Peer to Peer "Unit" Ownership using Bitcoin - (GLBSE Decentralization)

[Dunster]

Hello,

This is my first post.

Now that Bitcoin is now an accepted idea and the network has reached a tipping point towards completion of the blockchain, it is time to think of some features that use the Bitcoin methodology but support different aspects of a more complete economic system. Currency is one part of a system. But, there are others such as ownership stakes, rights, regulation, trust etc.

To begin, it would be nice to have a unit of of ownership. For example a share in a "company". The ownership of this share could exist in a wallet and be transferred the same way as a Bitcoin. Also, to make it very flexible the unit could contain one or more coupons that could be stripped from the initial unit and transferred independently. The coupons could also be reassembled to create the original unit.

This simple concept above would enable a new type of share, bond, and option markets in the same theme as Bitcoin.

The folks over at GLBSE have some good ideas but the centralization of an exchange which tracks ownership is a possible single point of failure. Of course, such an ownership tracking system should be peer to peer and have a blockchain.

Any comments or any other folks working on these ideas?

Thank you,

Dunster

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[Liberate]

Yep stuff like Namecoin exist so using bitcoin concepts for other purposes is possible

[Meni Rosenfeld]

Hi Dunster, welcome to the Bitcoin forum.

See for example this, this and this for discussion of blockchain-based decentralized asset representation and exchange.

Somewhat related is this comment about a computational generalization of the concept of "company". There's not much written discussion of this, but I've talked in person with the suggester and he's very enthusiastic about it.

[Dunster]

Thank you Meni for your links and help they were very useful.

I think that the fundamental difference between "shares" and Bitcoin is that shares can be created at will by Issuers if they want to. There would no proof of work necessary to create a share. I like the idea of using the Bitcoin chain to document the shares but it seems a bit cumbersome on an initial review as it might be difficult to embedded information that is needed into the blockchain. But I suppose "The Share System" could be designed and cleverly overlayed on top of the Bitcoin blockchain assuming the blockchain can handle this with no changes to the current Bitcoin client.

A fundamental concept to grasp is that an Exchange is different than a "share". In an ideal world there would there would be multiple exchanges competing for business to trade in "shares".

If we step back and take a look at how public company shares are handled in the "real" world it can be boiled down to:

Issuers - The company that wants to issue a share in the enterprise in return for capital.
Shareholder - A partial owner of an Issuer
Transfer Agent - The "official" independent company that tracks the number of shares and who owns those shares of an Issuer.
Auditor - The "official" independent company that reviews the books of the Issuer to confirm that the financial statements are accurate.
Regulator - The "official" regulator that defines regulations and performs the regulation to try to create a "fair" market.
Broker/Dealers - The companies that take client funds and buy stock on the client's behalf on the exchanges.
Exchanges - The companies that host computers (and floor trading) to match buying and selling orders.
Custodian - The companies that actually perform the swap of shares for local currency because they have access to both with other custodian counter-parties.
DTC - The mostly single monopoly company that holds the shares in electronic format (book entry). DTC has vast filing cabinets full of paper certificates which they hold in reserve against their book entry database.

An Internet based system does not need all of the above elements.

A peer to peer share tracking and transfer system that supports Issuers and Shareholders is a good start but the protocol should be flexible to add digital signatures from an auditor and other future parties would be nice. If that protocol could be overlayed onto Bitcoin as it stands then that is interesting also.

In the future, I would expect that Issuers could be self existing software (SES) as well as humans. The economic system that we set up should allow an SES to be on the Internet so that it would have its own means to issue shares and buy resources such as computer time without human intervention.

Best Regards,

Dunster

[Nefario]

Hey Dunster,

you're right, GLBSE is a central point of failure but that's not whats holding it back. Actually GLBSE is tiny in comparison to nearly all the bitcoin exchanges out there.

Yes it's the only bitcoin stock market right now but that market is very small (although I'm guessing something like 10% of the hasing power on the bitcoin network is a result of GLBSE companies).

When the market grows there will be competitors, the problem often is not tech, it's trust. We've been around since shortly after bitcoin started, GLBSE itself is nearly 1year old.

We've had 0 hacks, and never run off with anyones money.

But yes, the future is with namecoin.

[Dunster]

It seems like this overall concept could be realized with a "colored coin" overlay on the blockchain? Are colored coins assigned a BIP yet?

Thank you,

Dunster

[Meni Rosenfeld]

It seems like this overall concept could be realized with a "colored coin" overlay on the blockchain?

That's the plan.

Are colored coins assigned a BIP yet?

Not that I'm aware of.