and the fees MUST remain competitive to alternative payment networks.  If it's not cheaper than eg. Paypal then Bitcoin is useless, less adoption, even more problems for Bitcoin valuation.  Seems like all the problems will hit at once.

I get the clear impression that practically no one here is actually reading these papers, or even has the background knowledge to determine if they are valid or not.

I explain how to use Vouchers in Confidence Chains here: https://docs.google.com/document/d/1cKlN55wX7n0SLvxidLoFVrJnNMJO-Iefr8bVyeHBseg/edit

There are serious issues with Color Coins as has been stated many times already.

completely agree with this thinking.  this is what turned me off to a number of digital currency projects I've worked with in the past.

The banking world wants to develop technologies that keeps their privilege intact whereas the people here want technologies that provide an even playing field.  The trick is that group #1 is trying to appear as though they are group #2.  The rest is just episodes in this ongoing sitcom I've been witness to for over a decade, although it's been going on a lot longer.  See: J. Orlin Grabbe for recent episodes or even go back to American colonial times, Jackson/Hamilton, etc.  For instance Hamilton for some reason ended up being a 'founding father' however he clearly was working for Imperial Banking interests, and he was _never_ a US President.

One thing to be vigilant about are privacy issues.  A recent trend has been that funding seems to emerge for practically any functionality, EXCEPT PRIVACY, because the financial support comes from those who invade your privacy for profit, power, etc.  I wont name names here but it's fairly obvious to anyone who follows this space.

It does use block chains similar to Bitcoin.  It DOES NOT use THE BLOCKCHAIN- this seems to be the point of departure between Confidence Chains and the other technologies in this class.

There are problems with using the BTC Blockchain for other purposes.  For instance Meni Rosenfeld posted a video recently where one of the speakers claims that the blockchain is 'free'.  It's not free, and that seems to be a common misperception, and this thinking is what led to the problems of COIN DUST.  When you start to use the Blockchain for all sorts of things(perhaps some clearly abusive others are useful), than this will greatly magnify this problem of what is permissible use of the block chain and what is not.  It also suggests some very complex problems about the economics of mining.  In addition complex financial functions require judgement- how will we implement that using the blockchain?  Already this group has demonstrated a lack of vision in this department.  It was quite obvious that microtransactions would be a problem however the term did not even appear on the list until I brought it up.

Clearly the public has not fully grasped what Confidence Chains is.  I often get emails asking how someone can mine Confidence Chains for profit.  note: there is no mining in Confidence Chains.

It's a major departure from the concept of Bitcoin.  A break with Bitcoin ideas is appropriate when you start to venture into the world of financial instruments.  Re. some of the other projects, Im instantly wary of any project that wants me to buy some of their credits up front for some awesome feature in the future(Ripple Redux?).  As soon as someone defines some kind of requirement, we get a dozen people log in here and post some new project that claims to have a solution.

And this is why, Meni, that Color Coins are generally irrelevant.  Bitcoin was interesting because it had ZERO TRUST, not only at the technology level, but the financial level as well.  Nothing was BACKING it.  Color Coins suggest BACKING and exchangeability, thus you've removed zero trust AND you can safely remove the technological zero-trust(POW) from the equation as well.  This is what has been done with Confidence Chains.

lets not get nasty... but I do agree there are a lot of dubious claims being thrown around these days regarding various open source projects.  Real money has been spent on Color Coins and for this expenditure to be considered profitable, Color Coins must become a standards for a given set of functions.  At this point I think a number of issues have emerged which suggest this is probably not happening.

There are a number of projects in this space competing for attention.  Color Coins is a respectable idea, the primary problem is that:

It will not only be subject to the issues regarding block chain bloat, microtransactions, and coin dust- it will exacerbate them greatly.  Think Number of Transactions to the power of Number Color Coins.  It's not viable in my view, and the moment you use it for complex financial functions you are seriously pushing performance capacity.  This dovetails into all the other issues that Bitcoin faces in it's natural state.

My project, Confidence Chains, factors out Proof Of Work altogether.  One of the members on the BitcoinX continues to attack me every time I contribute to the conversations.  I originally brought up the issue of Microtransactions/Coin Dust, which this person denounced as irrelevant, later when it became obvious this was a big problem, he pretended as if he knew about it all along(check the list records for evidence of this).  I certainly wish the project well, and Color Coins offers one feature that Confidence Chains does not, and that is Bitcoin's zero trust model.  Confidence Chains gives you much much more though including Decentralized Exchanges, Bond Auctions, and many more features that will be described in upcoming publications.  Virtually any Financial device is possible to implement efficiently and cleanly.  Importantly, it gives you instantaneous transactions and that's a critical factor in many applications.  At best they will need to build protocols ON TOP OF Bitcoin, that are probably MORE complex and difficult to support than basic Confidence Chains.  Meanwhile Confidence Chains gives you these valuable functions out of the box.  I think the inertia that remains is the effort required in order to understand the basic algorithm- it does not behave like Bitcoin and you need to know quite a bit about the basic elements of Bitcoin in order to grasp it.  It's gaining ground at a steady pace though.

https://docs.google.com/file/d/0BwUFHE6KYsM0ZkxLVmFwbXQ3ck0/edit?usp=sharing  

But anyway, we need to have an environment of respect AND competition.  There is reason to be angry if you throw significant money at something and an alternative idea pops up.  C'est la vie, suck it up, etc.  But let's be fair, Color Coins was a great effort and deserves respect for it's contribution to the space.

בהצלחה

next time do the conference around a big bowl of Hummus.  

great to see a Bitcoin Think Tank in Israel.  This kind of discussion is comparable to what I've seen in NYC, which as usual is impressive for such a small country under so much international pressure.

I've done a lot of work with alt-currency people in Europe and a great deal of them get their views of International Banking straight from the Adolf Guidebook.

It's possible to do this with the core technology Im working on, Confidence Chains.

the advantage is there is no Proof Of Work problems and some kind of distributed authority(depending on how you lay it out) manages the block chain of the tx records you describe.  I dont really have time to work on this directly, but there are possibilities out there.

Even of more concern is that IBM has been circling around these areas recently.

IBM has access to enormous computing power.  While they may not aggressively attack Bitcoin per se, they certainly could start brokering privileged positions in the network.  Computing power on that level is very much in the reach of IBM, and they are perhaps the biggest player in high technology for Financial applications.

just passing this along, someone sent me this today.  Paper is published on Arxiv.

http://www.newswise.com/articles/bitcoin-open-to-takeover-researchers-discover-with-new-algorithm

I tend to think that people would develop better personal security systems if there was a need for them.  You could rig up some kind of system using very cheap commodity hardware, smart cards, etc. to make a crypto-bank account possible on a PC with open source software and less possibility of misplacing your credentials.  I just dont think there is much of a need at this point, Bitcoin is only used for a few classes of transactions.  At one point they tried to work SmartCard readers into Mozilla.

here's a USB Smart Card Reader for $15.99  http://www.staples.com/office/supplies/StaplesProductDisplay?storeId=10001&catalogIdentifier=2&partNumber=IM1RH9702&langid=-1&cid=PS:GooglePLAs:IM1RH9702&srccode=cii_17588969&cpncode=33-197953902-2

I show how it can be done with Confidence Chains : https://bitcointalk.org/index.php?topic=324106.0

You can get FDIC insurance by simply opening a real bank account and then basing the asset on the deposits in that bank account.  Thus you have a crypto-security that is FDIC insured(more or less).

Given what's been happening in the banking world I think the stronghold of FDIC might even come under question at some point in the future.

People can design any kind of investment device they want with the Bond Auction system, you can loan money out to your friends and your interest comes from their successes.  To build more stability create a fund and a pool of loans.  Sounds more like something Bitcoin people could appreciate.  Remember when you open a savings account with Wells Fargo, your money is going to all the people who are consistently reviled on this list.

not sure if the OP patent covers Bitcoin, but it is relevant that IBM has been nosing around this space lately.  They are some of the worst patent trolls in the field and they have billions invested in selling financial technologies to Wall St. etc.  Remember what happened when they bought Red Hat?

http://www-935.ibm.com/industries/financialmarkets/
http://techrights.org/2013/09/20/ibm-pr/

IBM's hardware sales have not been going well lately: http://gigaom.com/2013/10/17/for-ibm-hardware-news-is-bad-news/

doesnt matter if it's doubled up.  You don't even need to crack it[1], you just need to find a way to bias the probability of finding a solution to a block.  Once you've done that, than you have a monopoly on mining not to mention other disruptive things(look at the thread link I just posted).

perhaps there are even spooks on this forum participating anonymously and attempting to influence the discussions.

[1] meaning reverse the hash

A good example of additional function would be a LOAN system.

Simply Issue a Bond(either Zero Coupon or Fixed Rate depending on the desired payment framework of the loan), whose total total debt obligation is X.  Then sell the Bond for X-I.  I is then the Interest, and X-I is the Principal of the loan.

Note also that you now have the notion of credit worthiness.  A loan is valued by it's risk, or the perceived ability for the debtor to pay back the loan.  Thus there are also all sorts of possibilities to design credit rating systems based on practically anything.  Running credit operations is profitable if done right.  You could even securitize these loans and build a basis for something like a mutual fund.  ie. The Bitcoin Development Mutual Fund.

The last section of the paper alludes to really a whole new vista for personal finance.  Currently loans are highly regulated(in the US and Europe).  For instance Prosper.com was torpedoed by the authorities.  You have to wonder: why?  America was built on alternative finance.  http://en.wikipedia.org/wiki/Early_American_currency , but with this tool you could for instance issue mortgages on the system, and you can own a piece of your neighbors mortgage, even use it as a kind of tender(as explained in the paper) for local commerce.

Backdoors to hashing algos have emerged before.  Some even suggest that these backdoors are intentionally worked into our crypto standards.  If you have any knowledge of the way this field operates politically and legally you would know that this is entirely possible.

it's even been discussed on this forum before: https://bitcointalk.org/index.php?topic=291217.0

given the Snowden revelations you can't exactly say my suggestion is 'totally out of left field'.

thanks!  If you have any questions please post them here, I'll be glad to answer them.

The system is very flexible and I don't go into great detail as to all the different ways the system can be used.  It's important to realize that the bonds look and feel like a Bitcoin, they can be transferred freely, they are valued with exchange rates, etc.  Remittances are transferred directly to the owners address(in this system many different asset types can be associated with a given address).

My hopes are this brings us one step closer to bringing all the functions of finance to the entire public.

There are more papers forthcoming.

very nice work Sergio.

I tend to think youre on with this:


might give you a clue as to who is behind Bitcoin... who has access to this high-grade crypto hardware?  Might shed some light on other mysterious factors as to the origins of Bitcoin.

It also would suggest something profound: that there is a backdoor to SHA256 and whoever has knowledge of this backdoor could bring down Bitcoin or generate coins at a fraction of the processing cost.