Quote from: adam3us on November 14, 2013, 06:58:54 PM

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

To understand what Confidence Chains means you have to revisit some of the initial design goals of Bitcoin. Bitcoin was meant to be a currency without backing and without ownership. Color Coins and other related technologies have a different purpose: digital vouchers(although Confidence Chains does much more than that). Thus, you've removed ZERO TRUST. You must trust the backer. The idea of leaving in Proof Of Work anyway is just meaningless really and reflects a lack of vision as to why it was there in the first place. The core oversight is that the block chain is a free database that anyone can insert information for any purpose. You'll find this assumption is a standard amongst the Color Coin people. It is here that Color Coins breaks down. We saw this unfold with the COIN_DUST issue.

Trusting the issuer is a plausible trade off and others have worked with that assumption.

But there remain advantages for mining/blockchain validation based security.

I appreciate the comments, and I address the individual points below but before I do, consider the advantages of this architecture.

* No mining
* No expensive hardware.
* No excessive network usage.
* No mining pools.
* No asic manufacterers.
* Instant Confirmations.
* No thorny security issues that are often intractable and unmanageable.

the general point is though, that ultimately value must rest in it's redeemability for something. Even if this is a complex financial derivative that is a financial function of a financial function denominated in a currency that is itself a complex of financial functions. Ultimately you need to exchange it for something. Even if this exchange isn't something that is eg. edible or physical, it still has some kind of legal value outside the system. This reliance is implicit in all financial systems. And if you don't trust the issuer, why would you want to trade in their issued vouchers?

Quote from: adam3us on November 14, 2013, 06:58:54 PM

Consider:

- if you want the issuer to be offline (it could be dangerous to have a key online that can create value on whim if it is hacked the system may break down).

- more advanced/2nd gen types of features where the bearer shares are the shares, not a representation for shares in some external authoritative ledger or issuer escrow broker account: there may be a digital prospectus where the issuer is issuing 10,000 shares for their A-round of financing. The prospectus says they need approval from 25% of share holders to issue a second round or to do a share buy-back. So the network validates shares, and all peers reject any shares created in violation of the company prospectus apriori.

You can certainly do complex things such as this in Confidence Chains.

Quote from: adam3us on November 14, 2013, 06:58:54 PM

- mostly when one is talking about shares, there is no redemption (outside of a company voted share buy-back) - there are just buys and sells on a market setting the price. If you want to redeem the value of your share you sell it.

Sell it for what? another share that has an implicit value, because that share is exchangeable for something else with implicit value. Remember Bitcoin wasn't worth anything until someone bought a pizza with it.

So ultimately you must have at least ONE person willing to redeem the digital vouchers for something in the real world. That could be peanuts, USD, Turkish Lira, Gold Coins, etc. In most environments though there will be MANY issuers who have such implicit promises and what Confidence Chains gives you is a very quickly assembled ledger that all those issuers agree on. Consensus is the key word here. I've abandoned Bitcoin's idea of a global ledger, and this bought me some very attractive performance and architecture features(as well as simplicity).

Granted there are issues in hosting eg. trades and supporting some sense of non-bias. Im not sure how a PoW system can give you that.

"you can't eat money."

Quote from: adam3us on November 14, 2013, 06:58:54 PM

- smart contracts depend on final settlement. If the settlement is not final, then undo requests will be made by users in dispute. If your system is based on consensus the court will hit your transaction server/issuer with a demand to undo consensus. Once this happens people will realize the contracts are not smart, and incur the same posthoc dispute costs at the transaction layer as credit cards etc.

you can also do this kind of complex logic chaining and then the remarketing of the risk implicit in those agreements. Confidence Chains can support the same exact Transaction formats that Bitcoin does if you really want it.

btw- not sure if you saw Peer-To-Peer Bond Auction http://goo.gl/LVU7A5

thanks for your comments, -bm