Can you explain how the double-spend attack works with ppcoins? I've heard about it and I have a technical background but I still don't really understand it. Is it like a Finney attack?

And is this an issue with all future proof of stake coin implementations? I really like the idea. Yes the cost of securing the bitcoin chain is far less than securing our banking system, and don't get me wrong I think it's a fantastic idea, but proof of stake seems to be even more energy efficient and potentially more secure, since acquiring a lot of hashing power is more feasible than acquiring half the coins in existence. For bitcoin to be completely secure from a 51% attack, it needs more hashing power than any group, government, or corporation can possibly get it's hands on and we're far from there.

Unless I'm mistaken somewhere in my understanding of proof of stake an the bitcoin block chain, in which case please enlighten me.

No. You are mistaken - I intentionally differentiate from 1.99%, 2% and 2.01% if the growth is 2%. 2% or 2.01% is not the same as you put it. 0.01% difference can look small now but will produce substantial differences in the long run.

If the difference is negative (1.99 monetary growth - 2% economy growth) you are pushing more allocation into holding money, and if the difference is positive you are pushing more allocation into investment and production (economy). If the monetary growth is higher then econ people who are holding money are loosing purchasing power and people holding "the economy" are gaining it. If the monetary growth is smaller then economy growth people holding the money are gaining and people investing and producing are loosing.

thus, bitcoin negatively effect investing and production since it's better to allocate more into monetary substitute then into economy.

I don't know about PPcoin in particular, but the general idea of proof of stake is that people with more (and older?) coins get a break on difficulty. So someone with no 'stake' might have to have 90%+ hashing power to pull a double spend/rollback attack someone with a lot of coins might be able to do it with just 10% of the hashing power of the network.

I think the general counter to that is that the people who have an easy time doing it don't want to do it.

Somehow I missed your last post, I'll look it over when I get a chance and respond.

It should be neither. Different people have different risk tolerances. This is no more wrong than someone liking chocolate or vanilla ice cream. There is no right answer.

If you assume investing to mean successful investments even, it's still not even true. As you mentioned immediately above this time - different people have different risk tolerances. Society is not better off when you force people to take a risk they don't want to take, even if it is +EV in terms of an investment. If someone says "I would rather have $100 today than $150 in 10 years (constant purchasing power)", and you say society is better off when they invest, you are wrong. Some of society may be, but those people are clearly worse off by their own preferences.

All savings is simply deferred spending. The very act of saving is an act of consuming in the future. In the irrational case of people saving and never spending in the future, this also is very good because people produced something and will never consume. So the rest of society is better off. So if people are irrational and never consume in the future, it will affect investment by having more stuff now, therefore making current prices cheaper, meaning it's a good investment opportunity.

When no one else is investing, that absolutely is a sign to invest. It means there is a great opportunity and no one else will be competing. Sure, weak market participants and followers will lose out. But this is simply buy low, sell high. I'm not interested in how this will influence intellectual weaklings and psychology.


I never said it was investing. If I did, I was mistaken. I said it was beneficial. But you are dead wrong in the second part. There are X resources in the present time and Y Bitcoins. This is the most basic economic formula ever with supply and demand. When there is less demand, price lowers. Production already has occurred at this point. So there are fewer coins bidding on the same amount of goods, and the result is there is more stuff available for the people who are spending.

As for future production, it depends if the producers are idiots and if the people storing the coins are idiots. Savings almost always represents future consumption.

But keep asserting your conclusions.


That's exactly what savings is. Savings is "I do not wish to consume now. I wish to consume in the future!" People are allowed to be dumb, and those who are dumb will lose and those who are smart will win. This is nothing new in life.


Explain how. Or keep asserting your way to victory.


So if you know you are going to get robbed, its no longer robbery? This is a terrible argument. If a woman wears a short skirt and gets raped, it's fine because she knew it would encourage rapists?

When you are penalized, that's exactly what I mean by pressured. But you argued that point just about as well as I would.

And it's not piggy-back, it's symbiotic. They are forgoing consumption and leaving resources available for now, in order to consume in the future. There are two ways you can have investment - outbid consumers for resources, or reduce consumption. Simple as that. Savers are simply the latter, and investors are the former.


This is not trolling. You seem extremely butthurt about people who are sacrificing in the present benefiting from this sacrifice. This is ridiculous, as I've illustrated numerous times. If you want to actually counter any real argument, feel free. Your MO is basically to assert things as fact with no evidence or argument, or to get angry that people might "piggyback", which is false, and has been illustrated over and over.

@TC
can you comment my post #2851 also. I'll use some time to think about your answers , and I'm presently occupied...

I don't see what to comment on, other than it being your own personal opinions on stuff and assertions.

There is, you are moving from economy to personal preferences. It should be neither but it is impossible to have an optimal equilibrium.

Again personal preferences do not indicate what is better for the economy as a whole. There is a whole theory about personal needs and group needs and how they interact. Your statement above is wrong.

You are arguing from a distribution standpoint putting my argument only on the outliers (spend now or spend never). People save now and spend in the future but when in the future is an unknown. The very act of saving is an act of consuming in the future but when? The longer they wait the more time money is out of the economy. Good investment opportunity isn't related to spending and prices. It is related with producing alpha in the economy (better, faster, cheaper, new utility...).

It does not mean there is a great opportunity. It means the risk is to great.

You are right.

~99% of population are in the idiots category when investments and risk analysis are concerned. that's why there is 1% and 99%.

I'll write an additional post...

straw man, will address it in the next post....

see above

Your argumet is that deferring consumption is actually investing. My argumet is that saving and investing is a far superior to simply saving and that bitcoin system is stimulating simply just saving and not saving and investing as current system does. That will produce a smaller economic growth and to paraphrase this bitcoin produce strain on economy do to the deflation.

You are misrepresenting me now. I've simply stated that I don't look at how much money you have but the purchasing power. You are parroting that I do. So once again: "I'm looking at purchasing power, thank you for your concern".

But on the "piggyback" thingy, I will address that in the next post....

So 2.01% money growth is good, but 1.99% is bad (compared to 2% economy growth). If 2.01% is good, would 4% be even better? 10%? 50%? I'm just trying to figure out what you consider to be the ideal rate of money growth compared to the economy growth, as well as when the rate of money growth starts becoming unacceptable.

I don't think it has to do with hashing power at all. PPCoins actually uses proof of work blocks for its initial distribution of coins, but it transitions to proof of stake over time. To make a proof of stake block, a user who holds coins "consumes" his coin-age, coins multiplied by the time they've been held in his wallet.

As I understand it, whatever system you use to secure the blockchain has to be expensive for hackers to overpower. Getting a ton of hashing power is expensive. So is getting a ton of coin-age, a hacker would need to be holding over half the PPCoins in existence to have more coin-age than the rest of the network and be able to build the longest blockchain.

This also allows the network to be secured with very little power and resources, I think only a tiny bit of computing power is necessary when one uses their coin-age to make a block.

The economy is nothing more than a sum of personal preferences. The term "optimal equilibrium" is a meaningless term.

This is where we disagree. You are putting your own values on what is "better for the economy". I disagree there is an objective "better", other than the sum of personal preferences. There is no such thing as "group needs". A group is merely a collection of individuals.


These are not outliers, these are the only two options. Actually, there is a third, spend never, but that's silly, and I think you agree on that one. And it's easy to deal with that situation.

When in the future IS an unknown, you are correct. Lots of things in life are unknowns. How much corn will be grown next year is unknown. But people estimate and try to figure it out. Some are right and some are wrong. Those who are right generally find a way to profit and those who are wrong profit less or take losses. Determining future demand is another thing people must estimate and try to figure out. Some will be wrong and they will be losers. Some will be right and they will gain.

And alpha has nothing to do with it. It breaks down even simpler than that. You gain by producing what people want when they want it.

Good investment has nothing to do with prices?!? This is insane. If I can purchase a factory for $10,000 with the expectations of selling $15,000 worth of stuff in a year, that is a profitable investment (assuming its worth the risk). If it costs me $20,000, it's a terrible idea. Cost and benefit are the ONLY thing that has to do with it.


If the risk is too great, then it's not a good time to invest. I think you are getting confused because of the way our debt-based economy currently works, where companies leverage themselves and need constant quarterly results to succeed, and can go under very quickly if things turn sour. Those companies will get destroyed, and rightfully so. This will lead to opportunities to soundly run companies that are actually financially sound.

Good thing 99% don't need to be making these decisions. We have a great thing called specialization. People who are good at determining investment opportunities can make these decisions for people and get paid. This is no different than 99% of the population being bad at fixing cars or writing software. The 1% can do this and charge a fee.

I've never once made that argument. I am merely saying they are contributing to make it easier to invest and easier to consume in the present. They are sacrificing so that others may gain. In turn, they receive benefits in the future.

This is no different than us each being promised 1 apple each day. I tell you that you can have my apple today if I can have yours for the next 2 days. Since you really want 2 apples today, you agree. I am not piggybacking anything (no investment is made), but I benefit by getting your apples the next days. If you are able to take those two apples today, and plant a tree (that magically grows in 1 day) that produces 4 apples each day after the first, I would have 4 apples after 3 days, you would have 8 apples. You will claim "oh no, you are piggybacking!" But in reality, I am freeing up apples today so that you can presently use them. You use them and are even more better off. Someone who is not a part of this trade and keeps his one apple a day income does not benefit. This analogy explains the difference between investing, consuming, and saving. The saver defers his consumption to enjoy later, the investor defers his consumption to consume even more later, and the consumer stays on the sideline and does not benefit.

I'm interested in hearing this piggyback argument. I'm not misrepresenting, I'm giving you the only excuse possible for making such egregious errors. If you are not making such a mistake, then the only reason you could be saying this is due to completely misunderstanding very basic things.

tl;dr

So I give you three systems:
MU - monetary unit
P -products- goods and services/ total economy

A) bitcoin

t= 0; 100 MU = 100 P
t=1; 100 MU = 200 P

saver holding 1 MU increases purchasing power to 2P

B) equilibrium

t= 0; 100 MU = 100 P
t=1; 200 MU = 200 P

saver holding 1 MU retains purchasing power to 1P

C) inflationary currency

t= 0; 100 MU = 100 P
t=1; 300 MU = 200 P

saver holding 1 MU loses purchasing power to 0.66P

-------------------------------------------------------------------
we are looking for t=2.

My observations:
People have an option to allocate their portfolio into products (investing or buying) or holding money as saving.

• Scenario A favors portfolio heavy oriented into MU. Since MU never rises holding P is never better then MU. You gain purchasing power by simply being passive.
• Scenario B does not favor any allocation. Holding money or products is all the same. You gain investing but don't gain anything being passive.
• Scenario C favors heavily holding P. Holding MU is discouraged and investing or consumption is encouraged. People exposing themselves pasivly to MU lose purchasing power.

- bitcoin discourages investing or consumption vs the inflationary currency since allocating portfolio into currency is always better of then allocating into P
- equilibrium where currency supply rises parallel with economic output is the fair system
- inflationary currency favors pushes people into investing. It's not "fair" but it's better then having deflationary currency that suppresses allocation into P

@TC obviously I'm wrong here by your reasoning - feel free to point where

Rikes I'm also interested to hear what your take is on Bitcoin's long term viability. You say it will fail because it will go up in value too much due to having a limited money supply. Personally I would consider bitcoins continuing to gain value an indicator of its success, would you not?

Or are you suggesting that an inflationary crypto-currency will replace bitcoins, therefore causing users to abandon btc and its value to plummet?

What do you think about the fact that bitcoin, in most scenarios one can imagine, will continue to operate alongside the world's inflationary fiat currencies? Does the option of converting one's bitcoins to an inflationary currency alleviate the problems with bitcoin's limited money supply you've been talking about?

Do you feel that gold is destined to fail, since it has a limited supply on this earth?

2%. Any lower and you have deflation, any higher you have inflation. Both have advantages and disadvantages. My argumentation is that deflation favors allocation into money and inflation into economy. Since money isn't productive and economy is, it is better to be allocated into economy. Inflation >> deflation. (Obviously hyperinflation and hyperdeflation are not good ))

It is more important that a digital coin rises in value. That is its selling point. I calculated empirically that the number of bitcoin vendors rose when the price of bitcoin rose. When the price of bitcoin was falling the number of bitcoin sites closed.

I also question whether you need mining fees to run a coin. The large owners of the coin will maintain the nodes to protect their investments.

The only reason bitcoin is not being abandoned, is the fact that it is certain the inflation in it will be gone in the future.

Most of the debt corporations hold is to cut down on their corporate income tax and hedge against inflation. There is no reason for a DJIA company to hold much debt other than that purpose. The ones that push the edge like Bain does with HCA and clear channel, will be the most profitable. But, they run a massive risk if the economy tanks and their earnings go negative. Bain probably hopes that happens since they own a lot of debt and it is an easy way to get rid of pesky shareholders.

If everyone is predicting that the coin will rise in value, then there is incentive to buy them now. That raises the price. Eventually you hit that equilibrium. Unless you have people speculating without any judgement to the price. Then people will just assume it will always go higher, but the problem is, the rise was already priced in. There is a time discount, but in a situation like this, the price gain will happen automatically and will be accounted for.

If you want to bet counter to what the averages tell you, then you can certainly do so. People who believe more in Bitcoin will buy, and people who don't will sell or won't enter the market.

The price of Bitcoin is tied highly to its adoption, so it's very coupled. As more people use it, the price goes up. But as more people use it, that encourages more businesses to use it. This causes more people to use it, and the price goes up. It's increasing its utility whenever this happens.

Currently trending on Mashable.com ...

http://mashable.com/2012/11/05/bitcoin-currency/

I'm not saying I disagree, but the taxes I'm not going to side with. Law .. what law .. you can't send money or if you do you have to charge X amount? I would like to think they charge so much based off of risk. Say there is some sort of laundering of some sort they have to account for.

Lets take a simple example. I'm in AC and my friend is in VA (4 hour drive?) and I need 1k because I blew some money on blackjack and now I need to get some money to grind some tourny's. If he WU or MG's me money instantly -- it's gonna cost around 50 bucks in fees. Though if we do a little BTC transfer it'll cost 0. Obviously still fees involved from BTC to get it into cash, but I think you get where I'm going ??

Why does it cost 50+ for WU when BTC can do it for free?

(btw - links to relevant docs are OK .. I can read I'm just not sure how to go about googling and getting to the correct and good sources.

I'm more talking about some types of regulations on being a currency exchanger in your country. And I'm talking about international transactions mostly. There is a huge disparity between remittance fees to different countries. When you see this, there either are extraordinary costs or some type of monopoly (that likely is caused by regulation of the local government). Getting approved as a legitimate provider of such a service, etc... There are tons of silly laws. Now if you want to run it underground and all that, sure. But that limits the scale tremendously and increases the risk (which increases the fees).

The cost of BTC is not zero, because you need to transfer to cash. If you want it instantly, you are looking at 5% in, 5% out, and that's $100 there! So you are worse off! I could be out of touch of what is immediately available now, though, so but you may be able to save a marginal amount below $50. Plus there are other superior methods of transferring money into a casino if you need it. They have these things called ATMs that cost $3-5 to use. Money can be transported instantly.

But in the case where you need money from someone else nearly instantly, yeah it's gonna cost you no matter what.

Because it's not free. Casinos do not accept Bitcoins. You need to do that transfer. Maybe you can get lucky and find someone to trade you in AC. But chances are they are either doing it out of being nice, trying to expand Bitcoin, or will take a fee to make it worth their time.

yup, this is true, he's a pleasure to trade bitcoins with

if anyone can give me $30 NETSPEND in the next, like, 20-30 minutes I'll ship 3.1 bitcoins (you'll be getting like 10% vig)

The "cost" is a currency conversion that you're adding in there. Apples and oranges.

When you use WU you're not converting currency (at least, not necessarily), you're sending the currency to a different person/place. It's free (nearly) to do that with bitcoins.

Why?

It might be unlikely that there exists someone who's ready to send you money, but if there is, the cost of sending you bitcoins is two or so clicks on the internet and a fraction of a penny network fee.

But this gives you zero utility. The casino does not accept Bitcoins. Who cares if you can send anything for free if you can't use it to pay for anything.

Cool. And then the cost of using it is significant. But sending it is free!

The problem of not enough people/companies accepting bitcoins is neither permanent nor inherent to bitcoins. Businesses that accept bitcoins will have a competitive advantage over businesses that don't because the costs associated with using bitcoins are much lower than the costs with using fiat currencies or commodities.

Right now you can't use bitcoins in casinos so you need to convert them to fiat before you can use them for that purpose. But that could change in the future, and I think the free market would eventually reward the businesses that switch.

Not really, because those businesses need to buy things without Bitcoins. To do this, they need to convert them. They need to manage their accounts. This is not lower cost.

So yes, in a magical society that does not exist today, it would theoretically be better. But I care about arguing about reality, not theoretical places. If casinos accepted poop as currency, I'd just take a dump on the floor when I needed chips.

That society isn't magical, it's just theoretical and I think it's certainly plausible. It could be reality one day, so it's fine to discuss it. And as it becomes more widely accepted, there's less of a need to convert btc to fiat.

Many businesses already accept bitcoins, even B&M businesses, so this is already a reality to a limited extent.

And converting bitcoins to fiat isn't that complicated, there are plenty of btc buyers and exchanges for that.