[Announce] Project Quixote - BitShares, BitNames and 'BitMessage'

[AnonyMint]

Larger dividends (nominal or percentage of price) don't stop some stock prices from being lower.

This is a false analogy. We are talking about the  the price of 2*dividend stream B in terms of dividend stream B. You are talking about two different dividend streams entirely.

Assuming B=BitShares, B is not only valued based on its revenue stream. Bitcoin has no revenue stream and it is $120.  

There are two different asset classes here, one is a BitShare and the other is an asset that has a short and long position that created it. Exxon-Mobile != Apple Computer != Gold futures options (Python syntax).

This talk of long, short, etc. has no intrinsic relationship to the real world.

Check out some of the gambling site's shit that people bet on. People will bet on anything. Bookies in Vegas will give you odds on a booger falling from Obama's nose when he is giving his state-of-the-prison address.

Make that State-of-the-Sanitarium

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[cunicula]

Check out some of the gambling site's shit that people bet on. People will bet on anything. Bookies in Vegas will give you odds on a booger falling from Obama's nose when he is giving his state-of-the-prison address.

Make that State-of-the-Sanitarium

Okay, sure. But the gambling is centralized. This is a decentralized currency right? So we should be able to make bitObamaBooger with no problem, as long as we define it precisely (e.g. bitObamaBooger is worth the one bitShare for every distinct booger visible in Obama's nose during the 2014 NBC HD broadcast of the State of the Union address ).

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.


 

[cunicula]

Larger dividends (nominal or percentage of price) don't stop some stock prices from being lower.

This is a false analogy. We are talking about the  the price of 2*dividend stream B in terms of dividend stream B. You are talking about two different dividend streams entirely.  

There are two different asset classes here, one is a BitShare and the other is an asset that has a short and long position that created it. Exxon-Mobile != Apple Computer != Gold futures options (Python syntax).

This talk of long, short, etc. has no intrinsic relationship to the real world. There is an assumption that everyone will expect the price of a bitUSD in terms of netshares to track the price of a USD in terms of netshares. Why won't it track the price of a Euro instead? Or a piece of horseshit? Or a weighted basket of horseshit and Euros, where the weights change at random from hour to hour? Explain.

Can I issue bitHorseshit? Will it track the price of a kg of horseshit if I back it with 2 kg of horseshit in bitshares when I issue it initially? If not, why not?

Yes, you can issue BitHorseshit if you can find enough market participants to make it a viable market and establish consensus.. of course you would have to launch a new blockchain with BitShorseshit as one of the items listed and because few people are interested in speculating on the price of Horseshit no one would mine the chain.     But the economics would still work.

The key here is market consensus.  Bitcoin only has the value it does because of market consensus and the price discovery on Bitcoin started out with very wide Bid/Ask spreads that were all over the map.  Eventually you establish some market depth and everyone knows what everyone else is currently thinking based upon the order book.   So on day one this is what will happen.

I will offer to short BitUSD at price     100 BTS
Someone else will bid                      1 BTS
Someone else will bid                      5 BTS
Someone else will offer to short at    50 BTS

This back and forth placing of bids will continue until finally two people agree on what the BTS / BitUSD price should be.   By this time there is enough market depth that consensus has been reached.  No one person can change this consensus and cause it to track something else.  

Okay, but why is the consensus at all related to the real world price of horseshit? Couldn't you just as easily suppose that consensus will determine that a bitHorseshit is worth 1 kg of diamonds as 1 kg of horseshit. What makes my choice of the name horseshit matter for the outcome in any way? If I backed bitHorseshit_1kg with 2x the price of 1 kg of diamonds and bitDiamonds_1kg with 2x the price of 1 kg of diamonds, wouldn't they be fungible assets? After all, they both yield the same revenue stream for asset holders. If my strongly backed horseshit sells for less then bitDiamonds_1kg, it seems like that would be an arbitrage opportunity.

[I am sounding like a broken record here. Indicating time for bed.]

[AnonyMint]

I will offer to short BitUSD at price     100 BTS
Someone else will bid                      1 BTS
Someone else will bid                      5 BTS
Someone else will offer to short at    50 BTS

This back and forth placing of bids will continue until finally two people agree on what the BTS / BitUSD price should be.   By this time there is enough market depth that consensus has been reached.  No one person can change this consensus and cause it to track something else. 

There is no contention about that. If that is what you mean by "nash equilibrium" then the above is an insufficient model, because it doesn't explain how moves in the price of USD will translate to moves in BitUSD. Over time there could be a pernicious drift, because the relative probabilities for being short and long are not symmetric in your design. I proposed a way to attempt to make them symmetric upthread.

[AnonyMint]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Indeed we share that rational skepticism.

But I am more open to the idea that decentralized speculation is viable. Yet I've never seen undeliverable futures or options markets.

[bytemaster]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Indeed we share that rational skepticism.

The link is in every user of the system communicating information they know through the prices they buy and sell at.

[AnonyMint]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Indeed we share that rational skepticism.

The link is in every user of the system communicating information they know through the prices they buy and sell at.

In game theory, they don't have an incentive to bet the price that USD is, rather they have an incentive to calculate the probabilities of the risks of the other market participants, then bet on where that moves the price to. That is why I say asymmretric probabilities may cause either a proportional skew or a parasitic pernicious drift. I have not been able to model which it will be.

[jedunnigan]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Is that not the same argument Bitcoin skeptics use?

[AnonyMint]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Is that not the same argument Bitcoin skeptics use?

One difference is Bitcoin isn't tracking another asset.

So maybe your point can be taken to support that BitAssets won't go to 0. Yet that facie evidence doesn't support a cogent argument that BitUSD will track USD (at least over long periods of time). We need a model.

[AnonyMint]

bytemaster, you really only need it to track for short periods of time, so that you can get the liquidity benefits for local exchangers. I think you are safe. Implement.

[bytemaster]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Is that not the same argument Bitcoin skeptics use?

One difference is Bitcoin isn't tracking another asset.

So maybe your point can be taken to support that BitAssets won't go to 0. Yet that facie evidence doesn't support a cogent argument that BitUSD will track USD. We need a model.

Yes, we need a model... so my mental model has been to come up with rational choices actors can make that would cause it to have any other value than one highly correlated with USD?  

The way I see it there are 3 'options':

1) Min Value  ==  0  (Ruled Out)
2) Max Value == collateral value. (Should be obvious extreme on the other side)
3) Something in the middle... based upon market forces.

I think we have proven 0 Value is not valid, and by the same logic, can assume that the value can never exceed the collateral or we would be creating value from nothing.

So this means there is some other 'equilibrium point'... the point at which a buyer and seller can agree to issue a new asset with offsetting positions.   So the only questions are:  what price would this be and why?  How does this change over time?  What does the change over time do to the expected present value of the asset.

One theory is that the price will fluctuate 'randomly'... namely the market won't know how to price it.... but I reject this theory because without some basis for consensus the very first trade creating BitUSD would never be executed.
My theory is that it will fluctuate according to market consensus of what it should follow.  You either trade with where you think the consensus will move or you will face loses by being on the wrong side of the bet.  On what basis could you rationally bet on which way the consensus would move?  

All that remains are attacks where the rules can be manipulated by a single actor independent of market consensus to manipulate the price to any arbitrary point profitably.  If these kinds of attacks are possible it would entirely undermine the system and thus I place a high value / bounty on finding and revealing them.

[jedunnigan]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Is that not the same argument Bitcoin skeptics use?

One difference is Bitcoin isn't tracking another asset.

So maybe your point can be taken to support that BitAssets won't go to 0. Yet that facie evidence doesn't support a cogent argument that BitUSD will track USD (at least over long periods of time). We need a model.

Ah yes, this I understand.

bytemaster: when are you planning to put up bounties for specific tasks. And are you using CIYAM? I have a friend who wants to help out.

[AnonyMint]

No harm in a little embedded humor, I hope you include BitBeavisAndButthead or BitMoanLisa in the main blockchain.

P.S. I dropped underscores from local variable names. I prefer lower case first letter. The underscores make names longer.

[bytemaster]

No harm in a little embedded humor, I hope you include BitBeavisAndButthead or BitMoanLisa in the main blockchain.

P.S. I dropped underscores from local variable names. I prefer lower case first letter. The underscores make names longer.

Bit MonaLisa at least as some market value to calculate against, not sure how a speculator would be on BitBeavisAndButthead...  when we launch our test network we are considering including some exotic assets just to collect the market data.   

[bytemaster]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Is that not the same argument Bitcoin skeptics use?

One difference is Bitcoin isn't tracking another asset.

So maybe your point can be taken to support that BitAssets won't go to 0. Yet that facie evidence doesn't support a cogent argument that BitUSD will track USD (at least over long periods of time). We need a model.

Ah yes, this I understand.

bytemaster: when are you planning to put up bounties for specific tasks. And are you using CIYAM? I have a friend who wants to help out.

Yes, we have plans to use CIYAM or a model very similar to it.  We are working with Ian to get BitID logins for CIYAM.   However, we are working on the project management overhead.  In the mean time I have created some tasks in the github repo... tasks.md  and put BTC bounties on them.   I will be adding tasks there as I come up with them until I can get a full time PM to manage CIYAM.    If you know anyone who wants to work on small tasks for small bounties then they can start with that.  As it grows and is proven successful I will probably spend more time enhancing the process and integrating with CIYAM.   

So check out the tasks.md file in the github repo, contact me, and I will update the tasks.md file to indicate that it is reserved for you..  Fork the code, submit a pull request with a BTC address for payment and I will payout on merge.  Some of the tasks are 'menial' right now, but good to get your feet wet and allow me to focus on the core algorithms.

[AnonyMint]

Bit MonaLisa at least as some market value to calculate against...

Bit MoanLisa wasn't a typo  

Cheers. I am headed over to CoinJoin thread for a while.

Oh my, Obama wants to starve students at school.

Socialism always ends in scarce resources.

[jedunnigan]

However, I don't see why the price of bitObamaBooger will be related to the real world booger count. It doesn't matter what actually happens in the real world because the real world has no link to the bitshares world at all.

Is that not the same argument Bitcoin skeptics use?

One difference is Bitcoin isn't tracking another asset.

So maybe your point can be taken to support that BitAssets won't go to 0. Yet that facie evidence doesn't support a cogent argument that BitUSD will track USD (at least over long periods of time). We need a model.

Ah yes, this I understand.

bytemaster: when are you planning to put up bounties for specific tasks. And are you using CIYAM? I have a friend who wants to help out.

Yes, we have plans to use CIYAM or a model very similar to it.  We are working with Ian to get BitID logins for CIYAM.   However, we are working on the project management overhead.  In the mean time I have created some tasks in the github repo... tasks.md  and put BTC bounties on them.   I will be adding tasks there as I come up with them until I can get a full time PM to manage CIYAM.    If you know anyone who wants to work on small tasks for small bounties then they can start with that.  As it grows and is proven successful I will probably spend more time enhancing the process and integrating with CIYAM.   

So check out the tasks.md file in the github repo, contact me, and I will update the tasks.md file to indicate that it is reserved for you..  Fork the code, submit a pull request with a BTC address for payment and I will payout on merge.  Some of the tasks are 'menial' right now, but good to get your feet wet and allow me to focus on the core algorithms.

Oh cool. He was hoping for some more serious tasks, I'll have him check back in due time.

[nomailing]

Here is another suggestion for improvement:

In the white paper you propose:

Unfortunately, merged mining requires a Merkle tree as the proof-of-work (POW) and thus takes more space in the block headers that must be stored for a year or more.

...

Thus you can calculate your mining reward as  block-reward / 2^(merkel-branch-depth). The end result is that if Red and Blue BitShares have equal market value and difficulty then merged mining is equally as profitable single mining.

You do not have to include the full merkel-tree in your block header, but just some nodes of the tree. If you have a merkle tree with depth N, then it is enough to include only N hashes in each individual blockchain, but at the same time you can merge mine in parallel in 2^N chains. So i hope you realize that the problem of space in the block headers, what you describe, is not really such a big problem.
*EDIT: see https://en.bitcoin.it/wiki/Merged_mining_specification for more in depth explanation

So if you discount the block reward by block-reward / 2^(merkel-branch-depth), as you suggest in the white paper, then you give incentives to miners to not do merge mining, because it wouldn't generate more reward but would require more bandwidth and storage. This is a very serious security issue, because this will lead to maybe 1000+ chains eventually (as proposed in your paper) with miners distributed across all chains not merge mining. In this distributed mining environment, it is very easy for an attacker with less than 1% of the total hashing power to control over 50% of the hashing power in one of the individual chains.

So you really should either remove the discounting based on the merkel-tree-branch or at least do the discounting proportional to the space requirements by merged mining. So instead the reward could be:
block-reward / merkel-branch-depth

Edit: i.e. if you do merge mining on 4000 chains, then you just have to include 12 hashes in the block headers. This is really not so much space, if you evaluate the benefit of much improved security and the benefit of more miners running full nodes in all chains if their bandwidth allows it.

[AnonyMint]

Don't forget the loss of fungibility argument for anonymity:

Would it be wise to implement "stronger" anonymity in bitcoin ?

This has been asked before— and I think it's an important question. We shouldn't just assume that any feature is good.

After extensive consideration, I think I can answer this with an emphatic "Yes".  Without good anonymity the fungibility of Bitcoin can be substantially degraded.  The road to fungibility loss is paved with good intentions, but the end result makes Bitcoin less useful as money.   "We're really sure that _this_ bitcoin was stolen" ... "We're quite confident that this person is bad" ...  but if Bitcoin is to be trustworthy you must never have reason to feel that you'll wake up on the wrong side of a kafkaesq heuristic, or that you'll have to fight for what is rightfully yours even if there is due process, having to defend yourself means you already lost.

I believe that the ultimate social good that comes out of weaker anonymity for Bitcoin like activity is fairly limited: Bad-guys will generally figure out good ways around the lack of transaction anonymity, but still get caught based on their other activities even when transactions are strongly private. The harms from not having good anonymity— the losses of privacy, the danger to fungibility— hurt everyone.

Then there is the question of should it be in the system or outside of it.  If we ignore the implementation cost, I think here again the answer is emphatically that it should be inside the system:  Putting it outside greatly reduces its effectiveness.   But right now implementation costs are non-trivial and so I don't think there is much of a question of including it in the system—  and, if people build it outside of the system: we can't stop them even if we were to agree that it were a bad thing.

[bytemaster]

Don't forget the loss of fungibility argument for anonymity:

Would it be wise to implement "stronger" anonymity in bitcoin ?

This has been asked before— and I think it's an important question. We shouldn't just assume that any feature is good.

After extensive consideration, I think I can answer this with an emphatic "Yes".  Without good anonymity the fungibility of Bitcoin can be substantially degraded.  The road to fungibility loss is paved with good intentions, but the end result makes Bitcoin less useful as money.   "We're really sure that _this_ bitcoin was stolen" ... "We're quite confident that this person is bad" ...  but if Bitcoin is to be trustworthy you must never have reason to feel that you'll wake up on the wrong side of a kafkaesq heuristic, or that you'll have to fight for what is rightfully yours even if there is due process, having to defend yourself means you already lost.

I believe that the ultimate social good that comes out of weaker anonymity for Bitcoin like activity is fairly limited: Bad-guys will generally figure out good ways around the lack of transaction anonymity, but still get caught based on their other activities even when transactions are strongly private. The harms from not having good anonymity— the losses of privacy, the danger to fungibility— hurt everyone.

Then there is the question of should it be in the system or outside of it.  If we ignore the implementation cost, I think here again the answer is emphatically that it should be inside the system:  Putting it outside greatly reduces its effectiveness.   But right now implementation costs are non-trivial and so I don't think there is much of a question of including it in the system—  and, if people build it outside of the system: we can't stop them even if we were to agree that it were a bad thing.

Our goal is to have as much Anon. as possible.  Including using things like CoinJoin, ZeroCoin, etc.   Ultimately privacy is protected at a higher level than the block chain based upon how clients generate transactions and use the chain.