report from Tesla Coils and Corpses meeting

[Zooko Wilcox-OHearn]

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========================================
 LAFS Tesla Coils & Corpses, 2014-05-29
========================================

in attendance: Zooko (scribe), Daira

Zooko is dreaming about launching a new cryptocurrency. It has two main
features. The first feature is SNARK-based unlinkable transactions, a la
ZeroCash ¹, which is the strongest kind of privacy yet invented for
cryptocurrencies.

¹ http://zerocash-project.org/media/pdf/zerocash-oakland2014.pdf

The second feature is all about marketing: we are willing to stand up and
say that privacy is a social good! We're creating this strongly private
cryptocurrency for good, not for evil. We believe that privacy makes
individuals, nations, and our planet-wide society stronger, safer, and
more prosperous. We believe that a decentralized protocol for private
execution of these sorts of transactions (e.g. money and domain names) is
necessary for planet-wide, borderless commerce.

Then we started talking about economics. Actually Zooko did most of the
talking. Zooko has recently had a shift in perspective, to thinking that
in a cryptocurrency *there is no inflation or deflation*.

Zooko thinks this because in a cryptocurrency there is no *uncertainty*
about future changes to the monetary base, or about what changes to the
monetary base have already happened, and therefore there is no inflation
or deflation as commonly understood from traditional economics. The
reward given to Bitcoin miners is a wealth transfer from all holders of
Bitcoin to the miner beneficiaries, but that transfer should *not* change
anyone's opinion about the overall value of Bitcoin vs. goods and
services, because everyone *knew* that it was going to happen.

One way to understand this perspective is to pretend you live in an
alternate universe where Bitcoin is exactly the same as in our universe,
except that the user-interface displays *only* the percentage of all
Bitcoin that you own. It never displayed the absolute number of Bitcoin
units. That would demonstrate to everyone that the reward given to miners
is a wealth transfer, causing the Bitcoin-percentage balances of everyone
else in the world to fall a tiny fraction of a percent and causing the
balance of the lucky miner to increase by exactly the sum of the amount
that everyone else's balances decreased. (It always adds up to exactly 0
because it is all transfer — there is no creation or destruction of
Bitcoin-percentage).

This would make it very clear to everyone that if, for example, you
engage in a long-term debt contract obligating you to pay 0.000001% of
the world's Bitcoin to someone at some time in the future, that this will
be slightly harder for you amount to pay 0.00001% of the world's Bitcoin
today. It would be slightly harder for you to pay in the future for the
simple reason that the percentage of Bitcoin that you own decreases a
tiny little bit every time a new block is mined.

We ended the meeting early because Daira was tired and because
LeastAuthority is in the middle of launching an upgrade to our secure
storage service.

Regards,

Zooko Wilcox-O'Hearn

Founder, CEO, and Customer Support Rep
https://LeastAuthority.com
Freedom matters.