Quote from: AnonyMint on August 25, 2013, 10:08:34 AM

9. In the margin call, the BitAsset is destroyed, so what happens to the collateral of the counter-party which did not receive a margin call? If it goes to them, why are they forced to redeem their BitAsset prematurely? Wouldn't a better design be let the BitAsset remain for the counter-party? Also why does the redeemed money go to the dividend pool (for that BitAsset or all BitShares?) and not to counter-party, so that the counter-party gets some leverage?

The leverage I proposed apparently can be controlled by abs(market value - collateral) x leverage ÷ 2 as the amount of collateral of the losing side awarded to the counter-party.

Quote from: AnonyMint on August 25, 2013, 10:08:34 AM

12. Kudos on determining market price from the bid/ask that don't settle (due to positive bid/ask spread), i.e. the marginal supply and demand, as that is correct economic theory of price. And also because as you say the transactions that do settle (due to zero or negative bid/ask spread) could be transactions to self if also control the miner with winning PoW block (although they incur a transaction fee, and probably also capital gains tax if the system isn't perfectly anonymous). But couldn't a miner also exclude bid and asks, thus manipulating the market price? This appears to be a major flaw in the design.. I don't have idea for a solution yet.

So far, my only idea for a solution is that market makers should be separate entities from miners. Miners must take all the bid and asks sent by each market maker (take it all or none, so more difficult to hide manipulation). Each market maker resolves the bid/asks before sending them to the miners. Market makers need to receive some compensation. Users choose which market markers to use based on their performance. The miner still resolves the margin calls, using the market pricing from the market makers which the miner included in the block. The miner will have much fewer variables to play with, since users will pick market makers. Users can't pick miners, because PoW does randomly (weighted by miner's share of difficulty).

This has another benefit of enabling market makers to present real-time data of their bid/ask distributions.

It is not perfect (relies on trust which is inherently centralizing, although freedom-of-choice and P2P is more decentralized than the trading systems we have now), but no such trading system will ever be. At least you can make this P2P and the barrier-to-entry for new market makers is fairly low. Users keep it honest by monitoring the market makers they trade with.

This is why we must keep the altcoin transfers (PoW mining) orthogonal to trust based trading. The market marker will always have to be trusted.

I think an axiom is to never never make miners responsible for time-preference transactions, because there is too much conflict of interest that corrupts mining from its primary purpose which is to secure the block chain. When transactions don't have a strong time-preference then the random selection of miners by PoW insures that transactions are likely to go through, unless one entity controls a large % of the difficulty.

When I wrote my Bitcoin: The Digital Kill Switch (mirrored on a popular financial site), I was primarily worried about corporations gaining a large percentage of the PoW and then using such a cartel to gain leverage w.r.t. to time-preference of consumer transactions, e.g. Amazon's quick checkout (1 click). Later I came to find out the key developers and Satoshi had long planned (the link is buried in my posts) for Bitcoin to be taken over by the large corporations (which is very dangerous given we are headed into a period of fascism due to the need of boomers to tax at greater than the Laffer limit in order to sustain the bankrupt socialism with a police state). We are in the dangerous stage where the financial center of the world transfers, this time to Asia after 2033 with lots of pain between 2007 and 2033 (mirroring 1929 to 1955). Btw, inflation is necessary and also this link, it is centralized inflation that is bad.

Btw, I think I may have already solved the level playing field for GPU/ASIC-resistant PoW (some details buried in my posts, no code written yet). I see you are coming closer to my ideas on that since the astute (obviously very intelligent) core Bitcoin developer Gregory Maxwell challenged you.

P.S. I had some tangential misconceptions (e.g. thinking Bitcoin could be a Ponzi scheme) when I first got seriously into Bitcoin when I wrote The Digital Kill Switch. Nevertheless, the main aspect I was concerned about remains my concern.