If N2 basically has to pay a tax towards money being challenged through N2 after the node is in use for a while, why doesn’t it instead create a N3 node to use as a conductor for payments?
Great Question. The ‘bits’ in the system I’m proposing are based on a system wide demurrage or ‘decay rate’ of currency. Simply switching to a different node doesn’t change the decay on cash you hold. There isn’t an incentive to create a new node. On the positive side, existing customers have a loyalty factor. N1 will be more likely to buy the same commodity from N2 than from a random Nx. This behavior has a limited life though because diminishing returns eventually catch up and suddenly the benefit from being one of the first contributor to Nx is greater than the loyalty to N2.
This gives a lifespan to legal entities and increases the turnover thus increasing the likelihood of more fit entities emerging(if you assume that entities can cross generationally share information).
You basically get the the attractiveness of youth, the steadiness of adulthood, and the slow decline to oblivion. (and with this an increased incentive to figure out immortality by creating enough value to outrun the diminishing returns)
I don’t think the question you asked above is answerable at the level of detail you use to speak about. But I don’t think what you saying is true.
It quite hard to believe that “There isn’t an incentive to create a new node.” and “younger companies offering equal goods and services will become more attractive for the general public than old established corporation.” can be both true.
You also say “If someone pays from a Hypercapital account to your hypercapital account, there is no fee. ” and you say your system is build on Bitcoing with does include fees.
I think that both can be true and yet still have real results. Take humans, reproduction, and marriage. Typically a man is fertile for more years than a woman. We see in marriage a tension between men staying loyal to the wife of their youth and moving on to a more fertile partner. I don’t have statistics in front of me, but over history the tendency is to stay loyal. Patrimonialism has a profound evolutionary basis and my theory is that you can use that built in bias to form a sustainable system where legal entities have life spans instead of immortality. If the life span is too short, than it is useless.
As far as the fees go, Bitcoin’s fees are non-zero but very close to zero and many alternate payment schemes can be constructed. Typical CC transactions are 3%...much higher than the about .05 needed for a BTC transaction. There are also ways to convince miners to mine your transactions even though no BTC Fees are provided.
I don’t have statistics in front of me, but over history the tendency is to stay loyal.
If you look at how companies try to evade paying taxes, that’s a bad assumptions. Companies usually try to whatever they can do to legally avoid paying taxes instead of paying more taxes then necessary out of loyalty to the government.
As far as your current setup seems to work, all the “pref” seems to go back to from N1 to N2 in cases of decay payed. The person who owns N2 can create a N3 and transfer all the money from N2 to N3. That way N2 never pays any decay fees and N2 get’s part of the decay fees that N3 pays and can refunnel them to N3.
As far as the fees go, Bitcoin’s fees are non-zero but very close to zero
While fees might be less than the average CC transactions they are not zero. Claiming that they are zero suggests that you are not clear about how bitcoin works on that level.
many alternate payment schemes can be constructed
Yes, Ripple manages to work with much less fees but you seem to want to use a blockchain based model.
I’ve tried to set up a system where tax avoidance is reduced or eliminated. Because the transaction system will reject transactions that don’t pay the fee when they use their cash, they are stuck with the decision to participate in the system or not. Once the cash is in the system, they must pay the tax or the tax will be taken from them(using btc multi-sig where the decay charging authority is held accountable to only charge the fee on delinquent accounts.
N2 can certainly set up Nx and move all cash over there. Lets use a real example.
N1 spends $100 with N2. N2 wants to avoid the decay(but the system always charges at least one day of decay during a transaction) So they move the cash to Nx. The transaction occurs and $0.003 cents goes back to N1. Now the cash is in Nx. What are they going to do with it here. If they let it sit for 30 days they will be auto charged a decay fee of about $0.10. This flows to N2.
Even if N2 is proactive and sends it back to N3 immediately, $0.0000032 will flow back to N1. A small amount to be sure, but overtime these small amounts add up.
And if Nx uses the cash to develop something that brings in far more cash than went in, the amounts get much bigger.
That is besides the point because we want to avoid the situation entirely where N2 tries to devalue N1s benefits by passing to a shell corporation Nx
Re: Fees—I don’t have a great solution to this other than offering miners a share of future pref payments for any mined items that they charge no fee for. This involves them taking risk, but also provides substantial long term rewards.
All of this goes much deeper than the original question which I think now is best framed as ‘does having a backflow of cash based on amount spent enhance the information we can get out of an economic system over the standard capitalistic model of today.’ If we add too many things in we end up in a conjecture bias situation.
Once I answer the first question in the affirmative, then I can move on to whether the implementations of the system are rational or not. If achieving the prior is a priority, there likely exists an implementation that can achieve it. At least I think.
You don’t say anything about how is supposed to have the power to enforce that statute.
It’s also not quite clear in what way having a shell corporation is illegal in your system. Even if you have a fixed rule that a single individual can only own a node, people can move money to their family.
Even if N2 is proactive and sends it back to N3 immediately, $0.0000032 will flow back to N1. A small amount to be sure, but overtime these small amounts add up.
Have you done any math to show that they add up?
Also in a system like Bitcoin where it costs $0.04 to do a transaction, are you sure you can transfer $0.0000032 effectively?
That is besides the point because we want to avoid the situation entirely where N2 tries to devalue N1s benefits by passing to a shell corporation Nx
All of this goes much deeper than the original question which I think now is best framed as ‘does having a backflow of cash based on amount spent enhance the information we can get out of an economic system over the standard capitalistic model of today.’ If we add too many things in we end up in a conjecture bias situation.
Economic systems work by their agents trying to maximize returns. That means if there a way in your system to maximize returns in a way you didn’t anticipate the calculation based on the ways you anticipate is worthless.
If you want to have a mathematical answer you have to be clear about your assumptions.
Also in a system like Bitcoin where it costs $0.04 to do a transaction, are you sure you can transfer $0.0000032 effectively?
Yes. It can just be a few satoshi’s to an output with the rest(the bigger values) going somewhere else. If the amounts are too small they can be kept off chain.
Economic systems work by their agents trying to maximize returns. That means if there a way in your system to maximize returns in a way you didn’t anticipate the calculation based on the ways you anticipate is worthless.
Thus the need to experiment and try to blow the thing up. I agree 100%.
And yes, we limit citizens to one account and legal entities, and governments have different kinds of accounts with different restrictions.
If a citizen creates a legal entity, doesn’t he get his second account?
The wine seller creates a legal entity “wine shop” and transfers the money from it into his citizens account whenever the shop get’s any money.
Yes. It can just be a few satoshi’s to an output with the rest(the bigger values) going somewhere else. If the amounts are too small they can be kept off chain.
Of course you can transfer a few satoshi. On the other hand that doesn’t stop you from paying bitcoin fees. The bitcoin blockchain is incapable of doing cheap micropayment transactions.
A corporation may choose to issue citizen accounts to anyone alive. We think that geographic restrictions still make sense, but they are not a requirement.
That sounds like a corporation could issue a citizen account to someone who already has an account.
In general if you do have to trust a government to enforce rule of law, why use the expensive bitcoin system where trust relies on the blockchain?
The assumption that the business man doesn’t do anything with his money is unrealistic. It also doesn’t make sense to assume a 3 person economy. It would make more sense to run a model economy with 10,000 participants and assumptions about how the market participants interacts with each other via an open python script. Including a miner who gets his $0.04 for every transaction.
If a citizen creates a legal entity, doesn’t he get his second account?
The wine seller creates a legal entity “wine shop” and transfers the money from it into his citizens account whenever the shop get’s any money.
Yes...this is possible. I would expect a legal entity to pay it’s employees. The Legal Entity also benefits for what is paid out to employees. The string of accounts and how many lengths away an account is will be a short term concern but not a long term concern. In addition wine buyers can hold the wine maker responsible for making this decision if they feel it is defrauding them in some way. The theory is that the market will tend toward vendors that use cash to invest further in the industry vs. immediately shifting money out of the industry.
Of course you can transfer a few satoshi. On the other hand that doesn’t stop you from paying bitcoin fees. The bitcoin blockchain is incapable of doing cheap micropayment transactions.
I can put together some transactions I guess...but I promise it is possible.
Input
0xA $5.02
0xSystem $.04
Output(This will have 10 outputs)
0xA’ .02
0xn1....-n99 $14.98
0xMinerFee $.04
That sounds like a corporation could issue a citizen account to someone who already has an account.
When I first wrote this I was envisioning a system that anyone could implement with possible a number of entities setting up different currencies.
In general if you do have to trust a government to enforce rule of law, why use the expensive bitcoin system where trust relies on the blockchain?
Only because the banking system is more expensive and because there is a significant amount of technology that allows the actual transfer of real value on BTC. I’d prefer to have proprietary system, but that takes more time and more money. This system is based on the existence of a public ledger and BTC has one of those.
The assumption that the business man doesn’t do anything with his money is unrealistic. It also doesn’t make sense to assume a 3 person economy. It would make more sense to run a model economy with 10,000 participants and assumptions about how the market participants interacts with each other via an open python script. Including a miner who gets his $0.04 for every transaction.
Yes. This was my first computer model. I did a second one that added a government and taxation. Next step is to write some much more detailed monte carlo simulations that have many more actors that make rational and irrational decisions and do their best to sink the economy.
Thanks for the comments they really do help me see what needs reinforcement and what ideas are weak.
The string of accounts and how many lengths away an account is will be a short term concern but not a long term concern.
Why? The one day decay of 10%/365 doesn’t do much. Transaction itself aren’t strongly taxed.
What’s taxed is letting money sit and those taxes go one level back in the chain.
Output(This will have 10 outputs) 0xA’ .02 0xn1....-n99 $14.98 0xMinerFee $.04
Transactions costs fees based on the amount of data they contain. If you batch up 10 transactions into 1 transactions the cost doesn’t become the costs of 1 transaction.
Only because the banking system is more expensive and because there is a significant amount of technology that allows the actual transfer of real value on BTC.
The banking system can internally move money for nearly zero fees. Stocks get traded in a way where a 0.1% transaction tax would have major repercussions.
Our banking system costs money because it does things like fraud protection. Anybody can charge back any credit card payments made with their card.
This whole discussion reminds me of how Eliezer interacts with people who put forward AGI designs. When the AGI designer is vague, it’s impossible to specifically show how the AGI will take over it’s own utility function. When it comes down to the math, and Eliezer shows them how the AGI will overtake it’s utility function the person just says: “Well that’s not exactly what I meant...” and they are never really convinced.
I’m not certain that what you propose can’t work but it seems you are making a lot of assumptions that things will just work out without having thought it through on a deeper level.
Any suggestions on how to think about it a deeper level? I’m new around here just trying to get my head around some of these ideas.
A couple points, if your one year decay rate is 12% and you have $1 billion in the system you will decay $120 million that will flow back to the system. Yes it will matter how close you are to the nodes of activity. That is the point. This updates our decision function when engaging in commerce. The question isn’t is this the most affordable apple, it is is this the best apple made by the best process in a way that will lead to the most value for future apples.
I still have othe options to entice the mining of my transactions. Potentially more attractive than fees.
I’d be more than happy to engage the existing banking system and with unlimited capital I wouldn’t involve Bitcoin. The cost from 0 to transaction 1 on btc is 1000x less than 0 to 1 on the banking system. State of Texas wants 20 million in reserve to even sniff your banking application.
Any suggestions on how to think about it a deeper level? I’m new around here just trying to get my head around some of these ideas.
I think writing down a monto carlo model helps to make decisions explicit. At best you do it in a form where the model is easy to modify for other people.
You could run a tournament where people can submit bots that act in the economy to maximize their returns.
I’d be more than happy to engage the existing banking system and with unlimited capital I wouldn’t involve Bitcoin.
Bitcoin invests a lot of resources into not needing to trust any single entity. That’s why it’s transactions are much more expensive than Ripple transactions.
If you want to trust central authority to uphold law anyway, then it’s likely beneficial to not go via bitcoin trust model and have cheaper transactions.
If N2 basically has to pay a tax towards money being challenged through N2 after the node is in use for a while, why doesn’t it instead create a N3 node to use as a conductor for payments?
Great Question. The ‘bits’ in the system I’m proposing are based on a system wide demurrage or ‘decay rate’ of currency. Simply switching to a different node doesn’t change the decay on cash you hold. There isn’t an incentive to create a new node. On the positive side, existing customers have a loyalty factor. N1 will be more likely to buy the same commodity from N2 than from a random Nx. This behavior has a limited life though because diminishing returns eventually catch up and suddenly the benefit from being one of the first contributor to Nx is greater than the loyalty to N2.
This gives a lifespan to legal entities and increases the turnover thus increasing the likelihood of more fit entities emerging(if you assume that entities can cross generationally share information).
You basically get the the attractiveness of youth, the steadiness of adulthood, and the slow decline to oblivion. (and with this an increased incentive to figure out immortality by creating enough value to outrun the diminishing returns)
I don’t think the question you asked above is answerable at the level of detail you use to speak about. But I don’t think what you saying is true.
It quite hard to believe that “There isn’t an incentive to create a new node.” and “younger companies offering equal goods and services will become more attractive for the general public than old established corporation.” can be both true.
You also say “If someone pays from a Hypercapital account to your hypercapital account, there is no fee. ” and you say your system is build on Bitcoing with does include fees.
I did ask it in the stupid questions thread. :)
I think that both can be true and yet still have real results. Take humans, reproduction, and marriage. Typically a man is fertile for more years than a woman. We see in marriage a tension between men staying loyal to the wife of their youth and moving on to a more fertile partner. I don’t have statistics in front of me, but over history the tendency is to stay loyal. Patrimonialism has a profound evolutionary basis and my theory is that you can use that built in bias to form a sustainable system where legal entities have life spans instead of immortality. If the life span is too short, than it is useless.
As far as the fees go, Bitcoin’s fees are non-zero but very close to zero and many alternate payment schemes can be constructed. Typical CC transactions are 3%...much higher than the about .05 needed for a BTC transaction. There are also ways to convince miners to mine your transactions even though no BTC Fees are provided.
If you look at how companies try to evade paying taxes, that’s a bad assumptions. Companies usually try to whatever they can do to legally avoid paying taxes instead of paying more taxes then necessary out of loyalty to the government.
As far as your current setup seems to work, all the “pref” seems to go back to from N1 to N2 in cases of decay payed. The person who owns N2 can create a N3 and transfer all the money from N2 to N3. That way N2 never pays any decay fees and N2 get’s part of the decay fees that N3 pays and can refunnel them to N3.
There are people who argue that bitcoin fees should be $0.41 per transaction (http://www.coindesk.com/new-study-low-bitcoin-transaction-fees-unsustainable/). Even the 4 cents that currently exist can still matter.
While fees might be less than the average CC transactions they are not zero. Claiming that they are zero suggests that you are not clear about how bitcoin works on that level.
Yes, Ripple manages to work with much less fees but you seem to want to use a blockchain based model.
I’ve tried to set up a system where tax avoidance is reduced or eliminated. Because the transaction system will reject transactions that don’t pay the fee when they use their cash, they are stuck with the decision to participate in the system or not. Once the cash is in the system, they must pay the tax or the tax will be taken from them(using btc multi-sig where the decay charging authority is held accountable to only charge the fee on delinquent accounts.
N2 can certainly set up Nx and move all cash over there. Lets use a real example.
N1 spends $100 with N2. N2 wants to avoid the decay(but the system always charges at least one day of decay during a transaction) So they move the cash to Nx. The transaction occurs and $0.003 cents goes back to N1. Now the cash is in Nx. What are they going to do with it here. If they let it sit for 30 days they will be auto charged a decay fee of about $0.10. This flows to N2.
Even if N2 is proactive and sends it back to N3 immediately, $0.0000032 will flow back to N1. A small amount to be sure, but overtime these small amounts add up.
And if Nx uses the cash to develop something that brings in far more cash than went in, the amounts get much bigger.
That is besides the point because we want to avoid the situation entirely where N2 tries to devalue N1s benefits by passing to a shell corporation Nx
Nothing can keep someone from just passing cash and on and on and on to cash it owns except rule of law and accountability. Accountability can be observed in the blockchain and bad actors identified. Rule of law comes later. (I try to cover this in STH. Statutory Theft—https://github.com/skilesare/art_and_democratic_hypercapitalism/blob/master/the_pattern_language/sth_statutory_theft.md )
Re: Fees—I don’t have a great solution to this other than offering miners a share of future pref payments for any mined items that they charge no fee for. This involves them taking risk, but also provides substantial long term rewards.
All of this goes much deeper than the original question which I think now is best framed as ‘does having a backflow of cash based on amount spent enhance the information we can get out of an economic system over the standard capitalistic model of today.’ If we add too many things in we end up in a conjecture bias situation.
Once I answer the first question in the affirmative, then I can move on to whether the implementations of the system are rational or not. If achieving the prior is a priority, there likely exists an implementation that can achieve it. At least I think.
You don’t say anything about how is supposed to have the power to enforce that statute.
It’s also not quite clear in what way having a shell corporation is illegal in your system. Even if you have a fixed rule that a single individual can only own a node, people can move money to their family.
Have you done any math to show that they add up?
Also in a system like Bitcoin where it costs $0.04 to do a transaction, are you sure you can transfer $0.0000032 effectively?
Economic systems work by their agents trying to maximize returns. That means if there a way in your system to maximize returns in a way you didn’t anticipate the calculation based on the ways you anticipate is worthless.
If you want to have a mathematical answer you have to be clear about your assumptions.
I say a lot about it in my book. The system relies on Rule of law: https://github.com/skilesare/art_and_democratic_hypercapitalism/blob/master/the_pattern_language/law_rule_of_law.md
And yes, we limit citizens to one account and legal entities, and governments have different kinds of accounts with different restrictions.
https://github.com/skilesare/art_and_democratic_hypercapitalism/blob/master/hyper_capitalism/citizen_accounts.md https://github.com/skilesare/art_and_democratic_hypercapitalism/blob/master/hyper_capitalism/legal_entity_accounts.md https://github.com/skilesare/art_and_democratic_hypercapitalism/blob/master/hyper_capitalism/state_accounts.md
I’ve run a computer model in a closed system. I present the results here: https://vimeo.com/user17783424/review/115279592/1bb88f885d
Yes. It can just be a few satoshi’s to an output with the rest(the bigger values) going somewhere else. If the amounts are too small they can be kept off chain.
Thus the need to experiment and try to blow the thing up. I agree 100%.
If a citizen creates a legal entity, doesn’t he get his second account?
The wine seller creates a legal entity “wine shop” and transfers the money from it into his citizens account whenever the shop get’s any money.
Of course you can transfer a few satoshi. On the other hand that doesn’t stop you from paying bitcoin fees. The bitcoin blockchain is incapable of doing cheap micropayment transactions.
That sounds like a corporation could issue a citizen account to someone who already has an account.
In general if you do have to trust a government to enforce rule of law, why use the expensive bitcoin system where trust relies on the blockchain?
The assumption that the business man doesn’t do anything with his money is unrealistic. It also doesn’t make sense to assume a 3 person economy. It would make more sense to run a model economy with 10,000 participants and assumptions about how the market participants interacts with each other via an open python script. Including a miner who gets his $0.04 for every transaction.
Yes...this is possible. I would expect a legal entity to pay it’s employees. The Legal Entity also benefits for what is paid out to employees. The string of accounts and how many lengths away an account is will be a short term concern but not a long term concern. In addition wine buyers can hold the wine maker responsible for making this decision if they feel it is defrauding them in some way. The theory is that the market will tend toward vendors that use cash to invest further in the industry vs. immediately shifting money out of the industry.
I can put together some transactions I guess...but I promise it is possible. Input 0xA $5.02 0xSystem $.04
Output 0xB $5.00 0xDecayAuthority $.02 0xMinerFee $.04
Later that day
Input 0xDecayAuthority $15.04
Output(This will have 10 outputs) 0xA’ .02 0xn1....-n99 $14.98 0xMinerFee $.04
When I first wrote this I was envisioning a system that anyone could implement with possible a number of entities setting up different currencies.
Only because the banking system is more expensive and because there is a significant amount of technology that allows the actual transfer of real value on BTC. I’d prefer to have proprietary system, but that takes more time and more money. This system is based on the existence of a public ledger and BTC has one of those.
Yes. This was my first computer model. I did a second one that added a government and taxation. Next step is to write some much more detailed monte carlo simulations that have many more actors that make rational and irrational decisions and do their best to sink the economy.
Thanks for the comments they really do help me see what needs reinforcement and what ideas are weak.
Why? The one day decay of 10%/365 doesn’t do much. Transaction itself aren’t strongly taxed. What’s taxed is letting money sit and those taxes go one level back in the chain.
Transactions costs fees based on the amount of data they contain. If you batch up 10 transactions into 1 transactions the cost doesn’t become the costs of 1 transaction.
The banking system can internally move money for nearly zero fees. Stocks get traded in a way where a 0.1% transaction tax would have major repercussions.
Our banking system costs money because it does things like fraud protection. Anybody can charge back any credit card payments made with their card.
This whole discussion reminds me of how Eliezer interacts with people who put forward AGI designs. When the AGI designer is vague, it’s impossible to specifically show how the AGI will take over it’s own utility function. When it comes down to the math, and Eliezer shows them how the AGI will overtake it’s utility function the person just says: “Well that’s not exactly what I meant...” and they are never really convinced.
I’m not certain that what you propose can’t work but it seems you are making a lot of assumptions that things will just work out without having thought it through on a deeper level.
Any suggestions on how to think about it a deeper level? I’m new around here just trying to get my head around some of these ideas.
A couple points, if your one year decay rate is 12% and you have $1 billion in the system you will decay $120 million that will flow back to the system. Yes it will matter how close you are to the nodes of activity. That is the point. This updates our decision function when engaging in commerce. The question isn’t is this the most affordable apple, it is is this the best apple made by the best process in a way that will lead to the most value for future apples.
I still have othe options to entice the mining of my transactions. Potentially more attractive than fees.
I’d be more than happy to engage the existing banking system and with unlimited capital I wouldn’t involve Bitcoin. The cost from 0 to transaction 1 on btc is 1000x less than 0 to 1 on the banking system. State of Texas wants 20 million in reserve to even sniff your banking application.
I think writing down a monto carlo model helps to make decisions explicit. At best you do it in a form where the model is easy to modify for other people.
You could run a tournament where people can submit bots that act in the economy to maximize their returns.
Bitcoin invests a lot of resources into not needing to trust any single entity. That’s why it’s transactions are much more expensive than Ripple transactions.
If you want to trust central authority to uphold law anyway, then it’s likely beneficial to not go via bitcoin trust model and have cheaper transactions.
I took your advice and posted this over in discussion:
http://lesswrong.com/r/discussion/lw/m38/publishing_my_initial_model_for_hypercapitalism/