Thursday, July 21, 2016

an idea for an ideal cryptocurrency

Introduction, context:
Previously I have discussed the problems with limited-quantity coins.  This is a coin idea that might be constant-value, or half-way between. This is an outline (without addressing implementation problems) of what I think would be close to an ideal based on the idea that maximizing median human happiness is the "meaning of human life" and the implicit goal humans should be assigning to the economic machine.  I do not say "our" economic machine because we are not intentionally (let alone intelligently) cooperating to maximize the benefits we receive from the machine as whole.  The "invisible hand" of competitive, cooperative, honest selfishness at the individual transaction level is not a God that makes everything better for our system as a whole, without diligent, intelligent, conscious effort at the system-wide level (such as government regulations for rule of law to encourage safe and honest transactions, and against monopolies and pollution). The prisoner's dilemma does not have a synergistic gain during cooperation unless the rules and goals of the game are intelligently known and enforced.  My goal is to prevent evolutionary optimizations from mindless humans and mindless machines to sneak into our economic optimizations without regard to human happiness.  But as can be seen from the following, maximum median human happiness might turn out to be equivalent to letting the machines rise, encouraging a decrease in human population. This could be painful in the short term like the black plague, but beneficial in the long term like the enlightenment.  But the machines have enough wealth in efficiency that the process does not need to be painful.

Coin description:
Assign a fixed amount of coin to each person on planet. Co-join their "DNA" (not necessarily a retinal scan) and a 2-factor authorization device (random key generator based) as part of their private key(s). The number of coins each adult (25 and older) with unique DNA receives along with their 2-factor device is 1,000,000.  Young people receive 100,000 per year from age 16 to 25.

Governance, fees:
If world is overpopulated, people will have less purchasing power.  Pay-weighted voting might be a good balance between democracy (which can cause too many regulations, socialism, and overpopulation) and stake-weighted voting (which has problems from insiders and lobbies).  Pay-weighted voting might be the only tax for implementing the governing laws.  If it's not, then fees, interest, and rent should be collected by the government, targeting entities that are acting against the overall goal which is "maximum happiness per median person".

Constant quantity or constant value?
I can't decide if it should be constant quantity like this (increasing only with population), or if the government can be allowed to expand or contract coin supply based on a basket of commodities. Tracking a basket of commodities keeps prices and wages very stable and prevents boom/bust cycles. Today's financial games driving commodity prices away from supply and demand (Szabo wrote an article on this) do not help in tracking a basket of commodities. Maybe if a measurable-quantity coin(s) takes over the world, these games are not possible. (would it be harder to do fraudulent/stupid derivatives and keyboard credit that pretends to be real coin?) Government printing could be directed to reduce the effect of technological dis-employment. Constant-quantity coin could encourage dis-employment and thereby lead to reduced population and increase median happiness per person.

Coin is continually created, but population is not increasing as fast as productivity gains, so it is half-way between a constant-quantity coin and a constant-value coin.

Wednesday, July 20, 2016

Proof of stake correlate with vote power, at least not anonymously

Post to github

Voting by POS is like lobbyists influencing the government. It protects or increases assets without regard to the long term health of the economy. For a coin, "health" means "used in the marketplace" or "long term value" (which are probably mutually dependent). These are abstract ideas too far away for the vast majority of stake holders who are looking at their bank account. Stock holders are biased towards short-term profit at the long-term expense of the company. Laws had to be put in place to stop it: public disclosure of who the largest stakeholders are and how much they have. The rest of the shareholders demand they restrict themselves to if and when they can cash out. These are not even options for Zcash, so voting by number of shares held as in stocks is not a good idea.

Paying to vote would be better, like the largest taxpayers deciding where government spends its money. Government is no more than code (law) directing the proper use a currency (legal tender for taxes, court, and the marketplace). People in this space need to realize coders=government, stakeholders=voters, and nodes=banks. Voters pay taxes to the government and fees to the banks. The only difference is that computers are infinitely more efficient and reliable than brains.

A short-term investor is less likely to spend money to vote. Money gained from the vote should be invested to increase the value of the coin (like taxes for gov). Helping merchants accept it is an obvious possibility, as is paying more to researchers/coders. Destroying the voting coins is possible, but limited quantity coins are already enough of a marketplace disaster that I would not encourage it. (Markets need constant value in order to keep contracts, wages, and prices valid in the same way science needs units and conversion factors to stay the same. )

Coders/researchers/economists should be the law makers, like Plato's elite philosophers, in designing the constitution. Voters can work out details and future problems. The goal is to make the game fun, fair, and long-lasting. The winning team should not be given extra power to change the rules in the middle of the game. The winning team should even be penalized so that the games remains a distributive network, unless they want to end up playing by themselves, with no external value.
My sensitivity to seeing it [coin issuance curve changes] is partly based on decision-makers being large holders of the coin in quantities unknown even to each other. The rest of this paragraph is against this type of proof-of-stake voting, an issue I posted on yesterday #1112 The complexity of the tech issues in Zcash makes the founders de facto stock-like insiders despite it being open source, insiders that may have a preference for short-term gain at long term expense and not regulated to prevent this expectation. Explicit voting by size of stake is bad because it is a bias for short term holding value at expense of long-term marketplace-use value, which is the basis of long term holding value. Under the pretense of having an unbiased interest in the long-term health of the coin is worse. Proof of stake voting with noble pretenses underlies Bitcoin's woes. "Our developers will not mine". But how will you know? I am not really concerned about this major concern, but the laws have not caught up and the company could accidentally do things that would normally be illegal if it follows a path that is intuitively good. Voting by size of stake is a bias towards a chain letter. Doing it secretly is a bias towards ponziness. Does Satoshi's abandonment of the project indicate awareness of a conflict of interest as a large anonymous stakeholder / insider that should be illegal? Would him selling without disclosure normally be illegal and this is the reason he has not sold any?

All things considered, I think the company should explicitly state its contract with society (what the coin must always be) in its principles of organization, self-referentially unmodifiable, with a copy-left inheritance requirement in the event of a buyout, rigidly connected to and defining the "Zcash"
trademark. The target audience of the contract would be with future holders of the coin, not current holders. Then add it to the blog and code, before launch.

ETH giving release names seems more necessary because the system's philosophy and understanding of itself is still changing. This is why I have very little interest in it. I would like an asset. I want them to succeed in replacing government and banking. But I still want an asset I can understand that is not connected to complexity and self-identity confusion, let alone "Turing-complete security holes".
Both supply curve and name changes give an impression of "instability". Name changing is more of an issue with me because it implies the coin's identity is changing. That's great for improving products who's primary features are changing. They need to change identity in order to advance. But Zcash should have a rigid, limited, stated philosophical identity like Excel and Powerpoint instead of CPU-like name changes. I think Zcash is trying to be anonynous, secure, bitcoin quantity and at least similar curve, distributed mining as much as possible, and fast and efficient as much as possible. Since these features should only improve and without substantial change or any foreseeable addition, names seem to add only confusion as to what the name means (is it one of many products under a Zcash company umbrella? Has the coin changed it's anonymizing or hash method?) and gives an impression of changeability. Of course everyone wants the product to improve the stated goals, but not to otherwise change. A major anonymizing or hash algorithm change is a detail that should fall under Zcash "2.0" or whatever release notes.

Saturday, July 16, 2016

A.I. and economics again, post to zcash forum

Your 1st and 2nd sentences seem contradictory. My view is that making ASIC infeasible (to level the playing field) is a drastic market interference, for a good reason. A free market evolves towards concentration of wealth and monopolies. Democratic voting creates a more level playing field (1 person = 1 vote) by causing government to write the rules (algorithmic protocol) to bias the free market (capitalism) away from concentration of wealth, towards socialization.

Developers are the "governing employees" that make Zcash more democratic, more social. Equal access to coins based on investment expense is a fair market, made possible by a "government" (algorithm). It's a democratic idea, 1 vote = an equal investment expense.

It's true my ROI is entirely speculative. My point was to show small miners will lose only if big miners lose. Equihash is a good system for preventing wealth concentration at the outset: if ASICs were feasible, special interests could be a problem at the outset. Look at bitcoin's miners.
The economic/democratic problems I'm about to describe for any constant-quantity coin like Zcash are long-term. Given no other option, not even in theory, I'm choosing Zcash to be in the 1% instead of the 99%. All economic woes are a consequence of the physics of evolution. There is no solution. Humans are not capable of subverting the physics of evolutionary progress towards higher efficiency.

Anonymity that prevents government from unjustly targeting individuals is a form of wealth distribution. It can take away power of special interests who try to subvert democracy. But it can also prevent government from performing the good aspects of its democratic role. Among other things, if a constant quantity coin becomes the default currency, compound interest always results in wealth concentration in the lenders. Gold historically works only in times of anarchy and war. The people needing loans also need an inflating currency (but not inflationary prices). Ideally all the interest charges should be used to finance all of government. Interest should be the only tax, and that tax should fund the expansion of the society (which is ~ equal to its need for the currency) so that there is no inflation in prices or wages, which keeps contracts in that coin valid (think ETH).

Equitable computation is a more intelligent network (solves problems) for deep reasons, despite being less efficient. In A.I., the most effective systems evenly distribute computation. The constant quantity of total available CPU time and memory space is the "currency" that needs to be distributed to grant access. There's a conversion factor between the CPU time and memory space that is not unrelated to Einstein's meters=i*c*seconds based on Landauer principle. Genetic algorithms, agoric economic agent systems, bayesian techniques, & neural nets seek to redistribute computation among a wider variety of "genes/agents/nodes" and the "weighting factors" ("wiring" or "links" in the web) between them by distributing computational requirements more evenly, economizing the resources towards solutions. An unused node, gene, or web page (no links to it) and a very low price (in agoric agent-based computing) or very low probability (bayesian) are all computational elements that can be eliminated from the algorithm with minor error (a universal NAND gate with no wiring to it is the simplest example of an unused computational element).

Like everyone else interested in cryptocurrencies, I want to make as much profit with the least amount of work. Constant quantity currencies might be ideally suited for the 1% and a subversion of democracy. Wei Dai expressed a similar concern about bitcoin. That's why he likes tracking commodities. An ideal coin would expand in lock-step with its M2-like usage to keep wages and prices constant, which keeps contracts in that coin valid, and prevents early adopters from profiting (gaining more access to society's finite resources) without having to work for it (contributing to society).

A constant quantity currency is contrary to equitable (intelligent) economics for these reasons. It is only optimal when the resources it represents control of are a constant, as in A.I. systems constrained a specific hardware system. It will be beneficial in times of war and anarchy for the survivalists have planned ahead. Anonymity amplifies this benefit.