5 ms·

I may be wrong, but due to the deflationary nature of BTC (limited supply, increasing demand), when that happens, those fees are worth more (in government backe

by gnerd 13y ago

I may be wrong, but due to the deflationary nature of BTC (limited supply, increasing demand), when that happens, those fees are worth more (in government backed fiat currencies) than they are today. It's like being upset that the original miners could get a block reward of 50 BTC for mining on a CPU but today you have to use specialized hardware for less BTC. But as competition increased (and difficulty increased), the BTC is worth way more than it was and is less risky (although, still risky). Profit is profit and some people/organizations will still have incentives to mine. Of course, there are problems that need to be sorted out before then though, like having more transactions included in each block to make it worth while for miners and cheap for users.

heeton 13y ago
Would something like FreiCoin help? (bitcoin with demurrage - coins 'evaporate' over time so that there are always new ones to be mined and lost coins eventually go back into the pool)
- polarix 13y ago
  I don't think anyone sane would use that as a value store.
- oleganza 13y ago
  No one would bother with Freicoin (which leaks money) because no one will invest in it when you can invest in Bitcoin. So it will not have a crowd of people that value it, therefore it won't have "value", therefore it won't be used as currency. Because currency is something that has widely-acknowledged value (by those who save it, of course). There is no such thing as "transactional currency".
  - yebyen 13y ago
    My understanding is that coins must sit idle for a full year before they "evaporate." If you simply create another wallet, or another wallet address, and move your coins (transact) without buying or selling anything, you fulfill the demurrage requirement and your coins don't evaporate. If you work with large amounts of digital money and you don't check on it for a year, quite frankly you deserve to lose it! You should have robots executing on arbitrage opportunities and it should be no problem for you to show some activity in the span of a year, if you call yourself an investor. That being said, I don't have any Freicoin and I won't put my money where my mouth is, there are more interesting bits to tune in Bitcoinia, like Terracoin which has shorter block targets and hard-coded limits on the amount of variability and swing that difficulty can have.
    - Mchl 13y ago
      I'm pretty sure you have some savings or belongings that you didn't touch for a year or more. Can I have those?
      - yebyen 13y ago
        I have a closet full of crap that you are welcome to mine for good stuff. There are probably some old PS/2 keyboards and non-working motherboards in there, as well as questionable power supplies. I don't have time to look at it. People even call me a hoarder, luckily I've got it down to just one closet now because of repeated moves. I can promise I don't have savings in excess of the bitcoins I already mentioned, sadly.
    - oleganza 13y ago
      "you deserve to lose it" Your opinion is irrelevant. People will not put money where they need to run some robots just not to lose their funds if they have a better alternative. Freicoin thus will never have any value and therefore no one would use it as a currency. Terracoin is essentially the same as Bitcoin, but is compatible with Bitcoin ASICs and thus prone to attacks from their part. Litecoin, on the other hand, has incompatible hashing scheme, but no one would invest in mining Litecoin if you can invest in mining Bitcoin. In other words, people want one, most marketable, most popular, most liquid money. If Bitcoin was leaking savings, people would choose Bitcoin 2 which wouldn't and stick with it.
      - yebyen 13y ago
        You say "leaking" but it's not leaking. It's demurrage. If you leave it alone for a year, it _all_ goes away. That's not a slow leak, that's making a bad decision and failing hard in a preventable way. My hat is two sharks, your argument is invalid[1]. Asserting confidently that bitcoin is a transaction network not a value store mechanism, and that "people like you" who have excess value are the ones who attack it, by keeping the bitcoins and speculating that they will be worth more later, rather than executing or transacting with them, just holding them as some kind of "savings." Terracoin is "susceptible" to attack by ASIC just as Litecoin is "susceptible" to the "millions of GPU-toting gamers" attack vector. Mining is "investing" in the network, and if your only interest is to see yourself on top and the network in shambles, you could probably find a better way to invest. Then again, some people are anarchists.
- hafichuk 13y ago
  The only way for coins to evaporate is for the wallets to get lost. It happens. The thing people seem to get stuck on is that a coin isn't divisible. It is. Even if there was only a single coin available to the market, it would still function, albeit the real value of that one coin would be equal to the size of the market.
deskamess 13y ago
I am still learning about Bitcoin... so these may be a silly questions or questions based on wrong assumptions. From what I understand, as you get close to the max (21 million or so) the coins are harder to mine. Does that not mean transactions take longer to verify? And if you cannot verify transactions in a 'timely' manner is the system effectively dead? What is the acceptable user experience for maximum verification time of a transaction? At that max 'verification time' difficulty level, how long would it take to generate all remaining coins?
- polarix 13y ago
  The blocks (the fundamental unit of verification) get harder or easier to complete based only on how quickly the last set completed: this is to maintain a constant speed of block mining. The bitcoin payout (which goes to the miner of a block) gets predictably smaller over time. So no, this affect does not increase expected transaction time.
- gnerd 13y ago
  The difficulty will increase in response to the hash rate of the network, it doesn't directly correlate to the amount of coins in existence. So when the last BTC is mined, if people stop mining the difficulty will go down (after about 2 weeks I believe) and if more mine, it will still go up. The difficulty is designed to be at a rate that will see a block mined every 10 minutes. So the ideal max verification time should be about 60 minutes (6 blocks) on average, although you should see your transaction included in the next block mined (in 10 minutes-ish, assuming the miner included your transaction, which they have an incentive to do if you included a fee) but to stop a double spending attack, it would be unwise to consider a transaction verified after 1 block, 6 blocks makes sure your transaction is not lost in a blockchain fork or part of a double spending attack. Some people consider 3 blocks to be enough verification time, it depends on how much money you are dealing with but the recommended amount of 6 blocks is in the original paper. The last block to generate BTC that will be mined should happen in around 2140 (with the reward halving every 4 years) and then there will be a maximum of 20999999.9769 BTC in existence. Interestingly enough, if you flooded the network right now with your own transactions and included a higher than normal transaction fee on those transactions, you could conceivably block other transactions from being included in the blockchain, at least for a while. Last time I calculated the cost of such a scheme it was about 72BTC per hour, so even without fixing the scaling issues of transaction volume in BitCoin, the rise in price makes this sort of attack less likely (still theoretically possible).

by gnerd 13y ago

heeton 13y ago

Would something like FreiCoin help? (bitcoin with demurrage - coins 'evaporate' over time so that there are always new ones to be mined and lost coins eventually go back into the pool)

polarix 13y ago
I don't think anyone sane would use that as a value store.
oleganza 13y ago
No one would bother with Freicoin (which leaks money) because no one will invest in it when you can invest in Bitcoin. So it will not have a crowd of people that value it, therefore it won't have "value", therefore it won't be used as currency. Because currency is something that has widely-acknowledged value (by those who save it, of course). There is no such thing as "transactional currency".
- yebyen 13y ago
  My understanding is that coins must sit idle for a full year before they "evaporate." If you simply create another wallet, or another wallet address, and move your coins (transact) without buying or selling anything, you fulfill the demurrage requirement and your coins don't evaporate. If you work with large amounts of digital money and you don't check on it for a year, quite frankly you deserve to lose it! You should have robots executing on arbitrage opportunities and it should be no problem for you to show some activity in the span of a year, if you call yourself an investor. That being said, I don't have any Freicoin and I won't put my money where my mouth is, there are more interesting bits to tune in Bitcoinia, like Terracoin which has shorter block targets and hard-coded limits on the amount of variability and swing that difficulty can have.
  - Mchl 13y ago
    I'm pretty sure you have some savings or belongings that you didn't touch for a year or more. Can I have those?
    - yebyen 13y ago
      I have a closet full of crap that you are welcome to mine for good stuff. There are probably some old PS/2 keyboards and non-working motherboards in there, as well as questionable power supplies. I don't have time to look at it. People even call me a hoarder, luckily I've got it down to just one closet now because of repeated moves. I can promise I don't have savings in excess of the bitcoins I already mentioned, sadly.
  - oleganza 13y ago
    "you deserve to lose it" Your opinion is irrelevant. People will not put money where they need to run some robots just not to lose their funds if they have a better alternative. Freicoin thus will never have any value and therefore no one would use it as a currency. Terracoin is essentially the same as Bitcoin, but is compatible with Bitcoin ASICs and thus prone to attacks from their part. Litecoin, on the other hand, has incompatible hashing scheme, but no one would invest in mining Litecoin if you can invest in mining Bitcoin. In other words, people want one, most marketable, most popular, most liquid money. If Bitcoin was leaking savings, people would choose Bitcoin 2 which wouldn't and stick with it.
    - yebyen 13y ago
      You say "leaking" but it's not leaking. It's demurrage. If you leave it alone for a year, it _all_ goes away. That's not a slow leak, that's making a bad decision and failing hard in a preventable way. My hat is two sharks, your argument is invalid[1]. Asserting confidently that bitcoin is a transaction network not a value store mechanism, and that "people like you" who have excess value are the ones who attack it, by keeping the bitcoins and speculating that they will be worth more later, rather than executing or transacting with them, just holding them as some kind of "savings." Terracoin is "susceptible" to attack by ASIC just as Litecoin is "susceptible" to the "millions of GPU-toting gamers" attack vector. Mining is "investing" in the network, and if your only interest is to see yourself on top and the network in shambles, you could probably find a better way to invest. Then again, some people are anarchists.
hafichuk 13y ago
The only way for coins to evaporate is for the wallets to get lost. It happens. The thing people seem to get stuck on is that a coin isn't divisible. It is. Even if there was only a single coin available to the market, it would still function, albeit the real value of that one coin would be equal to the size of the market.

deskamess 13y ago

I am still learning about Bitcoin... so these may be a silly questions or questions based on wrong assumptions. From what I understand, as you get close to the max (21 million or so) the coins are harder to mine. Does that not mean transactions take longer to verify? And if you cannot verify transactions in a 'timely' manner is the system effectively dead? What is the acceptable user experience for maximum verification time of a transaction? At that max 'verification time' difficulty level, how long would it take to generate all remaining coins?

polarix 13y ago
The blocks (the fundamental unit of verification) get harder or easier to complete based only on how quickly the last set completed: this is to maintain a constant speed of block mining. The bitcoin payout (which goes to the miner of a block) gets predictably smaller over time. So no, this affect does not increase expected transaction time.
gnerd 13y ago
The difficulty will increase in response to the hash rate of the network, it doesn't directly correlate to the amount of coins in existence. So when the last BTC is mined, if people stop mining the difficulty will go down (after about 2 weeks I believe) and if more mine, it will still go up. The difficulty is designed to be at a rate that will see a block mined every 10 minutes. So the ideal max verification time should be about 60 minutes (6 blocks) on average, although you should see your transaction included in the next block mined (in 10 minutes-ish, assuming the miner included your transaction, which they have an incentive to do if you included a fee) but to stop a double spending attack, it would be unwise to consider a transaction verified after 1 block, 6 blocks makes sure your transaction is not lost in a blockchain fork or part of a double spending attack. Some people consider 3 blocks to be enough verification time, it depends on how much money you are dealing with but the recommended amount of 6 blocks is in the original paper. The last block to generate BTC that will be mined should happen in around 2140 (with the reward halving every 4 years) and then there will be a maximum of 20999999.9769 BTC in existence. Interestingly enough, if you flooded the network right now with your own transactions and included a higher than normal transaction fee on those transactions, you could conceivably block other transactions from being included in the blockchain, at least for a while. Last time I calculated the cost of such a scheme it was about 72BTC per hour, so even without fixing the scaling issues of transaction volume in BitCoin, the rise in price makes this sort of attack less likely (still theoretically possible).