[FoRK] bitcoins vs. alchemy

[Gordon Mohr]

On 12/6/12 7:56 PM, Ken Ganshirt @ Yahoo wrote:
> --- On Thu, 12/6/12, Gordon Mohr <gojomo-forkxent at xavvy.com> wrote:
>
>>
>> The consensus ledger then agrees that your key can spend those
>> bitcoins.
>>
>> Only if someone gets your private key can they pretend to be the
>> owner of those previously-minted-on-schedule coins.
>>
>> - Gordon
>>
>
> That's the part that I don't get, even after reading.  When you do
> get around to spending your bitcoins, do those earlier bitcoins have
> their original purchasing power? Or do they only have the more recent
> "devalued" purchasing power?

There is no 'devaluation event'. There's a decrease in the reward credited 
when someone wins the race to supply the next canonical transaction-log 
block.

The reward used to be 50 BTC per block; now it's 25 BTC per block. It will 
keep halving at regular intervals until it's less than the smallest  
representable value in the protocol.

1 BTC from a recent 25 BTC reward is exactly the same as 1 BTC from an  
earlier 50 BTC reward. Age of origin doesn't matter, and in normal use,  
the balances that originated in different block rewards get mixed  
together. (A subsequent use of that mixed balance just refers back to the 
immediately previous mixing-use. While it is *possible* to keep looking 
further back to precedent transactions, it's not *necessary*.)

Unfortunately the terms and analogies used to describe Bitcoin often lead 
to confusion. They're not really 'created by computation' or even  
'discovered', but disbursed on a reward schedule that's set by the  
system's 'technical constitution'. Who wins the  
hash-collision/block-creation competition only affects to whom the values 
are disbursed.

Thinking about them as a tangible thing (or even a specific  
number/solution) can also lead you astray; they're just a credit, in a  
shared globally-readable ledger. Based on that consensus ledger, veryone  
agrees a particular public-key may reassign that balance to one or more  
other public-keys (by submitting a signed transaction).

It's more like a bunch of swiss bank accounts in the peer-cloud, than it  
is some collection of digital rarities kept secure via confidentiality.  
(You just keep your signing keys -- your bank account passwords, if you  
will -- secret, so that no one else can issue signed transactions drawing 
down your balances.)

> Asked a different way, are all bitcoins of equal "value" all the
> time, just as 1 "dollar" of fiat currency is always equal to any
> other 1 "dollar" of that same fiat currency at any single point in
> time? Or is there a different value between the earlier and more
> recent.  Eg. Is there some distinction based on the different
> "vintages" that are baked into the "revaluation" process such that at
> the same instant in time 1 unit of bitcoin mined before a devaluation
> event is "worth" more than that same size unit mined after.

Yes, all bitcoin balances are denominated in the same  
mixable/interchangeable units. Vintage doesn't matter.

1 BTC (from any block/txn) + 1 BTC (from any other block/txn) = 2 BTC

(There are some other subtleties, regarding balances that were recently  
awarded or transferred. So by convention some balances may not be  
immediately/preferentially spendable. But in such cases just waiting for  
the blockchain to get a bit longer over 1-20 hours makes the balances  
completely equal.)

> There seems to be an assumption in some folks' questions that there
> is a difference in "value" by vintage, eg. related to/marked by each
> "revaluation" stage.  I'm not sure, so I have to ask the dumb
> question.
>
> Or perhaps there is something else baked into the process such that
> after a devaluation event the payout for a block is relatively
> smaller than it would have been before the devaluation event to
> offset the relative change in value due to the revaluation?

Any assumptions involving a 'devaluation event' or 'revaluation vintages' 
would be based on misconceptions.

Of course, the value of 1 BTC against other currencies floats around based 
on what people are willing to pay, but that's a different thing entirely.

- Gordon


> Or do I just need to change my bifocals?  Or my meds.  Or both.
>
> ...ken... _______________________________________________ FoRK
> mailing list http://xent.com/mailman/listinfo/fork
>
>

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