*************** Amber Alert ***************
Thoughts on Counterparty Pump for Darkcoiners and why you need to HODL (your DRK).
Did you see Vitalik's remarks about "metacoins" ?
(Don't read if you're bagholding counterparty right now - or at least wait till you've finished enjoying your Champaign).
There a link somewhere? Can't find the remarks and am curious.
Here's the problem with the counterparty / Bitcoin combination. It's to do with SPV (Simplified Payment Verification).
VERIFICATION - HOW BITCOIN WORKS
When you do a Bitcoin transaction, the blockchain "confirms" it by burying it under a number of blocks. The more blocks arrive on top of your transaction, the more secure it is because there's progressively less chance of the blockchain forking with every new block that's accepted by a majority of miners. (Usually 3 is good enough for exchanges).
Furthermore, when a new block is accepted, it implicitly contains the entire blockchain transaction history within it because it is a hash of the block before it which was a hash of the block before that etc etc.
VERIFICATION - HOW CONTRACTS WORK
Now think of a contracts protocol that's much more complex than Bitcoin's. Those contracts have their own "confirmation" rules which are governed by the "meta" protocol that's managed off the Bitcoin blockchain. Although the bitcoin blockchain can act as the "transport" mechanism for those contracts, it can't actually validate them because it doesn't understand the contract protocol.
Furthermore, a new Bitcoin block containing a contracts transaction is NOT a "hash" of all the contract confirmations that went before it - that still has to be done by the meta protocol which then has to potentially thread it's way back through the whole ancestry of transaction history for that particular contract, effectively requiring it to scan the whole Bitcoin blockchain just to confirm.
FUNCTIONALITY - HOW PROPRIETARY BLOCKCHAINS WORK
On the other hand, when these Bitcoin 2.0 protocols use proprietary blockchains, the blockchain *can* behave in a manner more analogous to bitcoin because they inherit the contracts protocol for the purpose of verification. That's why the approach that NxT, Etherium etc have taken will always blow the Bitcoin metacoin approach out of the water for speed, functionality, user experience.
WHY A BLOCKCHAIN ISN’T LIKE AN EMAIL PROTOCOL
Here's another thing. Blockchains are not like email or web protocol in terms of "generality". The blockchain is closer to an application than a transport protocol in terms of adoption profile. Here's an example:
With the email protocol (SMTP) I can use a Mac email client and have my message read by any other eMail client - even if it wasn't the one I used to send it. Even if it wasn’t the same “brand” or platform as the one I used to send it. Even if it has completely different functionality from the one I used to send it (like message threading, folder browsing, fancy archiving & indexing etc).
On the other hand, with a contracts protocol running over the Bitcoin blockchain I CANNOT send a contracts transaction and have it read/processed by a regular Bitcoin client. I need a client at the other end that understands the contracts protocol (in this case Etherium) that I'm using.
So by using the Bitcoin blockchain as the transport mechanism I’m not increasing the audience for adoption of my protocol. I’m just placing a great big spanner in the works and restricting the communications depth between initiator and recipient. I'm not gaining any advantages but am losing a whole pile of features such as speed, confirmation security, scriptability, user experience etc.
HOW DARKCOIN FITS INTO ALL OF THIS
The two extremes above are perfect for making an appraisal of how Darkcoin deploys an architecture thats absolutely optimal for what it's trying to do. Firstly, Darkcoin doesn’t use the Bitcoin blockchain for its transport meachanism but it DOES use the Bitcoin protocol which is the critical element for commercial adoption.
Secondly, Darkcoin DOES have a proprietary technology which is managed off blockchain (the masternode network). This gives it massive scope for innovation without being restricted by Bitcoin's protocol requirements. Despite this it's not subject to any of the restrictions of the contracts protocol described above because its role is purely concerned with enhancing transaction anonymity as opposed to the business logic of contracts within those transactions.
So Darkcoin’s architecture is optimally balanced to get the best of all worlds while Counterparty’s Etherium/Bitcoin combo is a complete square peg in a round hole (IMHO).
WHAT IS GOING ON IN THE XPC/BTC MARKET ?
To me, what's happened here is a market phenomenon, not a technical one. Whale pumpers are always looking for "newsworthy" entry points for starting a pump. The Counterprty announcement of a Bitcoin-Etherium combo is perfect because it takes 2 apparently competing protocols and integrates them - an investors dream ! Investment and hedge in a single buy. Only from a technical standpoint it's far from it because it's going to work like sh*t. But who cares when you know no investor reads any whitepapers.
I'll leave the last word to Vitalik who IMO knows his sh*t whatever anyone thinks of the business folk partnering him. Here's why he didn't go for this option in the first place - they already thought it all through (this is just one reason why it's a sub-optimal architecture, there are others).
https://www.ethereum.org/pdfs/EthereumWhitePaper.pdf Page 11:
