Subject: Re: [Bitcoin-development] libzerocoin released, what about a zerocoin-only alt-coin with either-or mining

From: John Dillon <[email-masked]>
Date: Sun, 14 Jul 2013 19:48:45 +0000

On Sun, Jul 14, 2013 at 7:33 PM, Luke-Jr <[email-masked]> wrote:
>> Merge mining is very much mining a coin for free. Ask not what the total
>> reward is, ask that the marginal cost of merge mining an additional coin
>> is.
>
> But the total reward is what mining will tend toward equalizing in costs.
> In any case, the cryptocurrencies are neutral to cost of mining, or perhaps
> even benefit from it being as cheap as possible: if it's cheaper to mine, you
> can get an even higher difficulty/security out of it.

Again, you forget that there may exist miners for which the value of the coin
is negative.

Never mind that in practice you want there to exist a cost to encourage miners
to actually pay attention to what they mind and to encourage them to update
software when required and participate.

>> The issue 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 maliciously or through negligence. If the coin isn't worth
>> much, either because it's market value is low or the worth is negative to
>> the malicious miner, your theories of value have nothing to do with the
>> issue.
>
> Invalid blocks are rejected by validating clients in all circumstances.

Validating clients, not SPV clients.

> I suspect you may mean a block that doesn't include transactions you want
> confirmed. In that case, you must not be paying sufficient fees for the miner
> to consider it worth their time, or must be doing something the miner
> considers fundamentally objectionable (in which case they won't be satisfied
> by any fee). But these miners, unless they are able to acquire over 50% of the
> hashrate (in which case the cryptocoin is compromised), are not the only ones
> mining blocks, and if another miner accepts your transactions there is no
> issue.

All those things simply change the amount of alt-coin the miner gets, which to
the miner may have no reward. You also have the issue that we may be talking
about a non-currency chain where reward is more nebulous.

In any case, regarding a zerocoin chain, Peter's observation that
proof-of-sacrifice allows a strong 51% attck defense is very clever and IMO is
significantly stronger than proof-of-work mining, merged or not, would provide.
It's essentially the ability to conjur up mining capacity on demand, but only
by those who have a stake in the crypto-coin. It does depend on the existance
of a proof-of-work chain, but we have a perfectly good one handy.

PS: good to see you signing you email!