Decentralized Autonomous Countries

[bytemaster]

Decentralized Continuous Election of Trustees

Suppose we were to accept the notion that it may be beneficial to have a handful of “trusted” individuals around to certify the official block-chain.   We would want to ensure that these trustees are indeed trust-worthy and not simply self-appointed opportunists who had enough capital to corner the voting market.   Everyone should have a an opportunity to vote without having to purchase special hardware or spend billions every year in electricity just to cast their vote.  Lastly, only those who currently own the currency should have a vote proportional their investment in the currency instead of giving the vote to foreigners who have no current interest in the currency.

Fortunately such a voting system is easy to setup by utilizing a concept known as coin-days-destroyed by a transaction to vote for trustees.  Coin-days-destroyed is calculated as your account balance multiplied by the length of time you have held that balance.    When you create a transaction to make a purchase you also include the address of the Trustee you would like to vote for using the coin-days destroyed by the transaction.

Each trustee would accumulate coin-days-destroyed in their voting balance, and when they vote on a block they consume some of their accumulated coin-days.  The best block is the one which has been voted upon by the most trustees.    While Bitcoin block creation is centralized in one person at a time, this new system would require several unique individuals as elected by the shareholders to approve every block.  As a result not even a single block is centralized into a single user.

The trustee’s could use a consensus model based upon the Ripple algorithm to agree on which blocks to create.    This means that in theory blocks could be produced multiple times per minute.   

Trusting the Trustees in an otherwise Trust-less system. 

The major innovation of Bitcoin was that it claimed to create a trust-less currency; however, as we have seen recent developments have reintroduced trust focused on the mining pools.   Does electing Trustees to certify the network open the network up to abuse of power?  In our opinion there is no such risk as the Trustee cannot create transactions that violate the rules of the block-chain and they have their signature on every block they produce.  Any trustee that signed two different blocks that would result in a double spend could be held accountable and of course as long as there are more honest trustees than dishonest trustees this is not a problem.

[NineLives]

Nice read but I don't understand.  Its a bit above me but, are you saying that Bitcoin will eventually be controlled by governments in a country some day no matter what?  I may not have understood.

I am saying that Proof-of-Work based upon consumption cannot achieve decentralization.  I am also saying that the current Bitcoin ecosystem is rather corrupt and while existing players are acting in a benevolent manner, we are ultimately at their mercy and thus living under a dictatorship without any checks and balances built into the protocol.  Two players could effectively enforce that tainted coins could not be transferred. 

Bottom line, proof-of-work in this form is incompatible with Invictus' goal of decentralization.

I understand.

The everyday user (like me) see bitcoin as a way to earn quickly and with huge profits.  Bitshares has a challenge on its hands if we are going to compete or play along side?  Yes it isn't totally decentralized so for it to work with Invictus, what do you purpose?

[bytemaster]

Nice read but I don't understand.  Its a bit above me but, are you saying that Bitcoin will eventually be controlled by governments in a country some day no matter what?  I may not have understood.

I am saying that Proof-of-Work based upon consumption cannot achieve decentralization.  I am also saying that the current Bitcoin ecosystem is rather corrupt and while existing players are acting in a benevolent manner, we are ultimately at their mercy and thus living under a dictatorship without any checks and balances built into the protocol.  Two players could effectively enforce that tainted coins could not be transferred. 

Bottom line, proof-of-work in this form is incompatible with Invictus' goal of decentralization. 

[NineLives]

Nice read but I don't understand.  Its a bit above me but, are you saying that Bitcoin will eventually be controlled by governments in a country some day no matter what?  I may not have understood.

[bytemaster]

Every user of Bitcoin is a citizen of the Bitcoin Country and has an opportunity to vote on which transactions get included in the blockchain.   In order to cast a vote they must purchase electricity and computing power.   If they decide to vote for themselves, they must purchase a lot of power or they effectively have no influence.   Your odds of being elected ‘President for a Block’ are about as good as being elected a term as President of the Untied States.   Instead, most people choose to join a political party known as a ‘mining pool’.  Everyone mining in a pool is voting the party line. 

As a country Bitcoin will burn almost $1 billion dollars in the coming year to reach consensus via voting on which blockchain is the official chain.  This is a billion dollars that could have been invested into other businesses in the Bitcoin economy. 

If you view bitcoin as the currency of the Bitcoin country, then the Bitcoin Government must impose a 12% wealth tax to fund its elections and provide for the common defense. The heads of various political parties take a cut of these taxes as well as the lobbyists (miners) which represent a small minority of bitcoin users and thus could be thought of as “special interests” compared to the vast majority of bitcoin users who have no influence.  If you would like become a special interest, you must purchase your right to vote from other special interests whom sell voting rights (ASICs) for a profit.

The interesting thing about Bitcoin voting rights, is that they allow foreigners to vote who may not own a single Bitcoin but instead are mercenaries for hire ready to work for any country that will pay them the most. 

Effectively, control of the Bitcoin is defined by who ever is willing to consume the most capital for the least reward and I know no one can compete with the United States Government in this metric.   

No mining system based upon computation and electricity will be able to avoid Bitcoin’s fate.  Even a mining algorithm that can only run on a CPU will result in mining being concentrated into specialized computers lacking everything but a CPU and RAM cooled in massive warehouses.  Mining pools will be created and “political parties” will form. 

Existing Proof-of-Work systems that operate on the basis of consumption of capital will result in centralization and in the hands of a few self-appointed mining Zars.