Topic: Bitcoin: Rather backing of others than a direct medium of exchange? (Read 1181 times)

Yes, a less radical approach without the need for protocol changes might work for some alt-coin. But for others this surely will be to restrictive, like PPCoin (Proof of stake) or Litecoin (higher frequency of blocks?)

I don't think we need to change anything to the bitcoin protocol in order to have alternate crypto-currencies backed by it. Remember that you can store anything you like inside a transaction. You could essentially define an alt-coin protocol that stores it's data inside the bitcoin blockchain. It would be secure from day 1 as you are piggy backing on the existing hashrate of the whole bitcoin network. However, you would need to weed-out the details like how to prevent double spending. But I've got a gut feeling that there's a solution.

If the ambition is to make bitcoin a backing of other _distributed_ crypto currencies, then I can´t see how this can be done without changing the protocol on the lowest level. This will be like transferring from single- to multi thread programming (each blockchain being a thread).

The general idea is:

1. A signal for transaction is made in the main chain (bitcoin) for transfer to the alternate chain (borgcoin), this can be verified by any miner of just bitcoin. The bitcoins concerned are subsequently transferred to an address with defined borgcoin escrow from where they can't be transferred in any other way than in 4.)

2. This is picked up on a miner holding both bitcoin and borgcoin, registering the transaction in the borgcoin chain to the designated address there (something like making 10xborgcoin from the bit coins).

3. Any disenchanted holder of borgcoin can then, after the rules defined locally in the borgcoin chain, register a transfer back to bitcoin, like "I want 1 bitcoin for my 10 borgcoin". He presumably also has to register this request in the bitcoin chain as a token transaction to make bitcoin miners aware what is going on in the borgcoin chain.

4. Any bitcoin miner holding _both_ the borgcoin and bitcoin chain, can then process the transaction from 3. out of any escrow account made in 1. This step will create a serious danger for forking of the bitcoin block chain. But I hope this danger can be averted by precautions like only allowing this kind of sync transactions to occur one day every week or so, when blocks with "borgcoin" sync transactions are to be preferred.

I understood OP as follows, with my own comments:

We should keep the bitcoin protocol as simple as possible. It should only handle the blockchain and distributed transaction validation. If we need specialized behavior, we should build applications on top of bitcoin, and keep bitcoin stricly as a network protocol. Much like we don't define any website related standards in TCP/IP. We build over it. This is called layering in a network environment and is considered a good thing. Every layer only concerns itself with what it does best.

I have very limited coding skills, and not a lot of spare time to develop on my ideas. But I hope to get others involved in this general line of thought, to the benefit of all. I am in no way trying to direct you, and I admit I am not very specific about the solutions. This thread is a suggestion of an alternate strategy of furthering bitcoin than the prevailing one.

I don't understand the OP.. Is the idea to direct what the market regulated by consumption i.e. a free market should be doing? Because if that's the case if one doesn't want to contradict themselves, they only way their idea will stick in such a market is for it to be rewarded by consumption i.e. not by making posts and asking the market to do what is asked of it.

In other words why don't you build your idea and let the market choose in stead of coming here and telling us what to do?

Yes indeed. But any large holder of bitcoin would have an interest in the direction of development, and even to commit some bitcoin to a favorable strategy. And for my suggestion 2.) a major change of the bitcoin protocol is needed, adding lots of complexity: https://bitcointalksearch.org/topic/m.1356990

Ultimately the market makes all of these choices, not any individual or a group of forum members.

many want dollars or euro, so i keep such currency amounts on mtgox and give out the mtgoxcodes, in case i need bitcoin value of that transfered, i sell usd and send btc.

Most discussions in this forum revolve around the ambition of making bitcoin easier to use as a medium of exchange; for settling between the accounts of buyer and seller in the blockchain, as pseudonymized normal bank accounts.

But why not pull down the ambitions a notch? Why not build on what is already proven? What about a bit of conservatism? I consider the concept of bitcoin proven as a practical way of making transactions with a digital good, with real-life commercial value, without any central bank or central point of failure. This is already very good! Wy insist on it also being so user friendly that you can buy groceries with it? Or so anonymous that you can buy a yacht the taxman can´t take his cut from?

My naive reaction from I have learned of bitcoin by lurking here for about a year, and also by reading up on it, is that bitcoin should rather build on its strength as a proven concept and leave other objectives to be solved by 1. Distributed banking, as in developing solutions for the trusted neighbor computer geek to provide bitcoin bank services, and 2. Making it easy for other crypto currencies to be backed by bitcoin

Bitcoin will then be something akin to the gold of old times, now with the goldsmiths replaced by those presumed to  be knowledgable in data security. The main added benefit is that the gold vault is totally transparent in the blockchain, which prevents any form of fractional reserve bitcoin banking!

I have expanded on both the suggested point in other threads in this forum, and in the alt-coin forum. I can make a synopsis from them here later - if my suggestion of principles isn´t totally ignored that is