IOTA

[Come-from-Beyond]

I don't see any way around what I wrote.

Sorry, you wrote so much that I'm not sure what exactly you are talking about.

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[mthcl]

But the cumulative weight of that tx is not so big, so why the merchant should accept it?

NP, the merchant waits of course for normal amount of confirmations.

On your picture it has 1 confirmation only?..

[TPTB_need_war]

We know that mining can't be used here because CfB has stated that it undermines the security model.

Can someone link me to that and/or the relevant page of the white paper? Seems to be mining could be used to generate check points. That was one of tweaks I had in mind.

If the idea is bootstrapping the distribution and not raising money, then spin off from an existing coin, preferably a widely used one. Multiple coins are even okay but make sure the weighting bears some sane relationship with fair market value (does not have to be exact).

But then I am responsible for how those shares were promoted as investment securities and I don't want to run afoul of the law against selling or offering for sale to the general public unregistered investment securities.

If the idea is raising money while unambiguously complying with all the (perhaps mutually contradictory) laws in the world while at the same time using a structure that achieves a widespread distribution in practice, and is verifiably resistant to cheating, well good luck. I don't know how to do that either.

The only way I can see to do this is either make no promises as to the number of coins you as the seller will end up holding, or do unique buyer verification.

As for complying with laws, my current thinking is to sell the software with some tokens for use at set prices to end users (not investors) with a cap on the size of the sale and user verification (by name and payment account is sufficient), so that it is not a significant amount to be worthwhile for investment and profusely disclaim any expection of future gains. Selling software internationally has not been illegal. Selling shares to investors is very illegal if they are not registered with the SEC in the USA.

Any investors who want large size would have to buy in on the open market later. Typically prices sag after an ICO, but maybe with this strategy where no one can buy in large quantity at the ICO, would have a more positive effect, but again no one knows and expectations of gain can be profusely disclaimed.

Why not give the little guy (the actual users) a chance to get in and maximally spread the distribution? That creates a wider base of support. Mining is dominated by professionals and a small cross-section of the actual users of crypto.

[Sebastien256]

In short: yes we could take up loans by people to buy up IOTA token. There are plenty of these opportunities if one wants to and this would not change if we had premine either, it would just give us even more IOTA.

As for verification process: there is no way to beat sybil, there would be numerous ways to fool this third party too. We could just pay some random people to buy coins via their IDs and then send them to us.

We wont cheat the system, it would be a detriment to IOTA and thus a larger detriment to ourselves than the profit we could get out of manipulating the ICO. This boils down to how inclined you are to believe in conspiracy theories. Fortunately participating in ICO is 100% voluntary.

I understand you can fool to some extent the verification process, but requiring a limit buy-in per user complicated the fooling process a lot.

[stdset]

But the cumulative weight of that tx is not so big, so why the merchant should accept it?

NP, the merchant waits of course for normal amount of confirmations.

On your picture it has 1 confirmation only?..

I can draw more pictures. But I don't think it's necessary. Imagine that the attacker started preparing for the attack a month ago. He spent the whole month to accumulate PoW on top of the second doublespend. He published no transactions during the month. Then he publishes the first doublespending transaction, provides the first confirmation, thus attaching it to recent part of the tangle, waits for the merchant to send him his puchase. Then publishes his secret subtangle and attaches in to the legit subtangle. The first doublespending transaction now is rejected by the network, the second doublespend has more weight.

[mthcl]

We know that mining can't be used here because CfB has stated that it undermines the security model.

Can someone link me to that and/or the relevant page of the white paper? Seems to be mining could be used to generate check points. That was one of tweaks I had in mind.

PoS can be used for that as well.

[smooth]

As for complying with laws, my current thinking is to sell the software with some tokens for use at set prices to end users (not investors)

It is not at all clear there are "end users" for something like this for years to come. It will take a significant period of time to build a market with supporting devices, services, and a large enough population of users, all interacting with each other using the token as a tool to accomplish something else. So I doubt that anyone buying it now could be viewed as anything but a speculator (including long term investor).

That might be different for some other kind of token such as one backing assets in a game or even maybe decentralized storage. Something with actual ready-to-go uses. But that seems a bit off topic on this thread.

[Come-from-Beyond]

Can someone link me to that and/or the relevant page of the white paper? Seems to be mining could be used to generate check points. That was one of tweaks I had in mind.

There is no about that in the whitepaper. There is no a formal proof that coin generation is impossible, intensive search for a coin generation technique was done to have 2% annual inflation (because it's a near-optimal number) and none of the ideas let to keep the security of the system at an acceptable level. This is a well-known problem of proof asymmetry, it's hard to prove that unicorns don't exist while it's trivial to prove the opposite if you have such a unicorn. If you have an idea how to add 2% inflation, share it, please.

[TPTB_need_war]

As for verification process: there is no way to beat sybil, there would be numerous ways to fool this third party too. We could just pay some random people to buy coins via their IDs and then send them to us.

If the maximum amount that can be purchased by name & fiat account is small, then you'd need to have many, many people involved in your Sybil attack, which would put you at much greater risk of being caught. Thus I think it radically lowers the risk of cheating.

Versus a promise (not to buy your own coins) which unverifiable.

But I am not telling you what to do. I am just stating the options that are available. You are choosing one of the options I stated, which is to admit you could buy as many of your own coins as you want to, but promising not to do so. It is not my role to judge that option. Your investors must judge that. At least you've been honest about which option you are planning to choose.

[smooth]

In short: yes we could take up loans by people to buy up IOTA token. There are plenty of these opportunities if one wants to and this would not change if we had premine either, it would just give us even more IOTA.

As for verification process: there is no way to beat sybil, there would be numerous ways to fool this third party too. We could just pay some random people to buy coins via their IDs and then send them to us.

We wont cheat the system, it would be a detriment to IOTA and thus a larger detriment to ourselves than the profit we could get out of manipulating the ICO. This boils down to how inclined you are to believe in conspiracy theories. Fortunately participating in ICO is 100% voluntary.

I understand you can fool to some extent the verification process, but requiring a limit buy-in per user complicated the fooling process a lot.

The track record in trying to do that is pretty bad. Limit per buy-in just raises the stakes to create/recruit/impersonate more straw buyers. See Stellar and probably some others.

[TPTB_need_war]

The track record in trying to do that is pretty bad. Limit per buy-in just raises the stakes to create/recruit/impersonate more straw buyers. See Stellar and probably some others.

That is more difficult if you can't pay with crypto and have to pay with a fiat account. And if the maximum amount per buyer is say $500. Not saying they should do that. We all hate the fiat world right? (I paid my rent today with BTC)

[mthcl]

But the cumulative weight of that tx is not so big, so why the merchant should accept it?

NP, the merchant waits of course for normal amount of confirmations.

On your picture it has 1 confirmation only?..

I can draw more pictures. But I don't think it's necessary. Imagine that the attacker started preparing for the attack a month ago. He spent the whole month to accumulate PoW on top of the second doublespend. He published no transactions during the month. Then he publishes the first doublespending transaction, provides the first confirmation, thus attaching it to recent part of the tangle, waits for the merchant to send him his puchase. Then publishes his secret subtangle and attaches in to the legit subtangle. The first doublespending transaction now is rejected by the network, the second doublespend has more weight.

He would have to attach it "below" the merchant's tx, but yes, you're right, it's a possible attack vector. Anyhow, the referencing algorithm is not yet finished, so we are discussing it with CfB right now.

[TPTB_need_war]

As for complying with laws, my current thinking is to sell the software with some tokens for use at set prices to end users (not investors)

It is not at all clear there are "end users" for something like this for years to come. It will take a significant period of time to build a market with supporting devices, services, and a large enough population of users, all interacting with each other using the token as a tool to accomplish something else. So I doubt that anyone buying it now could be viewed as anything but a speculator (including long term investor).

That might be different for some other kind of token such as one backing assets in a game or even maybe decentralized storage. Something with actual ready-to-go uses. But that seems a bit off topic on this thread.

Developers are an example of early adopter users who need access to a real world system in order to build out the ecosystem. Yes the number of users and people who want to play/experiment with such a system is small at the start. That is why if you sell to end users and not speculative investors, don't expect to raise $10 million at the ICO. You might raise $50,000 perhaps ($500 x 100).

[smooth]

The track record in trying to do that is pretty bad. Limit per buy-in just raises the stakes to create/recruit/impersonate more straw buyers. See Stellar and probably some others.

That is more difficult if you can't pay with crypto and have to pay with a fiat account. And if the maximum amount per buyer is say $500. Not saying they should do that. We all hate the fiat world right? (I paid my rent today with BTC)

For paying that may be true (the earlier attempts at "per person" distribution were mostly free). But then that raises other legal, institutional, and logistical costs and obstacles, as you have previously reported with respect to your social media experiments.

[myagui]

Re: Premine vs PoW vs ICO vs User ID vs 'a life of crime':

Why not simply make a fixed number of tokens available, at a fixed price per token?
(If not sold out, any unsold tokens would then be provably burned)

This way, developers can still buy their own tokens, but in doing so, they are competing with the other users/buyers. Any tokens bought up by the developers, are tokens that become unavailable for someone else to buy. This is much better than the usual premine, in the sense that the developers are trading a portion of potential outside funding, in exchange for whatever tokens they buy for themselves (aka, putting their money where their mouths are, because they then become a truly interested party, after funding).

Tying up to an existing coin (or coins) seems interesting as well. That would likely attract the widest user foundation, though possibly at the expense of most (all?) of the funding potential...

[smooth]

don't expect to raise $10 million at the ICO. You might raise $50,000 perhaps ($500 x 100).

I would guess that $50 000 would not be sufficient to develop hardware to support IOTA, but I could be wrong.

[Sebastien256]

As for complying with laws, my current thinking is to sell the software with some tokens for use at set prices to end users (not investors)

It is not at all clear there are "end users" for something like this for years to come. It will take a significant period of time to build a market with supporting devices, services, and a large enough population of users, all interacting with each other using the token as a tool to accomplish something else. So I doubt that anyone buying it now could be viewed as anything but a speculator (including long term investor).

That might be different for some other kind of token such as one backing assets in a game or even maybe decentralized storage. Something with actual ready-to-go uses. But that seems a bit off topic on this thread.

Developers are an example of early adopter users who need access to a real world system in order to build out the ecosystem. Yes the number of users and people who want to play with such a system is small at the start. That is why if you sell to end users and not speculative investors, don't expect to raise $10 million at the ICO. You might raise $50,000 perhaps ($500 x 100).

If only raise 50k, it would be reasonable to allow certain amount premine for the devs, but everything would be clear from the start.

[Come-from-Beyond]

He would have to attach it "below" the merchant's tx, but yes, you're right, it's a possible attack vector. Anyhow, the referencing algorithm is not yet finished, so we are discussing it with CfB right now.

Possible? I don't see how it's possible to draw a picture to have longest-path-as-the-score rule to be broken by an adversary.

[mthcl]

But the cumulative weight of that tx is not so big, so why the merchant should accept it?

NP, the merchant waits of course for normal amount of confirmations.

On your picture it has 1 confirmation only?..

I can draw more pictures. But I don't think it's necessary. Imagine that the attacker started preparing for the attack a month ago. He spent the whole month to accumulate PoW on top of the second doublespend. He published no transactions during the month. Then he publishes the first doublespending transaction, provides the first confirmation, thus attaching it to recent part of the tangle, waits for the merchant to send him his puchase. Then publishes his secret subtangle and attaches in to the legit subtangle. The first doublespending transaction now is rejected by the network, the second doublespend has more weight.

He would have to attach it "below" the merchant's tx, but yes, you're right, it's a possible attack vector. Anyhow, the referencing algorithm is not yet finished, so we are discussing it with CfB right now.

... there is also a complication that the current height calculation algorithm is not very computationally efficient. We'll have to modify it in any case, and there are already several good candidates.

[TPTB_need_war]

The track record in trying to do that is pretty bad. Limit per buy-in just raises the stakes to create/recruit/impersonate more straw buyers. See Stellar and probably some others.

That is more difficult if you can't pay with crypto and have to pay with a fiat account. And if the maximum amount per buyer is say $500. Not saying they should do that. We all hate the fiat world right? (I paid my rent today with BTC)

For paying that may be true (the earlier attempts at "per person" distribution were mostly free). But then that raises other legal, institutional, and logistical costs and obstacles, as you have previously reported with respect to your social media experiments.

Agreed it could. Paypal often withholds funds, especially if there is a sudden surge of payment volume.  Selling via BTC is much easier.

But it is possible to verify an account with Paypal (or Amazon payments) without taking payment via Paypal (or only take a small payment), then take the rest from that person via BTC. So then you don't care what Paypal does.