My answers to 2 questions from Sepp Hasslberger
2009 Feb 18
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My answers to 2 questions from Sepp Hasslberger @ Satoshi Nakamoto
- Author
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Satoshi Nakamoto
- Email
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satoshinakamotonetwork@proton.me
- Site
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https://satoshinakamoto.network
Sepp Hasslberger:
I have two questions, Satoshi.
the first one ties in with Joerg's doubts about the trusted supply of
tokens/coins.
As far as I understand, there will be a limit of the total amount of
tokens that can be created, and a changing gradient of difficulty in
making the tokens, where the elaboration gets more and more difficult
with time. Is that correct?
It is important that there be a limit in the amount of tokens/coins.
But it is also important that this limit be adjustable to take account
of how many people adopt the system. If the number of users changes with
time, it will also be necessary to change the total amount of coins.
Is there a formula to decide on what should be the total amount of
tokens, and if so, what is the formula?
If there is no formula, who gets to make that decision and based on
what criteria will it be made?
I will keep my second question for later. One thing at a time...
My answers are as follows:
It is a global distributed database, with additions to the database
by consent of the majority, based on a set of rules they follow:
- Whenever someone finds proof-of-work to generate a block, they get
some new coins
- The proof-of-work difficulty is adjusted every two weeks to target
an average of 6 blocks per hour (for the whole network)
- The coins given per block is cut in half every 4 years
You could say coins are issued by the majority. They are issued in a
limited, predetermined amount.
As an example, if there are 1000 nodes, and 6 get coins each hour, it
would likely take a week before you get anything.
To Sepp's question, indeed there is nobody to act as central bank or
federal reserve to adjust the money supply as the population of users
grows. That would have required a trusted party to determine the value,
because I don't know a way for software to know the real world value of
things. If there was some clever way, or if we wanted to trust someone
to actively manage the money supply to peg it to something, the rules
could have been programmed for that.
In this sense, it's more typical of a precious metal. Instead of the
supply changing to keep the value the same, the supply is predetermined
and the value changes. As the number of users grows, the value per coin
increases. It has the potential for a positive feedback loop; as users
increase, the value goes up, which could attract more users to take
advantage of the increasing value.
My answers to 2 questions from Sepp Hasslberger
2009 Feb 18 See all postsSatoshi Nakamoto
satoshinakamotonetwork@proton.me
https://satoshinakamoto.network
Sepp Hasslberger:
My answers are as follows:
It is a global distributed database, with additions to the database by consent of the majority, based on a set of rules they follow:
You could say coins are issued by the majority. They are issued in a limited, predetermined amount.
As an example, if there are 1000 nodes, and 6 get coins each hour, it would likely take a week before you get anything.
To Sepp's question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don't know a way for software to know the real world value of things. If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that.
In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.