Quote from: dacoinminster on August 01, 2011, 04:28:22 PM

Quote from: doldgigger on July 29, 2011, 10:44:04 PM

It is also hard to explain bitcoin's technical details to grandma. Maybe even more than public key crypto and webs of trust. This is what the client software is supposed to abstract away, and this can also be done for out-of-chain contracts etc.

Abstracting away the complexity is exactly what I have in mind, but I'm not sure how that can be done for webs of trust.

For starters, my approach would probably be based on some metrics for the web of trust, and statistics to calculate risks based on these metrics. Then an interface as simple as eBay with its feedback system would already be possible. It could be simplified even more by having some reasonable bootstrap web of trust, and a hard-coded value for the acceptable risk (at this point, however, there is more centralization in place, but I believe decentralization is always slightly more complex).

Quote from: dacoinminster on August 01, 2011, 04:28:22 PM

Quote from: doldgigger on July 29, 2011, 10:44:04 PM

I think there is nothing wrong with creating distributed infrastructure to trade gold, oil, currencies etc., but I don't think it belongs into the block chain. The value of bitcoins can be verified by every peer in the network, and I think this is what makes bitcoin so powerful. Tradable values based on currencies or commodities can only be securely verified by a relatively small subset of the network, and therefore introduce security issues not otherwise present, while still requiring resources from the whole network.

I took a poll, and the consensus seems to be that changes of this sort should be experiments in new block chains rather than changes to the existing block chain. I'm concerned that new block chains could compete directly with bitcoin (and make bitcoins less valuable), but perhaps there is a way to tightly integrate them with bitcoins without messing with the existing bitcoin protocol.

I don't think this is much of a problem. With a new crypto-currency in place, either bitcoin is superior, or the new currency. If bitcoin is superior, there is no point in bloating bitcoin with the new currency. If the new currency is superior, people will wonder why they have to still run bitcoin.

With a new crypto-currency in place, bitcoin won't be affected for some time as people will still use bitcoin as they know it better. There will be early adopters, and maybe they will prove that the new currency is better. Then bitcoin would be superseded. The only scenario where the competition might be a problem is when both currencies have their uses where they are superior to the other one. In this case, automated trading will have to evolve. As of today, I also buy some things in EUR and some things in USD, and it is not a problem because CC companies will automatically exchange the currencies. With everyone being able to invent his own currency, more complex scenarios are possible, but I am confident that similar solutions can still be found.

Quote from: dacoinminster on August 01, 2011, 04:28:22 PM

Quote from: doldgigger on July 29, 2011, 10:44:04 PM

New technology is always more volatile than established business tools. But I think there is a good chance for the current bitcoin implementation to fly for quite some time - sufficiently long to use it for business.

Moreover, I do not think your recommendations can prove stability, either. In fact, they take away a core characteristic of bitcoin that could be a base for its stability (once the business volume using bitcoin grows). No stable currency as of today is valuable simply because you can trade it to another currency, or a commodity. This kind of stability can only be backed by one or more individuals who can ensure the possibility to trade it for whatever they propose. Once the resources of these individuals are exhausted, you reach the limits of this kind of stability. True value of a currency comes from the vast range of goods or services that can be bought using that currency. So, every member of our community who starts doing business using bitcoin provides his share of the stability we all want.

I do think it is an interesting idea to have similar currencies with some other characteristics (for example a different algorithm to manage the amount of coins {which could, in theory, also be backed on commodities etc.}, or using different crypto algorithms), but I think they should have their own block chain and network so we have security through redundancy, rather than a single block chain that becomes so complex that no one can ensure it is robust enough to sustain attacks. Still, I assume the original bitcoin might still be the one that will turn out to be superior.

But I also think it is too early for this to be built. It will be interesting once there is enough freely available software to setup exchanges, do algorithmic trading etc., so users don't have to care about all the virtual currencies manually.

Well, the way I read your offer, I got the impression that just posting here might make me look like I just do that because of the offer. But I actually enjoy to discuss with people who wish to take bitcoin to its next level (as I do). Even if we have rather different ideas. I think we all can only learn from good discussions. If you wish to send coins, I'm also fine with that, but my primary goal is to be a responsible member of the bitcoin community who provides his thoughts for others to read them.

I agree with all of this.

Trying to peg a distributed currency to an external value like gold or oil is complex, and leads to a lot of strange "what if" scenarios. I do believe it is possible, although a complete protocol description has so far eluded me.

I don't think it is very complex, but it is a resource issue. To peg the bitcoin currency to gold, you need a large supply of both bitcoins and gold so you can manipulate the markets according to the intended value. I think this is more expensive than it's worth.

Maybe what you're looking for is actually a distributed payment processing network to transfer gold. Individuals with a large supply of gold could create this, possibly using similar protocols as bitcoin uses. But it is still sufficiently different from bitcoin to justify separate development efforts. For example, mining is not required in the same sense as bitcoin uses it (by extension, this means that such a network may be interesting to explore the effectiveness of bitcoin's method of creating a transaction fee market), and a way to cancel transactions in case one of the participants lies about his existing gold supply is needed.