[BET] Gold, Oil, and Dollars will be stored in the bitcoin blockchain by 2015

[dacoinminster]

http://betsofbitco.in/item?id=1210

Gold, Oil, and U.S. Dollars will be stored in the bitcoin blockchain by 2015
This statement will be regarded as true if before January 1st, 2015 it is possible to buy, sell, trade, and spend virtual currencies which track the value of gold, oil, and U.S. Dollars, with the record of these transactions stored in the primary bitcoin block chain.

The end user must be able to purchase and trade these currencies using distributed software (without requiring a centralized exchange).

Additionally, for the last 28 days of 2014 (after the bet deadline), some such examples of gold, oil, and U.S. Dollars must demonstrate the ability to maintain their target values by not deviating by more than 10% from their face value for more than 3 consecutive days. That is, a deviation of more than 10% must be corrected within 3 days. Whether such a deviation occurred will be determined by site administrators using their best understanding and whatever tools are available at that time.

There are currently software developers working towards these (and similar) goals (see notes below). Will they succeed? You decide!

* http://www.Bitcoinx.org is working on a decentralized exchange for "colored coins", but there is doubt as to whether such coins will maintain their nominal face values when pegged to commodities and currencies.

* "The Second Bitcoin Whitepaper" (https://sites.google.com/site/2ndbtcwpaper/2ndBitcoinWhitepaper.pdf) describes an elaborate scheme which is aimed at creating virtual currencies which if successful would meet the requirements of this bet, but there hasn't been any evidence of work on that project since the paper was published.

I started this bet, because I believe it will happen. Already, some people have bet against me, which I just realized is essentially creating a bounty for me to work on my own project!

[jtimon]

I started this bet, because I believe it will happen. Already, some people have bet against me, which I just realized is essentially creating a bounty for me to work on my own project!

Added 0.1 to the bounty
I haven't read your revised version yet, only a glance. I guess it could work, since tries to be some kind of saving/insurance market. But I'm not really much into derivatives.
Anyway, I wish I lose the bet, good luck.

[casascius]

Sounds unlikely for social, not technical, reasons.

I would bet against this for the same reason I'd bet against someone starting up a new e-Gold.  That's what this amounts to.

[starsoccer9]

would be cool to do something that would create x amount of coins each year x being the amount mined this year in gold or something like that. Each coin always equaling 1 ounce of gold and so on would be a neat feature

[casascius]

This statement will be regarded as true if before January 1st, 2015 it is possible to buy, sell, trade, and spend virtual currencies which track the value of gold, oil, and U.S. Dollars, with the record of these transactions stored in the primary bitcoin block chain.

What exactly does it mean for a virtual currency to "track" the value of something else?  Given that this is not a properly defined term, it's likely impossible to determine the truth of the statement.

[Sukrim]

To legally issue "Eurocoins" that are 1:1 pegged to the eouro for example, you need to have an e-money license. While not a banking license, it is close to being one and definitely NOT something that can be "decentralized".
I guess there are similar issues with USD.

Of course one can always go the "let's ignore the law - we are legion!" approach, but opposed to Bitcoins who float freely against other currencies, having something (be it colored BTC or a different block chain) directly representing fiat or other goods (gold, oil) is probably legally well documented and can be easily shut down or at least forced to be compliant.
This also happens for good reasons: Noone can stop me from issuing 1 million colored coins and pegging them 1:1 to 1 EUR each. I however don't have 1 million EUR on my account, so I'd be acting like a fractional reserve bank. This is already kinda bad when a bank does it - if everybody does it, there's no way these colored coins will stay in circulation for long - everyone who gets one will rush to immediately redeem them for "real" EUR, since I'm probably not as trustworthy (or as high insured) as a bank. If this is not the case, I can rename my forum account to "piratebelow40"...

[dacoinminster]

Regarding how a currency based on bitcoin can track an external value, that is what I wrote my paper about (see my sig).

Regarding the law, I expect that it would not be illegal to issue coins which track commodities like gold and oil. You might get in trouble releasing a virtual currency tracking dollars or euros, but I bet people will still do it anonymously.

I recently won a bet, and put most of my winnings on the "Agree" side of this. If you disagree with me, put your bitcoins where your mouth is!

[Bit_Happy]

I will hopefully find time to read your paper later.

[casascius]

Regarding how a currency based on bitcoin can track an external value, that is what I wrote my paper about (see my sig).

I am prejudiced against anything in the document you link to in your signature because I consider the title you have given to this document to be highly offensive.

This proposal purports with its title to be similar in importance to Satoshi's whitepaper, without being accompanied by extraordinary groundbreaking ideas that are as revolutionary today as Satoshi's paper was when published.  I view it as a display of complete disregard for the core ideas that underpin Bitcoin, and a reckless disregard for academic honesty.

I can barely get past the title and into the introduction.  If the purpose of a whitepaper is to solicit respect for an idea, but yours expresses a total disregard for the most meritorious jewel of this whole project by invoking it just to attract attention, why should I assume that the content is somehow going to be deserving of my respect?

Your paper deserves no more respect than a telemarketer who calls to say "your spouse had a car accident and is in the hospital... just kidding... but how would you like to switch to us and save 15% on your auto insurance?"  The notion that your paper is important because it's a "second" whitepaper after Satoshi's is nothing less than total kidney punch fraud.  I refuse to do anything more than skim it.

In the case I am somehow mistaken and the content of the paper truly is revolutionary, the community should bestow the honor of elevating this paper up there with Satoshi's paper, not you as its author.  So long as its title is what it is, it is worthy of nothing more than my virtual spit.

You instead should get a BIP number assigned to it (using the process described in BIP 1), and refer to it as BIP (yournumberhere), with a title that is relevant to the paper's content.  Or, you can skip the BIP route, in which case you should go ahead and make up a new title for your paper that references your ideas as presented in your paper, rather than referring to Satoshi's.

[Atruk]

Regarding how a currency based on bitcoin can track an external value, that is what I wrote my paper about (see my sig).

I am prejudiced against anything in the document you link to in your signature because I consider the title you have given to this document to be highly offensive.

So much, this.

[Sukrim]

Quickly skimming over that paper seems to describe an implementation similar to ripple.com to me, only with storing conversion values somehow in the Bitcoin block chain and not seperate ones...

Also the "real" bitcoin whitepaper was also quickly followed by a working example implementation. A lot of other nice electronic money schemes only exist on paper, what also makes Bitcoin stand out of all of that is that it is NOT just a nice idea (a few original twists, but all in all the things described by satoshi weren't exactly rocket science) but that it was followed up by an actual implementation that gained enough traction to become what you see today.

Satoshi's paper only has barely 9 pages, lacks in lots of deatils and examples but is easy to read and when viewed together with the implementation also easy to understand.

This "second paper" (written in MS Word by the way) is more than 1 year old but the scheme described is not used, implemented or even widely discussed as far as I'm aware in the Bitcoin community. Also it cites 0(!) sources, not even the "first bitcoin paper"...

Back to the bet, I don't like the fact that you promote essentially spamming the block chain with gold, USD and oil currency transactions.

[dacoinminster]

Regarding how a currency based on bitcoin can track an external value, that is what I wrote my paper about (see my sig).

I am prejudiced against anything in the document you link to in your signature because I consider the title you have given to this document to be highly offensive.

This proposal purports with its title to be similar in importance to Satoshi's whitepaper, without being accompanied by extraordinary groundbreaking ideas that are as revolutionary today as Satoshi's paper was when published.  I view it as a display of complete disregard for the core ideas that underpin Bitcoin, and a reckless disregard for academic honesty.

I can barely get past the title and into the introduction.  If the purpose of a whitepaper is to solicit respect for an idea, but yours expresses a total disregard for the most meritorious jewel of this whole project by invoking it just to attract attention, why should I assume that the content is somehow going to be deserving of my respect?

Your paper deserves no more respect than a telemarketer who calls to say "your spouse had a car accident and is in the hospital... just kidding... but how would you like to switch to us and save 15% on your auto insurance?"  The notion that your paper is important because it's a "second" whitepaper after Satoshi's is nothing less than total kidney punch fraud.  I refuse to do anything more than skim it.

In the case I am somehow mistaken and the content of the paper truly is revolutionary, the community should bestow the honor of elevating this paper up there with Satoshi's paper, not you as its author.  So long as its title is what it is, it is worthy of nothing more than my virtual spit.

You instead should get a BIP number assigned to it (using the process described in BIP 1), and refer to it as BIP (yournumberhere), with a title that is relevant to the paper's content.  Or, you can skip the BIP route, in which case you should go ahead and make up a new title for your paper that references your ideas as presented in your paper, rather than referring to Satoshi's.

I am prejudiced against anything in the document you link to in your signature because I consider the title you have given to this document to be highly offensive.

So much, this.

I'm so glad we are agreed! I also find my paper and its title highly offensive. It is well worth any scorn that can be heaped upon it. Someday I hope someone will write a paper more worthy of such a title, but I've been waiting a long time for that.

In the meantime, you can make some easy money by betting that the ideas in it are not revolutionary (the bet which started this thread). You certainly don't need to read it, since one can tell just from the title that it is not to be taken seriously.

Alternately, I will be on a panel about the "Future of Bitcoin" at the conference in San Jose in May (clearly the organizers did not read my paper either). That would be a priceless opportunity to turn virtual spit into the real thing!

[dacoinminster]

Back to the bet, I don't like the fact that you promote essentially spamming the block chain with gold, USD and oil currency transactions.

I personally think that anything that transfers value from one person to another and pays an appropriate transaction fee is not spam. There are others who feel differently, but I don't really see any way to enforce a ban on transactions like that. The alternative is to create a new block chain, and I'd much rather build on top of bitcoin than compete with it.

[casascius]

Why can't you just give the paper a more honest title?  This isn't like Borat, where "the more offensive the better".  Calling your work "the second Bitcoin whitepaper" is an act of academic dishonesty, an act of fraud, no matter where you're invited to speak, and for the most part, no matter what's in it.

Bitcoin is revolutionary because it brings convenient honest money to a world where there is none.  If you want to follow in Satoshi's footsteps, don't do it with a fraud.

[dacoinminster]

Why can't you just give the paper a more honest title?  This isn't like Borat, where "the more offensive the better".  Calling your work "the second Bitcoin whitepaper" is an act of academic dishonesty, an act of fraud, no matter where you're invited to speak, and for the most part, no matter what's in it.

Bitcoin is revolutionary because it brings convenient honest money to a world where there is none.  If you want to follow in Satoshi's footsteps, don't do it with a fraud.

The title honestly reflects the ambition and aim of what I'm trying to do (outline the next big set of changes in bitcoin design and function). If you say the document falls short of that ambition, I will not argue with you about that - you are probably right. I sincerely hope someone else can do better, as I would like to invest in whatever IS next for bitcoin!

[casascius]

If the title reflects your ambition, then why not go all in and put Satoshi Nakamoto as the author?  After all, that too is aiming high.  I'd love to be in Satoshi's shoes and write a paper about Bitcoin.  You could also call him the "honorary author" if you want to make sure the feedback goes to you and all.  Like so we pretend he wrote it even though he really didn't, although it doesn't really matter.  Or you could call him the co-author, you could say you and he wrote it together.  It's not like he's going to appear just to say "Hey, I didn't write that!"

[dacoinminster]

If the title reflects your ambition, then why not go all in and put Satoshi Nakamoto as the author?  After all, that too is aiming high.  I'd love to be in Satoshi's shoes and write a paper about Bitcoin.  You could also call him the "honorary author" if you want to make sure the feedback goes to you and all.  Like so we pretend he wrote it even though he really didn't, although it doesn't really matter.  Or you could call him the co-author, you could say you and he wrote it together.  It's not like he's going to appear just to say "Hey, I didn't write that!"

Ha! That would be awesome. The only catch would be if somebody challenged me to prove it using an account known to be in his control. I suppose I could claim that I lost all my passwords

[Puppet]

Only skimmed over the document and I have to partially agree with casascius, you are doing your idea a great disservice by presenting it the way you do. Its presumptuous and intellectually dishonest.

That said, Ive always thought that bitcoin as a payment system is as brilliant as its infantile as a currency, basically eradicating thousands of years of monetary evolution and returning to the idea of shells or feathers. Its like satoshi gave that part no more than 5 minutes of thought and basically came up with the most simplistic of solutions to test the rest of his ideas.

So I really wish someone would combine the very useful features of bitcoin (pseudonymous, irreversible, electronic,  almost free transactions, decentral, p2p) with a currency thats more appropriate for the 21st century. Ripple might be a step in that direction, and so might this idea. If you could use the bitcoin network and concept to send euro's or dollars, then you really have something that could see mass adoption.

[Sukrim]

Well, coloured coins (or the approach in this paper there) are not much more than taking e.g. a 1 USD note, writing down the serial number and claiming that whoever hands you this exact note can choose to get your car instead of just a different dollar note. Then you sell it off for the price of your car.

This approach does still NOT deal with the issue of trust or fraud - while it would be impossible to counterfeit a certain Bitcoin, it might be possible, that the car does not even exist any more or the one who claimed to hand out the car actually doesn't want to sell the car... Same goes for anything else that can be tracked in the block chain. I could hand out 1 million coloured coins for 1 EUR each and sell them for bitcoins. If the price of BTC rises against the EUR it might even be possible to pull this stunt off, so for the extreme bulls out there, here's how to do leverage in the wild west!
Anyways, just like one has to trust me that I'll be able and willing to pay back EUR for the coins I handed out, there's also no way to force me to do that - and good luck in court with something like THAT ("I paid internet funny money for some different internet funny money, but this guy said he'd give me EUR for that different internet funny money that is actually the same internet funny money as the first one. - No, he's NOT a licensed e-money dealer at all, I just fired up this software...").

I prefer Ripple to this one, as it deals with this trust issue by involving people you know (as far as I understood it) instead of staying completely pseudonymous.

[dacoinminster]

Well, coloured coins (or the approach in this paper there) are not much more than taking e.g. a 1 USD note, writing down the serial number and claiming that whoever hands you this exact note can choose to get your car instead of just a different dollar note. Then you sell it off for the price of your car.

This approach does still NOT deal with the issue of trust or fraud - while it would be impossible to counterfeit a certain Bitcoin, it might be possible, that the car does not even exist any more or the one who claimed to hand out the car actually doesn't want to sell the car... Same goes for anything else that can be tracked in the block chain. I could hand out 1 million coloured coins for 1 EUR each and sell them for bitcoins. If the price of BTC rises against the EUR it might even be possible to pull this stunt off, so for the extreme bulls out there, here's how to do leverage in the wild west!
Anyways, just like one has to trust me that I'll be able and willing to pay back EUR for the coins I handed out, there's also no way to force me to do that - and good luck in court with something like THAT ("I paid internet funny money for some different internet funny money, but this guy said he'd give me EUR for that different internet funny money that is actually the same internet funny money as the first one. - No, he's NOT a licensed e-money dealer at all, I just fired up this software...").

I prefer Ripple to this one, as it deals with this trust issue by involving people you know (as far as I understood it) instead of staying completely pseudonymous.

You've hit the nail on the head - that is the problem with colored coins - you have to trust the issuer to support their value.

This problem is exactly what I wrote my paper about!