bb6c750a0e
Finally going public with it. Linked it from my reaction.la web index, so should become visible to search engines bye and bye
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| lang | title |
|---|---|
| en | Crypto Currency Launch |
The total value held in the form of gold is ten trillion. But gold has problems – if you try to transport it through an airport, security will likely take it from you. Hard to travel with it hidden.
Hard to transfer it from one person to another, or from one identity to another. Hard to do international transactions in gold, hard to pay for oil with gold, or be paid for oil with gold, because transporting large amounts of gold is slow and dangerous.
So, something better than gold, more transportable, more hideable, people would probably keep more than ten trillion in that form.
The current value of bitcoin is about three hundred billion. Arguably crypto currency, if it works, if safe against the state, should be rather more than ten trillion. Say thirty trillion. This provides an upside of another hundred fold increase in value. On the other hand, the bitcoin is traceable in ways that gold is not. People are waiting to see what happens when the government cracks down.
A crypto currency needs to be totally traceable and totally untraceable. Ann wants to be able to prove to Carol that she paid Bob, and that therefore her debt to Bob is cleared, or Bob has an obligation the Ann. But Ann and Bob likely do not want a powerful hostile party to be able to discover that Ann made a payment to Bob. Existing crypto currencies suffer from total traceability.
Money is a store of value, a medium of exchange, and a measure of value. Gold sucks as a medium of exchange, because of transportation risks and costs. Crypto currency is very good as a medium of exchange, better than anything else, because banks are so remarkably incompetent, inefficient, and lawless.
As a measure of value, gold has immense and ancient history, which makes it the best for long term measure of value. If you graph the prices of something, such as oil, over decades and centuries, you get far saner and more plausible data when you graph in terms of gold than in dollars, or even supposedly inflation adjusted dollars. Gold is the best measure of value over time. Inflation adjusted dollars give results that smell of politics and propaganda. Bitcoin, because of volatility and extremely rapid deflation, is really bad as a measure of value, but time will slowly fix this.
The current price of bitcoin reflects a substantial possibility that it replaces the dollar as the currency of international transactions, in which case the dollar finds itself on the bitcoin standard, like it or not.
To attract a significant portion of the wealth of the world, we do not want to have any mining, since this basically a fee against large accounts. We want a per account fee, because every account results in accountancy costs, and a transaction fee, because every transaction results in transaction costs, but not a charge against holding enormous amounts of wealth in an account. Mining is a charge against the value of accounts, which is a bad idea if we want wealth holders to hold their wealth in our crypto currency.
We want it to be impossible to find who holds a large account if he does not want to be found, so that he is safe from rubber hose cryptography. We want it to be easy for him to keep control, and hard for anyone else to get control. He should be able to take the wallet that controls the bulk of his money offline, so that it cannot sign anything, because he has the signing key on a scrap of paper hidden somewhere, or on several such scraps of paper.
And then, bringing together the scraps of paper that are the secret number that controls his account paper, he can sit down at a computer anywhere in the world, and send that money hither and yon.
Gold has problems as the medium of international exchange, because of the problems of moving it. So everyone left their gold in Fort Knox, and moved ownership of that gold around, but it gradually became more and more obvious that America has embezzled all that gold.
Because of problems with gold, people wound up using the US$ as the medium of international exchange. Which works fine if the US Government likes you, but from time to time it decides it does not like someone, for reasons that grow increasingly capricious and unpredictable.
Bitcoin is moveable. Big advantage over gold.
Bitcoin is governed by consensus, which has serious problems because it is a consensus of miners, rather than a consensus of people who hold large amounts of bitcoin, but it has the advantage that the miners are rational, self interested, and competent, and are therefore predictable, while the US government is increasing crazy, self destructive, and criminal, and therefore unpredictable.
The coin to invest in needs to be able to scale all the way to wiping out the US$ as a world currency. But it also needs to gain initial critical mass.
How do we start up the coin?
Bitcoin got started because everyone and his brother and his brother’s dog could mine, thus getting the software and and a small amount of coin into the hands of a large number of interested people. But a coin that relies on weight of share, rather than weight of processing power, does not have mining. Instead, the coin is effectively shares in the startup. Founders, investors, and initial employees get the coins. But for the coins to be useful, have to get them into the hands of a wider circle of people.
At the core of a crypto coin is a mechanism for determining and globally witnessing a global truth. That is a service that needs to be available on a for profit basis.