[ANN][XCP] Counterparty - Pioneering Peer-to-Peer Finance - Official Thread

[freedomfighter]

2-way pegging means that value may be transferred at a pegged (fixed) rate in either direction. The "2-way" is in contrast to one-way pegging, which is for example how Counterparty was issued. Unlike proof-of-burn, 2-way pegging involves sending coins to a special form of output which identifies the destination chain and recipient on the other side. At this stage it is similar to proof-of-burn: you have provably made the currency unspendable to you, and in doing so you gain the right to claim an equal number of coins at the destination side chain.

What's new is the return peg: to move those side chain coins back onto bitcoin, you perform the same operation again. First you send the side-chain coins to a special output naming the bitcoin chain and yourself as recipient. On the bitcoin side you take one of those previous burn-like outputs which sent coins into the side chain, and present your proof of having "burnt" sidecoins in order to claim an equal number of real bitcoins.

This special form output is a script which is able to understand an embedded proof-of-spend from another chain, which validates the accounting rules (you need to spend X bitcoins to claim X sidecoins, and vice versa), and which makes sure that claimed coins go to the indicated recipient.


This sortof-is and sortof-isn't fixed exchange rates. If you are coming from an economic background you know the problems of fixed exchange rates, but those problems don't really apply here. The problem with a fixed exchange rate over national currencies is that the two are not in fact equivalent -- you have two issuers that are separately backing each currency. In the case of 2-way pegging however, the two currencies are equivalent. You only ever get sidecoins by making bitcoins inaccessible, and vice versa. It isn't about fixing exchange rates between two currencies, rather it is about using the same exact currency on two different networks: sidecoins are bitcoins, and bitcoins are sidecoins.


Regarding innovation, monetary reward from speculative asset issuance is a failed model. Any innovation that occurs could be cloned on a side chain using bitcoins, freicoins, or some other already issued coin as the native currency. In a free market there is absolutely no reason to prefer the non-pegged alternative.

this question related to the red-marked quote:

What happens if I moved a BTC to a side chain to be used with a financial instruments such as options or even betting and GAINED an equivalent value to what I moved out. I now have 2 sidecoins but previously moved only 1BTC. can I go 1-way with one of them?

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[sparta_cuss]

This is interesting!

"To address the dearth of nodes in the Bitcoin network, the Counterparty Team will be launching the Nodeshares initiative. Nodeshares is a
non-profit that collects donations for the setup and maintenance of full bitcoin nodes."

<snip>

"To kick-start the Nodeshares initiative, Counterparty will be donating 100 full nodes to Nodeshares, which is approximately 1.1% of the total nodes in the Bitcoin network. For comparison, Counterparty data currently makes up approximately 0.03% of the data in the blockchain."

https://www.counterparty.co/full-bitcoin-nodes

... and ...

http://nodeshares.com

The pope just rang me up to tell me you guys have just been granted Aureoles. Wash them separately at 30 degrees.

But really, this is incredible. After paying a 2000+ dividend to all holders of BTC rather than keeping it for yourselves you step up once more and do this. May the haters forever be silent, and may all the initiatives in the community share this spirit. I salute you.

What's just as incredible is that in the hour or so that this post has been up on reddit, 8 comments have been made, and none of them is hating on Counterparty. This is some kind of record, I think.

[baddw]

2-way pegging means that value may be transferred at a pegged (fixed) rate in either direction. The "2-way" is in contrast to one-way pegging, which is for example how Counterparty was issued. Unlike proof-of-burn, 2-way pegging involves sending coins to a special form of output which identifies the destination chain and recipient on the other side. At this stage it is similar to proof-of-burn: you have provably made the currency unspendable to you, and in doing so you gain the right to claim an equal number of coins at the destination side chain.

What's new is the return peg: to move those side chain coins back onto bitcoin, you perform the same operation again. First you send the side-chain coins to a special output naming the bitcoin chain and yourself as recipient. On the bitcoin side you take one of those previous burn-like outputs which sent coins into the side chain, and present your proof of having "burnt" sidecoins in order to claim an equal number of real bitcoins.

This special form output is a script which is able to understand an embedded proof-of-spend from another chain, which validates the accounting rules (you need to spend X bitcoins to claim X sidecoins, and vice versa), and which makes sure that claimed coins go to the indicated recipient.


This sortof-is and sortof-isn't fixed exchange rates. If you are coming from an economic background you know the problems of fixed exchange rates, but those problems don't really apply here. The problem with a fixed exchange rate over national currencies is that the two are not in fact equivalent -- you have two issuers that are separately backing each currency. In the case of 2-way pegging however, the two currencies are equivalent. You only ever get sidecoins by making bitcoins inaccessible, and vice versa. It isn't about fixing exchange rates between two currencies, rather it is about using the same exact currency on two different networks: sidecoins are bitcoins, and bitcoins are sidecoins.


Regarding innovation, monetary reward from speculative asset issuance is a failed model. Any innovation that occurs could be cloned on a side chain using bitcoins, freicoins, or some other already issued coin as the native currency. In a free market there is absolutely no reason to prefer the non-pegged alternative.

this question related to the red-marked quote:

What happens if I moved a BTC to a side chain to be used with a financial instruments such as options or even betting and GAINED an equivalent value to what I moved out. I now have 2 sidecoins but previously moved only 1BTC. can I go 1-way with one of them?

Yes, because the 1BTC that you gained through trading had to be originally moved into the sidechain as well, and it can be redeemed in the same way.

[sparta_cuss]

2-way pegging means that value may be transferred at a pegged (fixed) rate in either direction.
<snip>

This special form output is a script which is able to understand an embedded proof-of-spend from another chain, which validates the accounting rules (you need to spend X bitcoins to claim X sidecoins, and vice versa), and which makes sure that claimed coins go to the indicated recipient.

<snip>

this question related to the red-marked quote:

What happens if I moved a BTC to a side chain to be used with a financial instruments such as options or even betting and GAINED an equivalent value to what I moved out. I now have 2 sidecoins but previously moved only 1BTC. can I go 1-way with one of them?

Yes, because the 1BTC that you gained through trading had to be originally moved into the sidechain as well, and it can be redeemed in the same way.

Where did this gain, this additional sidecoin, come from?

[baddw]

2-way pegging means that value may be transferred at a pegged (fixed) rate in either direction.
<snip>

This special form output is a script which is able to understand an embedded proof-of-spend from another chain, which validates the accounting rules (you need to spend X bitcoins to claim X sidecoins, and vice versa), and which makes sure that claimed coins go to the indicated recipient.

<snip>

this question related to the red-marked quote:

What happens if I moved a BTC to a side chain to be used with a financial instruments such as options or even betting and GAINED an equivalent value to what I moved out. I now have 2 sidecoins but previously moved only 1BTC. can I go 1-way with one of them?

Yes, because the 1BTC that you gained through trading had to be originally moved into the sidechain as well, and it can be redeemed in the same way.

Where did this gain, this additional sidecoin, come from?

Who knows?  Trading?  Betting?  SatoshiSidecoinDice?  Either way, that coin didn't come from nowhere.  It came from someone who moved it into the sidechain from the mainchain.

[Peter Todd]

This is interesting!

"To address the dearth of nodes in the Bitcoin network, the Counterparty Team will be launching the Nodeshares initiative. Nodeshares is a
non-profit that collects donations for the setup and maintenance of full bitcoin nodes."

<snip>

"To kick-start the Nodeshares initiative, Counterparty will be donating 100 full nodes to Nodeshares, which is approximately 1.1% of the total nodes in the Bitcoin network. For comparison, Counterparty data currently makes up approximately 0.03% of the data in the blockchain."

https://www.counterparty.co/full-bitcoin-nodes

... and ...

http://nodeshares.com

Any specs yet on what a "full node" represents?

In terms of actual capacity you're probably donating quite a bit more than 1.1% of the capacity of the network - for starters there aren't 11,000 full nodes reachable at any one time, more like half that number.

[maaku]

the coins come from somewhere.when you enter into a contract with someone else their loss is your gain. when it comes your time to redeem the coins it does not matter where they came from, just who currently holds them.

[PhantomPhreak]

This is interesting!

"To address the dearth of nodes in the Bitcoin network, the Counterparty Team will be launching the Nodeshares initiative. Nodeshares is a
non-profit that collects donations for the setup and maintenance of full bitcoin nodes."

<snip>

"To kick-start the Nodeshares initiative, Counterparty will be donating 100 full nodes to Nodeshares, which is approximately 1.1% of the total nodes in the Bitcoin network. For comparison, Counterparty data currently makes up approximately 0.03% of the data in the blockchain."

https://www.counterparty.co/full-bitcoin-nodes

... and ...

http://nodeshares.com

Any specs yet on what a "full node" represents?

In terms of actual capacity you're probably donating quite a bit more than 1.1% of the capacity of the network - for starters there aren't 11,000 full nodes reachable at any one time, more like half that number.

Noted. A preliminary list of requirements is probably:

* Has a complete copy of the blockchain.
* Has a high likelyhood of being on a different physical machine from all other nodes.
* Has an external IP address and allows incoming connections.
* Has a large number of relatively low-latency connections to other nodes.
* Is well-situated geographically.

[sparta_cuss]

2-way pegging means that value may be transferred at a pegged (fixed) rate in either direction.
<snip>

This special form output is a script which is able to understand an embedded proof-of-spend from another chain, which validates the accounting rules (you need to spend X bitcoins to claim X sidecoins, and vice versa), and which makes sure that claimed coins go to the indicated recipient.

<snip>

this question related to the red-marked quote:

What happens if I moved a BTC to a side chain to be used with a financial instruments such as options or even betting and GAINED an equivalent value to what I moved out. I now have 2 sidecoins but previously moved only 1BTC. can I go 1-way with one of them?

Yes, because the 1BTC that you gained through trading had to be originally moved into the sidechain as well, and it can be redeemed in the same way.

Where did this gain, this additional sidecoin, come from?

Who knows?  Trading?  Betting?  SatoshiSidecoinDice?  Either way, that coin didn't come from nowhere.  It came from someone who moved it into the sidechain from the mainchain.

So is it the case that at any time, anyone can move any amount of BTC that they control into any sidechain?
EDIT: What I am getting at is whether there are limits to the number of units on a particular sidechain. One does not need to find a "seller" or "redeemer" of sidecoins to make a BTC-sidecoin trade, since the sidecoin is not truly a separate unit of currency, so one is not really trading into it, correct?

(Thank you all for your patience and generosity in responding to my questions. I assume others trying to learn, too. I'm trying to piece things together from here and the two reddit threads.)

[xnova]

This is interesting!

"To address the dearth of nodes in the Bitcoin network, the Counterparty Team will be launching the Nodeshares initiative. Nodeshares is a
non-profit that collects donations for the setup and maintenance of full bitcoin nodes."

<snip>

"To kick-start the Nodeshares initiative, Counterparty will be donating 100 full nodes to Nodeshares, which is approximately 1.1% of the total nodes in the Bitcoin network. For comparison, Counterparty data currently makes up approximately 0.03% of the data in the blockchain."

https://www.counterparty.co/full-bitcoin-nodes

... and ...

http://nodeshares.com

Any specs yet on what a "full node" represents?

In terms of actual capacity you're probably donating quite a bit more than 1.1% of the capacity of the network - for starters there aren't 11,000 full nodes reachable at any one time, more like half that number.

Noted. A preliminary list of requirements is probably:

* Has a complete copy of the blockchain.
* Has a high likelyhood of being on a different physical machine from all other nodes.
* Has an external IP address and allows incoming connections.
* Has a large number of relatively low-latency connections to other nodes.
* Is well-situated geographically.

We are also in the process of developing the required hardware specs as well. The RAM per node will be between 1GB and 2GB. While we are staging hardware requirements experiments internally, we would be interested to know if anyone has had issues running bitcoind on Linux (Ubuntu) server with 1GB of RAM (especially with 0.9.0+). The VPSes will be dedicated to running bitcoind, essentially.

[charitycoin]

I have created a new asset on the system:  Charity Coin
See http://charitycoin.co.uk

The primary purpose of this coin is to encourage charitable donations and I think this could add value to Counterparty

The basic principals are:
1. £1 verified donation to any registered charity = 1 Charity Coin
2. This is the only method of coin creation
3. There will be a maximum of 100 million coins

The basic idea is to verify all donations via the comments on JustGiving and then publish the links to all the comments so all the users can know that coins are only created after genuine donations.  The coins are then manually allocated to donors.

Please let me know what you guys think and how this could improve.  It is only in the early stages so there may be many weaknesses in the system.  Please contact me at info@charitycoin.co.uk if you have any suggestions on how to improve it or if you would like to help.

Please also feel free to test the concept out and make a small donation to a charity of your choice.

[BitcoinTangibleTrust]

We are also in the process of developing the required hardware specs as well. The RAM per node will be between 1GB and 2GB. While we are staging hardware requirements experiments internally, we would be interested to know if anyone has had issues running bitcoind on Linux (Ubuntu) server with 1GB of RAM (especially with 0.9.0+). The VPSes will be dedicated to running bitcoind, essentially.

I cannot say who our current VPS provider is, but we've had VPS shutdowns when running nodes with 1GB of RAM on a large VPS provider. These nodes shutoff unexpectedly and we think there are rule-based trips we've crossed with the VPS provider.

As such, we've upgrade all our nodes to a minimum of 2GB RAM and 40 connections for each node and we seem to be doing okay.

[maaku]

So is it the case that at any time, anyone can move any amount of BTC that they control into any sidechain?

Yes, and in doing so they give up access to those bitcoins. So the amount of total bitcoin-equivalent coins under control by users is conserved.

EDIT: What I am getting at is whether there are limits to the number of units on a particular sidechain.

Well there obviously can't be more than 21 million * peg price sidecoins. Other than that, the number of sidecoins in existence is simply determined by current demand. It helps to think of sidecoins and bitcoins being the same thing, as distinctions between the two are mostly implementation details. At any given time there are max 21 million bitcoins in existence, some of them on the main bitcoin chain, some of them on specific side chains.

One does not need to find a "seller" or "redeemer" of sidecoins to make a BTC-sidecoin trade, since the sidecoin is not truly a separate unit of currency, so one is not really trading into it, correct?

This is getting into implementation details, so pay close attention to the parts which seem contradictory. Conceptually anyone who wants sidecoins and has bitcoins or vice versa can simply move value from one chain to the other, in essence destroying bitcoins and printing sidecoins albeit in a reversible process. However, this takes a considerable amount of time to clear -- about 3 days -- and blockchain space which requires fees. So in practice we fully expect that someone wanting to trade bitcoins for sidecoins will use a distributed marketplace and atomic cross-chain swaps in order to buy one coin with another, by finding a buyer at the other side. Use of the pegging mechanism will be limited to market makers who arbitrage when the price starts to deviate from the peg. Make sense?

[halfcab123]

Database 9 is now 26 MB 

[BitcoinTangibleTrust]

I have created a new asset on the system:  Charity Coin
See http://charitycoin.co.uk

The primary purpose of this coin is to encourage charitable donations and I think this could add value to Counterparty

The basic principals are:
1. £1 verified donation to any registered charity = 1 Charity Coin
2. This is the only method of coin creation
3. There will be a maximum of 100 million coins

The basic idea is to verify all donations via the comments on JustGiving and then publish the links to all the comments so all the users can know that coins are only created after genuine donations.  The coins are then manually allocated to donors.

Please let me know what you guys think and how this could improve.  It is only in the early stages so there may be many weaknesses in the system.  Please contact me at info@charitycoin.co.uk if you have any suggestions on how to improve it or if you would like to help.

Please also feel free to test the concept out and make a small donation to a charity of your choice.

Welcome!

Great to see more AssetBacked issuances launching on Counterparty.

Cheers!
BTT

[jimhsu]

Haven't posted here in a while. Real life takes its toll. Lots seem to be going on after the mainnet launch.

Since everything appears to be fine, I'll step out again.

[sparta_cuss]

So is it the case that at any time, anyone can move any amount of BTC that they control into any sidechain?

Yes, and in doing so they give up access to those bitcoins. So the amount of total bitcoin-equivalent coins under control by users is conserved.

EDIT: What I am getting at is whether there are limits to the number of units on a particular sidechain.

Well there obviously can't be more than 21 million * peg price sidecoins. Other than that, the number of sidecoins in existence is simply determined by current demand. It helps to think of sidecoins and bitcoins being the same thing, as distinctions between the two are mostly implementation details. At any given time there are max 21 million bitcoins in existence, some of them on the main bitcoin chain, some of them on specific side chains.

One does not need to find a "seller" or "redeemer" of sidecoins to make a BTC-sidecoin trade, since the sidecoin is not truly a separate unit of currency, so one is not really trading into it, correct?

This is getting into implementation details, so pay close attention to the parts which seem contradictory. Conceptually anyone who wants sidecoins and has bitcoins or vice versa can simply move value from one chain to the other, in essence destroying bitcoins and printing sidecoins albeit in a reversible process. However, this takes a considerable amount of time to clear -- about 3 days -- and blockchain space which requires fees. So in practice we fully expect that someone wanting to trade bitcoins for sidecoins will use a distributed marketplace and atomic cross-chain swaps in order to buy one coin with another, by finding a buyer at the other side. Use of the pegging mechanism will be limited to market makers who arbitrage when the price starts to deviate from the peg. Make sense?

Yes, that makes sense.

Why will it take 3 days to clear?

It will be interesting to see (if this is actually implemented) how the distributed marketplaces will act. They will reserve certain amounts of particular sidechains, so how will they know how much? Will their fees for transacting bitcoins for sidecoins and back depend upon the scarcity of the sidecoins they have allotted/reserved? Will such fees be flexible according to the demands for particular sidecoins? We will see, perhaps.

I initially was confused because people were talking about running altcoins as sidechains, and I thought that meant that the same unit limits would be enforced. Now I see that sidechains are simply ways of running your bitcoins as/through specialized protocols that are not available through the primary bitcoin blockchain.

Thank you for your detailed responses.

And I apologize to the Counterparty regulars. It appears we've used this thread to talk about something that is not specifically about internal Counterparty issues, though it might bear on Counterparty.

[allwelder]

I tried to transfer xcp from blockchain address to counterwallet. I take private key from the blockchain BTC wallet under the option " Export unencrypted and and Bitcoin-Qt format". When I imported the private key to counterwallet, it shows "Not a valid private key". Anyone know how to solve this problem? Many thanks.

anybody help me?

Importing uncompressed keys is high on our todo list.

It should have been the very first feature.
I don't see the use of this wallet if I cannot import the priv key from blockchain.info and I think everyone would agree.

It can import some private keys from Blockchain.info. The lack of support for uncompressed keys was an oversight which we will rectify as soon as possible.

hope you can handle this ASAP.

[dexX7]

we would be interested to know if anyone has had issues running bitcoind on Linux (Ubuntu) server with 1GB of RAM (especially with 0.9.0+). The VPSes will be dedicated to running bitcoind, essentially.

The MSC faucet runs on a 1 GB RAM Ubuntu 12.04.4 x64 node with bitcoind 0.9 without problems and 60+ connections for a few months now. 512 MB were too little and resulted in random crashes.

[maaku]

Why will it take 3 days to clear?

First, a significant amount of work needs to be built on the “burn” transaction before it is used to claim the coins on the other chain, for the simple reason of avoiding DoS attacks. Then there is a length of time called the quieting period during which the return transaction and associated proofs are published, but not finalized, and anyone else can step forward with a reorg proof and rollback the transaction. Finally, there is a period of time afterwards analogous to the coinbase maturity where the coins are not spendable because a reorg could undo the peg transaction.

So that's three different waiting periods, each of which would probably be in the range of 100 - 144 blocks, if not more. The exact parameters are not set in stone at this moment, but with that in mind we should expect a peg transaction to take at least 2-3 days to fully clear, depending on the final choice of parameters.