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Topic: [ANN][XCP] Counterparty - Pioneering Peer-to-Peer Finance - Official Thread - page 347. (Read 1276826 times)

member
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I just want to put this out there for those of you who DO believe in Counterparty and XCP that also have Bitcoin to spare etc., Watch the exchanges closely over the next week+, if you're timing is right you're going to get some really cheap XCP Wink

Halfcab, stop this dump plz!!!
full member
Activity: 214
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I think you are making great points. Only I still can't find any esteem for the 'implicit' and 'social contract' arguments - if extra data storage is bad - then why not charge extra fees for OP_return proportional to their burden on the network - there is no absolutely no conclusive logic behind 'these types of transactions are part of the social contract' 'these types of transactions are not' - it's just political posturing - it's like if someone came out to tell people that the Internet was designed for X and not for Y: ergo should not be used for Y.
If his Freimarkets proposal is better than Counterparty, than he can implement it and market forces will decide which is better.


The problem is that Bitcoin's current fee model is definitely "less-than-ideal". It is both static (i.e. non adaptive) and does not compensate full node operators who store the data. This whole debate, I suspect, is a consequence of that. The model can be adjusted, and there has been copious amounts of talk on doing that, but to the credit of the core devs, it's quite hard to change a flat tire on a 2 ton dump truck going down the road at 70 miles an hour. Cheesy

Full Nodes have never received any fees - and it's been okay all this time - but then you add .003% more Data and it's abuse? Besides that I think Counterparty users are the straight up largest percent wise group of Full Node operators  Wink

Take this analogy - you have a highway whose maintenance is paid for by toll fees, and a logging company's trucks cause more wear to the highway surface than your average passenger vehicle - but instead of saying, hey let's do an analysis of how much more wear the logging trucks are causing and charge them higher fees accordingly - they are saying those trucks are evil and hurting all other car owners. Isn't there a problem with this mentality?
Sure your average toll paying driver does not need the 'logging trucks', but they are in fact, perhaps essential to the state's economical development in a very important sector. It's economically backward minded - sure that can change with time and I think it will; I just have a problem with libertarians turning free-market economics into 'social ideology that ought to be good enough for everyone' as soon as it violates their favorite order of things.
sr. member
Activity: 390
Merit: 254
Counterparty Developer
I think you are making great points. Only I still can't find any esteem for the 'implicit' and 'social contract' arguments - if extra data storage is bad - then why not charge extra fees for OP_return proportional to their burden on the network - there is no absolutely no conclusive logic behind 'these types of transactions are part of the social contract' 'these types of transactions are not' - it's just political posturing - it's like if someone came out to tell people that the Internet was designed for X and not for Y: ergo should not be used for Y.
If his Freimarkets proposal is better than Counterparty, than he can implement it and market forces will decide which is better.


The problem is that Bitcoin's current fee model is definitely "less-than-ideal". It is both static (i.e. non adaptive) and does not compensate full node operators who store the data. This whole debate, I suspect, is a consequence of that. The model can be adjusted, and there has been copious amounts of talk on doing that, but to the credit of the core devs, it's quite hard to change a flat tire on a five ton dump truck going down the road at 70 miles an hour. Cheesy
member
Activity: 111
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Digitizing Valuable Hard Assets with Crypto

Product and Service Updates March 27, 2014

Introduction:
We at BitcoinTangibleTrust are happy that to launch a public, trustless trial of BitcoinTangible Trust's gold asset purchase, custody, and issuance on the Counterparty Platform. The players in this public purchase will be:

  • Global_trade_repo(Counterparty Forums) also known as led_cd(BitcoinTalk Forums)
  • BitcoinTangibleTrust (Counterpart Forums) also known as BitcoinTangibleTrust(BitcoinTalk Forums)
  • Agora Commodities
  • DiamondState Depository

Objective:
Our objective is to open up the BitcoinTangibleTrust process to the community in order to build trust from with our process and to validate that there is a value proposition we can continue to scale with more customers and further sales.

Our Process:
Walk with led_cd through the purchase of approximately 1 BTC of gold for custody and DEX trading through BitcoinTangible Trust process. led_cd will provide his public feedback on the purchase, custody, and trading process to the community. We welcome a very public exercise. We will not charge any fees to led_cd/Global_Trade_repo outside the fees from either gold sellers or our custodian partners.

The first step will be for led_cd to fill out our Order form online and inform us of his desire to make a purchase of 1 BTC of gold here: http://bitcointangibletrust.com/buy-gold/

Our Ask:
We look to you, the community to share any thoughts on the process and how we might improve by quoting us in the feedback we will share during the entire process. Will you help us?

Thank you Counterparty Devs and the Counterparty Community,
Bitcoin Tangible Trust Team
Cross Posted to Counterparty Forums:
https://forums.counterparty.co/index.php/topic,203.0.html
full member
Activity: 214
Merit: 101
How is this a comment from a bright individual you can reach out to? It's just another Luke Jr.

Quote
What we are against is extorting other participants of the bitcoin network into processing your transactions which were not in the original social contract of bitcoin, especially when clearly explained alternatives exist. That is frankly evil, although I'll give you the benefit of the doubt and chalk it up to ignorance. This time.



The Bitcoin core devs are focused and clearly care about the network. I think a lot of this *may* come from a fundamentally different viewpoint on what Bitcoin is. I.e. is it just a digital currency payment network, or is it a payment network as well as a platform for building higher-level crypto-financial applications, so to say. And if it is the latter, there is a secondary debate on how such data "should" be stored in the block chain.

With Mark's view above, it reminds me of Peter Todd's original responses to JR of Mastercoin when that came out. These were, to put it mildly, rather harsh. Since that point Peter's views have changed considerably and he has become a supporter and innovator in this space of "embedded consensus systems". Mark is also an innovator with "2.0"-type systems with his work on Freimarkets, but his views are obviously different than Peter's on multiple levels.

My view is that Counterparty is targeting a sector that, by capitalization values, dwarfs that which Bitcoin it targeting by many multiples. Bitcoin is already adding tremendous value to Counterparty, and in return, there is tremendous value that Counterparty can add to Bitcoin, through its building on the Bitcoin "stack", which offers an end-to-end solution for decentralized financial data, and is proven, secure, and reliable. In contrast, building our own DHT system, or running a side chain, or whatever else a) adds complexity, b) is not proven to be secure, c) is potentially centralized, or less decentralized than Bitcoin and d) does not add and advantages towards how we are doing things today.

Even if Counterparty was not doing things this way, soon enough someone else will be, and then someone else, and then more people. It will become a game of whack-a-mole to the core devs, as building on Bitcoin entirely just makes sense, at least at this stage, as it is not just the simplest solution, but also the provably most robust one. And those two things are immensely important to a platform looking to carry billions of dollars of market movement on top of it (and on top of Bitcoin, as well). This is not about us being "lazy".

That all being said, if, in the future, an innovation were to come such as a side chain that was provably as secure as Bitcoin (through being in *actual use*, and not just a whitepaper or a post on the mailing list), possibly had shorter block times (if block based) and was better tuned towards storing this data, then we would strongly consider using that for embedding our transactions. But in that case, the question would arise of not simply just moving to that, if it had as much clout as Bitcoin (and was not simply seen as a supplementary data storage side-chain).

Bitcoin has a potential here to embrace and "lock in" solutions like Counterparty, and fully integrate them into the BTC economy. We believe this opportunity dwarfs any burden imposed through an extra use of ~10-30 bytes per Counterparty transaction, for instance (i.e. through storing a hash instead of storing the full transaction). This includes the benefits we would hopefully bring both to miners (through paying tx fees on every transaction), as well as full node operators (through hopefully lending extra "future-proofed" market value to the BTC they are likely to hold).

Hopefully this response was helpful and constructive towards illustrating our views on this matter. Smiley

I think you are making great points. Only I still can't find any esteem for the 'implicit' and 'social contract' arguments - if extra data storage is bad - then why not charge extra fees for OP_return proportional to their burden on the network - there is no absolutely no conclusive logic behind 'these types of transactions are part of the social contract' 'these types of transactions are not' - it's just political posturing - it's like if someone came out to tell people that the Internet was designed for X and not for Y: ergo should not be used for Y.
If his Freimarkets proposal is better than Counterparty, than he can implement it and market forces will decide which is better.
full member
Activity: 238
Merit: 100
sr. member
Activity: 390
Merit: 254
Counterparty Developer
How is this a comment from a bright individual you can reach out to? It's just another Luke Jr.

Quote
What we are against is extorting other participants of the bitcoin network into processing your transactions which were not in the original social contract of bitcoin, especially when clearly explained alternatives exist. That is frankly evil, although I'll give you the benefit of the doubt and chalk it up to ignorance. This time.



The Bitcoin core devs are focused and clearly care about the network. I think a lot of this *may* come from a fundamentally different viewpoint on what Bitcoin is. I.e. is it just a digital currency payment network, or is it a payment network as well as a platform for building higher-level crypto-financial applications, so to say. And if it is the latter, there is a secondary debate on how such data "should" be stored in the block chain.

With Mark's view above, it reminds me of Peter Todd's original responses to JR of Mastercoin when that came out. These were, to put it mildly, rather harsh. Since that point Peter's views have changed considerably and he has become a supporter and innovator in this space of "embedded consensus systems". Mark is also an innovator with "2.0"-type systems with his work on Freimarkets, but his views are obviously different than Peter's on multiple levels.

My view is that Counterparty is targeting a sector that, by capitalization values, dwarfs that which Bitcoin it targeting by many multiples. Bitcoin is already adding tremendous value to Counterparty, and in return, there is tremendous value that Counterparty can add to Bitcoin, through its building on the Bitcoin "stack", which offers an end-to-end solution for decentralized financial transactions, and is proven, secure, and reliable. In contrast, building our own DHT system, or running a side chain, or whatever else a) adds complexity, b) is not proven to be secure, c) is potentially centralized, or less decentralized than Bitcoin and d) does not add any advantages compared to how we are doing things today.

Even if Counterparty was not doing things this way, soon enough someone else will be, and then someone else, and then more people. It will become a game of whack-a-mole to the core devs, as building on Bitcoin entirely just makes sense, at least at this stage, as it is not just the simplest solution, but also the provably most robust one. And those two things are immensely important to a platform looking to carry billions of dollars of market movement on top of it (and on top of Bitcoin, as well). This is not about us being "lazy". It IS about us building on proven solutions, and avoiding potentially costly bugs and issues which can undermine any trust placed in a "Bitcoin-based" platform. We have to remember, this is totally new to the mainstream world. We *have* to make the best first impression possible, and a big part of that is building on top of the most rock-solid technology available and in-use *today*.

That all being said, if, in the future, an innovation were to come such as a side chain that was provably as secure as Bitcoin (through being in *actual use*, and not just a whitepaper or a post on the mailing list), possibly had shorter block times (if block based) and was better tuned towards storing this data, then we would strongly consider using that for embedding our transactions. But in that case, the question would arise of not simply just moving to that, if it had as much clout as Bitcoin and was not simply seen as a supplementary data storage side-chain.

Bitcoin has a potential here to embrace and "lock in" solutions like Counterparty, and fully integrate them into the BTC economy. We believe this opportunity dwarfs any burden imposed through an extra use of ~10-30 bytes per Counterparty transaction, for instance (i.e. through storing the full transaction in place of a hash). This includes the benefits we would bring both to miners, through paying tx fees on every transaction, as well as full node operators, through hopefully lending extra "future-proofed" market value to the BTC they are likely to hold.

Hopefully this response was helpful and constructive towards illustrating our views on this matter. Smiley
legendary
Activity: 1176
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Does any sort of collateralization requirement denominated in XCP limit the total amount of assets that can be traded on the exchange to the market cap of XCP? How do you work out the margin requirement? Or is the idea that any asset in one's possession can be used as collateral, but represented as an XCP equivalent?

In a world with XCP backed assets, one way I could imagine this working would be that the current market price of the asset (based on a price feed) would be locked away when the asset was created, and the issuer would place a bet to cover future variations in the price, up to a disclosed bet size, and future date.

An issuer could choose the amount of margin they want to put up, and when they run out, the asset would be automatically liquidated. This would have the side effect of dumpling an asset holder back into XCP if a market got volatile, but I think it could dramatically reduce counterparty risk, and everyone would know were they stood.

When issuing, an issuer would lock away $1 worth of XCP to create the asset, and might choose to commit, say, another 25% to cover variation. So $1.25 worth of XCP might be locked away per USD token. They could sell the token to get $1 of XCP back, so they'd basically be net a long XCP bet.

I can imagine that this kind of usage would increase the scarcity of XCP and push the price up (so in the next round a unit of XCP could back a larger dollar value of assets, and so on).

You cannot eliminate counterparty risk from an asset-backed currency peg, as there is no mechanism at the protocol level to stop the issuer (i.e. the user with the private key of the address with the XCP backing) from withdrawing funds. I still think though that is a really good use-case.

A currency peg that actually requires no trust is making a CFD on the price of an asset to which you would like to peg your holdings in XCP. The effectiveness of the peg, however, depends on one's leverage, which in turn increases one's risk. For anyone who is interested in making such a peg, I have come up with a few examples which would show how you do it.
I would be interested in making this!

James
legendary
Activity: 1666
Merit: 1010
he who has the gold makes the rules
Here is a post just now by Mark F.- a BTC core developer explaining the issue as JGarzik did in previous posts here. I only bring it because even-though, again, I dont really like a paragraph such as his last one, I think that we should continue and speak to them as partners. so... his writing also requires a response in my book.  

Mark Friedenbach • 5 minutes ago
You say that "Counterparty users pay fees to Bitcoin miners who process their transactions." However it is not miners which process their transactions, it is the set of fully-validating nodes of which large mining pools make up a mere 0.01%. To the rest of these participants in the bitcoin network, processing of transactions is a fully externalized cost - you have electricity and storage expenses for running a full node but don't see a single satoshi of transaction fees in compensation.

This is a fundamental incentive problem with bitcoin today, and the parasitic use of the block chain as a publication system for Counterparty, Mastercoin, etc. is exacerbating the problem without any attempt to provide a solution. If and until the incentive problem is fixed (it's not clear it can be!) these groups should be doing their transactions on a separately validated side-chain, so only those users who opt-in to running the side chain incur the cost. Hopefully using 2-way pegging so their currency can be bitcoins, if they want to avoid the scummy currency issuance investment model.

If they don't do this, they are forceably extracting a rent from those current users of the bitcoin network which did not expect to be processing these transactions without pay when they started using bitcoin.

We are not hostile to this kind of innovation. In fact, I co-authored a distributed p2p exchange model using bitcoin side-chains accomplishing the same things as Counterparty and published six months before Counterpart started their development:

http://freico.in/docs/freimark...

What we are against is extorting other participants of the bitcoin network into processing your transactions which were not in the original social contract of bitcoin, especially when clearly explained alternatives exist. That is frankly evil, although I'll give you the benefit of the doubt and chalk it up to ignorance. This time.

Mark Friedenbach
Bitcoin Core developer
 

Social contract indeed is the key to this.

The very first word of the whitepaper is "Commerce" and as we know commerce involves 2 parties buying and selling, and "Satoshi" himself noted the problem of the how to "protect buyers".

Unfortunately, "Satoshi" didn't bother to elaborate on how these "routine escrow mechanisms [that] could easily be implemented to protect buyers" should be designed.  

So we are left to guess at the open ended nature of the social contract for these routine mechanisms, and I think ultimately it will be up to the miners.




full member
Activity: 224
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CabTrader v2 | crypto-folio.com
I just want to put this out there for those of you who DO believe in Counterparty and XCP that also have Bitcoin to spare etc., Watch the exchanges closely over the next week+, if you're timing is right you're going to get some really cheap XCP Wink
member
Activity: 70
Merit: 10
Does any sort of collateralization requirement denominated in XCP limit the total amount of assets that can be traded on the exchange to the market cap of XCP? How do you work out the margin requirement? Or is the idea that any asset in one's possession can be used as collateral, but represented as an XCP equivalent?

In a world with XCP backed assets, one way I could imagine this working would be that the current market price of the asset (based on a price feed) would be locked away when the asset was created, and the issuer would place a bet to cover future variations in the price, up to a disclosed bet size, and future date.

An issuer could choose the amount of margin they want to put up, and when they run out, the asset would be automatically liquidated. This would have the side effect of dumpling an asset holder back into XCP if a market got volatile, but I think it could dramatically reduce counterparty risk, and everyone would know were they stood.

When issuing, an issuer would lock away $1 worth of XCP to create the asset, and might choose to commit, say, another 25% to cover variation. So $1.25 worth of XCP might be locked away per USD token. They could sell the token to get $1 of XCP back, so they'd basically be net a long XCP bet.

I can imagine that this kind of usage would increase the scarcity of XCP and push the price up (so in the next round a unit of XCP could back a larger dollar value of assets, and so on).

You cannot eliminate counterparty risk from an asset-backed currency peg, as there is no mechanism at the protocol level to stop the issuer (i.e. the user with the private key of the address with the XCP backing) from withdrawing funds. I still think though that is a really good use-case.

A currency peg that actually requires no trust is making a CFD on the price of an asset to which you would like to peg your holdings in XCP. The effectiveness of the peg, however, depends on one's leverage, which in turn increases one's risk. For anyone who is interested in making such a peg, I have come up with a few examples which would show how you do it.

Quote
as there is no mechanism at the protocol level to stop the issuer (i.e. the user with the private key of the address with the XCP backing) from withdrawing funds
But would it be possibility to implement such a mechanism: The issuer of XLTC sends the funds to a LTC wallet within the Counterparty system....
hero member
Activity: 647
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Counterpartying
There is a lot of emotion over the data storage topic right now on both sides and that's understandable. There is also a lot of bad information being circulated.

I am not going to judge Mark on a statement or two that I don't agree with. Mark proved to be very reasonable in our discussion at CoinSummit. He had some interesting ideas and is willing to have discussions with the Counterparty developers that will allow us to work towards a solution together. It was obvious that mark cares deeply about Bitcoin as well as the ethics and motivations of other projects in the digital currency space.
full member
Activity: 216
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For anyone who is interested in making such a peg, I have come up with a few examples which would show how you do it.

Quote

It's still a good service! And indeed I think that if a trusted exchange (or even a trusted community member) were to implement something like this on Counterparty, it would gain adoption.


Great, maybe you could drop us a link / point us to your examples? Smiley

I've PMed you. Smiley
member
Activity: 70
Merit: 10
What sucks is that while the term Decentralized exchange let imagine the possibility of the elimination of third party risk, actually there is a lot more counterparty risk by using it. (I prefer trust Bitstamp or Cryptsy than a random asset issuer on top of counterparty, and it's not even close).

The thing is, a centralized exchanged like Bitstamp or Cryptsy is really complicated, and you can't read the source.  There are potential vulnerabilities throughout their entire systems.

An asset issuer on Counterparty needs only do one thing correctly: hold the asset.  They don't need to make sure their wallet software is updated, they don't need to match orders correctly, they don't need to keep orders on the books.  They only have to do one thing, and that one thing can be provable (such as providing bank statements, photos of physical assets, etc.).  The rest is on the Counterparty implementation, which is open-source.

Do you trust that Cryptsy owns the correct amount of coins for the 50+ coins that they trade?  And that a vulnerability in one of the wallets in one of those coins won't lead people to make fake deposits, trade those fake coins for BTC, cash out the BTC and leave Cryptsy with nothing but a bunch of fake coins?  (Like supposedly happened with CryptoRush and BlackCoin?)

I'm not trying to pick on Cryptsy here, I use them myself and trust them more than I trust other centralized exchanges.  But for them to prove to me that they have all the required coin balances for 50 different coins would be quite complicated.  And then they would have to prove to me that their exchange code can't be cheated.

What advantage does an issuer have when issuing for example XLTC on Counterparty?

 
full member
Activity: 214
Merit: 101
How is this a comment from a bright individual you can reach out to? It's just another Luke Jr.

Quote
What we are against is extorting other participants of the bitcoin network into processing your transactions which were not in the original social contract of bitcoin, especially when clearly explained alternatives exist. That is frankly evil, although I'll give you the benefit of the doubt and chalk it up to ignorance. This time.

full member
Activity: 210
Merit: 100
Here is a post just now by Mark F.- a BTC core developer explaining the issue as JGarzik did in previous posts here. I only bring it because even-though, again, I dont really like a paragraph such as his last one, I think that we should continue and speak to them as partners. so... his writing also requires a response in my book. 

Mark Friedenbach • 5 minutes ago
You say that "Counterparty users pay fees to Bitcoin miners who process their transactions." However it is not miners which process their transactions, it is the set of fully-validating nodes of which large mining pools make up a mere 0.01%. To the rest of these participants in the bitcoin network, processing of transactions is a fully externalized cost - you have electricity and storage expenses for running a full node but don't see a single satoshi of transaction fees in compensation.

This is a fundamental incentive problem with bitcoin today, and the parasitic use of the block chain as a publication system for Counterparty, Mastercoin, etc. is exacerbating the problem without any attempt to provide a solution. If and until the incentive problem is fixed (it's not clear it can be!) these groups should be doing their transactions on a separately validated side-chain, so only those users who opt-in to running the side chain incur the cost. Hopefully using 2-way pegging so their currency can be bitcoins, if they want to avoid the scummy currency issuance investment model.

If they don't do this, they are forceably extracting a rent from those current users of the bitcoin network which did not expect to be processing these transactions without pay when they started using bitcoin.

We are not hostile to this kind of innovation. In fact, I co-authored a distributed p2p exchange model using bitcoin side-chains accomplishing the same things as Counterparty and published six months before Counterpart started their development:

http://freico.in/docs/freimark...

What we are against is extorting other participants of the bitcoin network into processing your transactions which were not in the original social contract of bitcoin, especially when clearly explained alternatives exist. That is frankly evil, although I'll give you the benefit of the doubt and chalk it up to ignorance. This time.

Mark Friedenbach
Bitcoin Core developer
 

Matt Y from our team spoke to Mark recently at Coinsummit. Mark is a very bright individual and has echoed some valid concerns. We are in the process of reaching out to Mark and hope to get a call going between him and I, so that we can begin to build a dialogue together on this topic and work towards a resolution that is acceptable for all parties.

This is excellent and highly professional. Thanks for the update. There are also some good responses to his post from various individuals.

member
Activity: 111
Merit: 10
Digitizing Valuable Hard Assets with Crypto
What sucks is that while the term Decentralized exchange let imagine the possibility of the elimination of third party risk, actually there is a lot more counterparty risk by using it. (I prefer trust Bitstamp or Cryptsy than a random asset issuer on top of counterparty, and it's not even close).

The thing is, a centralized exchanged like Bitstamp or Cryptsy is really complicated, and you can't read the source.  There are potential vulnerabilities throughout their entire systems.

An asset issuer on Counterparty needs only do one thing correctly: hold the asset.  They don't need to make sure their wallet software is updated, they don't need to match orders correctly, they don't need to keep orders on the books.  They only have to do one thing, and that one thing can be provable (such as providing bank statements, photos of physical assets, etc.).  The rest is on the Counterparty implementation, which is open-source.

+1 Indeed.

hero member
Activity: 700
Merit: 500
What sucks is that while the term Decentralized exchange let imagine the possibility of the elimination of third party risk, actually there is a lot more counterparty risk by using it. (I prefer trust Bitstamp or Cryptsy than a random asset issuer on top of counterparty, and it's not even close).

The thing is, a centralized exchanged like Bitstamp or Cryptsy is really complicated, and you can't read the source.  There are potential vulnerabilities throughout their entire systems.

An asset issuer on Counterparty needs only do one thing correctly: hold the asset.  They don't need to make sure their wallet software is updated, they don't need to match orders correctly, they don't need to keep orders on the books.  They only have to do one thing, and that one thing can be provable (such as providing bank statements, photos of physical assets, etc.).  The rest is on the Counterparty implementation, which is open-source.

Do you trust that Cryptsy owns the correct amount of coins for the 50+ coins that they trade?  And that a vulnerability in one of the wallets in one of those coins won't lead people to make fake deposits, trade those fake coins for BTC, cash out the BTC and leave Cryptsy with nothing but a bunch of fake coins?  (Like supposedly happened with CryptoRush and BlackCoin?)

I'm not trying to pick on Cryptsy here, I use them myself and trust them more than I trust other centralized exchanges.  But for them to prove to me that they have all the required coin balances for 50 different coins would be quite complicated.  And then they would have to prove to me that their exchange code can't be cheated.
sr. member
Activity: 390
Merit: 254
Counterparty Developer
Here is a post just now by Mark F.- a BTC core developer explaining the issue as JGarzik did in previous posts here. I only bring it because even-though, again, I dont really like a paragraph such as his last one, I think that we should continue and speak to them as partners. so... his writing also requires a response in my book. 

Mark Friedenbach • 5 minutes ago
You say that "Counterparty users pay fees to Bitcoin miners who process their transactions." However it is not miners which process their transactions, it is the set of fully-validating nodes of which large mining pools make up a mere 0.01%. To the rest of these participants in the bitcoin network, processing of transactions is a fully externalized cost - you have electricity and storage expenses for running a full node but don't see a single satoshi of transaction fees in compensation.

This is a fundamental incentive problem with bitcoin today, and the parasitic use of the block chain as a publication system for Counterparty, Mastercoin, etc. is exacerbating the problem without any attempt to provide a solution. If and until the incentive problem is fixed (it's not clear it can be!) these groups should be doing their transactions on a separately validated side-chain, so only those users who opt-in to running the side chain incur the cost. Hopefully using 2-way pegging so their currency can be bitcoins, if they want to avoid the scummy currency issuance investment model.

If they don't do this, they are forceably extracting a rent from those current users of the bitcoin network which did not expect to be processing these transactions without pay when they started using bitcoin.

We are not hostile to this kind of innovation. In fact, I co-authored a distributed p2p exchange model using bitcoin side-chains accomplishing the same things as Counterparty and published six months before Counterpart started their development:

http://freico.in/docs/freimark...

What we are against is extorting other participants of the bitcoin network into processing your transactions which were not in the original social contract of bitcoin, especially when clearly explained alternatives exist. That is frankly evil, although I'll give you the benefit of the doubt and chalk it up to ignorance. This time.

Mark Friedenbach
Bitcoin Core developer
 

Matt Y from our team spoke to Mark recently at Coinsummit. Mark is a very bright individual and has echoed some valid concerns. We are in the process of reaching out to Mark and hope to get a call going between him and I, so that we can begin to build a dialogue together on this topic and work towards a resolution that is acceptable for all parties.
full member
Activity: 224
Merit: 100
CabTrader v2 | crypto-folio.com
Highest volume on BTER goes to? XCP.
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