We now have coloring schemes which allow very high degrees of divisibility.

For example, you can create 1 billion shares, and make each share divisible into 1 million parts.

Take a closer look: For cognitive, issuer is COGNITIVE <garrett@cogntitivemining.com>

For  FIMB, issuer is CREATE <garrett@cognitivemining.com>

That is, he registered a different account to issue FIMB (actually he registered it for another security, but then re-purposed it for FIMB).

Email is the same, BTCT.co allowed one to use same email for multiple accounts.

It's simply an email address. If I have email address @gmail.com it doesn't mean that I work for gmail.com.


References are not a part of a contract. They are simply links to his other ventures to show that he is credible.


Yes, and that's a normal practice. It's like a CV: you always mention what company you currently working for and what companies you worked for before so that people can assess your credibility.


Well, contract doesn't say that it is associated with Cognitive, and in fact "Organization and Management" section only mentions Garrett.

It is your fault that you misunderstood it. DO NOT invest if something is not 100% clear.

FIMB is not linked to Cognitive.

Garrett wanted to buy more mining equipment for himself, so he borrowed some money.

From that thread:


So, apparently, it was a personal loan: Garrett said that he will pay out of his own pocket.

As we know, his mining endeavor totally failed: Avalon did not ship their chips in time. And thus Garrett, as a person, defaulted.

Cognitive is also in a state of default, but for a different reason: we didn't receive correct dividends for October/November.

People who say that Garrett is trustworthy are either retards, or liars who want to sell COG at a good price.

Most likely Garrett simple has no money now, perhaps he invested everything into mining hardware and now waits until it is delivered, hoping that mining revenues would allow him to start paying.

We'll just call them chromatokens.


Well, I hope so. Centralized exchanges do not need to change much, just issue colored coins for each asset (under the hood) and give people an ability to withdraw to other exchange or other wallet.

This removes the need for passthroughs and provide an easy path of migration in case exchange closes down. Otherwise, people can just keeping using centralized exchanges if that is what they prefer.

About a year ago one person actually proposed abandoning p2ptrade and promoting colored coins as a mean of security transfers among exchanges. But exchanges looked very confident back then, they thought that having ownership records available to issuer is enough of a contingency plan.

Yes, I don't think there is a way to fix them without changing fundamental parts of Mastercoin design, and I haven't heard any plans on fixing those.

I mentioned that Mastercoin's decentralized exchange will be slow few months ago, Mastercoin people said that centralized exchanges will be used for faster trading. So most likely that's the plan.


BitShares do not use Bitcoin blockchain and won't allow one to use Bitcoin for payments natively.

Otherwise, I haven't studied BitShares in detail and cannot comment on them further.

I believe that native Bitcoin payments are important because Bitcoin is the only cryptocurrencty with significant market liquidity and infrastructure. Say, selling $1M worth of Bitcoin will not change Bitcoin price that much, but that's not true for various alt-coins.

BTW analysis above is true for Counterparty, as Counterparty is similar to Mastercoin.

I believe that  we'll have a ChromaWallet version which is "good enough" by the end of January.

Hmm, well, in simple terms, colored coins are transferred together with Bitcoins, thus many properties of Bitcoin are also applicable to colored coins.

For example, Bitcoin escrow and dispute mediation contracts: ( https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_dispute_mediation ) also work for colored coins.

On the other hand, Mastercoin works by embedding messages into the blockchain, semantics of those messages is entirely different from semantics of Bitcoin transactions.

1. Lightweight wallets: to check whether Mastercoin payment is correct, one needs to obtain the whole list of messages, and the only reliable way to do that is to scan the whole blockchain starting from the first exodus transaction. This means that client can't be lightweight. On the other hand, to check whether colored coin payment is correct it is enough to check transaction history from genesis transaction of a color up to a transaction in question, it is anticipated that this history is much smaller than the whole blockchain, and it is possible to obtain it from anybody (e.g. a guy who pays you) as client can verify history independently without scanning the blockchain on his own.

2. Bitcoin network ignores conflicting transactions, and thus merchant can accept small-value transaction without confirmations, knowing that double-spending it is hard. On the other hand, Mastercoin transaction conflicts are not recognized by Bitcoin miners, thus double-spending Mastercoins is pretty much trivial, thus vendors shouldn't ever accept them.

3. Bitcoin contracts which I mentioned above can be used to implement secure instantaneous payments: a third party can guarantee lack of double-spends. Same can be used for colored coins. But since Mastercoin doesn't use Bitcoin scripting, it cannot use this approach.

4. Colored coins trading is done through a separate protocol, p2ptrade. Blockchain is used only to fix trades. Being a separate protocol, it is very flexible. On the other hand, Mastecoin trading is a part of the protocol and it needs to be done through a blockchain, and one needs to wait until offer is confirmed before accepting it, confirmations take time.

5. It is also possible to combine p2ptrade with 3rd-party double spend prevention to achieve instantaneous secure trading. No such thing is possible for Mastercoin, they'd have to use fully centralized services to do this.

6. It is possible to do p2ptrade transactions without publishing them on the blockchain for some time, which means that it is possible to do more transactions than Bitcoin network allows with only very limited trust to trading service, and without paying large fees. Again, no such thing is possible for Mastercoin...

To elaborate on the last point, this requires some kind of centralized trading service which will coordinate trading, but it won't be able to steal anyone's coins.

Well, I'm not a big fan of Mastercoin, you know, they haven't really thought it through:

• lightweight wallets have to trust payment verification done on servers
• trade requires waiting for several confirmations, and this is slow
• fundamentally incompatible with accepting zero confirmation payments
• incompatible with Bitcoin contracts

I really don't know why would one prefer a platform which is slow, has higher fees and is inconvenient. But then again, they have more money to spend on PR, so who knows.

Yes, I think colored coins will be a part of bigger infrastructure. There might be companies which offer verification services and things like that.

Most likely it will be very sloppy at first, but eventually we'll see more and more serious and sophisticated players on this market.

Well, an issuer is supposed to provide a contract which is digitally signed by him. In most countries law recognized digital signatures, they are widely used by banks etc.

So the issuer can write a contract like this: "I owe $100 to person who can produce proof of ownership according to the following protocol: ...".

Essentially, colored coins can be seen as a decentralized database which contains records of ownership of digital tokens, with transfers being authorized using digital signatures and secure decentralized timestamping.

I don't think that it explicitly needs to be approved by the government. For example, let's consider PayPal: they record information about user balances in some kind of a database. Suppose one day PayPal goes under and users will want to claim their funds. It's unlikely that government said that a certain database is approved for storing balances, more like they'll just collect evidence from PayPal and use it to distributed liquidation proceedings.

Same thing about Amazon gift cards: it doesn't matter how Amazon stores information about them, it is important that they constitute Amazon's liabilities.

(Disclaimer: I'm not a lawyer, everything mentioned above are just ideas.)

Ehm. We already missed two weeks (13 Jan an 24 Jan). Which means accumulated BTC is less by 246 BTC, i.e. we only get only 134 BTC.


If this math is right and mining will start in the end of January, we get only 20% of bitcoins back. Which demonstrates that purchase of mining equipment is a hedge rather than investment. (I.e. buying mining devices and not keeping any bitcoins is just dumb.)


Maybe it is better to wait a bit, taking the above into account, and taking into account that multiple companies will be producing 28nm devices in large quantities: that will start a price war.

There is no way to invest into 'colored coins' in general. It is just a concept, not something you can buy.

You can invest into concrete securities, however.

For example, if ActiveMining will issue its shares in form of colored coins, you'll be able to buy those shares via ChromaWallet p2ptrade... But in that case you're investing in ActiveMining shares, if company goes bust their value will be negligible.

Currently there are no real assets issued in form of colored coins, our software is alpha and should be used only on testnet. We plan to release beta software in end of January.

Perhaps, one day you'll be able to invest in colored coin startups...


LOL

BitShares uses both collateral and derivative market incentives to peg value of digital coin to value of a commodity.

(Open Transactions is more-or-less honest cryptocurrency accounting system.)

What happens if value of cryptocurrency held in escrow drops?

Colored coins can be used to track ownership of securities, such as shares, bonds, IOUs and so on.


The guy who issued "gold coins" is supposed to demonstrate a signed contract and evidence that he is trustworthy and owns the asset.

It's up to you to decide if he is trustworthy enough.

In simple terms, colored coins allow you to do same things you could do on centralized Bitcoin 'stock exchanges', like BTCT.co, BitFunder.com, HavelockInvestments etc., but in a decentralized way: you don't have to trust your bitcoins to exchange.

However, trustworthiness of assets (securities) is the same, and I'm sure we'll see a lot of scams and bankruptcies.

As for gold, there were funds traded on BTCT.co, e.g.: https://bitcointalk.org/index.php?topic=133556.0

Some guys actually posted photos of physical gold coins they own.

But I think at some point bigger and more trustworthy companies will get involved.


If somebody tells you that it is possible to create gold-backed coins which require no trust, he is lying.

I know that some projects (not related to colored coins) put cryptocurrency into escrow to "guarantee" value of "gold" coins... I hope I don't need to explain why it won't work so well...

Wow, so they arrive in approximately two weeks? 

it is displayed above every thread in Securities subforum.

LOL. If I wanted to "spread my endless FUD", i would have said things which are several orders of magnitude more harsh than what I wrote above.

I was simply discussing various design decision with this fellow (use of alt-chain vs. use of Bitcoin blockchain) and had to mention some facts...

I simply rephrased what J. R. WIllett said himself: he said that it is very important to keep Mastercoin simple to be able to implement it ASAP, and that rules out use of alt-chain/side-chain. (On the other hand, hashrate is nearly irrelevant here. That was the point of my message.)

As to calling it an "illusion of working cryptocurrency", well, it isn't a secret that Mastercoin wasn't functioning as a cryptocurrency for the first two-three months of its existence: there was a way to send coins, but no way to check that payment was made (aside from manual inspection).