RFC -- Distributed Bitcoin Stock Exchange (DBSE)

[boonies4u]

But you could sign a legal contract (maybe with a digital signature technology provided by your state) in which you express the legal meaning of the tokens.

Do you really believe that existing government courts are going to enforce these things?

Good luck explaining to the judge what a "blockchain" is

A series of chained blocks. Obviously.

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[caveden]

The advantage of the chain solution is that it would enable a global and completely decentralized market

The OT protocol is pretty much global too. And I must insist: this chain solution would not manage to decentralize the most important aspect of this problem, which is the trust on the issuer. This problem is inherently centralized. The chain would only decentralize double-spend checks, which IMHO are a minor issue in this context (if your issuer is serious, he won't allow double-spending, if he's not, that's the least of your worries).

Anyway, if you are really wanting to go by this chain solution, I'd suggest researching the viability of making this chain fully compatible with OT, in the sense that the chain itself, in what concerns the OT protocol, could be seen as just an extra server. This would bring more flexibility, interaction and competition.

As an aside, maybe it should be called more generally a Distributed Asset Exchange since Bitcoin is just the currency of choice and Stocks are just one instrument that might be handled within it.

+1

I definitely agree with that as well.

[jtimon]

But you could sign a legal contract (maybe with a digital signature technology provided by your state) in which you express the legal meaning of the tokens.

Do you really believe that existing government courts are going to enforce these things?

Legal contracts? Of course.
If the contract is based on certain technology (say the parts of a vehicle) the courts may have to call expert witnesses. That's how it works in Spain, at least.

Good luck explaining to the judge what a "blockchain" is

I'm not planning on enforcing nothing legally. That was YOUR requirement. I was just telling you how you could do it.
Of course, you need a lawyer to write such a contract and make it well defined and legal, maybe even a notary.
By the way, a service offering those kind of contracts is an entrepreneurial opportunity if any lawyer's interested...

[caveden]

Stock in a company represents an enforceable claim on the assets and future earnings of the company.

That's the ideal, of course, but there's no way we can do that with technology only. That doesn't mean strong reputation systems can't arise. If everything you've got are "gentlemen agreements", we can at least try to better identify who are the gentlemen and who are not. That's not as good as enforceable contracts, but still, I believe such a thing could bring some competition into an over regulated and consequently too concentrated market.

[jtimon]

The advantage of the chain solution is that it would enable a global and completely decentralized market

The OT protocol is pretty much global too.

As far as I can tell, each OT transaction server would have its own market. I meant global in the sense of unique.

And I must insist: this chain solution would not manage to decentralize the most important aspect of this problem, which is the trust on the issuer. This problem is inherently centralized.

Of course.

The chain would only decentralize double-spend checks, which IMHO are a minor issue in this context (if your issuer is serious, he won't allow double-spending, if he's not, that's the least of your worries).

This solution as well as the OT one, would allow the issuer to manage the double-spendings cheaply. It's just a technical advantage for the issuer and a convenience for the buyers. You also remove the needed trust from the operators of the market.
For example, with GLBSE you have to trust both the issuer and the market managers.

[caveden]

This solution as well as the OT one, would allow the issuer to manage the double-spendings cheaply.

Are you sure of that? Miners would want their fees. There's also the harder to measure costs of waiting for confirmations, as well as the probability of double-spends.

Anyway, we can't really know for sure what would be better, I guess both have its uses. I'm just saying that I think it would be more productive if we would focus on improving what's already there for OT, instead of working on this new chain right now. The OT protocol seems promising. I myself should read more about it and eventually contribute, I believe I saw there's a Java client for it or something...

But of course, an OT-blockchain, compatible with the OT protocol, would only bring extra choices and thus improvements.

[jtimon]

This solution as well as the OT one, would allow the issuer to manage the double-spendings cheaply.

Are you sure of that? Miners would want their fees. There's also the harder to measure costs of waiting for confirmations, as well as the probability of double-spends.

I mean cheaper for the issuer than running its own server.

Anyway, we can't really know for sure what would be better, I guess both have its uses. I'm just saying that I think it would be more productive if we would focus on improving what's already there for OT, instead of working on this new chain right now.

Sure, the OT solution could be "tomorrow". And this thing "the day after tomorrow" or later. We're just playing with a design draft.
I'm interested in this solution because it offers some advantages and enables new possibilities. For example, (and this is what's most interesting to me) a blockchain based ripple.

The OT protocol seems promising. I myself should read more about it and eventually contribute, I believe I saw there's a Java client for it or something...

That sounds great.

But of course, an OT-blockchain, compatible with the OT protocol, would only bring extra choices and thus improvements.

I'm not sure I get this part. What's an OT-blockchain?

[caveden]

But of course, an OT-blockchain, compatible with the OT protocol, would only bring extra choices and thus improvements.

I'm not sure I get this part. What's an OT-blockchain?

I don't even know if it's feasible, but I was imagining a blockchain implementation that would do pretty much the same task an OT server does. This way, such chain could be seen as another OT server by OT clients. This would make everything more flexible, adding competition and interoperability. Do you see what I mean? Actually, do you understand the OT protocol well enough to say if what I'm imagining is even feasible?

[jtimon]

I don't even know if it's feasible, but I was imagining a blockchain implementation that would do pretty much the same task an OT server does. This way, such chain could be seen as another OT server by OT clients. This would make everything more flexible, adding competition and interoperability. Do you see what I mean? Actually, do you understand the OT protocol well enough to say if what I'm imagining is even feasible?

Now I understand what you mean. I would say it is not feasible, but don't take my word for it. I don't understand OT well enough to be able to firmly tell you that it is not possible. It's just that you can't talk to a block chain like you do with a server. Request, answer, request, answer, etc. If possible, it would be definitely harder to implement than the chain proposed here.

[caveden]

Not to the chain of course but perhaps sending requests to the p2p network of miners instead... the answers could be in the blocks. The message structure doesn't need to be precisely identical, only "compatible" so that centralized tokens could be exchanged by tokens issued on this chain, and also that issuers could migrate their tokens from a server to the chain and vice-verse.

[jtimon]

Don't know, maybe. I see it complicated.

[weex]

Is anyone still interested in this idea? I think a distributed asset exchange built on a blockchain with written linkage to traditional legal entities has merit.

[CliffordM]

Bitcoin's beauty is the fact that the underlying database is distributed, and enforced by the 51% rule.  A global asset exchange/registry based on the same principles would be revolutionary. 

Hard ?  Yes, but that's what we do.

[ripper234]

Bitcoin's beauty is the fact that the underlying database is distributed, and enforced by the 51% rule.  A global asset exchange/registry based on the same principles would be revolutionary. 

Hard ?  Yes, but that's what we do.

Just something to think about:

Bitcoin enables many other P2P projects, most of which we can't imagine yet.
I think there should be some sort of P2P Bitcoin-backed database, that could serve as infrastructure to such projects.

I wrote a paragraph about it on Reddit:

Utilizing similar technology to Messaging Services, this database would be a data store, accessed via an API, that supports CRUD functionality: Create, Read, Update and Delete records.

Your records would only be accessible to you via a private/public key pair. Even though the blockchain is append-only, Updated and Delete could be implemented with logs - the blockchain would represent the log of all previous actions. This database would be very inefficient, but it could be cached by trusted 3rd parties that serves as mediators.

Your API would talk to several 3rd parties (to counter the possibility of any single one of them attacking you), and they would store the information in the blockchain. The 3rd parties should not have access to your credentials, and cannot decrypt the contents of your data.

I'm not saying that it makes sense to develop this database while also developing BDSE, but it's just something to keep in mind. If you could kill two birds with one stone ...

[caveden]

Is anyone still interested in this idea? I think a distributed asset exchange built on a blockchain with written linkage to traditional legal entities has merit.

I'm definitely "still interested", but I still think Open Transactions+bitcoin is probably the way to go. It is as distributed as we need, and the technology is already there.
I don't think we need to create new chains for everything. The issuance of backed tokens is pretty much what OT is about.

[weex]

I'm personally a little bit annoyed at the mention again of Open Transactions. We know Bitcoin works and I've still not seen a working system using Open Transactions. I'm watching a video on it now so hopefully I'll learn that OT is ready to go but I think the OT community could do a better job of providing demo servers or examples of sites that are using it.

[weex]

Ok, I've watched a couple of videos on OT and visited the github wiki page. I can see now that Open Transactions has a lot going for it. If it works, it has the fundamentals of what we need.

It also solves a problem of incentives for mining a new general asset blockchain. If you have a ton of assets and nothing to give miners besides initially sparse transaction fees, a general asset blockchain might fail.

The most glaring issue with OT that I can see is the lack of a javascript client. GLBSE is as easy to use as it is because of the javascript client and seeing one for OT might enable users/issuers etc to get up and running with a minimum of fuss.

Also, I think this thread should culminate in some sort of action. Perhaps a bounty for an OT javascript client?

[fellowtraveler]

FYI, "the OT community" can only be a reference to me, since I have slaved away on it, alone, for the past year-and-a-half. (Seeking volunteer coders.)

We're in the process now of testing our way through the first alpha server.  Discussion is at irc.freenode.net #opentransactions

My own focus has been on developing the library itself, and supporting anyone who uses it (not so much on building sites that use it or creating demos, which is your job, not mine.) In the end there will only be two types of people: those using OT, and those re-inventing the wheel, coding new systems that do the same things. There is no escaping this. (And either end is fine with me  :-)

-FT

[weex]

Thanks fellowtraveler for the reply.

I think I understand where you're coming from. If OT does what it's billed to then it really needs lots more users which mean some sort of marketing.

I guess I should thank you for chiming in on this thread since OT does seem to fit well with the goal stated here.

So, who wants to setup an OT server so readers of this thread can play with it?

[fellowtraveler]

Thanks fellowtraveler for the reply.

I think I understand where you're coming from. If OT does what it's billed to then it really needs lots more users which mean some sort of marketing.

I guess I should thank you for chiming in on this thread since OT does seem to fit well with the goal stated here.

So, who wants to setup an OT server so readers of this thread can play with it?

FYI Markm is already running a test server, though it's down today until I get a certain bug fixed. Should be back up tomorrow or the next day.
Search this forum for markm, open transactions alpha server, and you will find all the relevant info.

The easiest way to play with OT is to just download it, since the default configuration includes sample data for a "localhost" server.
You just run the server yourself on your local machine, then run the GUI on the same machine, in order to play with the functionality.
(That's what you see me doing on the OT videos.)

I wouldn't characterize OT (the library itself) as needing marketing, since it is already well-known and short on demos.
More likely, once more user-friendly applications are available, then those will need the marketing.
(The first real users of OT will encounter it not directly, but through software built with it. That's where I think marketing will come in.)

-FT