I created a separate thread for "The Second Bitcoin Whitepaper":

https://bt.irlbtc.com/view/31645.0

I am officially extending my offer to pay for intelligent posts to include posts made in that thread as well.

I agree that a perfectly stabilized currency is not possible. What is possible (in my opinion) is to let people choose who experiences the instability. The instability is there (risk), but with risk comes reward. I wish to give bitcoin users (at least) two additional choices beyond holding bitcoins: a low-risk low-reward extrapolation, and a high-risk high-reward extrapolation which takes on both the risk and reward from the people who chose low-risk low-reward.

MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL  MEGA LAWL 

Since there are people working on various OT clients, I get images and screenshots in the email sometimes. Below is an example.

I never understood why people say that OT is "way too complicated for the average Joe" since those people have probably never actually SEEN an OT client. Plus, in my own personal opinion, the OT-API is retard-easy to use. In fact, I can't imagine a system doing all the things OT does and having an easier interface than it already does. A trained monkey could code an OT client!



Of course, every OT client will have a different interface, so above is only an example of what could be done.

There are also some screenshots of the test GUI: https://github.com/FellowTraveler/Moneychanger
(But keep in mind that a Test-GUI isn't meant to have the prettiest interface. Rather, it's meant for testing the protocol.)


In OT, the issuer is the one being trusted. (The magical part about OT is not having to trust the transaction server.)

In the case of Bitcoin (using Bitcoin as a "backing currency" on an OT server) then you could have a trusted issuer also, the same as with gold or anything else. While this is no different than what the Bitcoin world is doing now (MyBitcoin, MtGox, etc) it is certainly not good enough for me, which is why I have written on this forum on how to use voting pools to eliminate entirely any need for an "issuer" (for Bitcoin on OT.)


If you want to learn more about OT's concept of "low trust servers", check out the post Stephen already referenced:
https://bt.irlbtc.com/view/20425.0

"Seek and ye shall find."

As well as this related post:
https://bt.irlbtc.com/view/28565.msg363945#msg363945

FYI, OT is open source.


Given that the first clients haven't been released yet, other than the test client, I think marketing copy is a bit premature.  However, there is a pretty easy description at the top of the OT Wiki:

WHAT IS “Open Transactions” ?

• Open-Transactions allows users to issue and manipulate digital assets. Users may create many pseudonyms (public keys), each of which may own asset accounts of various types. Users can transfer digital assets securely between accounts (even a server cannot change balances or forge transactions.) Users can also operate “cash-only” (without accounts) for maximum anonymity.
• Open-Transactions supports a range of financial instruments, such as cheques, vouchers, and untraceable digital cash. These are all analogous to the same financial instruments that we all use at normal banks today. Everyone already has an intuitive understanding of these financial instruments, because we use them regularly in our normal daily lives.
• Open-Transactions also implements higher-level, contract-based transactions such as payment plans and markets with trades. The markets on Open-Transactions support market orders, limit orders, fill-or-kill orders, day orders, stop orders, and stop limits, just like trading on a real market. OT also supports basket currencies.
• All of this is accomplished in such a way that all parties are able to prove, at all times, which transactions have cleared and which instruments are authorized, without having to store their entire transaction history, but instead by merely keeping the last signed receipt.
  (Without the special mechanism that makes this possible, all parties would otherwise be forced to store all receipts forever--no matter which system you are actually using.)

OT is not a "killer app" but rather, a SOFTWARE LIBRARY. There are MANY possible different interfaces that could be built.

The basic use cases are:

-- Issue a new currency (by uploading the new currency contract to an OT server.)
-- Open accounts of any asset type.
-- Withdraw Deposit in untraceable digital cash.
-- Use "cash only" (no accounts) for full anonymity.
-- Write cheques, cashier's cheques, and perform account transfers (all with signed and unforgeable receipts.)
-- Trade on markets (like MtGox.)

Who could use OT?
-- A market site (like MtGox) where users are able to trade currencies, including Bitcoin, on markets.
-- A "Wallet" website (like MyBitcoin or whatever).
-- A client application. (OT works on all platforms...Android, Windows, Linux, Mac, etc)
-- A gambling site.
-- Etc.

The above are just basic uses which I mention first, since you are all mostly building such things. However, much more useful applications of the library are possible, such as creating the next generation of file-sharing software, the next generation of anonymous networks, etc.

I think the most disruptive use of OT would be using it to solve issues of resource allocation that arise in anonymous networks, mesh networks, darknet hosting, etc.

OT is also useful in combination with Bitcoin. Why?

Bitcoin gives OT: a universal “glue” between servers, a network of existing exchangers, and a publicly-auditable, reserve currency that cannot be confiscated or shut down.

OT gives Bitcoin: Untraceable cash, instant finality of settlement, and convertibility to other currencies on OT Markets.

(Soon, using the low-trust technology, OT will also give Bitcoin the only servers where Bitcoins can safely be stored, without risk of the server, or a hacker, stealing them.)

I think this would work, yes.

First, you'd actually issue two bitcoin-like currencies onto an OT server. For example, Bitcoin and Namecoin.

Second, since you don't want to have to trust an issuer, we'd use the "low trust voting pool" solution I've proposed, which eliminates the need for an issuer, for any Bitcoin-like currencies. (There is no avoiding issuers for gold-based currencies, but for bitcoin-like currencies it is possible to eliminate issuers.)

Third, since OT has markets (like MtGox) the users are now able to make offers on those markets, trading Bitcoins for Namecoins.

Finally, the OT server(s) processes the trades according the rules defined in the various market offers. Whenever a successful trade occurs, receipts are dropped into the parties' inboxes.

(And yes, the trades are atomic, meaning BOTH parties get a receipt, or not at all.)


Not sure what you mean by this...

When you make an offer onto an OT market, you can attach specific terms to your offer. That is, minimum price ($50 per bushel minimum) or minimum amount traded (500 bushel minimum per trade). You can also create stop-orders (do not activate this offer until the price reaches $50 per bushel.) Basically the same sorts of things you would do on a real market: stop orders, limit orders, stop limits, fill-or-kill orders, day orders (date ranges), etc.


(FYI, OT does support basket currencies, so if you actually wanted to define a single currency as a basket of others, you can do that.)

As I said before, the magic of Open-Transactions is that you do not have to trust the transaction servers. IOW, you still do have to trust the issuer.
For example, if the issuer is holding 100 oz of your gold, he could still disappear with your gold. (This is why OT has traditionally focused on securing the transaction server, so that the server itself doesn't become ANOTHER party that you have to trust, since you normally have no choice about trusting the issuer.)

However for Bitcoin-like currencies (crypto-currencies) as I said before, this "issuer risk" can be eliminated on OT using low-trust servers with voting pools. (By eliminating the issuer entirely.) But obviously such solutions are not possible with gold, silver, or other physical commodities, and so the markets will have to decide on their own which gold issuers they will trust. (One thing OT will never be able to do is PHYSICALLY AUDIT your gold warehouse.)  Therefore I don't know how "anonymous issuers" will work, although I've heard that the eCache group is experimenting with a solution for that, based on bonding.


Keeping things simple, let's assume there is only one OT server, and that 2 oil issuers are using it. (They have both issued their own oil currencies onto the OT server.)

Even though we logically know that both contracts are valued in the real world in terms of "oil", the OT server has no way of knowing that. OT just sees two different contracts -- that's all.

An easy way to convert between the two oil-based currencies, in that example, would be to trade on OT markets.  You just trade one for the other, on the market, the same way that people trade dollars for BTC now on MtGox. The trades would be processed automatically by the OT server, based on the terms in the respective offers, with receipts being dropped into the inboxes of the respective parties once the trade is complete.

There are other solutions for this. For example, if each of the 2 issuers honestly believe that the other oil-based currency is comparable to their own, then there is no reason why the issuers themselves couldn't perform such exchanges on behalf of the users. The issuers could also leave standing orders on the oil markets, and thus use the markets themselves to perform this functionality.  That way no one has to worry about being paid the second half of any trade, since the OT markets handle all of this.

I personally prefer the "hold a barrel of oil" model too. Take a look at this post I made describing how it could work for buying and selling "U.S. dollar" denominated bitcoins, which is exactly how I imagine it could work for oil, gold, and anything else you can think of: https://bt.irlbtc.com/view/31645.msg400477#msg400477

The idea DOES feel magical to me, which is why I'm pushing it so hard. There's no reason that binary contracts couldn't be built into the system too, but I really like the idea of something your kid brother or Grandma could use to buy/sell oil, gold, Euros, or anything else without understanding anything more than "buy a barrel of oil", "sell an ounce of gold", etc. No paperwork, no money trail, no proof of identification, no trying to grasp the difference between a put and a call or a futures contract. All you do is download bitcoin, get some bitcoins, and then start buying/selling whatever you want to hold.

I would personally hold the hyperbitcoins over any currency or commodity, allowing my bitcoins to be added to escrow as insurance against a crash in bitcoin prices in exchange for massive leveraged exposure to bitcoin price increases.

What is wrong with contracts, PGP keys, and webs of trust? The problem with them is they are hard to explain to Grandma. It's much easier to tell Grandma, "See, you bought some bitcoins, but you can store them as USD, Euros, gold, oil, . . . "


I hope you are right that bitcoin will eventually stabilize. However, price volatility favors speculators at the expense of people who just want to use bitcoin to engage in commerce or store value. The assertion that bitcoin will stabilize may be true, but it can't be proven. I'd rather have the protocol provide stability for the people that want it, and transfer the volatility to the speculators who want it.


Please don't be insulted if I offer to pay you for your post

The payments are kind of a gimmick to spur conversation on a topic that I am really really interested in.

The entire problem with backing bitcoins with gold, silver, etc is that someone has to come up with the 200 tons of gold in the first place to back it...  and treat bitcoins as the paper.

It's not going to happen.  

I am not saying it's impossible,  but you need some serious gold silver whatever behind it to make bitcoins backed by anything.

Here I'll back it..  1 ounce of silver for each bitcoin...  so people start sending me their bitcoins, and I in turn have to start sending them ounces of silver...  i'll go bankrupt in a week as I will hold thousands of bitcoins,  but out thousands of ounces of silver at 40 bucks a pop.

Now if you scale it down...  3 bitcoins for each ounce of silver...   that's fine...  until silver skyrockets or bitcoins do.. then someone's going to be either sending me more coins to exchange... or sending more silver to exchange...   leading to another bankruptcy...    

bitcoins have to stand on their own.

Yes, I agree, holding something with the features of bitcoins but with the value stability of oil would be great.  The problem is that somewhere along the line it requires a contract that's long on oil.  I agree that it is difficult or impossible to hold oil in a digital wallet.  This is precisely the problem.

To tie bitcoins into an oil contract such that it can be redeemed for oil will require an oil contract that can be held and transferred digitally.  Essentially a digital bearer certificate that can be unlocked when the derivative is redeemed... or something like that.  A company or 'bank' could hold reserves and issue digital bearer certificates, and those could be connected to bitcoins through derivatives.

But at that point it would be simpler to just use the digital bearer certificates themselves.

This doesn't mean that the derivative market is infeasible, it only means that the derivatives are subject to default risk.  If the bearer certificates could be used, then they could provide 100% guaranteed "backing" but without them there must be some counterparty who is holding the other side of the contract, and that counterparty could default.

If I trade derivatives through a broker, the broker is on the hook if my liabilities exceed my assets, so the broker will liquidate/cover my position if my reserves get too low.  This sort of system might be required for derivatives to be trustworthy enough to be fungible.  It would be a step in the right direction, and exchanges could provide this sort of service today if they wanted, without any changes to the block chain.

To go fully decentralized and guaranteed only by encryption, default risk is going to be a problem.  And it has two facets, one is the actual default risk, and the other is that it makes the derivatives non-fungible.

In my mind, overcoming the default risk is one of the core challenges of setting up such a system.  Perhaps the derivatives could be restricted to those with limited downside, where you can't lose more than 100% of the investment.  Instead of being short, you essentially own a put (or something like that).  Then these contracts can exist without risk of default and without having to figure out how to somehow connect the underlying asset itself.