Wednesday, December 14, 2016

Adding detail to my Bitcoin congestion control

I left the issue of Bitcoin, saying leave it as it is, it works as base money for sub coins which can be distributed and recovered via the S&L. But I notice all the alt coins are dying!  I try to solve that.

I have an idea that owners of Bitcoin can drop them into the micro coin lending pit. Now, let me warn you right away, the probability of a bitcoin getting stuck in the trading pit is finite and positive; over some finite sequence. In other words, compression of the bets will stick a finite number of Bitcoins on hr S&L graph,these large bitcoins have to reflect bit error.

S&L investors will trade on a separate background net to collect enough micro coins to cover a bitcoin and they can take a bitcoin out of the pits, reduce then supply of lending. So, S&L investors are a volunteer class, outside of the network. How they group and re-constitute micro coins into bitcoins is a separate subject, but they all agree to use the standard micro bitcoin, whatever standard is chosen.

But, there still remains the trust problem.  The receiver of a micro coin wants to dump it into the nearest S&L pit and have it recognized as the 'first spend'.  Hence here has to be a signalling path among the S&L pits, a network.  That is, we still have the implied , write_a_letter_to_thenet(), call. I am working on that. The idea is a broadcast network among the S&L pits, any time a micro coin is dropped into the pit, the broadcast is sent over the S&L net, with time stamp.

So validating a micro coin is a one step exchange with the local S&L. The each  S&L node keep a running hash of all their micro coins in the pit.

If the micro coin can divide the  hash, then it has already been dropped into that particular pit. . Hence each S&L keeps a running hash of micro coins outstanding, they can always test a micro coin against that hash.

I have no numbers, just paths here.  What quantity of micro coins can easily be safeguarded by a single hash, and how long to test against the hash. Buy, traders understand they lose a bit of determinism here, if bitcoins get stuck in an S&L, and investors want them back, hey need to a temporary demand for  micro coin among them.

The incentives in the system

In a standard S&L, which issues coin via the accumulation of bit error losses will get snookered, end up losing on the bet because a member managed to get trhe coin into usage, and an innovative shortage appears on the graph, the pit boss covers with loses.

In sibdividing bitcoin, the incentive is to get bitcoin stuck in the pits, an apparent loss of  a bitcoin, and after reconstituting the bitcoin from its parts, the winners walk away with an investors bitcoin..  But as this happens, the more bitcoins stuck, the wider the adoption of the micro coin, and the more valuable the residual, unstuck bitcoin become.  Bitcoin owners want their coins stuck on the graph, they earn a residual interest rate via raising the value of bitcoins all together.

The call
Pit.boss =m S&L +AssetBacked
Pit.coin = microBTC

Asset baked simple means the residual, accumulated bit error is the total of BTC stuck on the graph, minus the microBTC outstanding.  The residual bit error is biased up by the asset.  otherwise, this is a standard S&L and ther pit boss rules clearly state any bounds on stuck BTC.

Will borrowers get an ex post interest charge? Yep, and that means digital systems have the same problem as current banks, credit checking; or secure smart card.  Nothing makes the sand box except hard protection or credit checking.

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