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Date: Sun, 14 Jul 2013 19:22:10 +0000
Message-ID: <CAPaL=UVmr1zng6QtngkY-Y+fP+E67NST7MYRpkSHfjtwZ7PFNw@mail.gmail.com>
From: John Dillon <john.dillon892@googlemail.com>
To: =?ISO-8859-1?Q?Jorge_Tim=F3n?= <jtimon@monetize.io>
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Cc: Bitcoin-Dev <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] libzerocoin released,
 what about a zerocoin-only alt-coin with either-or mining
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On Sun, Jul 14, 2013 at 11:18 AM, Jorge Tim=F3n <jtimon@monetize.io> wrote:
> All the arguments in favor of this pegging use zerocoin's point of
> view. Sure it would be much better for it, but are additional costs to
> the bitcoin network and you cannot do it with every chain.

Seems that Peter is describing a system that requires no changes at all to =
the
Bitcoin codebase and thus there are no costs whatsoever.

Peter: I'm a bit confused by this concept of "bi-directional sacrifice" tho=
ugh,
I assume there exists only a sacrifice in one direction right? Wouldn't sel=
ling
a zerocoin be just a matter of giving zerocoin a rule so that the zerocoin =
tx
moving it to the new owner only happens if a specific form of bitcoin tx
happens too?

> Merged mining is not mining the coin for free. The total reward (ie
> btc + frc + nmc + dvc) should tend to equal the mining costs. But the
> value comes from demand, not costs. So if people demand it more it
> price will rise no matter how is mined. And if the price rises it will
> make sense to spend more on mining.
> "Bitcoins are worth because it costs to mine them" is a Marxian labor
> thory of value argument.
> It's the other way arround as Menger taught us.

Merge mining is very much mining a coin for free. Ask not what the total re=
ward
is, ask that the marginal cost of merge mining an additional coin is. The i=
ssue
is that unless there is a cost to mining a *invalid* block the merge mined =
coin
has little protection from miners who mine invalid blocks, either malicious=
ly
or through negligence. If the coin isn't worth much, either because it's ma=
rket
value is low or the worth is negative to the malicious miner, your theories=
 of
value have nothing to do with the issue.

Gregory Maxwell has written about this issue before on the #bitcoin-dev IRC
channel and on bitcointalk as well if memory serves. I advise you to look u=
p
his description of the problem, almost everything he writes on the topic of
crypto-coin theory is spot-on correct.
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