4 ms·

I've seen this "public timestamping" use case before, which is a very interesting exploitation of BitCoin's mechanic. It is curious, though, that it bears a mi

by lukifer 13y ago

I've seen this "public timestamping" use case before, which is a very interesting exploitation of BitCoin's mechanic. It is curious, though, that it bears a micro-cost, even at a thousandth of a penny. I've often heard it said that BitCoin is unique as a currency in that the total quantity is inherently fixed; but in fact, it's destined to ever-so-slowly dwindle over time, whether due to public ledger uses, or the loss/destruction of private keys. One-off transactions won't register as a blip, it's possible that some future use case might run at such a staggering scale (stock market micro-transactions?) that it leads to a financial tragedy of the commons and deflation runs rampant. Not being doom-and-gloom, just an interesting thing to think about. Just as we now marvel at the naiveté of thinking that 4 billion IP addresses or 64K of RAM would be more than enough, I wonder if someday we'll look back the same way on the minimum transaction of 0.0000001 BTC.

ewillbefull 13y ago
> I've seen this "public timestamping" use case before, which is a very interesting exploitation of BitCoin's mechanic. Not really an exploitation, even Bitcoin's original whitepaper describes its blockchain as a "peer-to-peer distributed timestamp server".
- lukifer 13y ago
  I knew I shouldn't have used that term. :) It wasn't meant pejoratively.
sliverstorm 13y ago
Don't worry, if it ever comes to that point I'm sure the central bitcoin authority will be able to introduce new bitcoins to the market.
- drostie 13y ago
  People are down-voting this (presumably for containing the words "central authority") but it's actually pretty realistic. What we need is a log-linear graph of a few things. The BitCoin production rate is ramping down exponentially, and everybody who gets interested in BitCoin makes BitCoin more interesting, so there is probably an exponential increase in both the value of BitCoin and the number of miners of BitCoin. Finally, the cost of the ASICs needed to mine BitCoin effectively are diminishing by Moore's law at an exponential rate. Probably when you add these effects on a log-linear plot together, they add up to a straight line going slightly upwards; it's still worthwhile to join the network. But if you just think about it for a second, all of these could change. Moore's law can break down, interest can level off, miners' ambitions could skyrocket. It is quite plausible that the line would shift downward and new people would stop coming in, and eventually the smaller groups would stop running their own BitCoin miners. The larger miners might even buy them up. When that happens one can certainly imagine that an oligopoly of more than 50% of the computational resources of the network emerges, which turns BitCoin into a centrally regulated currency.
  - eru 13y ago
    Moore's law has not too much to do with bitcoin, since the difficulty of mining is adjusted automatically.
    - drostie 13y ago
      That was the very first thing I said; the production rate is ramping down exponentially. I agree that if you're a consumer, Moore's law has less to do with BitCoin, but the whole point of the comment was stop looking from a consumer's perspective. From the point of view of a miner -- i.e. of the computational clusters which compete to make the ledger work -- Moore's law has plenty to do with BitCoin. The fact that the production rate is constant means that there's essentially a fixed-size "pie" in any given time-frame. The fact that electronics are becoming cheaper and better means that your investment of $X today can be matched by an investment of k $X tomorrow for some k < 1. The person who does that will eat up part of the pie, leaving less for you. And why should you look at it from the point of view of the miners? Because the economic pressures on the miners determine whether the system eventually stabilizes into an oligopoly. If it does, then it can degenerate into a central-authority currency.
- sliverstorm 13y ago
  I mean, honestly, is there anything that makes it impossible for someone to come along and adjust the network or reprogram the clients to allow new bitcoins? The number of primes is unlimited, so the number of possible bitcoins should also be unlimited.
  - TheCoelacanth 13y ago
    The main difficulty is in getting people to switch to the new client. If only some people switch, you have effectively split Bitcoin into two separate currencies with all of the old coins existing separately in each currency.
discountgenius 13y ago
It's non-trivial, but further division of bitcoins is possible to implement and would likely be accepted by the network if it was in the best interest of the currency.
- officialjunk 13y ago
  Except there's a growing number of miners are ignoring small transactions aka "dust"
  - jlgreco 13y ago
    In a world where bitcoin are so scarce that further division becomes necessary, that "dust" would be worth enough to have them not ignore it.
  - discountgenius 13y ago
    This sort of change would only be necessary if the value of a bitcoin grows significantly making today's dust into tomorrow's crumbs. I don't generally pick up pennies, but I've never ignored a dollar before.
deleted 13y ago
[deleted]
primitur 13y ago
0.0000001 BTC to store a bit of data, indefinitely, for as long as the BTC network exists? Methinks there is a Dropbox plugin on its way ..
- lukifer 13y ago
  Is there anything built into the protocol to stop abuse? Bouncing coins around infinitely in order to store large quantities of data in the transaction metadata (as opposed to the fake address method described ITA)?
  - wcoenen 13y ago
    Yes. In order for a transaction to enter the block chain, it needs to be relayed by bitcoin nodes and picked up by a miner who is willing to add it to a block. Bitcoin nodes have criteria that need to be satisfied before they relay the transaction. For example, version 0.8.2 of the reference client will not relay transactions with outputs smaller than 0.00005430 BTC. There are also rules for calculating a minimum transaction fee, and a 15000 bytes/minute cap to the amount of free transactions relayed. If your transaction isn't relayed, you can still circumvent this by connecting directly to a miner. But the miners have their own rules for prioritizing transactions and limiting block size.
  - tlrobinson 13y ago
    There are some rules built into the protocol (max block size of 1MB) and some rules that are default behavior in the majority of clients/miners: https://en.bitcoin.it/wiki/Weaknesses#Denial_of_Service_.28DoS.29_attacks https://en.bitcoin.it/wiki/Weaknesses#Denial_of_Service_.28D...
- TheCoelacanth 13y ago
  Not quite. The default transaction fee is 0.0005 BTC per transaction. If the transaction fee you offer is too small, miners won't process it.
btilly 13y ago
If BitCoin succeeds, it will have successor digital currencies that will try to start with a peg to BitCoin. If one of these successors succeeds, then we have have a new source of digital money that is financially equivalent. The protocol already allows the creation of publicly verifiable contracts with creation/destruction mechanics that allow BitCoin to translate into a new currency. That puts the price of BitCoin as a ceiling for the new currency. The challenge is making it popular enough that the price of BitCoin is a floor as well.
oleganza 13y ago
If you use you document's SHA256 as a private key or one of keys in MULTISIG 1-of-2 transaction, then you can get your amount of BTC back to your normal address. You will only pay a fee to a miner if it's required. No coins will be destroyed.
oleganza 13y ago
I've expanded on this topic here: http://blog.oleganza.com/post/51799353916/eco-friendly-timestamping-using-bitcoin http://blog.oleganza.com/post/51799353916/eco-friendly-times...

by lukifer 13y ago

ewillbefull 13y ago

> I've seen this "public timestamping" use case before, which is a very interesting exploitation of BitCoin's mechanic. Not really an exploitation, even Bitcoin's original whitepaper describes its blockchain as a "peer-to-peer distributed timestamp server".

lukifer 13y ago
I knew I shouldn't have used that term. :) It wasn't meant pejoratively.

sliverstorm 13y ago

Don't worry, if it ever comes to that point I'm sure the central bitcoin authority will be able to introduce new bitcoins to the market.

drostie 13y ago
People are down-voting this (presumably for containing the words "central authority") but it's actually pretty realistic. What we need is a log-linear graph of a few things. The BitCoin production rate is ramping down exponentially, and everybody who gets interested in BitCoin makes BitCoin more interesting, so there is probably an exponential increase in both the value of BitCoin and the number of miners of BitCoin. Finally, the cost of the ASICs needed to mine BitCoin effectively are diminishing by Moore's law at an exponential rate. Probably when you add these effects on a log-linear plot together, they add up to a straight line going slightly upwards; it's still worthwhile to join the network. But if you just think about it for a second, all of these could change. Moore's law can break down, interest can level off, miners' ambitions could skyrocket. It is quite plausible that the line would shift downward and new people would stop coming in, and eventually the smaller groups would stop running their own BitCoin miners. The larger miners might even buy them up. When that happens one can certainly imagine that an oligopoly of more than 50% of the computational resources of the network emerges, which turns BitCoin into a centrally regulated currency.
- eru 13y ago
  Moore's law has not too much to do with bitcoin, since the difficulty of mining is adjusted automatically.
  - drostie 13y ago
    That was the very first thing I said; the production rate is ramping down exponentially. I agree that if you're a consumer, Moore's law has less to do with BitCoin, but the whole point of the comment was stop looking from a consumer's perspective. From the point of view of a miner -- i.e. of the computational clusters which compete to make the ledger work -- Moore's law has plenty to do with BitCoin. The fact that the production rate is constant means that there's essentially a fixed-size "pie" in any given time-frame. The fact that electronics are becoming cheaper and better means that your investment of $X today can be matched by an investment of k $X tomorrow for some k < 1. The person who does that will eat up part of the pie, leaving less for you. And why should you look at it from the point of view of the miners? Because the economic pressures on the miners determine whether the system eventually stabilizes into an oligopoly. If it does, then it can degenerate into a central-authority currency.
sliverstorm 13y ago
I mean, honestly, is there anything that makes it impossible for someone to come along and adjust the network or reprogram the clients to allow new bitcoins? The number of primes is unlimited, so the number of possible bitcoins should also be unlimited.
- TheCoelacanth 13y ago
  The main difficulty is in getting people to switch to the new client. If only some people switch, you have effectively split Bitcoin into two separate currencies with all of the old coins existing separately in each currency.

discountgenius 13y ago

It's non-trivial, but further division of bitcoins is possible to implement and would likely be accepted by the network if it was in the best interest of the currency.

officialjunk 13y ago
Except there's a growing number of miners are ignoring small transactions aka "dust"
- jlgreco 13y ago
  In a world where bitcoin are so scarce that further division becomes necessary, that "dust" would be worth enough to have them not ignore it.
- discountgenius 13y ago
  This sort of change would only be necessary if the value of a bitcoin grows significantly making today's dust into tomorrow's crumbs. I don't generally pick up pennies, but I've never ignored a dollar before.

deleted 13y ago

[deleted]

primitur 13y ago

0.0000001 BTC to store a bit of data, indefinitely, for as long as the BTC network exists? Methinks there is a Dropbox plugin on its way ..

lukifer 13y ago
Is there anything built into the protocol to stop abuse? Bouncing coins around infinitely in order to store large quantities of data in the transaction metadata (as opposed to the fake address method described ITA)?
- wcoenen 13y ago
  Yes. In order for a transaction to enter the block chain, it needs to be relayed by bitcoin nodes and picked up by a miner who is willing to add it to a block. Bitcoin nodes have criteria that need to be satisfied before they relay the transaction. For example, version 0.8.2 of the reference client will not relay transactions with outputs smaller than 0.00005430 BTC. There are also rules for calculating a minimum transaction fee, and a 15000 bytes/minute cap to the amount of free transactions relayed. If your transaction isn't relayed, you can still circumvent this by connecting directly to a miner. But the miners have their own rules for prioritizing transactions and limiting block size.
- tlrobinson 13y ago
  There are some rules built into the protocol (max block size of 1MB) and some rules that are default behavior in the majority of clients/miners: https://en.bitcoin.it/wiki/Weaknesses#Denial_of_Service_.28DoS.29_attacks https://en.bitcoin.it/wiki/Weaknesses#Denial_of_Service_.28D...
TheCoelacanth 13y ago
Not quite. The default transaction fee is 0.0005 BTC per transaction. If the transaction fee you offer is too small, miners won't process it.

btilly 13y ago

If BitCoin succeeds, it will have successor digital currencies that will try to start with a peg to BitCoin. If one of these successors succeeds, then we have have a new source of digital money that is financially equivalent. The protocol already allows the creation of publicly verifiable contracts with creation/destruction mechanics that allow BitCoin to translate into a new currency. That puts the price of BitCoin as a ceiling for the new currency. The challenge is making it popular enough that the price of BitCoin is a floor as well.

oleganza 13y ago

If you use you document's SHA256 as a private key or one of keys in MULTISIG 1-of-2 transaction, then you can get your amount of BTC back to your normal address. You will only pay a fee to a miner if it's required. No coins will be destroyed.

oleganza 13y ago

I've expanded on this topic here: http://blog.oleganza.com/post/51799353916/eco-friendly-timestamping-using-bitcoin http://blog.oleganza.com/post/51799353916/eco-friendly-times...