Quote from: gendal on November 12, 2013, 11:39:21 AM

Quote from: bluemeanie1 on November 11, 2013, 10:14:29 PM

thanks for the input. I will post a few progress milestones to here when it is relevant. The http://www.altchain.org site is coming very soon.

Thank you too - your response was very clear.

If I understand correctly, your fundamental point is that if somebody/thing is going to assert equivalence between a "blockchain asset" and a real-world asset then a legal entity, ultimately needs to stand behind this assertion as there needs to be *something* that will act as the bridge to the real world. And if you have an identifiable entity as part of the system then some of the constraints that drove the original designs of bitcoin et al can be questioned, right?

that is a very lucid way to phrase it actually. Seems like youre treading on a few of the logical paths I took while I was coming up with this. It's sufficiently far enough from Bitcoin that it does take some effort to understand the what/why/how of it. A good portion of the people here are just interested in making money mining, so I've excluded them as people to talk to. Also, it does not require any legal support. People can issue assets(and other things) reliably without involving any traditional legal system. Cryptography does all the work here.

Consider this, you mentioned earlier something along the lines of- how do we stop people from just having their own identity weights? I do allude to this in the paper, the part about 'idiot nodes'. So you're individually free to reassess credibility values in the system, but ultimately, the issuers need to honor the ledger for you to get reimbursed. Therefore if you choose to be an 'idiot' then you risk alienation from your implicit contract with the issuer, and also alienation from the community of people transacting in the assets. [2] Why are you in a marketplace if you don't like anyone? Remember the chains build on top of each other, and to have some kind of radical choice of identity weights will just exclude you from opportunities to build blocks on the chain. It's effectively impossible to drastically diverge from the consensual layout of identity weights(small differences won't have major results). [3] This is a technology that allows people to easily and automatically generate a consensual distributed financial ledger(it can do many things, not just exchanges- I explain how to do a distributed auction as well).

Quote from: gendal on November 12, 2013, 11:39:21 AM

Your chain (no pun intended) of reasoning then becomes: "if we're going to have one trusted entity in the system, why not generalise the concept to one where *any* entity can be assigned some notion of trust and see where that takes us" I think. Which I think is a great insight.

I'm still unconvinced that it *would* generalise in the real-world, however.

For example, I'm not yet seeing the circumstances under which I would assign non-zero trust values to any entity other than the issuer of an asset unless I had some other out-of-band information about them from which I could make a determination about their trustworthiness (e.g. if they were a well-known and trusted brand, say?).

This also seems to be problematic for the Bitcoin crowd. We assign trust to entities all the time. Mt Gox has a pile of my money and they can easily take off with it. The advantage CChains gives you is that I can create a congress of trust. It's far more reliable than trusting one particular entity. For instance would you rather deal with Saudi Arabia(a monarchy) or France(a democratic republic)? [1] It would be fairly easy to organize as little as 5 nodes into something that is virtually bulletproof. Imagine you had a ledger that is mathematically proven to be agreed upon by 100 parties in 30 countries with varying shades of background and character? And this ledger is FAST, we can assemble this consensus practically instantly. That's the power of Confidence Chains.

The system also addresses Bitcoin's technical shortcomings. A great paper on why the underlying assumptions of Bitcoin are problematic: http://www.links.org/files/decentralised-currencies.pdf

Laurie points out for instance that Bitcoin relies on checkpoints. Who makes the checkpoints? Bitcoin is not exactly as decentralized as they make it out to be, and some of the 'solutions' to the problems they face are really removing the initial intent of the system. Most people involved at this point don't really care, they're just interested in latching onto the inertia of the movement. Theyre not necessarily concerned that the movement is moving in a completely opposite direction than originally intended.

Keep in mind that once we have factored out Proof Of Work, there is no mining, there is no need for expensive machinery to run the system. You can host 50,000+ txs a day(what Bitcoin does) with simple commodity hardware. You can probably host several thousand transactions a minute. Thus the technology brings money back into the hands of the average person. Naturally the big boys, who sell hardware and such are not interested in such things. Also the performance is much much better, you get virtually instantaneous response times. There is no block hashing, nonces, etc.

Quote from: gendal on November 12, 2013, 11:39:21 AM

If all I have to observe is their behaviour inside the system, then I don't understand the economic analysis / game-theoretic story that means they wouldn't easily be able to "build up" trust for some period of time before mounting a catastrophic attack. Perhaps the situation would be no worse than one in a "colored coin on bitcoin" world, where the attacks I discussed at the start of the thread could potentially occur - but I don't know.

It does not have the same set of risks as Bitcoin as there are no 'unbounded consensus' problems(sic. Ben Laurie). The 'inputs' in the system are your trust layout.

The risks for Color Coins are going to be a capacity/performance breakdown. They don't pose any serious additional security problems and generally it does not effect the 51% attack issue. Putting color coins on an altchain is just pointless because if you had an altchain you can redesign the tx format to support 'colors' directly without the need for this complex coloring schema.

Quote from: gendal on November 12, 2013, 11:39:21 AM

Disclosure: I've not yet had chance to read the other papers... so if you discuss these issues there (or elsewhere), please just tell me to RFTM.

Richard

the other papers describe how to make a Distributed Exchange and how to make a Distributed Bond Auction. There are few parties here and there claiming they can make a Distributed Exchange, however I'm the only one I know of that has described exactly how to do it in detail. One other camp claims to have it, but their claims are dubious to say the least. This project, which is currently posted all over the place here, is just kicking up dust trying to bring in investment money. If you have the time to closely follow their claims it's fairly easy to see what theyre up to.

Richard, much appreciate your comments here. danke schon! -bm

[1] who would you buy bonds from? Hint: countries like Saudia Arabia don't have the same sovereign debt system that democratic republics have because they are no where near as credible and reliable.

[2] and this tactic would be very short lived. If you chose for instance to ignore half the identity nodes because you felt they are untrustworthy, the confidence of your own private chain would be minuscule compared to the dominant chain. Then what? you could present this private 'idiot' chain to an issuer and claim you have an account balance. Your records might line up with the dominant records, and they may honor it. But the problem is you lose the ability to transact with all the people who are 'getting along'. This is basically how the algorithm fosters participation. If you don't 'get with the program' you are left out. If you don't like the program, maybe you can find an alternate chain to trade in. Remember though that in NO SITUATIONS can account transfers or the initiation of any financial instruments be falsified. The nodes to not have the ability to forge personal signatures.

[3] btw- most of these details are shielded from the average user. These things are only going to come into play when people start breaking open the system and trying to exploit it. The average person will see a very performant, publicly credible, feature rich exchange/financial service that does not appear to be branded by any one particular entity. Hackers will see the things I describe, and then they will discover that they cannot break the system.