Imagine a Bitcoin fork with the following modification: instead of a single difficulty target, there are two. Let’s call them the major difficulty and the minor difficulty, and let’s posit that the minor difficulty is 60 times easier than the major difficulty.

Miners can hash until they find one of the two targets. If a miner finds a minor difficulty, he broadcasts the block as usual. This is expected to happen approximately every ten seconds. These blocks will be very frothy, because there will likely be more valid blocks broadcast in a cluster of a few seconds. This doesn’t worry us too much (keep reading). Rewards will somehow be proportional to difficulty.

Approximately every ten minutes, a major block is found. Being just like any block, this is the authoritative chain of all the blocks that came before it, including the minor blocks. Since the difficulty is high, this will be the authoritative branch, unless another major block appears at the same time and competes with it. Assuming there's a clear winner, all historical frothiness is resolved, and frothiness begins anew for the next ten minutes.

The advantages of this system are:

* Higher resolution chronology. Bitcoin is a distributed record of chronology, and the original blockchain has a resolution of about 10 minutes. This one will have a resolution of about 10 seconds. This may not be extremely useful for standard transactions, but may be very important for some kinds of transactions, such as betting and stock trading.

* Minor blocks make 0/confirmation type double spending more difficult. Actual 0/confirmation attacks remain the same, but a vendor need only wait ten seconds for a minor block. Gaming the minor blocks would effectively require a 51% attack.

Disadvantages:

* The behavior of the system isn’t well understood. There will likely be many branches of minor blocks between the major blocks, which leads to wasted computing power and confusion. Minor blocks are not very authoritative until they’ve been buried under a major block.

My main motivation for this is as part of an alternate chain distributed betting system, but I haven’t seen it brought up before, and I realize there are probably some good reasons this can’t work. I’m looking forward to comments!

Oh, the main reason I moved to Manchester is because I thought it would be the best place to have a brick and mortar store, because of the relatively large population, central location in NH, and proximity to Boston.

Awesome, we need more bitcoiners! PM me if you need any more info about FSP, if you want to join Facebook pages or forums, etc. NH was a pretty good choice because of the location, low taxes and lower bureaucracy than most places, but the Libertarian population was probably the biggest factor.


error, are you referring to the Bitcoin Meetup or the FSP?

FSP was a big part of why I moved.

Yeah, I agree. I'm working on it, but there are a lot of other meetups going on, so it's a challenge. We are seeing new people each week though.

Nope, not yet. We need more people to up the pressure!

The next New Hampshire Bitcoin Meetup is on Sunday, August 5, at 6:30pm at the Strange Brew Tavern in Manchester, NH. We do this every week, and we usually get about ten people. For those of you with Facebook:

https://www.facebook.com/events/208856109243508/

Massachusetts Bitcoiners are welcome, as well as anybody else in the area. Plenty of free parking. Feel free to PM me.

Is that the same as this?


https://bitcointalk.org/index.php?topic=5194.msg147032#msg147032

nLockTime should handle this: https://en.bitcoin.it/wiki/Contracts

Although Bitcoin isn't mentioned by name but only linked to, it really looks like the Greeks are looking for alternative money and Bitcoin could be a great fit.

The link to Bitcoin is in the following paragraph:


http://www.radicalsocialentreps.org/2012/07/open-source-currencies-on-the-rise-in-greece/

+1

+1

Thanks for the great post! It's really cool to see computer science theory applied to social questions, such as what would happen on a ripple network if somebody far removed screwed up. Trust systems are a huge factor in bringing about a more p2p economy, and ripple is one really interesting way to do supply it.

Well, the collateral doesn't have to be dead weight, you could get pretty creative with it. For instance, if both parties to the trade agreed to invest it, say in a 5% bond, they could both sign-off on that. Or they could put it on another bet they agree on. I imagine things will work differently than they do today, if the whole system is based on low trust and no legal mechanisms, but it might be workable on a grand scale.

You bring up an interesting point. Betting on gold is not the same as having gold. In the case of gold, that might not be such a big deal, unless you're worried that the prediction market might fail and gold would remain. But if you're betting on oil, you might actually need the physical properties of the oil. That's why I brought up i2i markets. Maybe instead of buying oil from a huge company, you could buy it from a neighbor in small quantities, based on the prediction market price. Or maybe you could buy an ounce of gold from a neighbor, or someone across the country who mails it to you, all based on the prediction market price.

There wouldn't be any counter-party risk in the prediction market I described, because both sides would be putting up collateral in bitcoins as part of the market.

Yep, adding Bank of America might help a lot of people.

I just found this piece I wrote over a year ago but never posted, and I figured it was worth posting now, since it's just as relevant.

The Bitcoin Economy

Bitcoin is the opening shot in a new jurisdiction. The Bitcoin Economy is thriving in a jurisdiction outside that of any government. The jurisdiction of the Bitcoin Economy is ruled by math and not by violent force. The rules are set by competing software projects, and evolve based on what works. Bitcoin says “thou shalt not double spend.” And what happens if you double spend? Nothing. You can’t. The rules are akin to the rules of physics, not the rule of kings.

Today, the Bitcoin jurisdiction is a small island. There are few inhabitants, and we must leave the jurisdiction frequently and submit to governmental jurisdiction. As more of the economy is subsumed into the Bitcoin jurisdiction, it becomes a more powerful force, and government becomes weaker. For the Bitcoin project to succeed, we must find ways to move economies into this jurisdiction. We must also explore strategies to make the interface between the two jurisdictions safe and porous.

Prediction markets can furnish the Bitcoin Economy with many of the functions of finance, without requiring an interface to the government jurisdiction. This greatly expands the scope of the Bitcoin Economy, and provides an essential infrastructure for the rest of the economy.

The beauty of the prediction market, is that it confers almost all of the functions of finance to the Bitcoin economy, without requiring a departure from the Bitcoin jurisdiction.

Gold prices can be tracked on a prediction market. This means that one can essentially trade gold without having to purchase gold. Gold is a physical substance that must be under government jurisdiction, and so purchasing gold would require crossing over to that jurisdiction. Betting on gold lets one stay safely within the Bitcoin jurisdiction, while accomplishing the same goal. This discovery of the market exchange rate is the hard part; the ownership transfer of BTC for gold is an easy problem and involves only two casual individuals in many cases.

i2i (individual-to-individual, as opposed to business-to-business or business-to-consumer) describes the situation wherein large swaths of the economy are carried out by individuals trading with other individuals, rather than via large companies, corporations, and governments. The low transaction costs of the unregulated Bitcoin Economy make this more attainable, and it's an ideal interface between the Bitcoin jurisdiction and government jurisdictions.

Individuals carrying out small, ad hoc trades make onerous targets for government crackdown. They are hard to find in time and space, are low profile even if caught, and each crackdown has almost zero effect on the system as a whole. Even making an example of such a transaction with disproportional punishment would carry large public relations risks, since the crime would be a non-violent, low value, and fairly obscure transgression. The defendant would also likely be sympathetic, with no criminal record, and with a large, upstanding support network to defend him and raise awareness.

As large chunks of the economy migrate to i2i, governments lose control over those chunks, and it becomes difficult for them to enforce regulations and taxes on those chunks. This weakens governments further, making it increasingly difficult to maintain control while more and more of the economy migrates out of their jurisdictions. This is perhaps the greatest threat to authoritarian government that has ever materialized, and that's a pretty exciting thing to be a part of.

Awesome! This is a huge step forward for Bitcoin security, and I really think it will open the door for the safe storage of millions and billions of dollars of Bitcoin value, as well as the use of Bitcoin for partnerships and companies. And those are just the obvious applications.

No, I believe it's still in early planning stages.

I think this is unavoidable. Unless you know you'll be relaying a lot of packets through a specific node (in which case you could just pre-pay that node), there will have to be trust between nodes.  Doing an online transaction for relaying a single packet, which in itself would require an online transaction, doesn't make sense.

Naturally having a distributed trust and reputation system would be very helpful here.