Sunday, October 15, 2017

Smoothing coin release rate for bitcoin


If a coin wants to implement a continuous reward adjustment to give the same number of coins released as the same rate as bitcoin use:

C/block = 69.3*(0.5)^(-height/210,000)

But to implement it in an an existing coin, it takes a little more work to find a solution:

The halving events in BTC seem absurb in being such a powerful step function. Due to rounding error and trying to keep the same quantity of satoshis emitted every 4 years, it takes some effort to find a formula that exactly ends in 1/2 as many coins per block after 4 years (210,000 blocks) and gives the exact same number of Satoshis in those 4 years. Here's what I came up with.

Once every 4 hours, starting half-way into a halving event, set coins awarded to

BTC=C*int(1E8*A*B^(N/8750))/1E8

where

C = number of coins supposed to be emitted in this halving event.
A = 1.072026880076
B = 0.46636556
N = blocks after the 1/2-way point, up to 8750 when N goes back to 1 and C is cut in half.

8750 is 4 years' worth of 4-hour periods. I didn't like 5, 7, or 10 hours because it is not a multiple of a day. 2 hours would have been harder to check in excel, having 2*8750 adjustment per halving. Other options were not an integer number of blocks. I guess 8 hours is an option.

I guess it could be improved to not have to reset C and N every 4 years.

I believe there is a starting point that is better in the sense that it results in a simpler equation that is good for all time, like ln(2) = 0.693 into a halving event or maybe 1/e into it or 1/e before the end.


Wednesday, October 11, 2017

The ideal currency (new)

This does not replace my previous ideal currency article that talks about a p2p coin that depends on "reputation" as the coin itself. I want to connect the lowering of physical entropy on Earth to currency.

Previously I described how all characteristics of an ideal currency such as Nick Szabo's list (scarcity, fungibility, divisibility, durability, and transferability) can be derived from the desire to have constant value in space and time. The best measure of "value" results in a more specific definition: ideal constant value currency is proportional to the net work energy available per person. A legal system creates the relevance of the currency and guides system-wide goals. Otherwise it is an anarchy-type asset where individuals are not necessarily cooperating for a larger goal such as survival and promotion of a society. I'm not talking about that type of currency. The assumed legal system dictates how the energy may be used, which includes enforcing the concept of ownership of "the work energy assets" and enforcing law (settling disputes, collecting taxes, etc) in that particular currency (unless the transfer of other "work energy assets" in certain cases is more appropriate). Intellectual property does not have a visible net work energy that is proportional to its numerical value, but it ostensibly increases the net work energy available in other assets by making the use of them more efficient, even if only by entertaining people which may enable them to work better. Assets have a real net physical work energy, but in calculating how much more currency should be in the system due to those assets, the costs of anything such as intellectual property needed in its conversion to work should be first subtracted out.

There is waste energy as heat when work energy is expended, and the amount depends on the form of the original energy. There is also wasted energy when work energy is expended to get other work energy where it is needed. These and other forms of waste are not included in the "net total work in the system per person" that I'm talking about. So, I can't say this work is exactly based on Gibbs free energy ( E = U + pV - ST) of a set of atoms in some system because that is measured before these wastes. Gibbs free energy is the precise definition of "available work energy". So what I'm talking about is the Gibbs free energy minus the waste which includes cost of the intellectual property. Gibbs free energy includes a subtraction from the total that is due to the energy having an amount of disorder (entropy) at a given temperature (S*T). In a sense, the waste and I.P. expense is like a pre-existing "disorder" (or inefficiency) in the assets. If the size of the system under a common legal and currency control is stable, the new total net work energy coming into the system in a given time is equal to the waste energy going out. The infrastructure that acquires the input energy is a potential energy that will be depleted over time as the infrastructure depreciates. Every asset is similarly a potential energy. So the net work energy I've defined is probably better viewed as a potential energy and new energy coming in and going out in a stable system keep that potential energy constant. If the incoming energy coming is greater than the waste going out, the potential energy of the system is increasing, which should be accompanied by an increase in currency. Also, if the I.P. costs in the system decreases, it is like the S*T part of Gibbs free energy decreasing, enabling more of the potential energy to be converted into work energy. This also demands more currency creation.

The currency is proportional to the net work energy in the system, but not equal to it. All assets in a legal system should have a reference such as a document that defines the owner. The currency gains control of a portion of those assets (say, 10%) by owners having debts as well as assets which places a lien on their assets, so they do not exactly have full ownership of the assets they own. The debts may be expressible in other assets, but the legal system typically allows settlement in the currency. So not all debt is currency, but all currency is based on a debt. An immediate question I have is "Should the total debt-currency (as a percentage of the assets in the system) be constant?" My first guess is "yes" to keep things simple and therefore more measurable and predictable.

The rest is highly suspect that I need to investigate further. I have it here for my future reference.

coins = bytes = DNA = synapses => used to create economically beneficial arrangements of atoms and potential energy

The usefulness of energy depends on the form it is in as well as the pre-existing order of the matter it needs to move. For example, oil in the ground is not as valuable as oil in a tanker. Gold in an vein is not as useful as gold in sea water. So the order in the mass of commodities has value like energy commodities due to making itself more amenable for energy to move. A.I. systems like evolution and economies use energy to move mass to make copies of themselves to repeat the process. More precisely, the historical position of mass and potential energy gradients cause matter to form self-replicating way. Genes, brains, and A.I. are not forces that do anything of their own free will, but they are the result of forces from pre-existing potential energy gradients that created them. They are enzymes that allow energy and mass to move in an efficient direction, not forces. The following is mathematically exactly true: Intelligence = efficient prediction = compression = science. I am referring to the "density" of each of these, not the total abilities. For example, science seeks to predict the most in the least number of bytes. The least number of bytes is known as Occam's razor in science and is the 2nd of two fundamental tenants of science. The first is that observations should have the potential to prove a theory wrong (falsifiability), and that those observations always support the theory (reproducible observations). So the 1st science tenant is prediction and the 2nd is compression or efficiency. Total currency in an A.I. system = bytes / time that are destroyed in CPU computations and memory writes. Every computation in a CPU and memory write to RAM or a hard drive generates heat and entropy. The theoretical minimal entropy per byte destroyed is S =kb * ln(2). kb is boltzmann's constant. The minimal heat energy created (the energy lost) is Q = Temperature * S. In economics, the "bytes" are "dollars" that represent energy spent like a CPU computation to create a mass of a commodity (like the storage of a byte). When we write to memory in A.I. we are creating value that can be used in the future. Typically the writes are assigning weights to the connections in neural nets or the probabilities to a Bayesian net or making copies of a gene in genetic algorithms. Bytes in evolution are DNA. The bytes in our bodies are cellular energy like glucose and energy stored in the crystals of DNA. Energy-based commodities are spent to create mass-based commodities that are used for an economic system to replicate (expand), just like evolution and A.I. Total currency is the total available commodities per economic cycle. Approximating a constant number of economizing agents like people or neurons in a brain or nodes in a neural net means that the currency is also a bytes per economic cycle per economizing agent. Agents compete for the limited number of bytes in order to increase the number of bytes per agent per cycle. Coins are bytes that represent a percent ownership of the total commodities available per economic cycle per person.

ideal cryptocurrency:

This is jumbled, but I want to save it for future review to pick up where I left off.

The general idea is for people to gain "reputation points" as their own personal coin by "giving" something away, someone receives and gives "reputation to you". It costs them reputation to give to you. So you want to give only to people you trust to stay within the system. You vouch for them and they vouch for you. You lose reputation if they cheat on others in the future. You keep each other's transactions on a blockchain, and those of your mutual nearest neighbors. Everyone will have a different blockchain, supporting your "local" buyers/sellers, who support you. Trust before a transaction is from a potential buyer/seller checking your past transactions and confirming with those people that your blockchain is correct and complete. The exchange rate for reputation depends on how close buyer and seller are in their network of connections. It should be possible to limit the amount of your transactions potential buyers/sellers can see, but your exchange rate will not be good if you are too secretive about your past. Transaction speeds to check everyone and proceed should be very fast, less than a minute. Your reputation could be recoverable from your "local network" if you lose your keys. Outsiders not wanting to disclose information about themselves will not be able to decrypt blockchains that contain your data.

=======

Here's another "insane idea" to be added onto to the timestamp idea (again, not necessarily the stars). People get more coin by having more "friends". It might be a slightly exponential function to discourage multiple identities. Your individual coin value is worth more to your "local" friends than to "distant" friends. The distance is shorter if you have a larger number of parallel connections through unique routes. A coin between A and D when they are connected through friends like A->B->C->D and A->E->F->D is worth more than if the E in the 2nd route is B or C. But if E is not there (A->F->D) then the distance is shorter. More coin is generated as the network grows. Each transaction is recorded, stored, timestamped, and signed by you and your friends and maybe your friends' friends. Maybe they are the only ones who can see it unencrypted or your get the choice of a privacy level. Higher privacy requirement means people who do not actually know you will trust your coin less. Maybe password recovery and "2-factor" security can be implemented by closest friends. Each transaction has description of item bought/sold so that the network can be searched for product. There is also a review and rating field for both buyer and seller. For every positive review, you must have 1 negative review: you can't give everyone 5 stars like on ebay and high ranking reviewers on Amazon (positive reviewers get better ranking based on people liking them more than it being an honest review). This is a P2P trust system, but there must be a way to do it so that it is not easy tricked, which is the usual complaint and there is a privacy issue. But look at the benefits. Truly P2P. Since it does not use a single blockchain it is infinitely faster and infinitely more secure than the bitcoin blockchain. I know nothing about programming a blockchain, let alone understand it if I created a clone. But I could program this. And if I can program it, then it is secure and definitive enough to be hard-coded by someone more clever and need changing only fast as the underlying crypto standards (about once per 2 decades?)


zawy [9:54 AM]
Obviously the intent is to replace fiat, amazon, and ebay, but it should also replace FB. A transaction could be a payment you make to friends if you want them to look at a photo. The photo would be part of the transaction data. Since only you and your friends store the data, there are no transaction fees other than the cost of your computing devices. Your friends have to like it in order for you to get your money back. LOL, right? But it's definitely needed. We need to step back and be able to generalize the concept of reviews, likes, votes, and products into the concept of a coin. You have a limited amount dictated by the size of the network. The network of friends decides how much you get. They decide if you should get more or less relative power than other friends. (edited)

zawy [9:58 AM]
It would not require trust in the way you're thinking. Your reputation via the history of transactions would enable people to trust you. It's like a brand name, another reason for having only 1 identity. Encouraging 1 identity is key to prevent people from creating false identities with a bot in order to get more coin. The trick and difficulty is in preventing false identities in a way that scams the community.

zawy [10:04 AM]
Everyone should have a motivation to link to only real, known friends. That's the trick anf difficulty. I'm using "friend" very loosely. It just needs to be a known person. Like me and you could link to David Mercer and Zookoo, but we can't vouch for each other very well. That's because David and Zookoo have built up more real social credibility through many years and good work. They have sacrificed some privacy in order to get it. Satoshi could get real enormous credibility through various provable verifications and not even give up privacy, so it's not a given that privacy must be sacrificed. (edited)


zawy [10:07 AM]
Right, it should be made, if possible, to not give an advantage to people because they are taking a risk in their personal safety.


zawy [10:15 AM]
The system should enable individuals to be safer, stronger, etc while at the same time advancing those who advance the system. So those who help others the most are helped by others the most. "Virtuous feedback". This is evolution, except it should not be forgotten that "help others the most" means "help 2 others who have 4 times the wealth to pay you instead of 4 others with nominal wealth". So it's not necessarily charitably socialistic like people often want for potential very good reasons, but potentially brutally capitalistic, like evolution.



zawy [6:26 AM]
It does not have to be social network, but it does seem likable social people would immediately get more wealth. It's a transaction + reputation + existence network. Your coin quantity is based on reviews others give you for past transactions (social or financial) plus the mere fact that you were able to engage in economic or social activity with others (a measure of the probability of your existence). There have been coins based on trust networks but I have not looked into them. It's just the only way I can think of to solve the big issues. If the algorithm can be done in a simple way, then it's evidence to me that it is the correct way to go. Coins give legal control of other people's time and assets. If you and I are not popular in at least a business sense where people give real money instead of "smiles" and "likes" like your brother, why should society relinquish coin (control) to us? The "smiles" might be in a different category than the coin. I mean you may not be able to buy and sell likes like coin. Likes might need to be like "votes". You would get so many "likes" per day to "vote" on your friends, rather than my previous description of people needing to be "liked" in order to give likes, which is just a constant quantity coin. Or maybe both likes and coin could be both: everyone gets so many likes and coins per day, but they are also able to buy/sell/accumulate them. I have not searched for and thought through a theoretical foundation for determining which of these options is the best. Another idea is that every one would issue their own coin via promises. This is how most money is created. Coin implies a tangible asset with inherent value. But paper currency is usually a debt instrument. "I will buy X from you with a promise to pay you back with Y." Y is a standard measure of value like the 1 hour of laborer's time plus a basket of commodities. Government issues fiat with the promise it buys you the time and effort of its taxpayers because it demands taxes to be paid in that fiat. This is called modern monetary theory.


zawy [6:40 AM]
So China sells us stuff for dollars, and those dollars gives china control of U.S. taxpayers, provided our government keeps its implicit promise to not inflate the fiat to an unexpectedly low value too quickly, which would be a default on its debt. So your "financially popular" existence that is proven by past transactions of fulfilling your debt promises gives you the ability to make larger and larger debt promises. How or if social likes/votes should interact with that I do not yet know. But I believe it should be like democratic capitalism. The sole purpose of votes is to prevent the concentration of wealth, distributing power more evenly. This makes commodity prices lower and gives more mouths to feed, and that enabled big armies, so it overthrew kings, lords, and religions. Then machines enabled a small educated Europe and then U.S. population to gain control of the world.


[6:43]
If my ideas ever solidify, I'll program it in Python.

The end game of currency will be a trust network where your reputation among friends and past buyers/sellers is the amount of currency you own to purchase things in the future. You can't lose your keys because your reputation is stored on the network. It's not centralized in any way like bitcoin, except for the protocol people should agree on. Complete anonymity is not possible, but only sociopaths don't have any friends and don't deserve any currency. A super-majority of friends can rat you out or give your keys back. You can't exchange with strangers until the network grows tentacles via 6 degrees of separation. You are penalized if a friend cheats and vice versa. You can have multiple identities but it means you would have to split friends among them, not getting any net benefit except fall-back security and dispersion to distant networks. There is no currency except how friends of friends of friends etc choose to score your reputation. There's no profit to being a dev or adopting early. There's huge profit in not being anonymous.

your productivity would show in high scores from things youve sold. As I mentioned last time I'm using "friends" losely. The guy in india who gets me cheap meds is a friend. I sent him bitcoin blindly and hope i get the products


[9:26]
he and i benefit based on trust which is based on our reputation with each other

zawy [9:45 PM]
Again, the network would have to really grow "grassroots" style among people like you and me. You and I have not trust with the bots sending us spam and whatnot, and we would not believe anything posted on bitcointalk unless we had a history of knowing someone


[9:47]
the whole point is to solve these problems. I mean I have these problems in mind as a reason for designing it. I just havent worked on any of the details


[9:49]
our computer would check a potential sellers network for connections to ours, and we buy nothing from them because the reliability settings we've chosen would indicate low reputation no matter how many friends they have simply because we and our friends have no experience with them. an interesting side effect is that you're more likely to do business with people you know.


[9:50]
but in the beginning, we would trust strangers as much as we do people on ebay and openbazaar

zawy [9:53 PM]
we are each basically issuing our own credits and debits like the tally sticks. We are issuing our own currency. The settings people choose depend on how much they score our reputation.


[9:54]
so there would be 7 billion currencies and (7B)^2 exchange rates


zawy [9:56 PM]
total currency should equal total energy controlled by the legal system divided by the number of people

and recovering lost coins is not possible. I'm talking about trying to get perfect even distribution and lightening speed pf the network everywhere and the ability to recover lost keys and potentially losing anonymity only among friends

zawy [10:02 PM]
i mean i could be an anonymous person on the internet like Satoshi who has enormous reputation despite the physical body being unknown


your "blockchain" would be only a recorded of your friends transactions. so a buyer and seller's computer would request data from your past buyers and sellers (your friends) to take his own measure of your reputation score



zawy [10:07 PM]
so I should really say friends, but that's the way it could start. Really maybe it's more likely to start with strangers you just have to trust like I do cpeople in india and china. So instead of "friends
I should say "past buyers and sellers"