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[The following section]

Thank you very much for reading the essay and giving feedback.

You're welcome.

There are a couple problems with your proof:
1) you assume that only consensus mechanisms that produce coins are viable. If you are right, then bitcoin is on a path of death. Bitcoin is slowing down coin production by half every few years. If Satoshi consensus stops working at some point, then bitcoin might want to switch to Flying Fox consensus. It is optimized for a finite non-growing money supply.

No, I don't.

""For simplicity, this section assumes that all P2P systems release new coins at the same schedule (ie, at a rate of 50 units per 10 minutes, a rate which itself halves every 4 years). The following section will describe how changes to the schedule are irrelevant.""

This section describes how changes to the schedule (such as yours) do not remove the need for expensive proof of work: www.truthcoin.info/blog/pow-cheapest/#the-coinbase-rot-paradox-less-is-more

2) you only consider consensus maintained by the destruction of resources that cost the same amount for both coin-holders, and people who don't own coins. like POW and liquidity and elections. There exists a resource that is affordable for coin-holders, and expensive for non-coin-holders. (the coins)

Again, this is untrue. And furthermore, with a tiny assumption, that users are free to buy and sell coins (ie, that "a price exists", which -by the way- is a necessary assumption to even calculate the PoW expense, as it is defined with Bitcoin numéraire), it is irrelevant.

[impossible]

My proof demonstrates that it is impossible for any peer-to-peer monetary system to be cheaper than proof of work. I'm not sure why you are trying to do something that I believe to be impossible...

I think that you should try to explain what it is about my proof that you don't find convincing, which leads you to reject it and attempt to construct a counterexample.

When you write:

This document is NOT about the cost of creating new coins.

...you admit that your system cannot survive in it's earliest stages.

Ignoring that, how expensive will the crypto-monetary system be when it is the case that no new coins are created? In Bitcoin, it will be the sum of all transaction fees. Here, presumably it is the same, and the fees go to channel operators.

Ignoring all of that, the block-creator always gets to exclude transactions which he/she doesn't like. What is the "heaviest chain" rule for selecting a blockchain history, if you wake up and see two blockchains of length 100,000, which forked awhile ago (such that each chain had a group that attempted to prevent members of the rival group from opening channels)?

Reread the parts about "splitting" votes, and creating a counter-bribe.

If it is possible to prove how you voted, then it is possible for someone to commit to give you money, once you create the proof in the future.

This simply returns us to the original "bribe" topic, which is not different from simply buying VTC.
http://forum.bitcoinhivemind.com/index.php/topic,173.msg849.html#msg849

I added item (f) (2) to the latest Whitepaper in response to this point.

As I state there, I do not think it is a problem. I invoke a game theory solution, not a cryptographic solution -- voters can change their vote at any time.

As a result:

...while the "sealing" of votes can help, it is not necessarily very crucial or important. Voters can already change votes, and so all voting is "cheap talk" until the point at which votes become binding (at which point they are unalterable).

I will look at it this Sunday.

I felt that this theme had the Black / Orange flavor we really needed.

But, it you'd like to change it back, you can do so in your forum settings!

Hi James,

Always happy to help.


> 1. What is the relationship between Truthcoin and Hivemind? I thought Hivemind was the new name for Truthcoin meaning Truthcoin was no longer a thing but then I see activity on the Truthcoin website and docs after Hivemind already exists so is it more like Truthcoin is the concept/invention/protocol and Hivemind is one implementation of that concept/invention/protocol?

Names don't really matter, do they? Especially for a protocol, where one can use it without knowing the name. A protocol is just a set of rules, and the rule-set doesn't need to include it's own name, or any names.

Nonetheless, Truthcoin was the original name for the concept/invention/protocol, and it was also the name of one implementation of that concept, and thirdly it was the website where I hosted the project as well as my blog. However, people were a little uncomfortable with something that matched the Altcoin naming-schema, so I split my one website into two...one for both my blog and the project (emphasizing the blog), and a new website 'hivemind' for only the project and project-related content.


> 2. About predictions with scalar outcomes like how many Electoral College votes will Hillary win is it the case that there would/could be a prediction that pays 1/538 of $1 per vote won? So if she wins 0 votes its worth $0.00, if she wins 269 votes it pays out $0.50c if she wins 538 votes it pays out $1.00c and so on for every amount in between?

Scalar outcomes have 2 states: one for 'min' and one for 'max'. If, say, the prices are $0.50 and $0.50, and the max and min chosen were "0" and "538" (although these would probably indeed be the choices, this is not an absolute requirement -- someone might consider those outcomes to be excessively extreme, and might pick "40" and "500"), then this would correspond to an expectation of 269 (which is halfway between the two extremes. So it is very similar to what you've laid out, but not quite.


> 3. Do you imagine predictions being tradable outside the Hivemind system/sidechain? I guess by the keys for those predictions being traded privately potentially at a different price than the price on the Hivemind system/sidechain? 

It is certainly possible. I designed a way for this to be done which is conceptually similar to Bitcoin's lightning network. In addition to that, it is possible to move the 'shares' to the a trusted third party website, at which point users would have all of the benefits and drawbacks of a traditional database.


> If predictions could be traded in the dark, off market does that degrade the price signaling that is required for wisdom of the crowd accuracy?

No. In the very worse case, the signal is degraded to the exact extent of "someone who was going to make a trade, does not make one at all", but in all other cases the info quickly diffuses through the rest of the market.


> Although someone who trades a prediction at a different to market price has an incentive to arbitrage that trade on the market he might have real life knowledge that the prediction will soon go to $1.00c or $0.00c and real life incentive to not let the market know that. In such a case he might trade the predictions off market in a way that would change the price up if it were happening on market. In this case the market and the prediction does not gain from his knowledge right?

Perhaps not at first, but buyers (of anything) will always seek the best deal (and 'buyers' includes this "insider"), and arbitrageurs will always seek risk-free profits, so I don't think this will be a problem. Markets do spread information much much faster than, say, official reports or scientific papers or expert testimony or conversations, but they do not work magically, they do need a little bit of time to work.


> 4. When a market creator makes a new market how do the predictions get their initial price? Does the creator set the initial price by setting a loss limit per outcome? Like if he sets a $6.00c loss limit if Hilary wins and a $4.00c loss if Hilary losses does that mean the prediction that Hillary will win's initial price will be $0.60c?

When the market is created, it has uniform prices. However, the creator of the market is the first to know that the market has been created at all, so he is in an opportune position to make an the very first trade on this market. If his initial odds are well-selected, he will profit as a result.


> 5. Are betting exchanges prediction markets? I do understand the difference in trading mechanism, the concept of a prediction being trading between parties as different to parties matching each other's bets and that the logarithmic market scoring rule will give Hivemind the affect of liquidity. 

> Bur isn't the valuable part of a prediction market, the fact that the price implies a wisdom of the crowd probability, exactly replicated by a betting exchange?

A "bet" is almost a prediction market...each bet is missing some of the 'market' part: that the betting odds are dynamically repriced as (many) individuals trade (in the same place).

> If I go to Betfair and check the odds on Man U Vs Arsenal those odds are just as much a wisdom of the crowd probability with all the same incentives at play that would be for a prediction market right (except Betfair is centralized and non-anonymous)?

Betfair is very close to a prediction market, yes. Dynamic parimutuel betting is mathematically similar (and, sometimes, equivalent) to market scoring rule betting. The key thing is that the odds are dynamically repriced.

I get that Hivemind is decentralized and anonymous but that is just as much a case in favor of a decentralized anonymous betting exchange is it is in favored of Hivemind.

> So what would be the advantages or disadvantages of a decentralized anonymous betting exchange compared to Hivemind? Particularly if there are any advantages or disadvantages to the accuracy of its price signal as a forecast.

They would be very similar. Markets tend to do well with scale, as do blockchains, and technology in general, in my opinion.


> 6.  I assume a lot of markets will be created automatically by bots and I assumed they would be voted on by bots as well. But then I gather what each voter has to vote on is random which would make bot voting more difficult so do you think people will do voting manually by looking stuff up on google?

They will probably have software to help them, and manually check things over to make sure the software hasn't screwed up.


> Thanks for any info you can give, I have had a few ahha moments with this and I think I will get a lot more involved.

My pleasure.

Yes, indeed. Miners will be compensated with transaction fees, paid in BTC.

http://www.truthcoin.info/blog/drivechain/#drivechains-security

Ok, lets talk about (5) sometime soon.

Sorry, recovering from ScalingBitcoin HK...long flight, you know?

We've recently created a new dedicated node, and new guidelines on how to create and run your own node. It would probably be most helpful for everyone if you used the GitHub issues tracker to track any issues.

Voting happens very rarely, and you can only vote *on* Decisions after they have been created. Does that help?

Some people are confused about blockchains:

https://www.youtube.com/v/mLWhU3f0xlc?start=2948.1&end=2980.2&version=3&autoplay=1
https://www.youtube.com/v/U1XOPIqyP7A?start=163&end=356&version=3&autoplay=1
https://www.youtube.com/v/orQ0UJnw_eY?start=206&end=230&version=3&autoplay=1

I have written a book, to help explain The Blockchain: https://docs.google.com/viewerng/viewer?url=http://www.truthcoin.info/images/blockchainz.pdf

https://www.youtube.com/watch?v=Vcq0_h1_J30
...
It's like cash!

Hi,

The obvious thing would be to familiarize yourself with everything Robin Hanson, the pseudo-inventor of prediction markets: http://www.overcomingbias.com/bio

Lots of his stuff is online for free. Some of it I collated here: https://github.com/psztorc/Truthcoin/tree/master/docs/Further%20Reading

Hanson's blog, OvercomingBias, is top-shelf, as is LessWrong: http://lesswrong.com/lw/ni/buy_now_or_forever_hold_your_peace/

As for books, I think that the more important thing to do is familiarize yourself with the human brain, and how hopelessly defective it is (thus motivating the need for immediate help from reliable teammates).

Good books would be: Blank Slate by Pinker, Black Swan / Fooled By Randomness by Taleb, Thinking Fast and Slow by Kahneman.

I haven't read this book, but only because I'm virtually certain that I already know everything in it. My educated guess from the table of contents is that it is all very useful and reliable information:
http://www.amazon.com/The-Wisdom-Crowds-James-Surowiecki/dp/0385721706

Hopefully that helps.

A centralized one, certainly. A centralized org has the ability to bind itself with contracts which can be enforced in a country's legal system...this is a very very cheap way of creating trust.

> How much do users care about 3rd party risk?

Probably not very much, but the alternatives consistently steal user's money and/or cease to exist, so it seems that none of us really have any choice.

It is the same with Bitcoin....in my view, no one really *wants* to use Bitcoin...it is just the only tool that does the job.

> In other words, how putting PM on blockchain makes it more appealing to end users?

I think this is actually a very insightful question. For a protocol, it only has to work, the "user experience" is irrelevant. This is basically the opposite of most tech development, in which the user experience is everything.