughout history gold has inflated and will continue to inflate, but since gold mining requires energy, as bitcoin mining does, the inflation is beneficial to its value because it allows for a larger adoption base and solves the first adopter problem.
Inflation is not the enemy of bitcoin.
There really is absolutely no benefit for this type of a cryptocurrency not to be inflationary.
Then why are you still using it? Why aren't you using one of the inflationary altcoins? More to the point, why are you still bugging us about it?
There isn't an inflationary coin with the properties that i like.
I don't get it... bitcon network hashrate could just increase forever. what's the problem with that?
The less inflationary the cryptocurrency becomes, the more it depends on tx fees for revenue rather than block reward. Why do you remove a stream of revenue from the the profits of miners when it is their job to create a secure network?
I'm not sure you even read anything in this thread.
As I explained above:
The network must increase hash at a rate of total cost of network hash / 2 every 2 years.
If the network must double in present size of hashrate, then the cost of doubling the hashrate in 2 years will be the value of half the network hashrate in the present.
For example.
If the network is valued at 30b in the future (30b is a minor barrier to entry, which i don't think will be enough, perhaps 300b), but let us use 30. In 2 years the cost of that hash will be 15b. Thus every two years, for the network to grow at the rate of Moore's rate, the network must invest 15b for the cost to replicate network hash not to decrease. Otherwise, if the network does not invest half of its cost every two years, the barrier to replicate the original hash will decrease to 0 over time.
As I explained previously.
Given 1% inflation, the value of the cryptocurrency must be at least 25x the cost of network hash for miners to profit + electricity costs.
Given 2% inflation, the value of the cryptocurrency must be at least 12.5x the cost of network hash for miners to profit + electricity costs.
Given 3% inflation, the value of the cryptocurrency must be at least 8.3x the cost of network hash for miners to profit + electricity costs.
Given 0% inflation, for us to mimic 2% inflation:
If tx fees is 1%, then velocity of bitcoins has 2.
If tx fees is .5%, then the velocity of bitcoins has be to 4. That the total bitcoins sent every year must be equivalent to 4 times the amount of bitcoins in circulation.
if tx fees is 0%, then there is no mining profit and we have a problem where it's possible that mining cartels are actively undermining the system. This is not possible with an inflationary cryptocurrency.
But transaction fees cannot mimic inflation for revenue because inflation will naturally also have the same revenue stream of tx fees.
There really is absolutely no benefit for this type of a cryptocurrency not to be inflationary.
This is a good point. Block reward is fixed, tx fees are not. Thus, someone can solve blocks at negative cost and bankrupt all other miners, since he can reduce his tx fee to 0.
This is a nonsense statement. It's impossible for any entity to bankrupt all other miners, no matter his transaction fees. Not only would any such miner have to aquire the capital investment in order to build his network to beyond 51%, an uphill battle considering the vast majority of the current running network (now or at any other time) is a sunk cost already paid for; he would also have to compete with the hobbyist miners who benefit from co-generation of waste heat.
I have a GPU based mining rig that I choose not to use, that I can use for space heating in my garage at will. No miner can bankrupt me.
Therefore your "law" is invalid.
That has nothing to do with my Law. That specific vulnerability was something that someone else posted, not me.
If you believe you can use your mining to convert electricity into heat, i hope you live in a very cold climate.
Network hash must grow at least at the rate of Moore's Law. This is also known as Sweft's Law. If Bitcoin fails to satisfy this condition, then it will be prone to attack.
Why wouldn't hashrate grow according to Moore's law. If hardware performance increases in hashrate per $, everything else being equal, why wouldn't the bitcoin network hashrate increase accordingly and Sweft's Law be satisfied?
There will always be new miners entering the game with new up-to-date hardware (or existing miners upgrading) and old rigs will drop out, keeping bitcoin hashing equipment up-to-speed with moore's law.
An explanation of Sweft's Law for those having trouble understanding it.
Moore's Law states that the number of transistors doubles every two years.
This means two years from now, the cost of the network (hash / ($ / hash)), given equivalent hash, will be half.
And half in another two years. And half in another 4 years.
That means in 6 years it will take 1/8th the amount of capital to replicate the original hash.
Thus, the network must grow at the rate of Moore's Law to sustain the value of its hash so that the value to replicate the original hash does not decrease.
That means that the network must double its hash every two years.
Every two years there has to be a capital investment equivalent to the cost of network hash / 2 to double the hash in accordance with Sweft's Law.
But then we also have to calculate electricity costs, which i will do later.
http://www.marketoracle.co.uk/Article39704.html
The author of this article posted it here in this forum for discussion:
https://bitcointalk.org/index.php?topic=160612.0
51% attack can also exist as a "benevolent" mining monopoly or cartel that doesn't necessarily wreck the blockchain or ruin the value of the cryptocurrency, but simply controls the majority of transaction processing. It then controls the flow of money, who gets charged transaction fees, who doesn't, who even gets their transactions processed. They choose what makes it into the blockchain and what doesn't. They could freeze accounts or move coins to other accounts at will, behind the scenes, benevolently of course, to keep us safe or some shit like that, or without the majority of people knowing (or caring probably) that they can do this, as a matter of their policy.
As soon as the block rewards dry up, this cannot help but become a reality. It is a mathematical, economic inevitibilty, because joe shmoe miner can't afford to prevent it without block rewards. He will go out of business, and that is who we depend on to keep the network honest. We need joe shmoe to be at least 51%, not the walmart-amazon-google network hash cartel to be 51%. Don't let joe shmoe go broke mining!
This cartel will be comprised of corporations or entities who can subsidize their own mining operations, as in pay their electric bill out of their own pocket, buy their hardware, etc without needing block rewards or transaction fees. The joe shmoe public mining pools whose members depend on these compensations to operate would dry up, thus surrendering the 51% of network hash and more to fewer and fewer entities, which will then start acting like a cartel or monopoly and dictate their policies with the clout of essentially holding as hostage the blockchain.
Whoever doesn't think this will happen when the incentive to mine is gone is a fool or is too lazy to think into the future.
The economics of deflation (and inflation) is harmful to participants in an economy anyway in my opinion but that is for another thread. That's more of a general opinion on a complex issue, but the sweft law thing is not an opinion, it is bombproof math and economic reality.
The author of this article posted it here in this forum for discussion:
https://bitcointalk.org/index.php?topic=160612.0
51% attack can also exist as a "benevolent" mining monopoly or cartel that doesn't necessarily wreck the blockchain or ruin the value of the cryptocurrency, but simply controls the majority of transaction processing. It then controls the flow of money, who gets charged transaction fees, who doesn't, who even gets their transactions processed. They choose what makes it into the blockchain and what doesn't. They could freeze accounts or move coins to other accounts at will, behind the scenes, benevolently of course, to keep us safe or some shit like that, or without the majority of people knowing (or caring probably) that they can do this, as a matter of their policy.
As soon as the block rewards dry up, this cannot help but become a reality. It is a mathematical, economic inevitibilty, because joe shmoe miner can't afford to prevent it without block rewards. He will go out of business, and that is who we depend on to keep the network honest. We need joe shmoe to be at least 51%, not the walmart-amazon-google network hash cartel to be 51%. Don't let joe shmoe go broke mining!
This cartel will be comprised of corporations or entities who can subsidize their own mining operations, as in pay their electric bill out of their own pocket, buy their hardware, etc without needing block rewards or transaction fees. The joe shmoe public mining pools whose members depend on these compensations to operate would dry up, thus surrendering the 51% of network hash and more to fewer and fewer entities, which will then start acting like a cartel or monopoly and dictate their policies with the clout of essentially holding as hostage the blockchain.
Whoever doesn't think this will happen when the incentive to mine is gone is a fool or is too lazy to think into the future.
The economics of deflation (and inflation) is harmful to participants in an economy anyway in my opinion but that is for another thread. That's more of a general opinion on a complex issue, but the sweft law thing is not an opinion, it is bombproof math and economic reality.
This is a good point. Block reward is fixed, tx fees are not. Thus, someone can solve blocks at negative cost and bankrupt all other miners, since he can reduce his tx fee to 0.
Inflation also solves this problem because a mining cartel cannot remove all of the income from the solving blocks.
From my own perspectives, the block chain split was of zero consequence. If it were not for the activity on this forum at the time, and my interaction with this forum, I (personally) wouldn't have even noticed. The same would have been true for most users who either don't spend bitcoins on a daily basis or don't fret over the time to confirm. Once users are competing for blockspace, a 24 hour long time to confirm will become more commonplace for much more mundane reasons.
I think the fact that someone had a transaction with six confirmation that was then undone was extremely significant.Well, you have a point there.
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And the price crash wasn't even the worst crash that I've seen since I've been here. On a percentage basis, dropping from about $250 to about $50 over the course of a week or two isn't as bad as dropping from $32 to $2 in 2011 (2012?), although it happened much faster.
True, but it happened at a time when Bitcoin's rise was big news and there was a high rate of influx of new users. These are the conditions under which you would never expect such a drop. And it happened due to a failure at a choke point whose significant was not, I think, generally recognized.Those are exactly the conditions that I would expect a big drop, due to the eventual popping of a bubble. And that is largely what happened. Honestly, I expected it weeks before it happened, and lost a small fortune short selling with a stop-loss limit at $72. It never eeven got back down to where I thought it made fundamental sense, so I would have lost it anyway.
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But I agree with your point. You can see these events as Earth shattering or meaningless. The important thing is that bad things happened and Bitcoin barely noticed. So if you're worried about bad things happening, the evidence suggests that Bitcoin will survive.
It's much like the point about violence and terrorrism; terror attacks make big news but not really big body counts, as a nominally "free" US citizen is 9 times more likely to die by the unwarrented actions of a police officer than a terrorist.
Really, the perception of risks are out of prooportion with the reality of those same risks.
The issue isn't any one single double spend attack.
The issue is a long-term, ongoing double spend attack where the attacker holds a significant amount of hash.
Can someone develop this?
3 coins isn't really pocket change. I'd be willing to use a trusted forum member as an escrow for the transaction.
Bump3 coins isn't really pocket change. I'd be willing to use a trusted forum member as an escrow for the transaction.
why 2%? that is too low. I think inflationary should be about 5% to 8%
but, good idea
2% inflation requires the crypto market cap / mining hardware cost to be approximately 12.5but, good idea
3% inflation requires the crypto market cap / mining hardware cost to be approximately 8
8% inflation requires the crypto market cap / mining hardware cost to be approximately 3.15
8% inflation seems excessive. 2% preserves value and also benefits miners while having a 12.5x multiplier which is not outrageously high.
I'm not concerned with active or inactive coins, only how many coins have been generated.
It has no sense. Inactive and dead coins simply doesn't exist for market. You can't predict destruction or inactivation rate in the future, so you can't use fixed emission rate to keep constant coins value. It's something like the nuclear reactor control by using a sledge hammer. One small mistake and... BAAM 
You need adaptive algorithm, which will be based on active coins volume.
It also creates a problem because an rogue agents can buy coins and destroyed them, lowering the inflation rate and making the crypto that is designed for inflation, actually deflationary. Thus, destroying the whole purpose of your inflationary coin.
I do not want to judge between active and inactive coins. It is a benefit of the protocol that the inflationary rate should be based on all coins mined rather than coins in circulation, active or inactive.
I don't think that it's possible without serious protocol modifications. Just because available coins volume is unknown, we are able to see only sum of available and destroyed coins. The actual inflation rate should depend on active coins volume.
My proposal is not possible why?
I'm not concerned with active or inactive coins, only how many coins have been generated. If you base the inflation rate on active coins it creates all sorts of problems.
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-nSubsidy >>= (nHeight / 210000);
+nSubsidy <<= (nHeight / 210000);
+nSubsidy <<= (nHeight / 210000);
My work is done here.
Can you create the fork with the specifications i listed?
Yes, i don't find the protocol particularly attractive.
In any case, while there's a maximum block size, bitcoin can survive on fees. It is unclear if it could survive only on fees without a block limit. But many core devs think so and I find their arguments convincing enough.
But since you're concerned with this, Freicoin will have perpetual reward and is certain that you will not have to worry about this problem you discuss in the other thread.
1) Since it is not compounding the 5% surcharge will always have the same mining profit unless the price of the coins increases. An inflationary crypto, mining profit increases if price remains static.
2) the 5% surcharge makes it easier for a miner to accumulate a share of all coins proportional to his share of mining hash in a period of ~30 years.