[cryptography] Bitcoin observation

Alfonso De Gregorio adg at crypto.lo.gy
Wed Jul 6 01:53:17 EDT 2011


On Tue, Jul 5, 2011 at 9:22 AM, Jon Callas <jon at callas.org> wrote:

Good points. But nonetheless, it's a really, really cool property of the
> system that you can gain by destroying bitcoins. I mean heck -- let's create
> another sub-constant, H_s which is the constant that shows when it better to
> destroy one than steal one. Obviously, if you have zero bitcoins, then
> stealing them has some value. But heck -- what if you're sitting on a cache
> of 371,000 coins. My intuition is that it's going to be better to destroy
> than steal. If you're found with a stolen bitcoin, you have some 'splaining
> to do. But if you silently destroy one -- then you see a market float.
>


Let's assume there is a way to convince market participants that some
Bitcoins has been destroyed, what would happen then? The value of the
current Bitcoin supply would slightly increase, that's correct.

Would market participants be willing to invest more in order to secure their
liquid assets against Bitcoin assassination attacks? How the attack rate
would increase/decrease?

The tragedy of the commons suggests us that when both risks and benefits are
socialized between the elements of the population, individuals lack the
incentive to unilaterally invest in security.

On the other hand, as long as the reduction of money supply increases the
value of the survived assets (ie, there's demand), some elements of the
population will have an incentive to attack.

It would be interesting to investigate further.

Alfonso

-- 
 tweets @secYOUre      blog. http://Plaintext.crypto.lo.gy/
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