I think this is awesome and applaud the effort. I am very excited at the prospect of satoshi's colored to denote USD-denominated debt in particular.


Do you trust GLBSE? I heard the SEC is investigating. Do you trust MPOE? I heard the operator is a pedophile/pornographer. Do you trust Mt. Gox not to keep accurate records of account balances and not freeze your funds? Wouldn't it be better if you could trade your MtGox USD in the blockchain?

Doing away with one level of trust is a major contribution.

Right, funding development is one of the aims. However, Devcoin is inflexible and not accountable to users. Who is designated as the head developer? Is there even a head? How is the head selected? If the head sucks, can the users replace him or reduce his salary? What is the head's incentive to make efforts/decisions that benefit users.

At least something like the bitcoin foundation is accountable to someone. The problem is that the foundation is accountable to BitInstant and MtGox and their interests do not fully coincide with those of the user base. Ideally we want an organization that is accountable to everyone who has an ownership stake. That is what shareholder voting aims to achieve.

Thought that the Bitcoin Foundation might generate new interest in this topic. It is an alternative way of funding something like a foundation without the corporate legal apparatus, corporate sponsorship, etc.

I think a bitcoin foundation is great. However, I'm concerned that, due to its likely funding sources, it will not be a democratic organization.

Consider these options.

1) (I prefer) Compulsory taxation (e.g. txn fee levy) funds organization. Users elect foundation members (one coin = one vote). This is similar to a representative democracy (though wealth is the basis of voting power). The foundation will represent the interests of the median wealth holder. I think the median wealth holder would be an upper middle class consumer or small business owner.

2) (current system; I think it is better than nothing) Voluntary donation. Only special interests find it worthwhile to volunteer donations. Foundation members elect themselves, though presumably donating businesses have the ultimate say. This is similar to an industry lobbying group. The foundation represents special interests of large-scale, bitcoin businesses and is accountable to big business.

I believe that having a foundation is much better than not having one at all. However, I think system (1) is much better than system (2). I proposed an alt-chain based on this before. However, the vast majority here seems to think that compulsory taxation is evil, so we will have only system (2).

Not trying to knock on the foundation (it is a step forward), but I wanted to put this out there.

I'm not going to argue about the costs/profitability of acquiring 51% hashing power. Been there done that. We'll have to wait for an empirical test to resolve the argument.

My takeaway message is that DoS'ing the network strictly dominates manipulating price as an attack approach. As Joel notes, manipulating price would likely be counterproductive for the attacker.

Agree with JoelKatz here.

However, they could invest money in ASICs and shutdown the network. The attack would largely pay for itself. If someone wealthy wants to shutdown bitcoin right now or in the future, they could do it easily.

Nice site. I'd suggest you compete more aggressively on payout %.
If you are not able to eventually grab half of the satoshi's dice market share, then you are doing it wrong (i.e. not pricing aggressively enough).




 

Thanks for doing all the hard work to create this great project.

However, for the record:

1) Proof-of-stake is brought up by Quantum Mechanic in mid-July. Meni, myself, and others, discus implementations shortly afterwards.
https://bitcointalk.org/index.php?topic=27787.msg349645#msg349645

2) Pure proof-of-stake implementations based on coin-age are brought up in mid-August 2011.
https://bitcointalk.org/index.php?topic=37194.msg462913#msg462913

The best way around the scamming issue is the emergence of long-term players that earn a significant and publically verifiable income stream via bitcoin business activity and thus have something too lose from destroying their reputation in the bitcoin world.

Mt. Gox, Silk Road, and Satoshi's Dice, I think, are the only examples of such players in the bitcoin economy currently.

This seems to be a clone of Satoshi's dice with user defined odds as the point of differentiation.

1) Could you make one consistent address to send wagers to. (like Satoshi's Dice)
2) Could you allow the user to specify the odds of winning using the insignifcant digits of the amount bet (e.g.) say I'm wagering 1 BTC and I want to earn 64.0 BTC if I win. I could send 1.00000640 bitcoins to your single address.
3) You could specify a maximum possible winning payout to avoid jackpot's that break the bank. It would be quite transparent (e.g. no payouts greater than 100.0 BTC).
If I send you, 1.00010000 bitcoins, then you return the 1 bitcoin because the bet payout is too big for you to cover.

I think that would be a more user-friendly design (no need to access the webpage at all, except to nervously check bet results).

It would also be quite easy to verify your payment track record in the blockchain.

Not sure if serious. The company could very easily and happily release more satoshis if its debt appreciated.  Keeping the window open to redeem debt at face value would prevent any depreciation, except in the event of bankruptcy (closing the window). Again, not sure if serious. Yes, you need to trust the company.

There are several possible answers:

1) Anti counterfeiting is expensive. Colored Bitcoins can be a very cheap and reliable solution. Consider liberty reserve. Presumably they have overhead expenditures.
Turn liberty reserve dollars to colored bitcoin and you would greatly reduce overhead. Only redemptions with the company directly have to be handled by the company. The company would not even have to agree to process redemptions below a certain minimum value. There is very little that the company would actually have to do on a day to day basis. Transfers between users would have very small txn fees, i.e. whatever you need to pay to transfer some satoshi.

2) Colored bitcoins would be like bearer bonds, except that they can be exchanged digitially. Nothing like this really exists right now. Bearer bonds aren't even really legal anymore. The company could access demand for its notes by tapping this niche market.

3) A colored satoshi could be more easily traded than something on GBLSE. With GBLSE there are two counterparties. With colored bitcoins and P2P exchanges, you have the same functionality as GBLSE, but only one counterparty. No need to worry about attacks (hackers, gov't, etc.) on GBLSE anymore.

You also mention that more privacy would be good. That's true. Making bitcoin anonymous would help here. However, I doubt we could get to a state where a public investment in something like Silk Road would be a safe endeavor.

You could have a p2p USD or EUR derivatives. Suppose someone colors a satoshi and assigns a one dollar face value to it, promising to exchange this Satoshi for one USD of bitcoins in the future at the current bitcoin/USD market price. Suppose colored bitcoins and regular bitcoins can be traded via a p2p exchange.

Why would a company do this? Well, they can invest a percentage of the bitcoin they borrow by coloring satoshis (fractional reserve).

Why would anyone buy the colored Satoshi (i.e. lend to the company)? Well it might be convenient to acquire USD units of value. In addition to this, the company might pay some interest on these colored satoshis in exchange for the ability to raise debt.

If you have multiple companies doing this, then they could discount each others' colored satoshis which would increase liquidity. It would be like free banking and thus unstable. It would be nice to have a more stable solution as well (for example an overfunded reserve with company profit coming from txn fees rather than interest), but this seems more complicated to implement at this point.

I think of these as possible long-term goals for this project. A BTC/LTC exchange would be a good starting point.

Bitcoin could shift to proof-of-stake if this occurs.

The "reverting address" issue mentioned by Meni has been brought up a number of times. I think these types of addresses would be a terrific improvement.

As long as ex-post reversibilty is an optional user-defined feature, reversible and nonreversible payments would co-exist in the bitcoin ecosystem.
Decisions regarding where to use reversible and irreversible payments would be determined by the market. This is greatly preferable to enforcing irreversible payments in the protocol.

Okay, I'll leave your thread alone.

Oh really?



FTFY

Provisions allowing for probationary periods, vesting periods, unequal voting power, unequal returns relative to share ownership, etc. are generally believed to weaken corporate governance (i.e. encourage mismanagement).

However, you feel like these provisions are a good idea. Probably because you believe incumbents are more trustworthy and that the evil entities are new guys.

I think you are wrong about this and instead that incumbents and entrants are equally prone to dishonesty. If so, then your complex provisions will facilitate dishonest behavior.

This seems exceptionally complex to me and the benefits are unclear. Not good keep it simple.
It also incorporates some strange ideas (e.g. Incumbents are inherently more trustworthy than new entrants) Really? In most discussions of governance, provisions protecting incumbents are viewed as weaking governance. Doesn't stop megalomaniac founders from adding them though. If you are right, guess we should tell the founding fathers and get that term limit / regular elction crap ripped up so we can get more trustworthy, permanent  leaders.

Anyone have thoughts on the following mixed proof-of-work proof-of-stake system that incorporates a variant of Colbee's idea for a lottery. I personally prefer that
all blocks follow a symmetric system because it avoids unnecessary communication of blocks that don't provide useful security.

1) Lucky number

There is a lucky number each round. Lucky number should be a public random number that cannot be controlled without vast resources. Say it is a hash of the proof-of-work submitted in the last 100 blocks.

2) One lottery draw per coin confirmation

Each public address containing one or more coin confirmations provides lottery draw(s) which can be compared against the lucky number. Say an address k has c coin confirmations. This address k can then be used for c different lottery draws.

e.g. {lottery draw} = {hash (public key of address k,j)} where j = 1,2, ... ,  c if c>=1 and null set otherwise

Thus you get one lottery draw per coin confirmation. You only care about the best one in each round. Note that these draws are invariant over time. A set of possible draws can be computed once and for all time when the address is generated. They are public info, but only the address owner needs to care about them.

3) Each miner has a unique best lottery draw in the current round

In each round, a good lottery draw is close to the lucky number. Say we measure closeness as simple distance.

V(lottery draw, lucky number)= |(lucky number - lottery draw)|

A miner searches over his set of lottery draws and finds the one closest to the lucky lottery number. This determines his stake value, V', in the current round.

V*(lucky number) = min [V(lottery draw, lucky number)] in the set {lottery draw}

He only cares about the best possible lottery draw he has out of all of his addresses. Given that the draws are all pre-generated, finding his best draw should not be time-consuming.

4)  The miner faces a proof-of-work target. Most likely he can just connect to a pool and pay for access to their hashes.

target =  difficulty*V'^(p) where p >= 0

If p=0, then it is just like bitcoin. As p increases getting a good draw decreases the target more and more and proof-of-work becomes less and less important.

5) Block submission.

Miner submits proof-of-work that meets target and signs the block using the private key to his winning address. Anyone can verify that his proof-of-work, public key combination meets the target. As usual, difficulty is revised periodically to keep the block spacing to an average of 10 minutes.

I think the point of work here is to
a) manage the timing of block generation
b) ensure that the system cannot stop permanently because of an "unlucky" lucky number
c) generate lucky numbers


[edit: in the above, you could also replace one draw per coin-confirmations with one draw per coin and it wouldn't change much. One draw per coin-confirmation makes it easier for people with small balances to participate.]

I'm answering here because I don't want to clutter's Sunny's thread with irrelevant material. It encourages him to ignore our criticisms.

I don't understand what you are saying here. The amount of hashing you spend on hashing to maximize profits is subtle in my system. If you have an explicit formula, it could be really useful.

I only have results based on simulation. see https://bitcointalk.org/index.php?topic=68213.msg801253#msg801253 The simulation suggests that output per unit time is constant-returns-to-scale Cobb-Douglas. This implies that you optimally spend a fraction p of your mining investment on stake (where p is the proof-of-stake weighting) and 1-p on hashing power. Provided that perfect competition holds, this division is invariant to the scale of investment. I'm ignoring electricity use here and thinking about mining as powered by electricity efficient but capital-intensive ASICs.

I don't think scale matters at all unless someone is big enough to affect the aggregate hash rate. As in bitcon, domination big players affecting the aggregate hash rate decreases aggregate investment. You seem to be suggesting the opposite.