Quote from: justusranvier on November 20, 2014, 02:07:01 AM

Quote from: brg444 on November 20, 2014, 01:31:03 AM

Quote

Coloring Bitcoins. The systems Ive looked at dont route bids/offers over the Bitcoin system so any matching will be done external to the platform. So it seems to me that decentralized exchanges on this model will have to require those posting bids or offers to demonstrate that they have placed the corresponding colored coins/Bitcoins in escrow with one or more acceptable third parties.

http://gendal.wordpress.com/2014/06/10/a-decentralized-securities-trading-and-settlement-system-is-being-built-hidden-in-plain-sight/

How true is this?

It's possible to build decentralized order books.

Order matching does not require escrow with a third party.

Orders can be executed with atomic swaps on the blockchain.

At the same time, it's possible to use semi- or fully trusted third parties for any or all of those functions.

I expect both models to see real world usage.

But this doesn't really address the original statement you made. Originally you did not specify that you were talking about certain ways markets could be built that utilized colored coins.

Without that clarification, your statement about sidechains being "more decentralized" is false.

Colored coin tokens are stored on the main chain and enjoy the full security model of Bitcoin. The same can not be said for tokens created on a sidechain.

My original statement refers to trust. Decentralized trust. Is colored coins not introducing an additional layer of trust?