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Author Topic: **MANDATORY UPGRADE REQUIRED** [ANN] B&C Exchange - All users must upgrade  (Read 168911 times)
BCExchange
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April 28, 2015, 08:23:07 PM
 #81

any estimation on the snapshot date?

No, we are unable to guarantee a date that the BlockShares production blockchain will launch. Jordan Lee addressed it earlier:

Quote from: Jordan Lee
This is an important question, and one I would like to know the answer to as well. Development of an unprecedented software solution such as B&C Exchange is characterized by the unfolding of unexpected issues which must be solved.

I have delivered an unprecedented blockchain solution in the past in the form of the Nu network, which pioneered stable cryptocurrency and the ability of shareholders to constantly adjust the protocol by voting. The network worked just as promised and was delivered in 8 months at a cost of around 250,000 USD. While I made no promises about the time it would take to deliver Nu, I will report that I privately thought it would take 6 months and 500,000 USD. So, I was 50% under budget and 33% over my private time estimate.

I can say that I believe B&C Exchange is modestly or slightly simpler than creating the Peershare template and Nu. I am absolutely committed to doing everything in my power to delivering it as quickly as possible. However, investors should be aware that I am unable to absolutely guarantee its delivery at all, and I can't guarantee it will be delivered in a certain time frame or for a certain cost.
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April 28, 2015, 08:26:31 PM
 #82

After various number of hacks a decentralized exchange like that is a must! I hope it gets done quickly because I don't trust centralized exchanges.

We agree. Thank you for your support!
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April 28, 2015, 09:16:20 PM
 #83

Are we going to repeat the system where Blockcredits custodians will try to elevate grants to start operating in  small and untrustworthy exchanges and the Shareholders will cover the losses after the unavoidables hacks/adminrunnings?

BlockShares holders will have full control over which exchanges its custodians sell on since there is no centralized control by its developers. This means that shareholders could conceivably only elect BKC custodians that operate directly on B&C Exchange's safe platform.

Ok, that's a good point I didn't think about and a serious difference with the Nubits/Nushares system.

It is also worth pointing out that "mutualizing all the losses that custodians are going to suffer" is outside the scope of B&C Exchange operations because BlockCredits will not be supported at any specific price level. They will simply be sold for 1.00 USD. In the event that BKC are stolen from a custodian operating on a centralized exchange, they would likely be dumped on other exchanges for fractions of a dollar. Shareholders would only suffer lost revenue from the lack of new BKC being sold during the time the stolen BKC were dumped. For this reason, it is also likely that shareholders will prefer granting small batches of BKC to a custodian that will last for a week or two, rather than providing a year-long supply of BKC up front. Continuous replenishment of BKC to custodians is very easy in our design.

Aren't custodians risking bitcoins too in the pair BKC/BTC offered in the exchange? If so, custodians could lose both and, as hackings/adminrunnings occur, less and less custodians will be willing to request a grant. Something similar happened in nubits/nushares and, the only way to provide confidence, was to compensate custodians diluting Nushare holders. Why can't this happen here?

The design of B&C Exchange will protect networks like NuBits from the unpredictable and devastating failings of centralized exchanges. You are right that NuShareholders have not recently voted to give themselves a dividend as they work to recover from the exchange hackings of February. The dividend mechanism has been used in the past however and is fully functional.

It's curious. I'm, at the same time, Nushareholder and criticizing all these subjects but, in my opinion, transparency in this development must be fundamental. I hope you understand me.

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April 28, 2015, 09:40:02 PM
 #84

It's curious. I'm, at the same time, Nushareholder and criticizing all these subjects but, in my opinion, transparency in this development must be fundamental. I hope you understand me.

We appreciate the questions! We feel it is important that we are able to articulate and defend the design decisions we've chosen. If we couldn't, prospective bidders would not place much credibility in our efforts.

Aren't custodians risking bitcoins too in the pair BKC/BTC offered in the exchange? If so, custodians could lose both and, as hackings/adminrunnings occur, less and less custodians will be willing to request a grant. Something similar happened in nubits/nushares and, the only way to provide confidence, was to compensate custodians diluting Nushare holders. Why can't this happen here?

Custodians will not risk any of their own BTC in this design. In contrast to NuBits, where liquidity-provider custodians must place buy and sell walls, BlockCredit custodians will only place sell-side walls. A custodian has no obligation to purchase back BlockCredits they have sold.

A relevant section from the design document:

Quote
While BlockCredits are the same as NuBits to the code base, they have a completely different purpose. They are solely for use as transaction fees and are not intended for general trade as NuBits are. Accordingly, a peg for BlockCredits will not be maintained. They are comparable to postage stamps in many ways. They are sold with the promise you will receive one US dollar worth of transactions on the B&C Exchange. Just as you wouldn't expect to be able to sell postage stamps to a third party at face value, there shouldn't be an expectation that BlockCredits can be sold for one US dollar, although a resale market may appear. BlockCredits should only be purchased with the intent of consuming them to pay transaction fees on the B&C Exchange.

Let's pretend you have been elected as a BlockCredit custodian by shareholders after you have solicited their votes. Here would be a sample timeline of events from the perspective of shareholders:

Day 1: Polvos is elected BlockCredit custodian. Shareholders vote to provide him with 5000 BKC.
Day 2-7: Polvos sells his 5000 BKC in small increments for BTC. At the end of the 7th day he has 20.000 BTC. He announces that he will send a dividend to anyone who was holding BlockShares at the end of Day 7.
Day 8: Polvos logs into his BlockShares client. He selects the "Distribute Dividends" button, inputs "23:59 UTC Day 7" for a snapshot date, and enters in 20.000 BTC. He clicks "send". All shareholders who are eligible to receive Bitcoin dividends will then receive them, provided they are eligible for a dividend that is greater than the transaction fee required to send it.

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April 28, 2015, 09:51:43 PM
 #85

Ok, you say "This mechanism is currently being used with great success in the NuBits and NuShares network." Well, I'm a three months Nushare holder in your six months old Nubits/Nushares system and didn't see in all this time a single dime in dividends. All I have seen is nubits custodians losing funds in hacked/adminrunnered exchanges and Nushares holders being diluted trying to compensate the custodians lost.

I just wanted to say something about this real quick. While all Nu shareholders are entitled to receive a percentage of the dividends based on how large their equity stake is in the network, it is however not guaranteed that dividends will be given at all. In order for there to be dividends, there needs to be profit for the network. Just think of Nu as a decentralized business in this case. No one in the business should receive dividends if there is no profit.

Unfortunately as you mentioned, shareholders were the victims of 4 centralized exchange failures in which a lot of shareholder funds were lost. If shareholders want to receive dividends, then they need to work hard to figure out how to prevent things like this from happening and to figure out new ways of making profit. If the employees of a business don't put in the hard work and effort, then they won't receive the reward.

Since the February hackings, shareholders have been working hard on these issues. One of the main reasons so much money was lost was because we still had a centralized liquidity operation, with only several liquidity providers managing all the money on these exchanges. To help prevent shareholder funds from being lost again, we've been working on decentralizing our liquidity operations through the development of liquidity pools, in which anyone can join in with their own funds and provide liquidity for the Nu network, also getting paid for it. People don't even need to be elected as LPCs anymore in order to provide liquidity. They simply need to join the pool with their own funds and collect interest.

Another way to prevent this from happening again is Jordan's work on this decentralized exchange, in which our liquidity operations will be protected from hackings and theft. Nu shareholders are still very much in the process of perfecting their product. It's still going to take a long time and a lot of hard work. In my opinion, this is a project that will most likely take years before we see large and consistent profits. I believe we'll get there eventually though, as long as shareholders continue to solve problems and we continue to expand into new areas and figure out new ways of making profit.
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April 28, 2015, 10:05:08 PM
 #86

Ok, you say "This mechanism is currently being used with great success in the NuBits and NuShares network." Well, I'm a three months Nushare holder in your six months old Nubits/Nushares system and didn't see in all this time a single dime in dividends. All I have seen is nubits custodians losing funds in hacked/adminrunnered exchanges and Nushares holders being diluted trying to compensate the custodians lost.

I just wanted to say something about this real quick. While all Nu shareholders are entitled to receive a percentage of the dividends based on how large their equity stake is in the network, it is however not guaranteed that dividends will be given at all. In order for there to be dividends, there needs to be profit for the network. Just think of Nu as a decentralized business in this case. No one in the business should receive dividends if there is no profit.

....

Excellent explanation. There's still a lot of work to do but we're pretty much first to enter the competition and these ideas are solid gold. Also, I would rather see the price of NuShares soar than receive dividends. Dividends might sound attractive but in our current state of development they would slow us down too much.

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April 28, 2015, 10:48:53 PM
 #87

Thank you all for your answers. I think I get it now.

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April 28, 2015, 11:27:00 PM
 #88

Jordan, here is a question from r/cryptocurrency...

Quote
Who have they hired to audit their security? Because if they don't pay proper experts to do so (this costs more than $50k to get right), it will be hackers doing the auditing... from the inside.

Edit: At first I thought he meant auditing the code to make sure it's secure, but now I'm not sure.

Edit 2: He expanded on his comments here...

Quote
Their software and servers must be audited for security vulnerabilities by a reputable third party if they want anyone to trust their software with real BTC.
 
There are thousands of ways to attack something like this. Random examples: is their source code repository secure, or can I insert a backdoor by guessing a simple password? Is their web UI vulnerable to XSS attacks? Can someone spend a little to build a "reputation" and leverage that to steal a lot?
 
Actual banks spend tens of millions of dollars per year on securing their transaction systems. They wouldn't spend that money if it were optional - it is absolutely mandatory to invest heavily in securing financial systems.

Edit 3: Here is the Reddit thread with his comments...

http://www.reddit.com/r/CryptoCurrency/comments/345zng/bc_exchange_is_an_upcoming_decentralized_bitcoin/cqs04nh
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April 29, 2015, 01:15:09 AM
 #89


Day 2-7: Polvos sells his 5000 BKC in small increments for BTC. At the end of the 7th day he has 20.000 BTC. He announces that he will send a dividend to anyone who was holding BlockShares at the end of Day 7.


Here, I suppose Polvos can sell the BKC in any exchange that accepts BKC.
After selling, he or she would have to transfer the BTC proceeds to his or her wallet (B&C client) and then distribute the dividends.
So the only ways to lose the BTCs are the followings:
- the exchange is hacked (in case the exchange is B&C, the likelihood of being stolen is very low since that would imply collusion between several trusted signers)
- his or her client is hacked.

I am correct?
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April 29, 2015, 04:24:43 AM
 #90


Day 2-7: Polvos sells his 5000 BKC in small increments for BTC. At the end of the 7th day he has 20.000 BTC. He announces that he will send a dividend to anyone who was holding BlockShares at the end of Day 7.


Here, I suppose Polvos can sell the BKC in any exchange that accepts BKC.
After selling, he or she would have to transfer the BTC proceeds to his or her wallet (B&C client) and then distribute the dividends.
So the only ways to lose the BTCs are the followings:
- the exchange is hacked (in case the exchange is B&C, the likelihood of being stolen is very low since that would imply collusion between several trusted signers)
- his or her client is hacked.

I am correct?

Your assessment is correct, yes. We would also add that Polvos would only sell his BKC on an approved exchange(s) as outlined in the terms of his custodial agreement with shareholders, and so not necessarily just any exchange that supports BKC.
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April 29, 2015, 04:35:07 AM
 #91

Thank you to everyone who has submitted a bid so far!

If you are planning on eventually bidding please remember to submit it as early as possible to ensure you have priority in the event of a tie.
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April 29, 2015, 10:31:50 AM
 #92

I feel like B&CEx is a business easier to understand than Nu and better defined -
As a custodian that got elected by shareholders, they sell credits, and distribute the proceeding to shareholders - credits are then used to be pay tx fees

On Nu, custodians receive Nubits that they sell/buy on Markets (that get hacked) and are at the mercy of Bitcoin whose volatility traders hedge against Nubit free stability.
The 1st playing field of Nubits should have been payment processors, exchanges, and gateways (PEGs)
See: https://discuss.nubits.com/t/draft-promoting-nubits-to-internet-payment-processors-exchanges-and-gateways/2037

I am struggling to see how B&CEx is going to bring business to Nu, i.e. convert and transform Nu into a profitable business.

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April 29, 2015, 12:50:50 PM
 #93

I think its a shame you have such a high minimum - I would have like to put in my little half a bitcoin or something but there is no way I can afford $1000+. Can't say I'm very keen on the blind auction method either. But I wish you the best of luck and hope to one day be a customer even if I can't be a backer. In the meantime I've just published an article about this on my news blog:

http://cryptonewsday.com/nushares-votes-for-auction-to-fund-decentralized-cryptocurrency-exchange/

Suggestions or corrections (or likes and shares Wink) welcomed!

I totally share your view that the auction method keeps small investors a little bit out of the game. At the same time we have to have in mind that point of view of the developers and why they have chosen those thresholds.

I would therefore be willing to support you and help you place your bid as I will take part in the auction. Thank you very much for that article.

For all those skeptical about the trustworthiness of Jordan Lee and the team: I am also very skeptical when it comes to crypto and fundraising and all these things. Nevertheless, one has to admit that Jordan Lee has a clean slate with regard to his achievements in cryptocurrency. Taking into account that he pulled off huge projects where he could have scammed people for quite some money, I am feeling comfortable right now with supporting the development of that exchange.

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April 29, 2015, 12:53:56 PM
 #94

Is it generally possible to correct a bid after it has been submitted?

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April 29, 2015, 01:23:11 PM
 #95

What happens if one of the signer's server explodes and all their keys are lost?
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April 29, 2015, 03:32:48 PM
 #96

What happens if one of the signer's server explodes and all their keys are lost?

It's likely that shareholders will not vote for signers who have not taken the necessary precautions to run an effective, safe signing operation. This includes preparing for the possibility of hardware failure.

An earlier quote is relevant:

Quote from: Jordan Lee

Adam takes the following steps to prepare for the responsibility:

    He pays for a VPS subscription.
    He installs the Bitcoin client, the Nu client, the B&C Exchange client and the Tor browser bundle on the VPS.
    Each of the three clients is configured to use Tor by configuring the proxy settings in each client's Options dialog.
    He opens the bcexchange.conf file to configure access to the Nu and Bitcoin clients. The IP address (127.0.0.1), port number, blockchain ID, rpcuser and rpcpassword are entered for both clients.
    Using the getnewaddress RPC command in the B&C client (which has optional parameters for specifying how many new addresses to create and a blockchain ID), Adam creates 1000 new Bitcoin addresses, 1000 new NuBit addresses and 1000 new NuShare addresses.
    He creates a BlockShare and a BlockCredit address he will use as his reputed signer identity.
    He creates multiple backups of all five wallets, using encrypted volumes.
    Using the pairaddresses RPC of the B&C client, a blockchain record pairing Adam's reputed BlockCredit and reputed BlockShare address is created.
    Using the depositaddresslist RPC of the B&C client, Adam publishes his public Bitcoin, NuBit and NuShare addresses on the B&C blockchain.
    Adam's technical preparations are complete, so he makes a forum post detailing his preparations, promises to be a signer for at least a year, promises to hand over keys to a top reputed signer in the event he eventually chooses stop being a signer, posts a security deposit in BlockShares worth $20,000 and asks BlockShare holders to upvote his reputed signing address.

It is also important to note that the design of B&C Exchange is very fault tolerant in regards to signers, as mentioned in previous answers. This would include situations where a signer is dealing with a temporary hardware failure or other interruption of service.
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April 29, 2015, 06:14:47 PM
 #97

It is also important to note that in the case of an 8 of 15 multisig deposit address the system can tolerate up to 7 rogue top reputed signers and still function properly. In this case, "rogue" could also mean any signer who is dealing with a temporary hardware failure or other interruption of service. The design of B&C Exchange is very fault tolerant in regards to signers.

Is it one signature per block?
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April 29, 2015, 06:36:29 PM
 #98

Is it one signature per block?

No. In most cases, all signatures will go in the same block.

Bitmessage: BM-2cXS5ezep1jUqeu8CwC6M4aTmMSxcFEHNN
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April 29, 2015, 08:49:20 PM
 #99

Is it one signature per block?

No. In most cases, all signatures will go in the same block.

What's the block time?
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April 29, 2015, 09:32:01 PM
 #100

What's the block time?

Approximately one minute.
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