GLBSE owners lied to us. How to move forward and fix this? Move to Exchange X?

[burnside]

That all makes much more sense.

Sounds like OT is the rough equivalent of what would happen if I open sourced LTC-GLOBAL and built in a cross-site trading module?

[markm]

I don't understand what cross-site has to do with anything?

You trade on one site. Anything cross-site is over the counter, a gentleperson's agreement that if you give me some of X on server Y then I will give you some of A on server B.

What you need to be at all similar to Open Transactions is what would also make you similar to MPEX: cryptographically proven notarised balances, transactions, identities.

-MarkM-

[burnside]

By cross-site I meant server to server.  Eg: webserver to webserver instead of OT server to OT server.  And yes, such a cross-site functionality would require the cryptographic layers necessary to be able to trust one another.

Not saying it's simple or trying to downplay OT.  I'm trying to understand OT.  My initial impression was incorrect -- initially I thought it was like bitcoind, where it was distributed and any asset (coins on bitcoind) can be traded about the network without limitation.

Cheers.

[markm]

No it is not disitributed, though it is possible the audit system could end up using a distributed hash table.

It is decentralised, in the sense that there can be millions of servers and anyone can choose which servers to issue assets on (among servers willing to accept the possibly huge liabilities involved in allowing third parties to issue assets) or can run a server of their own.

Also FellowTraveler has always planned that once good reliable code for doing multi-signature transactions on the blockchain he will implement some system whereby a whole bunch of servers could all co-operate to control bitcoins so that bitcoins can only be moved if a majority of the involved servers agree how many to move and where to move them to.

Since you don't have to trust the server, you can always just move to another one at any time, and which server you use should not be very important, if one gets killed just fire up another.

-MarkM-

[Rassah]

I think I'm finally starting to understand what the heck OT is, though it still seems a bit cumbersome. I guess with OT, an issuing company would be able to set up its own OT server, and issue shares through that, thus maintaining control of those shares, knowing who has them, and where they were traded to? Or would the shares be freely traded among all OT servers, with the issuer loosing track as soon as the shares get traded on another OT server?

Also, is there anything to prevent someone from issuing identical fake shares on another OT server?

[markm]

I think I'm finally starting to understand what the heck OT is, though it still seems a bit cumbersome. I guess with OT, an issuing company would be able to set up its own OT server, and issue shares through that, thus maintaining control of those shares, knowing who has them, and where they were traded to? Or would the shares be freely traded among all OT servers, with the issuer loosing track as soon as the shares get traded on another OT server?

Also, is there anything to prevent someone from issuing identical fake shares on another OT server?

Try reading, you are repeating questions already asked and answered.

As for identical, that implies identical hash, which implies identical signature, implying they are not fake in fact at all (or the issuer gave someone else their identity.)

-MarkM-

[Rassah]

I think I'm finally starting to understand what the heck OT is, though it still seems a bit cumbersome. I guess with OT, an issuing company would be able to set up its own OT server, and issue shares through that, thus maintaining control of those shares, knowing who has them, and where they were traded to? Or would the shares be freely traded among all OT servers, with the issuer loosing track as soon as the shares get traded on another OT server?

Also, is there anything to prevent someone from issuing identical fake shares on another OT server?

Try reading, you are repeating questions already asked and answered.

Sorry, I have been, but it's been a combination of both, the OT descriptions being rather vague/high-level, and my just having a hard time wrapping my head around them (my own limits). I'm still stuck in the simple idea of "I have a coin/dollar, I send it to you, now you have it, done," and OT seems to offer WAY more complex options (though, in part, I'm also still having trouble figuring out WHY we need those options)

[markm]

In some ways it is like MPEX. Every communication between client and server is encrypted from one identity to another identity, just it uses openssl instead of PGP to do that. It is still public key private key style encryption.

This means you always have signed proof of your balance and it also means that the only way your balance can change is if you sign acceptance of the change.

Unlike MPEX all that signing is somewhat hidden, since you don't use a web browser you use a client that knows to do all this signing and the decrypting of the replies and so on.

Sure you could just chat with someone on IRC and agree they will give you a share if you send them bitcoins, but when you do that where are the crypto-signed receipts and agreements showing exactly what you agreed to and that you both agreed?

-MarkM-

[EskimoBob]

I spent some time with OT and the Moneychanger client.
Good news is, that someone (in IRC) is seriously considering to set up multiple servers for serious use.

It has potential to become a good alternative but at the moment it takes some serious effort to get it up and running. Documentation how to actually use it is nonexisting.

Getting the client (and server) running needs a good step-by-step How To.
In IRC, we actually walked trough the whole process of getting the client up and running - setting up the first user, "opening" currency and securities trading accounts and even transferring few devcoins between users (nyms?).

I personally thing that OT/Moneychanger is getting ready to be tested not only by programmers/hackers/nerds, but people with real world trading and business experience. If they can not use it for actual business, then what's the point?   the whole project will be just another fun waste of time experiment and that's it.

Do we have any other alternatives you like to recommend?

[matauc12]

How about getting some legal advice first? The problem isnt one of technology, the problem is that people seem to think  because its related to bitcoin, laws somehow dont apply. Thats horseshit.  If you want a credible and lasting alternative to GLBSE, you will need to operate within the confines of the law, like MtGox does, like Tangible Cryptography does, like Butterfly Labs does.

Operating legally may or may not be feasible for a security exchange, but its the first thing you should focus on. If you want to do a truly anonymous underground and illegal site like Silk Road, its doomed from the start. If you thought GLBSE was a scammer heaven, imagine a silk road like alternative.

BFL does not abide to law, its illegal to take order for a product that will knowingly not be delivered within 30days (even if they state so) AND its illegal to accept pre-orders for a non-ready-to-sell product (ie fund development/manufacturing with pre-order money)

[Puppet]

BFL does not abide to law, its illegal to take order for a product that will knowingly not be delivered within 30days (even if they state so) AND its illegal to accept pre-orders for a non-ready-to-sell product (ie fund development/manufacturing with pre-order money)

Link please?
It seems to violate Paypal TOS, but that doesnt make it illegal, nor does it expose customers to extra risk, quite the contrary.

[EskimoBob]

I was talking to someone who know about the laws around here (not US) and guess what: Setting up a bazaar (market) to trade some virtual  tokens (BTC is not a currency) is completely OK until legal currency is kept out of the equation.
You say BTC has value in fiat? So do all the stupid game cards that kids collect and trade in some countries. They do not call their collections Co's and themselves CEO and are not selling you a "share of ownership or debt (big bad words) in a INC, LLE, LTD etc". 
American based SEC has NOTHING to do with BTC. BTC is not a security. Only reason they can get upset is if  you keep calling your imaginary "what ever" a real company an keep telling to people,  how you are running a business blaa blaa blaa, dividends, IPO etc.  Then it can be considered as a scam and they (SEC, IRS, FSA, police etc) will get curious.
If you sell tokens for a imaginary team that operates under guidelines X and rewards it's members in those same game tokens (btc) no one cares wtf you do. Start using big words and you are in deep shit. As simple as that.

So. Nefario. Use some SQL magic, rename those moronic contracts to what they really are and open up your token bazaar.
You are running a online shop for trading game tokens to "teams" of imaginary teams of miners and cosmonauts.
 

[matauc12]

BFL does not abide to law, its illegal to take order for a product that will knowingly not be delivered within 30days (even if they state so) AND its illegal to accept pre-orders for a non-ready-to-sell product (ie fund development/manufacturing with pre-order money)

Link please?
It seems to violate Paypal TOS, but that doesnt make it illegal, nor does it expose customers to extra risk, quite the contrary.

Those are from the consumer us laws. I don't care about individulal payment method Toer, those are merely contracts that have to abide to your country of origins law.

BFL knows about it too. I emailed them requesting a refund on the basis that if they refuse it would open the door to legal actions, it took less than 24hours to get a refund (although they state it is non-refundable until 2013).

How legit is that?

And no link, I really don't feel the need to prove something I know, makes me less credible sure, but not any less right. There is actually a thread on these forums linking most of them anyways.

[matauc12]

I was talking to someone who know about the laws around here (not US) and guess what: Setting up a bazaar (market) to trade some virtual  tokens (BTC is not a currency) is completely OK until legal currency is kept out of the equation.
You say BTC has value in fiat? So do all the stupid game cards that kids collect and trade in some countries. They do not call their collections Co's and themselves CEO and are not selling you a "share of ownership or debt (big bad words) in a INC, LLE, LTD etc". 
American based SEC has NOTHING to do with BTC. BTC is not a security. Only reason they can get upset is if  you keep calling your imaginary "what ever" a real company an keep telling to people,  how you are running a business blaa blaa blaa, dividends, IPO etc.  Then it can be considered as a scam and they (SEC, IRS, FSA, police etc) will get curious.
If you sell tokens for a imaginary team that operates under guidelines X and rewards it's members in those same game tokens (btc) no one cares wtf you do. Start using big words and you are in deep shit. As simple as that.

So. Nefario. Use some SQL magic, rename those moronic contracts to what they really are and open up your token bazaar.
You are running a online shop for trading game tokens to "teams" of imaginary teams of miners and cosmonauts.
 

and that is called a commodity....

[fellowtraveler]

I don't know exactly Open Transactions, but if it requires something like signing documents with PGP, then it is both
1) quite scary the first time you see it
2) easy, after you spend 5 minutes figuring it out with a good howto.

Maybe, having money to recover is just what it takes to push people to make that little mental effort, and move in the realm of serious security at once; so, a great opportunity  

The user does not directly do any PGP-signing.

If you are using the OT wallet, then it will be signing things behind the scenes, but you will not see this.

The most you will see is, it will occasionally ask for your passphrase so that it can sign something.

is there a way to program OT in a way that the "notary" part would be commonly shared similar to a blockchain. Basicaly i wanna know if OT is capable to run decentralized.

You can issue the same currency onto multiple OT servers.

But each instrument must be redeemed on the same server where it was issued.

You can also move funds between servers (by going through any entity who has accounts on both servers, such as the issuer.)

There is also a plan to use multisig for placing BTC in voting pools (on the blockchain itself) so that individual servers cannot steal the coins that have been bailed onto them. (Nor could hackers...)

Yeah, move to Exchange X.  After they rob you, move again.

How many times do you have to get scammed before you wise up?

It is not possible for an OT server to rob you.

After every transaction, the most recent receipt is left on your machine.

This receipt proves your current balance, as well as which instruments are valid, and which transactions are closed. It proves everything.

The server cannot change anything on this receipt (or the next...), because the server cannot forge your signature on the original request. (A copy of your original signed request appears on the server-signed receipt.)

This means that "your account" is on your machine. So even if the server later disappears, you can still prove the balance on your account, and prove which instruments are still valid.

I like the idea of an Open Exchange. Does that software exists already? If yes, where I can look for more info and downloads?

Open-Transactions is able to act as a market exchange (similar to MtGox or GLBSE.)

However OT does a lot more than that. You can make your own custom-scripted smart contracts, and it will execute the terms of your scripted agreements, dropping receipts periodically into your inbox.

OT also does untraceable cash.

OT also does client-side scripting, with the full OT API available inside the scripts.

OT is also able to prove everything it needs to prove, without storing any account history (as long as you store the last signed receipt...)

OT also supports a wide range of financial instruments. Not only can you issue currencies/shares and trade them, but you can also open accounts, write cheques, withdraw cash, use cashier's cheques (aka banker's cheques), send account transfers, etc.

Sounds like OT is the rough equivalent of what would happen if I open sourced LTC-GLOBAL and built in a cross-site trading module?

Probably. OT is able to act as a market exchange, if that's what you mean. But it is only the core: the library, the receipts, the instruments, the keys, etc.

Meaning if you have a website in mind, you still have to build the website part. OT just processes all the finance and legal.

It has potential to become a good alternative but at the moment it takes some serious effort to get it up and running. Documentation how to actually use it is nonexisting.

Getting the client (and server) running needs a good step-by-step How To.

===> The actual compiling / linking of the project is not something that actual users will have to deal with (only developers.)

===> Installing the software (and various libraries) on your machine is also not something that actual users will have to deal with (there will be an install script that will automate this for users.)

===> There is not an actual GUI client yet. We do have a test GUI, as well as a command-line utility (opentxs) but I assume that some real client will be written before there are real users. In fact my company Monetas has already started raising our seed round, and we intend to produce a real client over the next year or so.

===> If you copy over the sample data when you first install OT, then you will see that you are able to run the OT server and the test GUI without having to set up any contracts or Nyms at all. You can just start playing with it.

===> If you start up the OT server with no data, it will walk you through the process of creating the necessary Nyms and contracts to get it up and running from scratch.

===> If you start up the OT client with no data (such as the test GUI) then it will automatically create its own blank data folder. From there you can create your first Nym yourself (on the Nyms tab) and import any server contracts or asset contracts that you wish to use, into your wallet. (On the contracts tab.) From there you can go to the Main tab and create accounts (in those asset types, on those servers.)

===> A real GUI would lead you through that initial setup process (including the password image) using a Wizard. The test GUI, obviously, does not.

[Bitinvestor]

How about getting some legal advice first? The problem isnt one of technology, the problem is that people seem to think  because its related to bitcoin, laws somehow dont apply. Thats horseshit.  If you want a credible and lasting alternative to GLBSE, you will need to operate within the confines of the law, like MtGox does, like Tangible Cryptography does, like Butterfly Labs does.

Operating legally may or may not be feasible for a security exchange, but its the first thing you should focus on. If you want to do a truly anonymous underground and illegal site like Silk Road, its doomed from the start. If you thought GLBSE was a scammer heaven, imagine a silk road like alternative.

After reading this thread I now understand Open Transactions better than before but I have to agree with Puppet. It seems to be illegal to issue securities the way GLBSE did and it also seems to be illegal to issue securities through OT and therefore only a madman would do that. Please correct me if I'm wrong.

[markm]

I do not know of any law preventing anyone legally authorised / registered / licensed to issue securities from doing so using Open Transactions, albeit if they prefer to wait until their auditor's firm adds it to their list of platforms they feel qualified to audit and which they consider robust enough to recommend to their customers it could be a while yet before we see mass adoption of the platform among registered broker/dealers.

Plus, most large established stock-exchanges have legacy custom software in place so adoption there might take a while too. Maybe more likely would be adopting of code snippets, ideas, functions and such into their custom code.

You seem to be confusing the use of a tool with legality of doing the job the tool is used to do. Given that doing the job is legal for you, what laws restrict you from using this tool to do it?

There are already procedures in place for getting licensed, it remains only for people/companies to use them or for those who already have to add bitcoin to their portfolios / repertoires.

Incumbent's advantage strikes again.

(Sorry young pups, I know back in our day we all got grandfathered in with less educational and examination passing requirements but young pups are spawning too fast we'll have to add more regulations to keep you down?)

-MarkM-

[Bitinvestor]

Right, I was under the impression that OT was meant to enable anybody to issue securities. Why would somebody who can already issue securities legally want to use OT?

[Rassah]

Right, I was under the impression that OT was meant to enable anybody to issue securities. Why would somebody who can already issue securities legally want to use OT?

It's not so much legally vs illegally, as within regulations vs outside regulations. Doing it within regulations gives you legal protections, such as limited liabilities. Doing it yourself is no different from distributing a bunch of papers with IOU written on this, which is legal, but won't protect you from issues the way going through regulated means will.
As for why? Cheaper, and much easier.

[fellowtraveler]

FYI, for "shares" based asset types, OT actually keeps a list of all the accounts of that asset type. (That's how it is later able to loop through all those accounts and send a dividend cheque to the Nym based on how many shares he owns.)

So it actually wouldn't be hard to provide the account IDs, balances, and owner NymIDs for those shares, to the issuer. We could add a message that requests this data, if the issuers of shares need access to it. Alternately, we could also make it an option inside the shares contract.