BitcoinCash allows a drop in difficulty down to 1/4 if the last 5 blocks took > 12 hours. But the rise in difficulty takes 2016 blocks (two weeks if the difficulty matches hashrate) like bitcoin. They did this so that difficulty could drop quickly after the fork. But this asymmetry (long time to adjust up, but short time to adjust down) is causing unexpected feedback that will cause oscillations that could cause too many coins to be issued and the price go towards zero until there is a fork to fix it.
This is how it starts and why it gets worse: Assume price is stable and difficulty matches hashrate correctly. If for some reason price relative to bitcoin falls at the end of a set of 2016 blocks, some will jump ship but next difficulty adjustment will still be too high because it is a long averaging window. A short rolling averaging window would not have caused a problem (and does not even need the attempted BCH "fix" to get difficulty lower). But as it is, difficulty will be too high for the next block, so miners are still discouraged from mining. The slower issuance of coins may actually support price, but maybe he longer solve times, seen as a problem, can cause an even more negative effect on price. If price falls a little more due to this, the threshold of mining profitability may be passed, so a flood of miners could exit, causing really long solvetimes. This can cause the price to drop even further due to not being able to get transactions to go through. So REALLY long solvetime could occur. As soon as the 5 blocks take more than 12 hours, difficulty in the next 2016 set (only the 3rd in this sequence) will go to 1/4. remember difficulty in the 2nd block had actually dropped a little, so the 1/4 is not fixing an accidental 4x increase in difficulty. Suddenly, it is really profitable to mine, unless the price also dropped to 1/4. Let's say it had dropped to 1/2 or less. So the blocks will come at a fast rate. But as soon as that 2016 set ends, difficulty will be massive in the 4th set of 2016 blocks, and the price may be even lower due to people seeing the problem and due to too many coins being mined too quickly and sold. No longer have long solvetimes is "fixed" for that set, but it is only replace by the opposite problem. The 4th set will have very high difficulty and last maybe only 5 blocks as it will take too long to solve, then the 6th block will get the difficulty down to 1/4. If there was more than 4x increase in hashrate due to miners jumping on, then 1/4 downward change may not be a lower difficulty than it was in the 3rd set of 2016. The price should also be worse. These two effects may reduce the oscillation. But notice it depends on a huge number suddenly jumping on AND a worse price, and this is the best case scenario for reducing the size of the oscillations. The alternative of larger oscillations will also have a negative effect on price. So it's an unavoidable downward pressure on price. I saw a buy/sell opportunity in BCH and made good on it. This is actually looking like an impending buying opportunity, right before a fork that fixes it.
A huge part of this is that BCH miners can go back and forth to BTC. But notice large BTC miners have no place to go if there was a similar problem in BTC. It's kind of another reason 1 big coin naturally results.
edit:
Summary
Causes:
1) Asymmetrical math in how difficulty rises verses falls.
2) There is a threshold to mining profitability, so that only a minor fall in price can cause many miners to jump ship
3) Miners can switch back to BTC while waiting for the difficulty to fall which magnifies the problem caused by 2).
3) 1 and 2 may not have been a problem if it was a short rolling average window to determine the difficulty instead of being like BTC and suddenly changing every 2016 blocks.
4) This problem erodes price from reducing the quality of the coin by have 2 hour solvetimes if not issuing too many coins too quickly.
Thursday, August 24, 2017
Friday, August 11, 2017
Strong Drink mix for Parkinson's
I have been putting together a really strong drink. I guess it's about $15 a day, with most of the cost being in the powder extracts, $2 to $3 per day each, straight from China in bulk.
12 oz pomegranate juice from Hispanic store (not the expensive POM)
added sweet concentrates:
=================
black cherry concentrate 12 g
black molasses 12 g (sugar cane juice after most of the white sugar is removed)
Jallab 12 g (Arabic grape skin extract plus others)
powder 10:1 extracts:
==================
blueberry extract 12 g (my eyesight sharpened enough to not need my barely-needed glasses in 4 days)
strawberry extract 12 g
apple peel extract 12 g
tangerine peel extract 12 g
Citrus flavonoids with animal studies in PD, bought from china in bulk.
These doses are 1/4 the human-equivalent doses because the studies are "shock" studies on the animals by which I mean they are very short term to see how the chemicals work in response to PD-like toxin challenges.
===================================
nobiletin 500 mg
naringin 300 mg
tangeretin 100 mg
Other stuff in pills with strong animal and epidemiological evidence for PD and ability to absorb and cross blood brain barrier (pills not in the drink):
====================
black tea extract
green tea extract
grape seed extract
fisetin
(inosine to be added)
The American producer of patented fisetin is not clear that it is pure fisetin and the brand is hiding details about what it is, so I'll spend 1/3 as much to get pure fisetin from China and then sell the excess on ebay. Inosine in bulk is also 1/3 the cost from china.
Canola mayonnaise, the bomb!
Broccoli, Sardines, home-made very yeasty beer, olive oil
1 hour exercise, then drink it to absorb the sugar.
12 oz pomegranate juice from Hispanic store (not the expensive POM)
added sweet concentrates:
=================
black cherry concentrate 12 g
black molasses 12 g (sugar cane juice after most of the white sugar is removed)
Jallab 12 g (Arabic grape skin extract plus others)
powder 10:1 extracts:
==================
blueberry extract 12 g (my eyesight sharpened enough to not need my barely-needed glasses in 4 days)
strawberry extract 12 g
apple peel extract 12 g
tangerine peel extract 12 g
Citrus flavonoids with animal studies in PD, bought from china in bulk.
These doses are 1/4 the human-equivalent doses because the studies are "shock" studies on the animals by which I mean they are very short term to see how the chemicals work in response to PD-like toxin challenges.
===================================
nobiletin 500 mg
naringin 300 mg
tangeretin 100 mg
Other stuff in pills with strong animal and epidemiological evidence for PD and ability to absorb and cross blood brain barrier (pills not in the drink):
====================
black tea extract
green tea extract
grape seed extract
fisetin
(inosine to be added)
The American producer of patented fisetin is not clear that it is pure fisetin and the brand is hiding details about what it is, so I'll spend 1/3 as much to get pure fisetin from China and then sell the excess on ebay. Inosine in bulk is also 1/3 the cost from china.
Canola mayonnaise, the bomb!
Broccoli, Sardines, home-made very yeasty beer, olive oil
1 hour exercise, then drink it to absorb the sugar.
Tuesday, August 8, 2017
Potential value of bitcoin, empires, and taxes
M3 is roughly "all cash". For US dollars, it's about $30 trillion. The rest of the world I'll estimate at $25 trillion because the Euro is about $12 T in USD. I expect bitcoin and alts to roughly follow this ratio, so BTC would be compared to dollars. so the max would be 30T/21M = $1.5M per BTC. As this happens, dollars all over the world will come flooding home making them worthless, so it's more important for Americans to switch early than in other countries, to maintain current lifestyle. The ability to print dollars and the growing world economy accepting them has been the biggest boon any country has ever seen. We were basically allowed to print them as fast as the world's economy grew. We spent half the surplus on a military which pushed and supported the use of the dollar, enabling stability and exchangeability in the same way MicroSoft "helped" software. Bitcoin is the Linux of money. Wealth will be more evenly distributed as the dollar monopoly in currency ceases.
Not just the U.S. but all governments will lose power to control if they lose control of the currency that their citizens demand. Countries enforce a currency by demanding taxes and legal disputes be settled in their dollars. Empires use currency to enslave other countries. So countries can start their own cryptocoin, enabling them to enforce law more directly and automatically extract taxes by being privy to every transaction. This would relegate BTC to replacing only gold for private holders, which is $7T, $350,000/BTC, but potentially a lot more since a lot of countries want to be more fair in international exchange instead of being stuck with the dollar. Gold is harder to move so there's a great desire to switch to BTC. Also, buying stuff directly from other countries instead of Amazon will need BTC, which is a "black market" as far as the U.S. government will be concerned. It takes away their power as the dollars come home. They can make it illegal to import things from other countries without dollars. The U.S. desperately needs dollars to stay out of the country. When foreigners like the Chinese government start giving us wads of dollars to get BTC, that is NOT the time to switch back to dollars. That is the end of the U.S. as the world power. That is when great powers fall: they spend too much on military to support a coin or gold, lose their skills at production due to enslaving people in the distant lands (via the coin supported by the military), then find themselves powerless as their coin collapses. In the case of Spain getting gold, they just spent it all, then the armada fell and Britain's superior skill at ship building took over. There is also the possibility that BTC will be a basis for establishing ownership of assets and enforcing smart contracts, again putting it well over the $1M/BTC range. I do not expect it to go over $500,000 in 20 years. If it reaches $100,000 it will be a primary way of buying $1M beach houses as old money finds itself increasingly poor and BTC millionaires start looking for something to do with their gains.
50x = $150k/BTC does not need BTC to be lucky. It only needs to be the best idea. When BTC reaches $150k it will be because it is starting to be used as an international standard for trade. It will be because dollars are coming home which will make them lose all their value. The U.S. government will then have to decide to cancel all social security and most government expenses (pollution, law, roads, retirements) and foreign debts, or print money (hyperinflation). That will not stop the inflation because there will be 3x more dollars inside the U.S. from foreigner not wanting them. If it takes 15 years, that will be 7% inflation plus our current 3%. 10% inflation is far from hyperinflation, but still a disaster. Actually the disaster was letting there be a "balance of payments" surplus the past 50 years which means more money going out (via free trade, military, and dept) than what was coming in. This results in erosion of the country's ability to support itself. Free trade is a disaster if it makes the balance of payments worse. The U.S. (like China) got out from under enslavement of a foreign currency by enacting trade tariffs. China's devaluation of currency is in effect a trade tariff on the external world's imports which forces its people to work harder and develop more skill. I believe the U.S. is sophisticated enough not to have hyperinflation. When it reaches $150k, it is NOT the time the sell, but a time to keep holding, unless you see a better option. But I think a capped-quantity coin is not a good solution and not the solution the rest of the world will want due to late-comers being at a disadvantage. But unless a new coin lets smartphones determine their own time via the stars or random or 3rd party consensus trust, and combine it with a local trust network to decentralize the coin (protecting it from big miners), BTC may be the best option. This is because all alts subject to 51% can be destroyed via simple forward-stamping timestamps, and if BTC miners are hodlers, they will soon find it more profitable to destroy alts than to mine, forcing more money into a few coins. They may even use their BTC value gains to buy more equipment to retain power by destroying alts instead of mining BTC. The miners may turn into BTC's military. This is what happens to all empires: they win by might is right until all the slave countries figure out a way to get out from under the coin that controls them. The coin is backed by a military. Coins are how governments exert control. Some argue BTC has no government, that devs are not really in control. However that may be, anyone who holds BTC will be the new lords, enslaving the late comers, backed by our military, the miners. At least this is our best-case scenario in our search for personal profit.
Not just the U.S. but all governments will lose power to control if they lose control of the currency that their citizens demand. Countries enforce a currency by demanding taxes and legal disputes be settled in their dollars. Empires use currency to enslave other countries. So countries can start their own cryptocoin, enabling them to enforce law more directly and automatically extract taxes by being privy to every transaction. This would relegate BTC to replacing only gold for private holders, which is $7T, $350,000/BTC, but potentially a lot more since a lot of countries want to be more fair in international exchange instead of being stuck with the dollar. Gold is harder to move so there's a great desire to switch to BTC. Also, buying stuff directly from other countries instead of Amazon will need BTC, which is a "black market" as far as the U.S. government will be concerned. It takes away their power as the dollars come home. They can make it illegal to import things from other countries without dollars. The U.S. desperately needs dollars to stay out of the country. When foreigners like the Chinese government start giving us wads of dollars to get BTC, that is NOT the time to switch back to dollars. That is the end of the U.S. as the world power. That is when great powers fall: they spend too much on military to support a coin or gold, lose their skills at production due to enslaving people in the distant lands (via the coin supported by the military), then find themselves powerless as their coin collapses. In the case of Spain getting gold, they just spent it all, then the armada fell and Britain's superior skill at ship building took over. There is also the possibility that BTC will be a basis for establishing ownership of assets and enforcing smart contracts, again putting it well over the $1M/BTC range. I do not expect it to go over $500,000 in 20 years. If it reaches $100,000 it will be a primary way of buying $1M beach houses as old money finds itself increasingly poor and BTC millionaires start looking for something to do with their gains.
50x = $150k/BTC does not need BTC to be lucky. It only needs to be the best idea. When BTC reaches $150k it will be because it is starting to be used as an international standard for trade. It will be because dollars are coming home which will make them lose all their value. The U.S. government will then have to decide to cancel all social security and most government expenses (pollution, law, roads, retirements) and foreign debts, or print money (hyperinflation). That will not stop the inflation because there will be 3x more dollars inside the U.S. from foreigner not wanting them. If it takes 15 years, that will be 7% inflation plus our current 3%. 10% inflation is far from hyperinflation, but still a disaster. Actually the disaster was letting there be a "balance of payments" surplus the past 50 years which means more money going out (via free trade, military, and dept) than what was coming in. This results in erosion of the country's ability to support itself. Free trade is a disaster if it makes the balance of payments worse. The U.S. (like China) got out from under enslavement of a foreign currency by enacting trade tariffs. China's devaluation of currency is in effect a trade tariff on the external world's imports which forces its people to work harder and develop more skill. I believe the U.S. is sophisticated enough not to have hyperinflation. When it reaches $150k, it is NOT the time the sell, but a time to keep holding, unless you see a better option. But I think a capped-quantity coin is not a good solution and not the solution the rest of the world will want due to late-comers being at a disadvantage. But unless a new coin lets smartphones determine their own time via the stars or random or 3rd party consensus trust, and combine it with a local trust network to decentralize the coin (protecting it from big miners), BTC may be the best option. This is because all alts subject to 51% can be destroyed via simple forward-stamping timestamps, and if BTC miners are hodlers, they will soon find it more profitable to destroy alts than to mine, forcing more money into a few coins. They may even use their BTC value gains to buy more equipment to retain power by destroying alts instead of mining BTC. The miners may turn into BTC's military. This is what happens to all empires: they win by might is right until all the slave countries figure out a way to get out from under the coin that controls them. The coin is backed by a military. Coins are how governments exert control. Some argue BTC has no government, that devs are not really in control. However that may be, anyone who holds BTC will be the new lords, enslaving the late comers, backed by our military, the miners. At least this is our best-case scenario in our search for personal profit.
Thursday, August 3, 2017
Shaking marbles in a jar as a bare-bones model of evolution, A.I., and economics
"...that we give off heat is not accidental, but essential. For this is precisely the manner in which we dispose of the surplus entropy we continually produce in our physical life process. This seems to suggest that the higher temperature of the warm-blooded animal includes the advantage of enabling it to get rid of its entropy at a quicker rate, so that it can afford a more intense life process. ... [But] the parallelism between body temperature and 'intensity of life', which I believe to exist, may have to be accounted for more directly by van't Hoff’s law: the higher temperature itself speeds up the chemical reactions involved in living."
- Erwin Schrodinger, What is Life?Physical evolution in its simplest form is shaking a jar of randomly-packed marbles in a gravitational field. In short, cyclic energy injected into a "closed thermodynamic system" results in entropy being released to the universe as black body radiation (more low-energy photons go out than high-energy photons came in, keeping a constant internal energy balance). Since entropy is a conserved quantity, the entropy inside the container is reduced (a feature of closed thermodynamic systems but not for "isolated" systems). A reduction in entropy exhibits itself as a higher degree of order by becoming more densely packed, harder, and repeating patterns.
The physics of shaking marbles in a jar
When you randomly and slowly place marbles in a jar they will pack with about 56% fill ratio, leaving 44% space. If you shake them afterwards, starting first with hard and then softer shakes, they will pack with > 63%. The harder shakes allow for the bottom layer to form first. The softer shakes allow the higher levels to settle without upsetting the lower levels. This is what the moon has done to Earth: it was initially a lot closer and is getting further away each year. The highest theoretical packing is 75%. Random forces in shaking do not have this effect. Non-random shaking can be thought of as a "periodic" or "semi-periodic" force (or energy injection). For packing differently sized and shaped particles much higher packing can be achieved by adding heat while lowering pressure, then raise pressure as the heat drops, and then repeat, but lowering the temperature and pressure each time (see "Simulated annealing"). The heat checks particle-orientation options while the pressure that follows secures and compacts the solutions. The pressure is a force like gravity. The heat is the shaking.
Chemical bonds
The reduction in entropy in the products of life can be measured via molar aka specific entropy. There exists in chemistry potential energy gradients due to charges that causes atoms and molecules to acquire lower-entropy states due to sticking better than previous arrangements, very much like the previous sections's packing. Again, the excess entropy is released to the universe. The cycle of seasons (surface temperature variation) caused by the collision that created the moon and the moon itself cause a shaking of the atoms and molecules that assists the discovery of the "tighter packings". A side effect of the moon and seasons is more lightning strikes, ocean vents, tides, and ore concentrations, all of which are lower-entropy events that are believed to have assisted the development of life.
Correlation between the jar and life on Earth
The Sun, moon, and Earth's rotation are the initial source of non-random energy coming into the biosphere. The "non-random" (low entropy) placement of the moon's mass away from the Earth has been crucial for life's development (Isaac Asimov once discussed this). Its effect has decreased with time as the moon has gotten further away each year. The effect of the moon is apparent to NASA's life-hunters: the most promising places seem to involve an external gravitational force periodically affecting a celestial body (usually moons close to a planet). Water is important as it helps atoms and molecules find lower-entropy arrangements as in the marbles being somewhat "fluid" in a jar. The Sun is more important via photosynthesis these days, but life probably initially capitalized on (or extracted?) the low entropy accident of the moon's initial placement, and axis tilt. I calculated in a previous post that today the Sun is providing 150x more energy than the yearly loss in Earth's rotational energy due to the moon, but at the beginning of life, the moon was >3x closer with >9x more gravitational effect, and the Earth was turning a lot faster. My calculation (from available data) indicated the moon provided about 20% of what the Sun was providing. This is a "mass moving" quality of energy rather than simple "heating" provided by the Sun. The combination may have been crucial: periodic heating was a "periodic shaking" at the molecular level while the "mass moving" shaking provided a larger-scale directional force to where the resulting molecules would go. There might be a parallel here with government providing a macro-scale container and forcing function to individual micro "high-energy" (thermal agitation) market transactions.
As the moon gets further away, the entropy of the Earth-moon system is increasing due to a volume increase. The Earth's rotation rate is slowing, giving some energy to the moon in order for it to get further away, but a much larger percent is used to churn the air, seas, and mantle via the moon's gravity. To what extent were an excess of ocean vents present (where the oldest known life fossils have been found) due to the moon churning the mantle? The second oldest place fossilized life has been found is in bays with ocean tidal zones, which is more obviously assisted by the moon. To what extent would our massive economic machine not have been possible if the moon had not churned the mantle enough to make more low-entropy ore concentrations possible via volcanic activity? Most commodity production that is crucial to our economics depends massively on concentrations of things like metal ores and good soil.
DNA is a very low entropy crystal that lasts a long time, as should be expected form the thermodynamics of Earth described above. It is important to keep in mind genes have no force of their own. They are just enzymes. Only energy gradients can move them and help them to make copies. The copies are in some sense lower entropy (a "copy" is almost by definition lower entropy). Certainly DNA crystals are lower entropy than a random arrangement of those same atoms and molecules in soil and air. This requires tapping into an external source of low entropy (for a given temperature and pressure). My thesis here is that the moon and seasons have been re-injecting lower entropy and thereby made life more pervasive.
If there had not been a collision that created the moon, the Earth would have still been rotating (giving a daily cycle of temperature changes and resulting air current "forces") and water, so it's far from clear the moon was a necessary condition.
Correlation to artificial intelligence
A large part of A.I. in finding solutions to complex problems is starting with random values in neural nets, Bayesian probabilities, and genetic algorithms. The "marbles" are the neural nodes, Bayesian nodes, or genes. You typically start with random values and give the program computational energy (shaking) for the nodes or genes to request CPU time and memory (energy) while they are under a system-wide A.I. algorithmic constraint (the jar). The "shaking" has to be periodic (low entropy), not random. A good parallel in A.I. is competing against a copy of itself in games. Non-efficient solutions will show many patterns in the node weights, probabilities, or genes. The patterns may be eliminated for condensing the node weights, probabilities, and genes into a smaller set of nodes that is more random on a per weight/probability/gene basis. This is like taking marbles out of the jar which is less entropy by a factor of roughly equal to N2/N1 (this is exact if it's a specific molar entropy) and it allows a smaller jar which is also less entropy by a factor described at the note at the bottom.
Correlation to economics
The A.I. must have some sort of direct, implied, or unnoticed limited-quantity currency that corresponds to the amount of CPU time (FLOPS) and memory that is available, if there is a limit on them. The currency is the energy being transmitted from the jar (the algorithm constraints) to each marble (the weight/probability change or gene replication). The CPU time and memory are kinetic and potential energies. The hardware itself is a potential energy. The currency quantity corresponds to computing quantity. If the hardware increases then the currency can be expanded by the algorithm (the government) to keep constant value so that nothing else in the algorithm needs to change. This is like increasing the level of shaking: the currency is the amount of energy being transferred from marble to marble from the jar. The energy comes from the governing jar or A.I via the permission granted by possession of the currency and eventually goes back to it (taxes). In my jar there is no currency I can point to except the energy itself. Although the energy coming in and size of the jar may not change, the entropy of the system gets smaller as it gets more efficient. The lower entropy means better command, control, and strength that is typically used to increase the incoming energy, the "size of the jar", and the number of "marbles". If the allowable nodes or genes are increased, then the value of the currency per node or gene decreases by that same proportion if the hardware has not improved because they will have to compete to get the same computer time and memory. So the currency quantity needs to decrease if the currency should represent the same amount of FLOPs and byte space.
In other words, for contracts to remain valid, the currency quantity should change in proportion to the energy per person that is under the system's control.
Physics note: All other things being equal, the entropy increase of the moon getting further away is S=S2-S1 where S1=a*[ln(b*V1) + c] where V is the volume of the Earth-moon system and a, b, and c are constants. There is rotational energy decrease and gravitational energy increase, but these are internal energies that do not change the kinetic energy of the system (that could have affected the entropy) because the Earth's temperature is about a constant. But those lost energies do emit a lot of entropy away from the system as waste heat. As another example important to the following: harder materials have lower entropy due to the atoms having fewer places per volume that they can occupy. Specifically, for a single harmonic oscillator (in a solid) S=k*ln(kT/hf + 1) where f is frequency of the oscillations which is higher for stronger bonds.
Wednesday, July 19, 2017
A P2P cryptocurrency to replace FB, Amazon, Fiat, and Bitcoin.
Posted to HUSH slack. A prelude to this
Here's an idea for a cryptocoin to build upon the timestamp idea I posted a few days ago (again, that does not necessarily use the stars).
People get more coin by having more "friends" (actually, people you know to be distinct individuals). 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?)
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.
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.
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. 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. It should be made, if possible, to not give an advantage to people because they are taking a risk in their personal safety.
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.
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.
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.
=====
see that the Ithaca NY local HOUR coins are a simplified version of what I was trying to invent. The things missing are: 1) digitize it 2) enable seamless expansion (exchange rates) to other "local" communities (in other words, "local" would be a continuous expansion from yourself, to your "friends" to the world. "friends" would have a better exchange rate as they are trusted more. "friends" is a bad word: "trusted market participants" is better. So Amazon (at least for me) would get a high beginning trust setting. There would be an algorithm for determining the exchange rate based on how much your trusted connections trust the secondary connections. Then your own history with secondary marketplace connections (such as buying from an Amazon chinese source directly) would increase your trust of them if your exchanges with them have been good. "Trust" aka "history of good reputation" would be the currency (not "friends"). A missing 3) item is the ability to include a review by both buyer and seller next to the history of exchanges. Your history of exchanges are stored in your most highly trusted connections. Future buyers or sellers wanting to interact with you (or you with them) would be able to see your hisotry of transactions. There would be a setting of how private you want to be. If you want to be intensely private, your exchange rate with distant buyers/sellers would not be as good because they can't verify your reputation. "Reputation" is the primary coin and it would be treated like any other asset. But the creation and destruction of the coin would be managed on a system-wide level so that your reputation can be compared to others, so those with least reputation are weeded out via the marketplace. If you give nothing measurable to society, then you would get nothing from it. You can sell your reputation for dollars or whatever. "likes" might be a 1 to 10 integer that goes beside the "review" field that adds or subtracts from your reputation. But giving likes comes at a cost of your own reputation. I have not worked out the details of this. These likes are just like the 10 signatures on the back of script in the Ithaca NY HOURS coins. So I could learn a lot from their 26-year experiment on how to enable it to expand. They need to be in contact with some really good blockchain devs who could implement something like I'm describing. It could be like an explosion emanating from Ithaca NY that changes the world. Proven there, it could pop-up in other places independently but instantly tap into Ithaca via a few extensions of trust. Extension of trust is the creation of a debt and credit, the source of all fiat-like currency. But by managing the total on a system-wide level without a trusted 3rd party prevents it from being like current gov-backed fiat. Some features: your personal blockchain of transactions is not publicly disclosed unless you want. It is also recoverable and reversible if > 50% of your most local trusted sources agree to your request for recovery. So no permanently lost coins. A thief and those who accepted funds from thieves would lose out. But if you get hacked too much, then the reversals hurt your reputation.
zawy [8:59 AM]
There are several crucial good features this has: 1) there's not exactly a single coin, but a continuous spectrum of exchange rates between reputations in keeping with an evolvability 2) security/protection of value via reversibility by local consensus. 3) The local consensus that determines reputation points and reversals can be penalized by the wider market if it has a reputation of being a bad or dumb consensus. 4) It's not a fixed-quantity coin (quantity of coin is determined by the market rather than an arbitrary decision by core devs, under the constraint of a protocol I haven't defined) 5) there is not a central blockchain which has security, privacy, anonymity, and failure problems. 6) the protocol can have various parameters chosen by the user. The user can chooses his reputation coin's characteristics. The wider market will decide how to value that coin. The users decide parameters that determine how to value other's reputation. I might trust chinese manufacturers to send product more than other people. You could decide this by haggling on price, but auto-searching for buyers and sellers needs you to define how you're going to rate potential candidates. Even the protocol has the potential of being changeable (evolvable). 7) OpenBazaar is not needed because it's inherent to the protocol. If you have a history of selling an item and allow your buyers to make it public, then scans of the network reveal you. Certain requirements are needed such not being able to pick and choose which past buyers can reveal past transactions. 8 ) Besides having "cross chain atomic swaps" and openBazaar built-in via a very simple protocol (Even Zcash-level anonymity might be choosable for individual transactions), I think it could also include STEEM and LBRY objectives as well as smart contracts.
9) government would have to bend over backwards to justify taxing your marketplace reputation. Even VAT taxes might have trouble if every reputation credit you issue creates a reputation debit. This could turn bank manipulation of government against both gov and banks: we are not taxed for taking out loans which enables banks to charge more interest. When we buy a house, our signature to promise to repay the debt is an asset on the bank's balance sheet. This enables them to create money out of thin air via the Fed, which is somehow connected to the FED's overnight interest rate. You pay 6%, bank gets 5%, FED get's 1%, or something like that. The rest of the money (your house's value) came from no-where to pay previous owner, and goes back to nowhere as you pay it off, except for the interest you gave to the banks and FED. Our promise to pay it back is the source of the initial money. Banks might be limited in their ability to do this by reserve requirements. Anyway, the system I'm describing makes your local trusted marketplace connections your bank. They are basically issuing credit to relative strangers by vouching for your reputation to repay. Your local network is taking the risk of you not repaying them. You repay the debt to your creditors via future transactions. The amount you buy must equal the amount you sell. Your expenditures equal your income so there is no net income to tax, as long as you do not convert your reputation credit to dollars. You and your local network have no net asset to be taxed. Any net assets you gain for resell are inventory that is not taxed (if less than $10 M)
I do not propose any mining, but local connections validate and record your transactions (including smart contracts). Everyone "mines" by giving more than they receive. Best summary of the idea: By initially trusting people more than your measurement of their reputation justifies, you are loaning trust to the system that the system will pay back to you. So "trust" is the debit side (what you give) and "reputation" (what you receive) is the credit side of your personal balance sheet that the system records on your local "connections" (these are not simple network peers but people with who you have a history of transactions). Let's say I send you a 2 pound bar of tellurium for nothing except to gain reputation points in the system. I need you to be a part of the system and to record the transaction. That still does not benefit my reputation unless you also gain reputation by buying or selling with others. Then those others and myself trust each other's reputation more since we all trust you. A history with them builds trust without you, so you could default out and things not crash. The trick is for the protocol to keep track of things so that it is not tricked by false identities into unjustly increasing or decreasing reputations. There needs to be a pre-existing trust to get it started. The system does not create any trust. It only keeps track of who deserves a credit of trust from past giving of trust and who owes a debt of trust by receiving goods or services or other likes without trusting anyone.
The only way to get a good reputation is to sell goods or services to someone who is not in your network. You get more reputation if you send the goods or services to someone who is not in anyone's network, provided they subsequently add others to their network who are not in yours. This should only add to your reputation after the fact only 1 level and decreases after they've added a few, so it's not a pyramid scheme. The goal is not to reward you for bringing in others, but reward you for making a real sale to a real independent person (not your personal friends who did not receive anything in return) who will use the system on their on. This is the same thing as "burning" something such as human labor (in antiques) or computing resources. Nick Szabo has also stressed the importance of the age of an item and it's history of use as a currency as increasing its value. So the length of time someone has been holding and building reputation without violating trust would add value to their reputation. This causes some added value for early adoption and for sticking with the system. The formulas for calculating reputation need to be derivable by statistical theory or determined by the marketplace.
Here's an idea for a cryptocoin to build upon the timestamp idea I posted a few days ago (again, that does not necessarily use the stars).
People get more coin by having more "friends" (actually, people you know to be distinct individuals). 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?)
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.
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.
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. 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. It should be made, if possible, to not give an advantage to people because they are taking a risk in their personal safety.
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.
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.
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.
=====
see that the Ithaca NY local HOUR coins are a simplified version of what I was trying to invent. The things missing are: 1) digitize it 2) enable seamless expansion (exchange rates) to other "local" communities (in other words, "local" would be a continuous expansion from yourself, to your "friends" to the world. "friends" would have a better exchange rate as they are trusted more. "friends" is a bad word: "trusted market participants" is better. So Amazon (at least for me) would get a high beginning trust setting. There would be an algorithm for determining the exchange rate based on how much your trusted connections trust the secondary connections. Then your own history with secondary marketplace connections (such as buying from an Amazon chinese source directly) would increase your trust of them if your exchanges with them have been good. "Trust" aka "history of good reputation" would be the currency (not "friends"). A missing 3) item is the ability to include a review by both buyer and seller next to the history of exchanges. Your history of exchanges are stored in your most highly trusted connections. Future buyers or sellers wanting to interact with you (or you with them) would be able to see your hisotry of transactions. There would be a setting of how private you want to be. If you want to be intensely private, your exchange rate with distant buyers/sellers would not be as good because they can't verify your reputation. "Reputation" is the primary coin and it would be treated like any other asset. But the creation and destruction of the coin would be managed on a system-wide level so that your reputation can be compared to others, so those with least reputation are weeded out via the marketplace. If you give nothing measurable to society, then you would get nothing from it. You can sell your reputation for dollars or whatever. "likes" might be a 1 to 10 integer that goes beside the "review" field that adds or subtracts from your reputation. But giving likes comes at a cost of your own reputation. I have not worked out the details of this. These likes are just like the 10 signatures on the back of script in the Ithaca NY HOURS coins. So I could learn a lot from their 26-year experiment on how to enable it to expand. They need to be in contact with some really good blockchain devs who could implement something like I'm describing. It could be like an explosion emanating from Ithaca NY that changes the world. Proven there, it could pop-up in other places independently but instantly tap into Ithaca via a few extensions of trust. Extension of trust is the creation of a debt and credit, the source of all fiat-like currency. But by managing the total on a system-wide level without a trusted 3rd party prevents it from being like current gov-backed fiat. Some features: your personal blockchain of transactions is not publicly disclosed unless you want. It is also recoverable and reversible if > 50% of your most local trusted sources agree to your request for recovery. So no permanently lost coins. A thief and those who accepted funds from thieves would lose out. But if you get hacked too much, then the reversals hurt your reputation.
zawy [8:59 AM]
There are several crucial good features this has: 1) there's not exactly a single coin, but a continuous spectrum of exchange rates between reputations in keeping with an evolvability 2) security/protection of value via reversibility by local consensus. 3) The local consensus that determines reputation points and reversals can be penalized by the wider market if it has a reputation of being a bad or dumb consensus. 4) It's not a fixed-quantity coin (quantity of coin is determined by the market rather than an arbitrary decision by core devs, under the constraint of a protocol I haven't defined) 5) there is not a central blockchain which has security, privacy, anonymity, and failure problems. 6) the protocol can have various parameters chosen by the user. The user can chooses his reputation coin's characteristics. The wider market will decide how to value that coin. The users decide parameters that determine how to value other's reputation. I might trust chinese manufacturers to send product more than other people. You could decide this by haggling on price, but auto-searching for buyers and sellers needs you to define how you're going to rate potential candidates. Even the protocol has the potential of being changeable (evolvable). 7) OpenBazaar is not needed because it's inherent to the protocol. If you have a history of selling an item and allow your buyers to make it public, then scans of the network reveal you. Certain requirements are needed such not being able to pick and choose which past buyers can reveal past transactions. 8 ) Besides having "cross chain atomic swaps" and openBazaar built-in via a very simple protocol (Even Zcash-level anonymity might be choosable for individual transactions), I think it could also include STEEM and LBRY objectives as well as smart contracts.
9) government would have to bend over backwards to justify taxing your marketplace reputation. Even VAT taxes might have trouble if every reputation credit you issue creates a reputation debit. This could turn bank manipulation of government against both gov and banks: we are not taxed for taking out loans which enables banks to charge more interest. When we buy a house, our signature to promise to repay the debt is an asset on the bank's balance sheet. This enables them to create money out of thin air via the Fed, which is somehow connected to the FED's overnight interest rate. You pay 6%, bank gets 5%, FED get's 1%, or something like that. The rest of the money (your house's value) came from no-where to pay previous owner, and goes back to nowhere as you pay it off, except for the interest you gave to the banks and FED. Our promise to pay it back is the source of the initial money. Banks might be limited in their ability to do this by reserve requirements. Anyway, the system I'm describing makes your local trusted marketplace connections your bank. They are basically issuing credit to relative strangers by vouching for your reputation to repay. Your local network is taking the risk of you not repaying them. You repay the debt to your creditors via future transactions. The amount you buy must equal the amount you sell. Your expenditures equal your income so there is no net income to tax, as long as you do not convert your reputation credit to dollars. You and your local network have no net asset to be taxed. Any net assets you gain for resell are inventory that is not taxed (if less than $10 M)
I do not propose any mining, but local connections validate and record your transactions (including smart contracts). Everyone "mines" by giving more than they receive. Best summary of the idea: By initially trusting people more than your measurement of their reputation justifies, you are loaning trust to the system that the system will pay back to you. So "trust" is the debit side (what you give) and "reputation" (what you receive) is the credit side of your personal balance sheet that the system records on your local "connections" (these are not simple network peers but people with who you have a history of transactions). Let's say I send you a 2 pound bar of tellurium for nothing except to gain reputation points in the system. I need you to be a part of the system and to record the transaction. That still does not benefit my reputation unless you also gain reputation by buying or selling with others. Then those others and myself trust each other's reputation more since we all trust you. A history with them builds trust without you, so you could default out and things not crash. The trick is for the protocol to keep track of things so that it is not tricked by false identities into unjustly increasing or decreasing reputations. There needs to be a pre-existing trust to get it started. The system does not create any trust. It only keeps track of who deserves a credit of trust from past giving of trust and who owes a debt of trust by receiving goods or services or other likes without trusting anyone.
The only way to get a good reputation is to sell goods or services to someone who is not in your network. You get more reputation if you send the goods or services to someone who is not in anyone's network, provided they subsequently add others to their network who are not in yours. This should only add to your reputation after the fact only 1 level and decreases after they've added a few, so it's not a pyramid scheme. The goal is not to reward you for bringing in others, but reward you for making a real sale to a real independent person (not your personal friends who did not receive anything in return) who will use the system on their on. This is the same thing as "burning" something such as human labor (in antiques) or computing resources. Nick Szabo has also stressed the importance of the age of an item and it's history of use as a currency as increasing its value. So the length of time someone has been holding and building reputation without violating trust would add value to their reputation. This causes some added value for early adoption and for sticking with the system. The formulas for calculating reputation need to be derivable by statistical theory or determined by the marketplace.
Saturday, July 15, 2017
Best difficulty algorithm: Zawy v6
This page will not be updated anymore.
See this page for the best difficulty algorithms
Without nodes enforcing real time and letting miners set the time, any >50% attacker can drive difficulty to zero with any algorithm. BTW if you have a real time available to nodes, you do not need consensus (i.e. POW mining) because you could create a synchronous deterministic network which does not have the Byzantine of FLP problems.
The +/- 6*T limit works out to be about the same as the 10^(2/N) limit. They overlap, so it is not an additive benefit.
I tried many different schemes for difficulty such as a dynamic averaging window, least squares fitting, and most-recent-block-more-heavily-weighted. Nothing worked better than simple:
```next_D=avg(past N D) * T / avg(past N solvetimes) / (1+0.67/N)```
with the two options for solvetime limits above (+/- 3600 on each solvetime or X^(2/N) and X^(-2/N) on the average, where X is the expected max hash attack size as a multiple of baseline hashrate). The (1+0.67/N). Note that ```next_D= sum(N D's) * T / [max timestamp - min timestamp]``` as is usually used is not as accurate if timestamps are being manipulated. The implied N's in the denominator of my averages will not cancel during a manipulation as this alternative equation assumes .
Difficulty has a seductive illusion of being "improvable". Any "fix" that tries to predict attacker behavior without employing a symmetrical "fix" to counter him acting exactly the opposite (and everywhere in between) will leave an exploitable hole or cause an undesirable side effect. Any fix that is symmetrical is limited in scope before it has undesirable side effects. We want fast response to changes in hashrate and a smooth difficulty when hashrate is constant. My best theoretical approach was a dynamic averaging window in Zawy v2 that triggers on various measures detecting a change in hashrate. For complex reasons, this still does not do better than simple average.
========
post to Zcash github:
Any upper limit you apply to timestamps should be reflected in a lower limit. For example, you could follow the rule that the next timestamp is limited to +/- 750 seconds from the previous timestamp +150 seconds (+900 / -600). If you don't allow the "negative" timestamp (-600 from previous timestamp) AND if miners can assign timestamps without a real-time limit from nodes, then a miner or pool with > 20% of the network hashrate can drive the difficulty as low as he wants, letting everyone get blocks as fast as he wants, in less than a day.
A symmetrical limit on timestamps allows honest miner timestamps to completely erase the effect of bad timestamps. ( You do not need to wait 6 blocks for MTP like Zcash does in delaying the use of timestamps for difficulty, see footnote. ) If you allow the symmetrical "negative" timestamps, you do not need nodes to have the correct time with NTP or GPS unless miners collude with > 51% agreement on setting the timestamps further and further ahead of time to drive difficulty down. It's a real possibility if miners decide they do not like a certain fork due to not providing them with enough fees.
But if you do not allow the apparently negative solvetimes, you better do like ETH and depend on 3rd parties for your node times in order to limit how low a timestamp manipulator can drive your difficulty.
But if your nodes have an accurate time, you do not need mining. The only fundamental reason for mining is to act as a timestamp server to prevent double spending. If you have an accurate time on all nodes, then you can make it a synchronous network to eliminate the need for consensus to eliminate the need for byzantine protection via POW.
BTC and ETH depend on nodes to limit the future time assigned to blocks. Zooko was the only one here who seemed to know there is something wrong about strong reliance on nodes having the correct time. The extent to which BTC and ETH need those forward-time limits to be enforced by real time is the extent to which they do not need mining.
Footnote:
MTP does not stop a 25% attacker who can set timestamps > 4 blocks ahead if other miners are not allowed to assign a "negative" timestamp to eliminate the error in the next block. But if you allow the "negatives" then MTP is not needed. Putting your tempering aside, this assumes you use
next_D = avg(D's) * T / avg(solvetimes, allowing negative solvetime)
instead of
next_D=sum(D's) * T / [max(Timestamps) - min(Timestamps) ]
because the N's of the denominator and number of the first equation do not cancel like you would think and hope (in order to use the second equation) when there are bad timestamps at the beginning and end of the window. With the MTP, your difficulty is delayed 5 blocks in responding to big ETH miners who jump on about twice a day. That's like a gift to them at the expense of your constant miners.
Also, your tempered N=17 gives almost the same results as a straight average N=63. I would use N=40 instead, without the tempering. It should reduce the cheap blocks the big ETH miners are getting.
Your 16% / 32% limits are rarely reached due to the N=63 slowness. This is good because it is a symmetry problem, although it would not be as bad as BCH. Use "limit" and "1/limit" where limit = X^(2/N) where N=63 for your current tempering and X = the size of the larger ETH attackers as a fraction of your total hashrate, which is about 3. This allows the the fastest response up or down at N for a given X with 80% probability. Change the 2 to 3 to get a higher probability of an adequately-fast response. The benefit is that it is a really loose timestamp limit on individual values, as long as the aggregate is not too far from the expected range.
See this page for the best difficulty algorithms
# Tom Harold (Degnr8) "wt-144"
# Modified by Zawy to be Weighted, weighted Harmonic Mean (WWHM)
# Zawy-selected N=30 and timestamp handling for all coins.
# No limits in rise or fall rate should be employed.
# MTP should not be used
# set constants
N=30
T=600 # (target solvetime)
adjust=0.98 # 0.98 for N=30
k = (N+1)/2 *adjust * T
# algorithm
d=0, t=0, j=0
for i = height - N+1 to height # (N most recent blocks)
solvetime = TS[i] - TS[i-1]
solvetime = 10*T if solvetime > 10*T
solvetime = -9*T if solvetime < -9*T
j++
t += solvetime * j
d +=D[i]
next i
t=T if t < T # in case of startup weirdness, keep t reasonable
next_D = d * k / t
and apparently better and amazing in that there's not even a loop or looking at old data:
=======================
# Jacob Eliosoff EMA (exponential moving average)
# ST = previous solvetime
# N=15 (Zawy-selected)
# MTP should not be used
ST = previous timestamp - timestamp before that
ST = max(T/50,min(T*10, ST))
next_D = previous_D * ( T/ST + e^(-ST/T/N) * (1-T/ST) )
The following is older text. The important stuff is above.
# Zawy v6 difficulty algorithm
# Newest version of Zawy v1b
# Based on next_diff=average(prev N diff) * TargetInterval / average(prev N solvetimes)
# Thanks to Karbowanec and Sumokoin for supporting, testing, and using.
# (1+0.67/N) keeps the avg solve time at TargetInterval.
# Low N has better response to short attacks, but wider variation in solvetimes.
# Sudden large 5x on-off hashrate changes with N=12 sometimes has 30x delays verses
# 20x delays with N=18. But N=12 may lose only 20 bks in 5 attacks verse 30 w/ N=18.
# This allows timestamps to have any value, as long as > 50% of miners are
# approximately correct and as long as timestamps are ALLOWED to
# be out of order to correct bad timestamps.
# Miners with >50% can be prevented from driving difficulty down to 1 if
# nodes do like bitcoin and have a median time and forbid blocks to have a timestamp
# more than 2 hours ahead of that time.
# For discussion and history of all the alternatives that failed:
# https://github.com/seredat/karbowanec/commit/231db5270acb2e673a641a1800be910ce345668a
#
# D = difficulty, T=TargetInterval, TS=TimeStamp, ST=solveTime
N=16; # Averaging window. Can conceivably be any N>6. N=16 seems good for small coins.
X=6; # Size of expected "hash attacks" as multiple of avg hashrate. X=6 for new small coins.
# An X too small is unresponsive. X too large is subject to timestamp manipulation.
# The following is how X is used.
limit=X^(2/N); # Protect against timestamp error. Limits avg_ST and thereby next_D.
# Instead of X and limit, there can be a limit on the individual TS's in relation
# to previous block like this:
# R=6; # multiple of T that timestamp can be from expected time relative to previous TS.
# Then nodes enforce that the most recent block have a TS:
# TS = TS_previous_block +T+ R*T if TS > TS_previous_block +T+ R*T;
# TS = TS_previous_block +T-R*T if TS < TS_previous_block +T - R*T;
#
adjust = 1/(1+0.67/N); # Keeps correct avg solvetime.
# get next difficulty
ST=0; D=0;
for ( i=height; i > height-N; i--) { # go through N most recent blocks
# Note: TS's mark beginning of blocks, so the ST's below are shifted back 1
# block from the D for that ST, but it does not cause a problem.
ST += TS[i] - TS[i-1] ; # Note: ST != TS
D += D[i];
}
ST = T*limit if ST > T*limit;
ST = T/limit if ST < T/limit;
next_D = D * T / ST * adjust;
# It is less accurate to use the following, even though it looks like the N's divide out:
# next_D = sum(last N Ds) * T / [max(last N TSs) - min(last N TSs];
===============
post to Bitcoing Gold github:
That was Digishield's reasoning. In reading the history of the Digishield development, it gives the impression the asymmetry caused problems, so they added the "tempering" to "fix" it, maybe not realizing this fix was just making it so slow the 32/16 became irrelevant. Either way, the main problem is the opposite: not returning to normal difficulty fast enough after a big hash miner leaves, causing long delays between blocks. Bitcoin Cash tried to solve this by doing the reverse asymmetry of dropping a LOT faster than it rises. This has caused oscillations and issuing coins too fast, and a few blocks every 2 cycles with really long delays. Asymmetry in the allowed rise and fall will change how fast coins are issued at the least, requiring an adjustment factor.
Rising fast protects your constant miners, although if a large miners come on and off at the right times and have a bigger coin to always return for a base profit, they can always get 1/3 of the coins issued at "zero excess cost" in difficulty (the difficulty algo was not rising fast enough to adjust to the increase in hashrate). The only thing that can help is to have a shorter averaging window to respond faster, but it turns out this also allows more frequent accidental drops in difficulty and if they simply attack more often for shorter periods, they can still get 1/3 of the block for "zero excess cost". Approximately, they just need to attack for 1/2 a window averaging period and stay off the next full averaging period, or just choosing when difficulty seems a little low on accident.
Dropping fast prevents a lot of long-delay blocks after an attack and prevents your constant miners from suffering a long period of high difficulty.
By leaving in the +/- 16% limit I am only trying to prevent catastrophic attacks on the timestamp. For example, if the code keeps bitcoin's node-enforced 2 hour limit on how far forward miners assign timestamps, and if a pool has >50% hashrate, then after a few blocks they would "own" the MTP (median time past) and can set it to 2 hours ahead of time (12 blocks). Zcash will likely reduce this to 900 seconds which is close to the 1000 seconds I recommended before they launched a year ago. Their current limit might be 3600 seconds. It appears BTCG copied Zcash's difficulty code. It should be kept in mind Zcash is 2.5 minute blocks, so if BTCG is using a stricter time limit than BTC like Zcash, it should not go below 3600 seconds. Zcash can do a 900 second limit because that is 6 blocks for them. An equivalent time in BTCG is 3600 seconds.
With N=40 like I've proposed, the 2-hour limit would allow a miner with 10x the normal hashrate to make the difficulty think it needs to drop to 40/(40+12) = 77% of correct difficulty when they begin to own MTP. After 12 blocks difficulty would be low by
```40^12 / [(40+12)*(40+11)*(40+10)*(40+9)*.... = 17%```
of the normal difficulty which is only 1.7% of the correct difficulty if they have 10x the normal hashrate. By limiting the drop to 16% per block, difficulty will get down to 43% instead of 17%. A tighter limit of +/-
12% instead of 16% may be good (69% would be the low). This is with bitcoin's 2-hour limit. I think BTCG has copied Zcash so maybe it is reduced to 1 hours. The +/- 12% is stricter than a 1 hour limit, so changing from 2 hour to 1 hour will help at a limit like +/- 16%, but not make a different at +/- 12%. A 1 hour limit on time with no other limit would allow a timestamp attacker to get difficulty down to 61% which is why I said the +/- 12% in allowing 69% drop is stricter (better). The two don't combine to help.
Using the MTP like Zcash and probably BTCG does prevents < 50% miners from manipulating the timestamp. But it makes the difficulty 5 blocks slower in responding. There is a fix to this that would require more code changes. See my [Zawy v6](http://zawy1.blogspot.com/2017/07/best-difficulty-algorithm-zawy-v1b.html)
I'll show the +/- 12% (or 16%) does not prevent the N=40 from responding as fast as it can. ( I'm going to edit my previous post to recommend 12% instead of keeping the 16%. ) Let's say an attack has 10x the normal hashrate. With N=40, the avg time it takes the difficulty to completely respond to meet the challenge is 40 blocks. So it will rise, on avg, this much per block: 10^(1/40). In my testing, it appeared a limit on the rise equal to 10^(2/40) = 12.2% was only reached about 10% of the time. I don't expect BTGC to experience a 10x "attack" very often so 12% with N=40 seems correct.
Another way to reduce the effect of timestamp manipulation is to limit how far the next timestamp can be from previous timestamp. I've found a good choice to be +/- 6*T from where you expected the solve to occur and where T = 600 seconds for BTCG. You expect the solve to be 600 seconds from previous timestamp, so you would limit the timestamps to 600 +/- 3600 the previous timestamp. This allows timestamps to be out of order which is important in Zawy v6, but if BTCG does like Zcash and uses the MTP protection / delay AND the nodes are enforcing the +3600 limit based on real time instead of comparing to the previous timestamp, then you can set the minimum to 1 second after the previous timestamp. Otherwise, without the nodes enforcing a real UST time limit, a miner with with >20% hashrate could drive difficulty to "0" in a few hours or days if a "negative" timestamp from previous one is not allowed even if using MTP and a 3600 forward time limit. Without nodes enforcing real time and letting miners set the time, any >50% attacker can drive difficulty to zero with any algorithm. BTW if you have a real time available to nodes, you do not need consensus (i.e. POW mining) because you could create a synchronous deterministic network which does not have the Byzantine of FLP problems.
The +/- 6*T limit works out to be about the same as the 10^(2/N) limit. They overlap, so it is not an additive benefit.
I tried many different schemes for difficulty such as a dynamic averaging window, least squares fitting, and most-recent-block-more-heavily-weighted. Nothing worked better than simple:
```next_D=avg(past N D) * T / avg(past N solvetimes) / (1+0.67/N)```
with the two options for solvetime limits above (+/- 3600 on each solvetime or X^(2/N) and X^(-2/N) on the average, where X is the expected max hash attack size as a multiple of baseline hashrate). The (1+0.67/N). Note that ```next_D= sum(N D's) * T / [max timestamp - min timestamp]``` as is usually used is not as accurate if timestamps are being manipulated. The implied N's in the denominator of my averages will not cancel during a manipulation as this alternative equation assumes .
Difficulty has a seductive illusion of being "improvable". Any "fix" that tries to predict attacker behavior without employing a symmetrical "fix" to counter him acting exactly the opposite (and everywhere in between) will leave an exploitable hole or cause an undesirable side effect. Any fix that is symmetrical is limited in scope before it has undesirable side effects. We want fast response to changes in hashrate and a smooth difficulty when hashrate is constant. My best theoretical approach was a dynamic averaging window in Zawy v2 that triggers on various measures detecting a change in hashrate. For complex reasons, this still does not do better than simple average.
========
post to Zcash github:
Any upper limit you apply to timestamps should be reflected in a lower limit. For example, you could follow the rule that the next timestamp is limited to +/- 750 seconds from the previous timestamp +150 seconds (+900 / -600). If you don't allow the "negative" timestamp (-600 from previous timestamp) AND if miners can assign timestamps without a real-time limit from nodes, then a miner or pool with > 20% of the network hashrate can drive the difficulty as low as he wants, letting everyone get blocks as fast as he wants, in less than a day.
A symmetrical limit on timestamps allows honest miner timestamps to completely erase the effect of bad timestamps. ( You do not need to wait 6 blocks for MTP like Zcash does in delaying the use of timestamps for difficulty, see footnote. ) If you allow the symmetrical "negative" timestamps, you do not need nodes to have the correct time with NTP or GPS unless miners collude with > 51% agreement on setting the timestamps further and further ahead of time to drive difficulty down. It's a real possibility if miners decide they do not like a certain fork due to not providing them with enough fees.
But if you do not allow the apparently negative solvetimes, you better do like ETH and depend on 3rd parties for your node times in order to limit how low a timestamp manipulator can drive your difficulty.
But if your nodes have an accurate time, you do not need mining. The only fundamental reason for mining is to act as a timestamp server to prevent double spending. If you have an accurate time on all nodes, then you can make it a synchronous network to eliminate the need for consensus to eliminate the need for byzantine protection via POW.
BTC and ETH depend on nodes to limit the future time assigned to blocks. Zooko was the only one here who seemed to know there is something wrong about strong reliance on nodes having the correct time. The extent to which BTC and ETH need those forward-time limits to be enforced by real time is the extent to which they do not need mining.
Footnote:
MTP does not stop a 25% attacker who can set timestamps > 4 blocks ahead if other miners are not allowed to assign a "negative" timestamp to eliminate the error in the next block. But if you allow the "negatives" then MTP is not needed. Putting your tempering aside, this assumes you use
next_D = avg(D's) * T / avg(solvetimes, allowing negative solvetime)
instead of
next_D=sum(D's) * T / [max(Timestamps) - min(Timestamps) ]
because the N's of the denominator and number of the first equation do not cancel like you would think and hope (in order to use the second equation) when there are bad timestamps at the beginning and end of the window. With the MTP, your difficulty is delayed 5 blocks in responding to big ETH miners who jump on about twice a day. That's like a gift to them at the expense of your constant miners.
Also, your tempered N=17 gives almost the same results as a straight average N=63. I would use N=40 instead, without the tempering. It should reduce the cheap blocks the big ETH miners are getting.
Your 16% / 32% limits are rarely reached due to the N=63 slowness. This is good because it is a symmetry problem, although it would not be as bad as BCH. Use "limit" and "1/limit" where limit = X^(2/N) where N=63 for your current tempering and X = the size of the larger ETH attackers as a fraction of your total hashrate, which is about 3. This allows the the fastest response up or down at N for a given X with 80% probability. Change the 2 to 3 to get a higher probability of an adequately-fast response. The benefit is that it is a really loose timestamp limit on individual values, as long as the aggregate is not too far from the expected range.
Monday, July 10, 2017
Doing better than the simple average in cryptocoin difficulty algorithms
I am still trying to find a better method than the simple avg, but I have not found one yet. I am pretty sure there is one because estimates of hashrate based on avg(D1/T2 + D2/T2 + ....) should be better than avg(D)/avg(T) if there is any change in the hashrate during the averaging period. This is because avg(D)/avg(T) throws out details that exist in the data measuring hashrate. We are not exactly interested in avg(D) or avg(T). We are interested in avg(D/T). The avg(D/T) method does not throw out details. Statistical measures throw out details. You don't want to lose the details until the variable of interest has been directly measured. I learned this the hard way on an engineering project. But avg(D/T) does not hardly work at all in this case. The problem is that the probability distribution of each data point D/T needs to be symmetrical on each side of the mean (above and below it). I'm trying to "map" the measured D/T values based on their probability of occurrence so that they become symmetrical, then take the average, then un-map the average to get the correct avg(D/T). I've had some success, but it's not as good as the average. This is because I can't seem to map it correctly. If I could do it, then another improvement becomes possible: the least squares method of linear curve fitting could be used on the mapped D/T values to predict where the next data point should be. All this might result in a 20% improvement over the basic average. Going further, sudden on and off hashing will not be detected very well by least squares. Least squares could be the default method, but it could switch to a step-function curve-fit if a step-change is detected. I just wanted to say where I'm at and give an idea to those who might be able to go further than I've been able to.
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