So I take it from these sentiments here that you would like to buy in ... or you'll never buy in, it is not clear. On the one hand you are saying they are worth an enormous amount of money (too much power for people who's motives you are impugning), yet at the same time they risk crashing to zero. Seems like a paradoxical position.

That's your opinion. Other people think the price is fair, and they buy.


Bitcoin is as useful for licit trade as it is for illicit ones.


Who are "they"? For what reason would they want to "destroy the bitcoin economy"? How would they do so?


Your opinion that it is a novelty does not make it so. Obviously lots of people have an opinion to the contrary.


Again... who are they, what can they do, and why do they want to do it?


Unless your catastrophe involves threatening violence against bitcoin users, it's usefulness will be the same for licit and illicit goods alike.


Ah, the early adopters. You want them to crash the market by dumping their saved bitcoin. Do you understand how markets or rational actors work?

I understand the technical details of how the currency works.  I will try to answer what can be done.  First, you must grasp the distinction between:

• Bitcoin, the technology properly called Nakamoto proof-of-work chains,
• bitcoin, lowercase, the currency ("BTC") based on a particular proof-of-work chain started in 2009,
• the block acceptance rules (monetary policy) implemented in the software used to extend a given chain, and
• the network of computing resources ("mining" or "hashing" community) working on extending a given chain and, in the process, protecting its transactions.

The technology can be trivially used to start new chains (even for non-financial applications as detailed in the wiki).  I have written in favour of starting a new chain with a policy similar to BTC's except for a much higher minimum difficulty.  ("Minimum difficulty" is a parameter of Bitcoin monetary policy.)  The new chain would result in a currency (herein called "BC2") functionally equivalent to BTC and competing with it but lacking the overhang of early wealth that concerns you.

BC2 would face several hurdles to acceptance similar to what BTC has overcome versus older national and digital currencies.  However, it would be based on a more proven technology than Bitcoin was in 2009, and the technical barriers to its adoption as a BTC alternative would be slight.  For example, once critical infrastructure supports BC2 (Block Explorer and MtGox, or something like them, come to mind), merchants, miners, and pool operators would have only to repeat the steps they took to support BTC.

It is hard to discuss this proposal in the forum, because most users oppose the idea, and many put it down to "jealousy".  I do not presume to know the motivation of any particular BC2 opponent or opponents in general, but one reason may be that they have a lot of BTC, want to profit from the continuing rise of the BTC price, and fear that a competitor could derail this plan.  Or perhaps they worry that a second currency will confuse the public and threaten the technology's acceptance.  Some may scorn the idea as a plan to punish the Bitcoin pioneers.  I consider objections on these lines baseless.  As I see it, a currency like BC2 would make an attractive product in comparison to BTC, and the potential value of all BTC (in a rational market, if such a thing exists) is inherently limited in a way that would not apply to BC2.  (Look up Forum user unk's posting history for some eloquence along these lines.)

I doubt that most Bitcoin users are aware of the situation, let alone how it came to be.  (BC2's chance of success would benefit from spreading this knowledge.)  Please look at Sipa's graph of difficulty and network hash rate over BTC's entire history: http://bitcoin.sipa.be/speed-ever.png.  Difficulty was at the minimum (because few computing resources went to mining) through nearly all of 2009 and didn't really take off until July 2010 (with the advent of GPU mining).  During those first 18 months, when the project could at best have been described as experimental, 65000 blocks were mined.  The "work" expressed in those blocks' hashes would get you perhaps about one block at today's difficulty.

This would be no big deal, but for certain of Satoshi's monetary policy choices, which the early user(s) supported by running his software.  Namely, the 50BTC reward for each block (constant over the period in question).  This fact of policy translates into 3.25 million BTC earned by whoever mined those 65000 blocks.

Satoshi could have chosen another formula for bitcoin creation (without having to abandon the deflationist principle or the 21 million bitcoin limit).  He could have chosen a formula that would have slowed money creation to a trickle while difficulty (more precisely, network resource growth) stagnated.

Some people may look at this and conclude that Satoshi designed it this way to obtain a lot of bitcoins for himself and his friends.  I don't see it that way at all.  Taking Satoshi at face value, I think he expected the climb in network hash rate to occur 12-18 months earlier than it did.  I think he did his best to promote both the technology and the currency before and after he started the chain, and it is really a matter of chance that it caught on when it did and not earlier.  Going out on a limb and giving Satoshi the benefit of the doubt, I think he is disappointed that it took so long, even though an earlier widespread adoption would have left him with far fewer BTC.  In other words, I think he and his fans wanted most of all to establish the technology for the benefit of humankind, and that amassing great wealth was, at best, a secondary motive.

With all due respect to the amazing thing Satoshi and the team have created, they have not been backed by a large budget (at least until recently) and have left several loose ends to be addressed by stakeholders once the system grows.  For example, ambitious scalability improvements have been proposed but not implemented, not even in a proof-of-concept.  The simplicity of the total BTC curve has more to do with Satoshi's time constraints than elegance or popular appeal.  To the list of loose ends, I think we can add the need to create a stronger block chain.

How best to do that is a question I've worked on and discussed a little in the forum, but I will leave it for another post.

As someone who is anything but an early adopter and with hardly any Bitcoin at all, allow me to say, first, why I think your idea is neither fair nor good and second why I think it has actually already been done in a better way.

As those of us who have launched a new product know, it doesn't matter what the product is if you can't get the word out. Marketing is hard even when you have great selling points. While you might look around and think good products just burst into fame over night, you will often find that it's a 5-10 year process in reality. Facebook? Launched in 2004. Google? Incorporated 1998. The early work is thankless toiling in obscurity for the faint glimmer of hope of being able to reap what has been sown in the future.

For Bitcoin, the carrot has been proportional to the risk and amount of work required. Early on much more marketing effort was required for something so unlikely to succeed that people even deleted their wallets and moved on once the novelty wore off. As the early adopters continued to pour marketing resources and fiat cash into the system, the balance slowly shifted and Bitcoin became more established and gained a trading record which, while looking extremely risky, implies much less risk than no record at all.

Cleverly, as people continued to invest into getting others to adopt the currency, and as the risk went down, the difficulty has been adjusting automatically to account for this. This is fair since the later adopters have less work to do and less risk.

I believe that your essential argument is that it's more 'fair' to start a new block chain now that more people know about it. But even if you disagree with my debunking of the fairness argument above, there is a second fatal flaw to your scheme.

It will also have early adopters.

Let's call your proposal 'Populist coin' and imagine what happens after one year. To continue with your fairness doctrine you would, naturally, be called upon to create 'Populist coin 2' at this point so as to prevent early adopters of 'Populist coin 1' from benefitting unfairly. 'Populist coin 2' would be exactly like 'Populist coin 1' but with a fresh chain and higher difficulty - and oh, the technical hurdles would be so much smaller!

This would continue to occur not only whenever the number of late adopters exceeded the number of early adopters, which if nothing else would happen naturally due to increasing fame, death and birth, but also whenever the number of people who spent all their coins exceeded those who still held coins. It doesn't matter if you were an early adopter since when you have spent all your coin, 'Populist coin 3' starts to look really tempting.

You might not see a problem with an infinite chain of 'Populist coin X' but if your premise is based only on 'there shouldn't be a reward for early adopters', you must now recognise you will never eradicate its pesky presence.

Now, a rational observer might say that it is true that there is no additional fairness in 'Populist coin', but that it's not a matter of fair or unfair. Why would any late adopter not want to create 'populist coin X'? It's "FREE COINS!", isn't it? If you have no coins today, you will want to go for the coins of tomorrow, every time.

Except for one thing. The coins of tomorrow have all the risk of Bitcoin on day one, but none of the novelty benefits, none of the established track record. And to top it all off it's likely to be replaced by another generation of coins in short order.

To convince people to use your new fragile coin despite it's bleak prospects you must yourself bring to the table all that the early adopters did for Bitcoin and then more. What incentives will you provide to users to weather years of obscurity with a worse risk/reward prospect than the established coin?

If, forgive my parody, your marketing message is essentially, "Be an early adopter in a Bitcoin replacement scheme with none of the established channels, success or fame but with higher difficulty and run by someone who hates early adopters!", I think you might find the external financing requirements for advertising quite formidable.

Now for the goods news. Someone already started an alternative block chain and even gave it a small amount of intrinsic value. It's called Namecoin and is strictly speaking for registering *.bit domain names in a non centrally controlled fashion. But if you just ignore the domain name bit, it is in fact exactly what you describe. A new block chain with higher difficulty and (as of yet) no established early adopters.

So if this is what you truly desire, it's there, and it's something even Bitcoin proponents might care about since it has additional value.

@stillfire

Despite the unfortunate name of this thread, the interest in a second Bitcoin currency in no way depends on notions of fairness or what the early adopter reward should be.  Those questions may lead one to an interest in a BC2, but the currency will stand or fall on its market value, if anyone bothers to implement it.  The questions of interest to me are: How much effort will it be to start BC2 (or BC3 etc.)?  How well will it compete against BTC?  And, what monetary policy will produce the best result?

I have read a little about Namecoin and found it uninteresting.  Certainly, it does not compete with BTC or address the weakness of BTC's early blocks.  If your point is that Namecoin is failing, and so therefore BC2 will fail, then apples to oranges.

https://exchange.bitparking.com/main

Now you know exactly how bitcoin was off the radar for so long. Are you even able to get the client sending and receiving without a GUI? For most it is technologically inaccessible. Namecoin is not going anywhere. It can stay stable for months and the tokens will still have tradeable value.

As it becomes more accessible it may become more desirable.

Just FYI, I read more about Namecoin, downloaded it, did a source comparison to bitcoin, installed it, ran it, bought some NMC, liked it.

I am coming to regard work sharing as an essential feature in a BTC competitor.  Someone (perhaps I) has to code support for accepting blocks with an associated hash that only indirectly hashes the block.  Mike has kindly described this process in some detail here: https://en.bitcoin.it/wiki/Alternative_Chains

With this change, the barrier to entry for mining new chains would be practically gone.  With a bit of setup, rigs would begin mining BTC, NMC, BC2, etc., using the same calculations!  New chain promoters could pay miners a small fee (related to setup and bandwidth) to include the chain in a Merkle tree of block headers tucked into the Bitcoin coinbase script.

The next question will be monetary policy details, but it doesn't really matter.  Just put up a site where people can post their favourite policies, promotional material, and instructions to mine currencies governed by them.  The market will choose among them.

For example, I imagine a bitcoin whose money supply goes as the log of total difficulty.  It would be a simple matter to code it up, given a "hook" interface like what VinceD created for Namecoin.  I'd distribute the code as a plugin to a modified Bitcoin client, pay the going rate (low thanks to Mike block trees) to get a lot of miners hashing on a chain, and start promoting the new currency.

If I see this come about in the next few months, I'll be happy and stop worrying about early BTC speculators.  I may still curse the market for overvaluing BTC, but against bubbles, yea, even the gods themselves contend in vain.