rpietila Altcoin Observer

[snr]

the issue is long solved and was much smaller than expected.

I think the biggest advantage of counterparty protocol is that you do not need to go the way btc-> nxt -> asset. you can simply buy the asset with btc.

the "currency" (xcp) of the protocol has a completely different function. it can be taken in escrow on the blockchain (until now impossible with bitcoin). It will be probably in short term be used for betting, mid-term for CFDs and long term as insurance.

BTW I used NXT AE and I was quite impressed by the easy to use functionality as well as the speed. kudos. 

Ok, if the issue was solved, that's fine, I actually liked XCP when I used it in its early stages, although it was quite buggy then, until NXT AE came along. XCP can survive, at least as long as Bitcoin survives, but you always have to worry about 51% attacks and such. With NXT you just don't have those worries and time between blocks is much shorter, so trading is closer to centralized exchange speed of trading.

FIAT->BTC->NXT->Asset will soon be shortned to FIAT->NXT->Asset, as there are fiat gateways under way, that's just a matter of time.

Then I am looking forward to
FIAT->NXT->Asset->Qora!

[devphp]

Then I am looking forward to
FIAT->NXT->Asset->Qora!

Qora asset was set up on the NXT AE 2-3 days ago by Dzarmush, go look it up and you can buy it there.

[Peter R]

In regards to colored coins built using the open-assets protocol, what aspects of the security model make you skeptical?  Are you concerned with a possible problem in the protocol, or the concept itself?

The concept itself. I doubt that attaching non-trivial value to an arbitrary attribute such as color can be secure.

I like to think of the open-assets protocol (colored coins) as just a decentralized accounting system for "tokens."  As long as the accounting system works, that's really all that matters in my mind.  For example, I could sign napkins: "Peter R promising to pay the bearer of this napkin $10.00" and as long as I can verify that no-one forged my napkins when they come back to me for redemption, what else matters?  The fact that colored coins allows people to split up my napkins into smaller pieces (if I allow that) is just a bonus.  

So where does the insecurity come from exactly?  Are you referring to the fact that the issuer might be a scammer, or some other insecurity?

If you're going to build colored coins, IMO you have to build it in far deeper than just the wallet.  

Colored coins are supposed to simulate multivalent amounts, but if you want multivalent amounts and you want them to be solid, you have to represent them as such in each transaction and txout.  

That was originally my biggest concern too: with bitcoin, I can look at a particular output in a block and see how many satoshis it contains.  But with colored coins, I need to scan all the way back to the original issuance to determine the value.   Anyone could create a colored coin transaction that turned 10 vouchers into 100 vouchers and the transaction would still get mined because the color data is just random bytes from the perspective of bitcoin.  

But now I don't see this as a problem: from the colored-coin abstraction level, the transaction didn't turn 10 vouchers into 100, it annihilated all of them.  They can no longer be passed off as real because according to the color-coin protocol they no longer exist.  

This property means that it's not possible to create an SPV client for colored coins, but can you give an example of how this might be a problem in practice?  The more time I spend thinking about the colored-coin concept, the more secure the idea seems to me.  Perhaps I am missing something.

[Peter R]

In my opinion, we need only one crypto-currency.

If that is true then bitcoin is doomed, and very soon, because of its extreme tracability.  I do not think it is true.

Would you still feel that we need more than one cryptocurrency if there was a sidechain that supported ring signatures (2-way exchange rate peg / bitcoins freely flow on and off the sidechain)?  Or what if we could create anonymous tokens pegged to 1 : 1 with BTC using Gavin's recent Oracle idea?

[smooth]

I like to think of the open-assets protocol (colored coins) as just a decentralized accounting system for "tokens."  As long as the accounting system works, that's really all that matters in my mind.  For example, I could sign napkins: "Peter R promising to pay the bearer of this napkin $10.00" and as long as I can verify that no-one forged my napkins when they come back to me for redemption, what else matters?  The fact that colored coins allows people to split up my napkins into smaller pieces (if I allow that) is just a bonus.  

So where does the insecurity come from exactly?  Are you referring to the fact that the issuer might be a scammer, or some other insecurity?

I'm referring to the fact that the block chain is not prepared to secure transfers of arbitrary value. The US stock market is about $20 trillion, global markets, derivative markets, and other asset markets are obviously much larger. The bitcoin block chain can not and likely will not ever be able to provide adequate security for these sorts of assets, or even the subset of these assets that change ownership on a regular basis.

If you put those assets on the chain and they are assets with real value, then chain will be attacked, relentlessly, until it is destroyed. Unfortunately, though, there is little incentive for individual to keep their own assets off the chain, so assets will attach individually, like barnacles, until the whole thing is weighed down with too much vulnerability and sinks.

Tokens that are small time scams or basically monopoly money in some other way, sure, not a problem. Unfortunately though, I don't really see a way to enforce a sane value limit, other than designing a chain that doesn't allow these attached assets at all (which as I said looks something like zerocash).

This is similar to your conjecture that only proof of (real) work can be secure. Issuing and moving "tokens" around without some expenditure of real rivalrous resources fails your test.

So I consider these schemes to be either a toy or a failure, perhaps a colossal failure.

[tacotime]

Would you still feel that we need more than one cryptocurrency if there was a sidechain that supported ring signatures (2-way exchange rate peg / bitcoins freely flow on and off the sidechain)?  Or what if we could create anonymous tokens pegged to 1 : 1 with BTC using Gavin's recent Oracle idea?

Sidechaining is possibly unscalable, centralizing, and insecure. Aside from that, I would prefer to operate in a blockchain that has complete obfuscation from the start, rather than later, as you're going to run into the issue where authorities are going to be staring at the ledger and examining closely every movement into and out of the private chain. This activity is publicly visible for the Bitcoin blockchain and sidechains.

I think a good question to ask might be: if you already had a cryptocurrency with high privacy, would you need to append a sidechain to it that didn't?

[smooth]

In my opinion, we need only one crypto-currency.

If that is true then bitcoin is doomed, and very soon, because of its extreme tracability.  I do not think it is true.

Would you still feel that we need more than one cryptocurrency if there was a sidechain that supported ring signatures (2-way exchange rate peg / bitcoins freely flow on and off the sidechain)?  Or what if we could create anonymous tokens pegged to 1 : 1 with BTC using Gavin's recent Oracle idea?

I don't believe a two way peg is economically stable or possible (even if technically possible and feasible to deploy, which is questionable), and I explained why on one of the side chain threads.

It is simply not possible for (or even plausible to believe that) coins on both chains have the exact same value so coins will migrate to one chain or the other and stay there. Unless of course both chains are in fact identical in every respect, but that is pointless.

It is similar to the impossible trinity (wikipedia). Whatever behavior that makes a chain distinctive constitutes its "independent monetary policy." You can't have that with fixed exchange rates and free flow of capital.

I have't studied the oracle idea.

[Peter R]

I think a good question to ask might be: if you already had a cryptocurrency with high privacy, would you need to append a sidechain to it that didn't?

Yes.  Soft anonymity (bitcoin) has more uses than hard anonymity (ring signatures).

Cryddit explained why a coin with hard anonymity could likely never become dominant in this thread a week or so ago.  He wrote several brilliant posts starting with this one here:

https://bitcointalk.org/index.php?topic=624223.msg7023199#msg7023199

[smooth]

I think a good question to ask might be: if you already had a cryptocurrency with high privacy, would you need to append a sidechain to it that didn't?

Yes.  Soft anonymity (bitcoin) has more uses than hard anonymity (ring signatures).

Cryddit explained why a coin with hard anonymity could likely never become dominant in this thread a week or so ago.  He wrote several brilliant posts starting with this one here:

https://bitcointalk.org/index.php?topic=624223.msg7023199#msg7023199

I think that's actually quite silly. I can't imagine a coin where you can't de-anonymize yourself if you want to, even using crude mechanisms such as publishing something about the transaction before you send it.

[klee]

I think a good question to ask might be: if you already had a cryptocurrency with high privacy, would you need to append a sidechain to it that didn't?

Yes.  Soft anonymity (bitcoin) has more uses than hard anonymity (ring signatures).

Cryddit explained why a coin with hard anonymity could likely never become dominant in this thread a week or so ago.  He wrote several brilliant posts starting with this one here:

https://bitcointalk.org/index.php?topic=624223.msg7023199#msg7023199

I bet we will find out really soon...

[cAPSLOCK]

In my opinion, we need only one crypto-currency.

If that is true then bitcoin is doomed, and very soon, because of its extreme tracability.  I do not think it is true.

I would agree with you heartily.  In fact I think there are strong arguments for advantages in both sorts of transactions.  I think there is a need for both an open public ledger, and a inscrutable one.

[Keyboard-Mash]

I think a good question to ask might be: if you already had a cryptocurrency with high privacy, would you need to append a sidechain to it that didn't?

Yes.  Soft anonymity (bitcoin) has more uses than hard anonymity (ring signatures).

Cryddit explained why a coin with hard anonymity could likely never become dominant in this thread a week or so ago.  He wrote several brilliant posts starting with this one here:

https://bitcointalk.org/index.php?topic=624223.msg7023199#msg7023199

I think that's actually quite silly. I can't imagine a coin where you can't de-anonymize yourself if you want to, even using crude mechanisms such as publishing something about the transaction before you send it.

Yes, Cryddit's claims were clearly made while having no real understanding of what was being discussed. I think the remarks were more toward an understanding of Zerocoin, not CryptoNote .. as my post about three after his pointed out (https://bitcointalk.org/index.php?topic=624223.msg7024305#msg7024305).

Of course at the time, we were both making more of a philosophical claims rather than technical ones (followed by a whole lot more philosophical banter).

Peter R., the same "soft anonymity" you claim bitcoin can provide is also very much available in CryptoNote. But, the "hard anonymity" is also available in CryptoNote. You are very much able to prove your transactions, and as such there would be legal avenues under which retribution could be claimed. But, unlike bitcoin, it requires participation of both of the spenders (something that can be demanded in a court of law), rather than a rash abuse of something that should be private.

[Peter R]

I like to think of the open-assets protocol (colored coins) as just a decentralized accounting system for "tokens."  As long as the accounting system works, that's really all that matters in my mind.  For example, I could sign napkins: "Peter R promising to pay the bearer of this napkin $10.00" and as long as I can verify that no-one forged my napkins when they come back to me for redemption, what else matters?  The fact that colored coins allows people to split up my napkins into smaller pieces (if I allow that) is just a bonus.  

So where does the insecurity come from exactly?  Are you referring to the fact that the issuer might be a scammer, or some other insecurity?

I'm referring to the fact that the block chain is not prepared to secure transfers of arbitrary value.

On this point we are in agreement.  But the way I interpret this is that if bitcoin's market cap continues to grow, its usefulness continues to increase.  The fact that at a higher market cap it could secure colored coin transfers of larger value is evidence of this.  

I guess I just imagine that a balance would be reached where the total value of asset that "barnacle" onto the blockchain would tend to grow linearly with bitcoin's market cap.  If you issue shares for your company as colored coins, then you're probably paying out BTC dividends to the addresses where the colored coins are held, and you're probably holding a cash balance in bitcoins too.  As your company grows (the value of its shares increase), so do this size of your dividends and balance sheet.  Is this not evidence that the demand to hold bitcoin would tend to increase as more assets like shares are attached to the blockchain?

[Peter R]

Peter R., the same "soft anonymity" you claim bitcoin can provide is also very much available in CryptoNote. But, the "hard anonymity" is also available in CryptoNote. You are very much able to prove your transactions, and as such there would be legal avenues under which retribution could be claimed. But, unlike bitcoin, it requires participation of both of the spenders (something that can be demanded in a court of law), rather than a rash abuse of something that should be private.

So if I sent you $1,000 and you didn't make good on your end of the deal, could I easily prove that? 

In any case, I should probably study the Cryptonote technology more closely because I'm actually not that clear on it.

[smooth]

But the way I interpret this is that if bitcoin's market cap continues to grow, its usefulness continues to increase.

This works if the asset being secured is bitcoin itself. An asset that is merely denominated in bitcoin doesn't necessarily cause bitcoins market cap to grow, or may do so only insignificantly.

I guess I just imagine that a balance would be reached where the total value of asset that "barnacle" onto the blockchain would tend to grow linearly with bitcoin's market cap.

There is no mechanism to bid for barnacle space. If there were, then I might have a different opinion. The bidding would increase the value of bitcoin, or mining, or the chain, or something usefully along those lines. But if the cost to put your asset on the chain is essentially zero, the resource will be overused (tragedy of the commons).

Is this not evidence that the demand to hold bitcoin would tend to increase as more assets like shares are attached to the blockchain?

It will but I doubt the coefficient of proportionality is high enough. The tragedy of the commons argument all but guarantees that it isn't. At least, there are some sorts of assets that won't increase demand for bitcoin (much), and those will still go on the chain, right up until it sinks.

[smooth]

Peter R., the same "soft anonymity" you claim bitcoin can provide is also very much available in CryptoNote. But, the "hard anonymity" is also available in CryptoNote. You are very much able to prove your transactions, and as such there would be legal avenues under which retribution could be claimed. But, unlike bitcoin, it requires participation of both of the spenders (something that can be demanded in a court of law), rather than a rash abuse of something that should be private.

So if I sent you $1,000 and you didn't make good on your end of the deal, could I easily prove that? 

In any case, I should probably study the Cryptonote technology more closely because I'm actually not that clear on it.

You can prove it using your private key, otherwise you couldn't even identify your own transactions, which you obviously can, because the wallet reports them to you when they appear on the chain. It is third parties who can't prove what you sent (without your assistance).

You'd have to prove ownership of your private key though, but I don't think that's really different from bitcoin.

[tacotime]

Peter R., the same "soft anonymity" you claim bitcoin can provide is also very much available in CryptoNote. But, the "hard anonymity" is also available in CryptoNote. You are very much able to prove your transactions, and as such there would be legal avenues under which retribution could be claimed. But, unlike bitcoin, it requires participation of both of the spenders (something that can be demanded in a court of law), rather than a rash abuse of something that should be private.

So if I sent you $1,000 and you didn't make good on your end of the deal, could I easily prove that?  

In any case, I should probably study the Cryptonote technology more closely because I'm actually not that clear on it.

Yeah.
There are two private keys to speak of, one which is used to recover your public key addresses (view key) and another which recovers your private key for those addresses (secret key).

You could prove to a third party that you own the address by giving them the view key (which reveals that you own the public key) and then by signing from that public key using the private key that is generated for that public key via your secret key.

For instance, the view key to our donations fund for development is e422831985c9205238ef84daf6805526c14d96fd7b059fe68c7ab98e495e5703, which will let you out the outputs that are owned by that account on the blockchain.

You can also disable ring signatures by setting mixin to 0, which means you spend directly from an input instead of mixing it with an arbitrary number of inputs (= mixin value).

So, effectively, you can operate without privacy if you really want to.

More simply:
Ring signatures obfuscate inputs,
stealth addressing obfuscates outputs,
but both may be functionally disabled if you so choose.

[epere]

I would still feel that we need more than one cryptocurrency and about as interested in altforums as I am in altcoins, I suppose.

[Its About Sharing]

Would you still feel that we need more than one cryptocurrency if there was a sidechain that supported ring signatures (2-way exchange rate peg / bitcoins freely flow on and off the sidechain)?  Or what if we could create anonymous tokens pegged to 1 : 1 with BTC using Gavin's recent Oracle idea?

Sidechaining is possibly unscalable, centralizing, and insecure. Aside from that, I would prefer to operate in a blockchain that has complete obfuscation from the start, rather than later, as you're going to run into the issue where authorities are going to be staring at the ledger and examining closely every movement into and out of the private chain. This activity is publicly visible for the Bitcoin blockchain and sidechains.

I think a good question to ask might be: if you already had a cryptocurrency with high privacy, would you need to append a sidechain to it that didn't?

This is my problem as well with putting all of our eggs in one basket. It is not that side chains, tree chains, etc. do not serve a function or won't even be successful, as I think they will.
My problem is if anything goes wrong with BTC, then we will be SOL in one big gigantic way. We need not only other coins that are in no way connected to Bitcoin, but we need other
technology. In this way I'm talking about NXT, Ether, etc. in that if there is a flaw in BTC's code or inherent design, some other coins won't go down with the ship.

Also, it is a very real possibility that one large coin can be attacked by a State(s) due to "National Security" reasons, but of course it will be "banking" or "corporate" reasons as is usually the case.
Don't make their job any easier. In the future, I foresee different Crypto's being able to interact with one another, if programmed as such, much like Side Chains, etc. will do with BTC anyway.

I think it is a very wise decision to take maybe 3%-10% of your Crypto Assets out of BTC and put it into a variety of coins such as MRO, NXT, Ether. This acts as both a hedge/insurance as well as a bit of an expansion beyond our current event horizon. It MAY limit profits, or it may actually magnify them, but that isn't really the issue imo.

Its about sharing

[jubalix]

its hard to take this thread seriously with no mention of PeerCoin

then againg the concept is waaaaay out infront, and the really loooooong game.