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Re: Colored Coins and Coinprism takes Bitcoin to a whole new level
OBC and POBC don't rely on the Bitcoin transaction rules either to verify transactions: the Bitcoin protocol has no knowledge of colors, so it's not possible to rely on that.
If you make an invalid transaction, depending on how inputs and outputs are setup, you may uncolor some or all of the coins you are transferring. If that is the case, they cannot be spent again (they have been uncolored, and no longer exist).
If there was such a thing as a color-aware client and miners were running it, it could reject such transactions.
You can check the example at the bottom of the document, it walks though the coloring process.
If you make an invalid transaction, depending on how inputs and outputs are setup, you may uncolor some or all of the coins you are transferring. If that is the case, they cannot be spent again (they have been uncolored, and no longer exist).
If there was such a thing as a color-aware client and miners were running it, it could reject such transactions.
You can check the example at the bottom of the document, it walks though the coloring process.
Okay, that makes sense. The spec is a bit light on discussing what constitutes a valid vs. invalid transaction. Can there exist a valid transaction with invalid outputs, or does any invalid output make the transaction invalid?
If address A has 100 units of color C, and I make a transaction that transfers 200 units of C from address A to address B, what is the result? Does A still contain 100 coins of color C?
Edit: Ah, it appears from the example in the spec that this is a valid transaction, but the coloring would be destroyed by this transaction (similar to Output 9 in the spec).
Re: Colored Coins and Coinprism takes Bitcoin to a whole new level
I'm trying to wrap my head around the Open Assets specification that CoinPrism is using. If I understand it correctly, unlike OBC or POBC ways of doing colored coins, it seems the Bitcoin transaction rules do not actually help do any validation of the transactions. If I have 100 WTK, I can create a transaction which sends 200 WTK and the Bitcoin network will process that just fine, and it would be up to the colored coin software to determine that was invalid, right?
So in the case above, what are the rules about that transaction? Is it just ruled completely invalid? Can I then re-send a transaction for 50 WTK since the previous send will be deemed invalid?
So in the case above, what are the rules about that transaction? Is it just ruled completely invalid? Can I then re-send a transaction for 50 WTK since the previous send will be deemed invalid?
Re: 1,000,000 bits = 1 bitcoin. Future-proofing Bitcoin for common usage? VOTE
ACK on bits.
ACK on bit = XBT.
Price quoting could move to inverted, similar to USDJPY. We would have USDXBT = 2222. Would just mean when you want to convert from bits to USD, you have to divide by the price, rather than multiplying.
ACK on bit = XBT.
Price quoting could move to inverted, similar to USDJPY. We would have USDXBT = 2222. Would just mean when you want to convert from bits to USD, you have to divide by the price, rather than multiplying.
Re: Ethereum: 2nd gen cryptocurrency with contract programming, "dagger" hashing
There is SO much confusion here about the initial price. Molecular has explained previously that the price relative to BTC does not matter, and he is correct. The only thing that matters is the total amount of BTC that is raised. Let me try to explain, by analogy to how startups raise money in Silicon Valley and elsewhere.
When a startup raises capital, they set a "pre-money" valuation for the company. All this means is a value for the company that the founders and the investors agree on, BEFORE the new money goes in. If the company raises $2 million on an $8 million pre-money valuation, then the post-money valuation is $8+2 = $10 million, because you have the existing value of the company, plus the new cash. Since the investors paid $2 million for their stake in a $10 million company, they own 20% of the company. If the company raises more money in the future, new shares are issued, and the first set of investors owns a smaller % of the company (i.e. they get diluted, as do the founders).
Now, let's leave aside mining for a moment and look JUST at the IPO for Ethereum. After the IPO, if investors put in X BTC, there will exist a TOTAL of 1.5X BTC worth of Ether (the units don't matter, just look at it in BTC or percentage terms). Let's simplify for a second and assume the founders retain the entire extra 0.5X (they don't technically own all of it, but they do control all of it -- see (*) below). This means the investors will own 2/3 of the resulting "company," while the founders will own 1/3. So, regardless of how much money is raised, the founders are selling exactly 2/3 of their company.
But this means that the valuation they're raising at is NOT fixed. Since the post-money valuation is 1.5X BTC, and the investors put in X BTC, the pre-money valuation must be 0.5X BTC. But that's not a fixed number: the more interest in the IPO, the higher the resulting valuation they raise money at (in direct linear proportion). If 1000 BTC of money wants to get in, then investors are collectively valuing the existing company at 500 BTC. But if 10,000 BTC wants to get in, then it must mean the company was worth 5,000 BTC initially. That's definitely not the way startups typically raise money, but it is not completely absurd, either. The more VCs that are competing to put money into a startup, the higher the valuation is going to be. The difference here, though, is that all the money doesn't go in at once. Only the people who invest BTC at the very end of the 60-day window will know approximately the actual valuation at which they're investing. The people who invest early on, might think they're getting 1% of the resulting company, but end up only getting 0.1% of the company.
If they chose to, the founders could address this in two ways. One way is to have an explicit pre-money valuation cap, of, say, 5,000 BTC. Then, the founders would receive min (0.5X, 5000) BTC worth of Ether, but they could end up owning less than 1/3 of the company. The other way would be to put a cap on the amount they're willing to raise in the IPO. If they committed to raise no more than 10,000 BTC, then the pre-money valuation is capped at 5,000 BTC, but the founders also guarantee they will still own 1/3 of the resulting company. This would be easy to do: simply return investments once 10,000 BTC had been reached. The benefit of both these approaches is that ALL investors, early and late, know the maximum they are paying for the company.
I do think it would be wise for the founders to do something of this nature, since it strains the imagination that a company which hasn't actually yet launched a product should be worth more than about $10 million (and even by Silicon Valley standards, that's a stretch). There's also a limit to how much and how quickly a large amount of capital could actually be effectively used. If they somehow raise $100M of BTC, it'd be awfully tempting just to split it up and go sit on a beach in a non-extradition country somewhere... So, just spare yourselves the temptation, guys. :-)
Ideally, the investors would also effectively have preferred shares. For instance, let's say that BTC value skyrockets, and the foundation is sitting on more BTC than they could ever use effectively. They decide to issue a BTC dividend proportionately to all Ether holders (somehow). In a perfect world, the investors would have to first get their BTC back before the founders' Ether got paid any dividend. That's exactly how it works for startups, but I'm guessing it may not really be that feasible here. However, I do think it's important that the founders can't simply pay the BTC to themselves. They should publicly commit to never use the IPO BTC to pay themselves beyond a basic salary -- but ideally, even their salaries should be almost entirely in Ether.
(*) I assumed above that the founders own 0.5X BTC, or 1/3 of the resulting company. Actually, they only own 0.225X, and 0.275X is reserved for paying employees, issuing bounties, etc. You can think of this 0.275X as more analogous to the employee stock option pool of a company. It's not actually in the hands of the employees yet, but the company can issue it later to pay for services. This doesn't really change the pre-money valuation calculations above, but it does mean that the founders themselves actually only own 15% (0.225/1.5) of the resulting company, not 1/3 as used above. The "company" owns the other 18.3%.
(**) All this is before mining starts. Think about mining as ongoing employee stock option issuance (payment for services rendered). Of course one can certainly argue whether 0.4X per year is a reasonable amount for mining or not. Or whether PoW is better than PoS, yadda yadda yadda.
When a startup raises capital, they set a "pre-money" valuation for the company. All this means is a value for the company that the founders and the investors agree on, BEFORE the new money goes in. If the company raises $2 million on an $8 million pre-money valuation, then the post-money valuation is $8+2 = $10 million, because you have the existing value of the company, plus the new cash. Since the investors paid $2 million for their stake in a $10 million company, they own 20% of the company. If the company raises more money in the future, new shares are issued, and the first set of investors owns a smaller % of the company (i.e. they get diluted, as do the founders).
Now, let's leave aside mining for a moment and look JUST at the IPO for Ethereum. After the IPO, if investors put in X BTC, there will exist a TOTAL of 1.5X BTC worth of Ether (the units don't matter, just look at it in BTC or percentage terms). Let's simplify for a second and assume the founders retain the entire extra 0.5X (they don't technically own all of it, but they do control all of it -- see (*) below). This means the investors will own 2/3 of the resulting "company," while the founders will own 1/3. So, regardless of how much money is raised, the founders are selling exactly 2/3 of their company.
But this means that the valuation they're raising at is NOT fixed. Since the post-money valuation is 1.5X BTC, and the investors put in X BTC, the pre-money valuation must be 0.5X BTC. But that's not a fixed number: the more interest in the IPO, the higher the resulting valuation they raise money at (in direct linear proportion). If 1000 BTC of money wants to get in, then investors are collectively valuing the existing company at 500 BTC. But if 10,000 BTC wants to get in, then it must mean the company was worth 5,000 BTC initially. That's definitely not the way startups typically raise money, but it is not completely absurd, either. The more VCs that are competing to put money into a startup, the higher the valuation is going to be. The difference here, though, is that all the money doesn't go in at once. Only the people who invest BTC at the very end of the 60-day window will know approximately the actual valuation at which they're investing. The people who invest early on, might think they're getting 1% of the resulting company, but end up only getting 0.1% of the company.
If they chose to, the founders could address this in two ways. One way is to have an explicit pre-money valuation cap, of, say, 5,000 BTC. Then, the founders would receive min (0.5X, 5000) BTC worth of Ether, but they could end up owning less than 1/3 of the company. The other way would be to put a cap on the amount they're willing to raise in the IPO. If they committed to raise no more than 10,000 BTC, then the pre-money valuation is capped at 5,000 BTC, but the founders also guarantee they will still own 1/3 of the resulting company. This would be easy to do: simply return investments once 10,000 BTC had been reached. The benefit of both these approaches is that ALL investors, early and late, know the maximum they are paying for the company.
I do think it would be wise for the founders to do something of this nature, since it strains the imagination that a company which hasn't actually yet launched a product should be worth more than about $10 million (and even by Silicon Valley standards, that's a stretch). There's also a limit to how much and how quickly a large amount of capital could actually be effectively used. If they somehow raise $100M of BTC, it'd be awfully tempting just to split it up and go sit on a beach in a non-extradition country somewhere... So, just spare yourselves the temptation, guys. :-)
Ideally, the investors would also effectively have preferred shares. For instance, let's say that BTC value skyrockets, and the foundation is sitting on more BTC than they could ever use effectively. They decide to issue a BTC dividend proportionately to all Ether holders (somehow). In a perfect world, the investors would have to first get their BTC back before the founders' Ether got paid any dividend. That's exactly how it works for startups, but I'm guessing it may not really be that feasible here. However, I do think it's important that the founders can't simply pay the BTC to themselves. They should publicly commit to never use the IPO BTC to pay themselves beyond a basic salary -- but ideally, even their salaries should be almost entirely in Ether.
(*) I assumed above that the founders own 0.5X BTC, or 1/3 of the resulting company. Actually, they only own 0.225X, and 0.275X is reserved for paying employees, issuing bounties, etc. You can think of this 0.275X as more analogous to the employee stock option pool of a company. It's not actually in the hands of the employees yet, but the company can issue it later to pay for services. This doesn't really change the pre-money valuation calculations above, but it does mean that the founders themselves actually only own 15% (0.225/1.5) of the resulting company, not 1/3 as used above. The "company" owns the other 18.3%.
(**) All this is before mining starts. Think about mining as ongoing employee stock option issuance (payment for services rendered). Of course one can certainly argue whether 0.4X per year is a reasonable amount for mining or not. Or whether PoW is better than PoS, yadda yadda yadda.
The betaCoin model is interesting, but I'd just make one import remark though: in this model, there's no financial incentive for people to migrate from bitcoin stable to bitcoin beta, since stable coins will always be more valuable than beta coins. This means that, from a monetary point of view, this beta risks being just a testnet++. Not many people will transfer their coins into it (it is not a reasonable investment strategy), and without much aggregated value, would it really have enough manpower behind it? If Gavin and Garzik are being fully employed to work on Bitcoin right now, it's precisely because bitcoins are valuable to lots of people. If there was a technical way to ensure people can get their beta coins converted back into stable coins at the same rate (i.e., pegging), then things could be different. But I don't see how could that be possible.
Thanks
Thanks
I think the thing to do would be to define an exponentially declining incentive for early adoption into the inflation schedule. For instance, first 100k coins moved each get 1 bonus betacoin. Next 100k get 0.5 bonus, etc. Similar to how bitcoin halving works, except it's coin-based, not time-based. But ideally, you'd do it in a continuous way, rather than have steep halvings. Something like N(c) = 1 + exp(-c * ln(2) / 100000), where N(c) is the number of betacoins that the c'th bitcoin destroyed results in.
Very useful thread. Would be nice to have another column with the daily deltas (how many XBT added), rather than having to eyeball it. Bonus points for a final column with the dollar value of the added XBT (based on the day's NAV).
Re: Ripple XRP climbing on open source and ZipZap news! UPDATE - up 83% and climbing
Here is an interesting reflection from jackjack (not quoted because French).
If Ripple becomes really open source, totally decentralized, then it can be forked with a better handling of XRPs. Either fairer distribution or completely different anti spam (like BitMessage).
I think it is very likely, as the real value is in the IOUs, which are provided by the gateways, not by Ripple.
If Ripple becomes really open source, totally decentralized, then it can be forked with a better handling of XRPs. Either fairer distribution or completely different anti spam (like BitMessage).
I think it is very likely, as the real value is in the IOUs, which are provided by the gateways, not by Ripple.
Yes, I pointed this out here: https://bitcointalk.org/index.php?topic=232238.0
Not all regions see competitive business advantage as a sufficient incentive to permit transaction freedom. Some may not be convinced by the merits of Bitcoin even with a complete understanding of it and the technology. If some near-totalitarian state were to decree Bitcoin outlawed, and assign capital punishment to users transacting in its jurisdiction unless using a government sanctioned escrow for the private keys of all its citizens, (which law, were it to exist, might even be enforceable to some degree).
Faced with such, how would you as a Bitcoin Foundation board member address this?
Citizens there may not be able to send TBF member fees nor get any representation in TBF without foreign help, would you advocate such help through the Foundation and how?
I'm insufficiently vain to imagine that any of the Board hopefuls will read this or answer it, but had to put it out there for the rest of us to contemplate because I am old enough to remember when "munitions grade" PGP was illegal to export from the USA.
Faced with such, how would you as a Bitcoin Foundation board member address this?
Citizens there may not be able to send TBF member fees nor get any representation in TBF without foreign help, would you advocate such help through the Foundation and how?
I'm insufficiently vain to imagine that any of the Board hopefuls will read this or answer it, but had to put it out there for the rest of us to contemplate because I am old enough to remember when "munitions grade" PGP was illegal to export from the USA.
Ben Davenport here (I'm a candidate).
I think the capital punishment scenario is probably a little far out there, so I won't address it, but the outlawing of making Bitcoin transactions in a jurisdiction is certainly a realistic possibility. The appropriate response from TBF depends a lot on the specifics here (I doubt we'd be able to do much if we're talking about North Korea, for instance). At minimum, I would certainly do anything reasonable to prevent loss of representation of BF members from that jurisdiction, such as suspending membership dues, accepting alternate payment forms, etc.
Following that, I think there are a number of possible approaches, depending on the jurisdiction and the particular law. My bias would be towards finding or constructing a test case with ideal attributes that allows us the best chance of overturning such a law, likely in conjunction with a grass roots campaign to sway public opinion.
It's interesting that you bring up the PGP crypto wars, because I think some similar tactics could apply. Ultimately, PGP was exported by printing it in book form, protected by freedom of speech/press, and OCR'd back into machine-readable form in Europe. And similarly, there were T-shirts made which implemented RSA in a few lines of Perl, with the statement "This shirt is a munition." Because making a bitcoin transaction simply consists of making a public utterance, i.e. speech, I think similar tactics could be used. For instance: build a tool which translates a bitcoin transaction into English or other natural language, and posts it to a public internet forum, where another tool scans and translates back to binary form and relays to the bitcoin network.
Re: Is Mastercoin bloating the blockchain and what we can do about it?
Hey Peter! Thanks for checking out the project! (Peter and I met at the conference in San Jose, and had some interesting discussions there, and he is a tireless advocate for keeping bitcoin awesome, as you can see from his sig)
I completely agree. We seem to have a rather formidable war-chest
Being a good block-chain citizen is a matter of survival for MasterCoin. If we don't, we'll face competition from a clone that says "We're like MasterCoin, but with less impact on the blockchain"
I completely agree. We seem to have a rather formidable war-chest
Being a good block-chain citizen is a matter of survival for MasterCoin. If we don't, we'll face competition from a clone that says "We're like MasterCoin, but with less impact on the blockchain"
With any luck you'll face competition from clones that realize the entire idea is just dumb. Are you planning to release the sourcecode to MasterCoin? Because if you don't, we'll all just say how it's probably got hidden backdoors that are going to steal all your (master)coins, and if you do release it, we can just take that code and remove the silly requirement for the exodus address/MasterCoins. Or just stick with, who was it, TierNolan and co's colored coins stuff?
Also, even if you want to use the colored coins paradigm, you actually don't need any data in the blockchain at all beyond what appear to be bog-standard pubkeys. Even better, is that you can design your protocol to really make it censorproof by allowing the colored coins to be included in standard CoinJoin transactions in such a way that anyone looking at the blockchain data will have no way of knowing what outputs were the colored coins.
Frankly the only clever thing you've done is you've taken the same colored coins/side-chains ideas everyone else has and found a way to get Bitcoin users to shovel money at you for it. Too bad really - I guess the rest of us couldn't imagine how you didn't even need to write any code to separate $300k worth of Bitcoins from the idiots who used to own them. (We forgot about The Pirate already!) Hopefully that's not actually true, and it's actually your own money and not many people are getting scammed here.
Anyway, I have better things to do than waste my time talking about ideas sufficiently stupid to be indistinguishable from scams for free, so don't bother replying unless you've got a paying contract. (1.5BTC/hr, escrow required for you)
I will say though, you're so close to doing something useful for me: showing the world how little protection we actually have against the UTXO set being bloated other than the blocksize limit. Do me a favor and keep your stupid protocol just the way it is.
Thanks for saying what many are thinking. Even if it isn't a scam, the system simply can't work. It shows complete lack of understanding about how markets and asset pricing actually work. Gold assets not backed by gold, but by MasterCoins (which will clearly appreciate faster than dumb old gold)... It's so obvious... Why didn't the people who started GLD think of that? They'd be so much richer!
No as ripple isn't decentralized at all. A single server processes all transactions. Take down the server, take down ripple. Their system doesn't work.
It's not decentralized NOW, because OpenCoin is the only one running servers. But they have clearly stated their long term plan is to open-source the server. The system is definitely designed to be decentralized.
I predict one of the two following things will happen:
1) Once OpenCoin releases the source for the Ripple server, we will find a way to fork the project and create a version that does not require XRP to function.
2) OpenCoin will never open source the server, making their claim of decentralization a lie.
Ripple can be a very useful system, allowing rapid payments, trading of IOUs and distributed exchanges. Its main problem is its reliance on XRP, and the company/developers that own the vast majority of them. We HAVE a wealth asset (BTC), and we don't need another one, especially not one with a central bank that controls most of it.
How could you make Ripple work without the XRP? One possibility: per-transaction proof-of-work similar to what's used in BitMessage. If not that, then something else. I have faith in the inventiveness of the developer community.
1) Once OpenCoin releases the source for the Ripple server, we will find a way to fork the project and create a version that does not require XRP to function.
2) OpenCoin will never open source the server, making their claim of decentralization a lie.
Ripple can be a very useful system, allowing rapid payments, trading of IOUs and distributed exchanges. Its main problem is its reliance on XRP, and the company/developers that own the vast majority of them. We HAVE a wealth asset (BTC), and we don't need another one, especially not one with a central bank that controls most of it.
How could you make Ripple work without the XRP? One possibility: per-transaction proof-of-work similar to what's used in BitMessage. If not that, then something else. I have faith in the inventiveness of the developer community.
The whole unit change seems so disruptive and difficult to coordinate now -- do we really want to have to deal with another one later when there are way more people to try to coordinate? I really think we should look to the endgame and figure out where we want to be.
I'd propose moving to uB (micro-bitcoin = 1e-6) as the standard unit now and forever. For now, it can be referred to as uB or uBTC, but over time, once it's ubiquitous, it should just be called a bitcoin. Because the smallest unit is the satoshi (1e-8), this means uB-denominated prices would get 2 decimal places maximum, which is the most that any consumer wants to deal with anyway.
At the same time, I'd propose inverting the exchange rate, so instead of quoting uB/USD = .00013, it would be quoted as USD/uB = 7692. This is exactly the same way Yen are quoted relative to USD (USDJPY = 100.66), and is also the same way other private virtual currencies such as WoW gold are quoted.
I'd propose moving to uB (micro-bitcoin = 1e-6) as the standard unit now and forever. For now, it can be referred to as uB or uBTC, but over time, once it's ubiquitous, it should just be called a bitcoin. Because the smallest unit is the satoshi (1e-8), this means uB-denominated prices would get 2 decimal places maximum, which is the most that any consumer wants to deal with anyway.
At the same time, I'd propose inverting the exchange rate, so instead of quoting uB/USD = .00013, it would be quoted as USD/uB = 7692. This is exactly the same way Yen are quoted relative to USD (USDJPY = 100.66), and is also the same way other private virtual currencies such as WoW gold are quoted.
Honestly, it's irresponsible of MtGox to even offer the option of issuing a market order given the known horrible performance of their matching engine. At minimum, they should not allow market orders when lag is significant.
Option 2. Never sell any Bitcoins, thus there is no tax event. Loan it to related parties, use it as collateral etc... talk to a good accountant first.
I would be surprised if any of the large holders ever sold any. The feds will be all over taxing the profits on BTC when it hits mainstream. The only way to escape capital gains tax is to never sell.
As the events in Cyprus show, sometimes you have to pay out of your current balances as well, so even the above is not 100% sure, assuming full compliance.
Disclaimer: I have never sold a BTC, nor I probably ever will.
Yes, this is the long play. There is no need for large holders to ever sell.
Compare: http://www.cnbc.com/id/46236916
MtGox has to run the trading engine all on one server.
In related news the entire NASDAQ must run on a single server because it is impossible for trading engines to span multiple servers.
Well, not quite true. They split up ticker symbols across multiple servers by alphabetical ranges. But your point stands, that the NASDAQ engines probably each handle about 100-1000x more order flow as MtGox does. Whoever wrote Gox's software deserves to lose their CS degree, if they ever had one.
Re: Why going all-in is not financially responsible. Capital is your Security.
One of the beautiful things about buying bitcoin right now is that there is NO NEED to go all in! It is such an asymmetric bet, that in a truly ridiculous upside scenario, investing even a small amount at today's prices will make you very very wealthy. If you invested 5% of your net worth, and bitcoin went up 100x, you'd be 84% in bitcoin at THAT point, but at that time, it would actually be a much safer holding by virtue of the implications of its successful history.
There are a lot of unknowable risks still lurking out there. At this time, unless your net worth is extremely low compared to your salary (i.e. you're young and you basically haven't saved much), going all in is just a recipe for panic-selling when the inevitable volatility rears its head. In general, if you can't sleep at night because of your bitcoin holdings, you have too much invested.
There are a lot of unknowable risks still lurking out there. At this time, unless your net worth is extremely low compared to your salary (i.e. you're young and you basically haven't saved much), going all in is just a recipe for panic-selling when the inevitable volatility rears its head. In general, if you can't sleep at night because of your bitcoin holdings, you have too much invested.
?? There's roughly BTC6.8k more on the market than there was on the 22nd, and there has been consistently more during that time frame. I agree the walls are being placed further away, but they're still there AND they're increasing.
This makes sense - the wall spacing ought to be somewhat proportional to the price. Putting a wall a dollar away from the market at $45 doesn't give nearly as much buffer as it did at $15.
have you been buying again Mr.Loaded? make sure to warn us before you decide to sell off a ton of coins 
Have been selling all along. Just on a different market.
Who else is enjoying the ride? More to come.
I am!
Thanks for paying off my student debt, lmfao.
Thank my clients, and several other large buyers here.
If you're actually still trying to acquire coins for clients, why would you say "more to come," allowing anyone on the forum to front-run you/them? Why wouldn't you be trying to talk the market down instead? Smells a tad fishy.