Topic: [Necro Thread] It's here: The Second Bitcoin Whitepaper (Read 18414 times)

It's been a loooong time since Mastercoin was launched. I'm briefly unlocking this thread to let you guys know about my new project which was recently featured at Forbes.com, UpToken, which I believe to be "The Perfect Token Sale". Check it out on this thread: https://bitcointalksearch.org/topic/ann-inventor-of-the-ico-unveils-uptoken-a-bitcoin-atm-on-every-corner-2199751

Sadly, I can't go to Amsterdam. I barely convinced my wife I should spend the money to get to the San Jose conference

Here's the official launch thread: https://bitcointalksearch.org/topic/mastercoin-new-protocol-layer-starting-from-the-exodus-address-265488

I'm locking this thread now, since that thread is live.

Excellent, I'll review it shortly.
MasterCoin was a very interesting concept at the time, I'm excited to see your improvements.

BTW, are you attending Bitcoin Amsterdam?
I'm on the alt currency panel there, would be interesting if you presented/talked about MasterCoin there.

Hey guys,

Here's a sneak peak at the complete MasterCoin specification: https://sites.google.com/site/2ndbtcwpaper/MasterCoin%20Specification.pdf

I spent a lot of hours on it, and it is ready to go. I've been privately circulating it among bitcoin experts since Monday, with positive responses.

MasterCoins will be available for sale soon, and I hope it will make a big splash

Thanks for writing the post ... I'm really interested in learning more, and all else aside, I think it's an interesting paper. Comments below:

Necessity

I don't think you have sufficiently demonstrated that this protocol is necessary:

1. Instability - if/when Bitcoin becomes a major force in the global economy, its value will be stable because of the larger market cap. Its current instability is simply because of the tiny market. Why do you doubt this scenario will happen on its own without extra layers?
2. Insecurity - Isn't multi-sig a very good step towards security? In what ways exactly is your protocol secure, where Bitcoin is not? Can't Bitcoin be augmented to be "secure enough" without changing its fundamental properties or building abstractions over it?
3. Disunity - I think Alt Chains are a superb idea. They are a place to experiments, and good ideas from them can be imported into the main chain. I don't think they really "confuse our message" - let the coins evolve, and the best one wins. The alts don't seem to be hurting Bitcoin so far.

It took me a while to understand this, but I now do - your protocol does not guarantee a minimal value of a Mastercoin. Let's assume you set a maximal value of 1 MC = 5 BTC. Then if I invest BTC when MC is launched (1 MC = 1 BTC), I can gain a max of 400% on my initial investment, but I can lose all of it. For anyone to make such an investment, they would need to believe there's a decent chance (I'd say around 40%) it will succeed. 20% chance is just the break even point.

A lot of people on these forums believe that just by holding BTC for the next ten years, they'll already become rich. You have to have really convincing arguments why MC is necessary.

Mastercoin - Bitcoin ratio

What do you mean by

"every single person buying MasterCoins with bitcoins ignored the cheaper MasterCoins and chose the more expensive ones instead" ?

I agree with your point that destroying bitcoins has to increase the worth of the other bitcoins, and this price ration can be maintained - just the sentance above is not very clear.

Second price manipulation - shares and currency

I might be thick, but I still don't understand how it actually works.

Satoshi's objection to embedding
Can you provide a citation?

Also, check out my previous post on Stack Exchange about your paper.

Thanks so much for all the thoughtful replies!

I've posted my response on bitcoinmedia.com:

http://bitcoinmedia.com/the-second-bitcoin-whitepaper/

It's a fun and exciting time to be a bitcoin enthusiast. Anyone with more feedback, please post it in this thread. If anyone wants to chat about collaboration, please get in touch!

Here's some feedback:

Piggybacking protocols that solve the same problem: don't do it. Especially if the existing protocol already has massive scalability issues.
Naming your system 'Bitcoin2' although it has little to with Bitcoin except for the above-mentioned piggyback: don't do that either.
Attempt to 'stabilize' the value of currencies without being an economist well versed in the theory and history of such endeavors: don't.

There are many more problems and open issues with this proposal (such as how would 'voting' go, who would count the votes, etc.), suffice to say it's a non-starter.

On second thought, this is quite useless - I believe that this "value protection" protocol change is entirely equivalent to each potential MC buyer simply buying 20% less MC.

I read this initially on my android (small font), so I missed one important detail:

While there is a minimal bitcoin value and maximal MasterCoin value, there is no minimal MasterCoin value.
So, suppose you gather up let's say 10,000 BTC in the initial bootstrapping process, and then 10,000 + 1000 MC are created.

Those MC can drop to being worth 0 BTC, and never recover.

Let's hypothesize that the MasterCoin protocol is deemed to be unnecessary:
 - Centralized Bitcoin Banks will naturally arise, fulfilling some of the needs described in the paper
 - The core Bitcoin protocol will be enhanced to support other needs (e.g. multi-sig is on its way as we speak)
 - The core MasterCoin is deemed too complex to serve any real use case

In this event, MasterCoin value will plummet. The BTC used for bootstrapping will have been spent for various purposes ... and early adopters of MasterCoin will effectively lose their pants.

When I first read this paper, I thought that MC will always be within a constant factor of BTC. Obviously, investing in a new currency is risky business, but if there's a bottom price, then the damage (in case it flops) is controllable.

How about keeping 20% of every BTC used to create MC in a "reserve pool", such that the owner of that MC can always cash out - destroy the MC, and get 0.2 BTC? This will make MC effectively "backed by BTC", and increase its stability.

See this video for plans for OpenTransactions to support Bitcoins in what I guess I would call in layman's terms, a decentralised bitcoin bank (via pooled voting):

http://vimeo.com/28142096

Exciting! :-)

Could this be the start of the mythical decentralised exchange?'

+1

We already have bitcoin banks: MtGox, Tradehill, Virtex. Just like bitcoin itself is both a currency and a commodity (nobody likes my "commodency" monicker?), the exchanges also function as banks.

Bitcoinnhas often been called a singularity. I tend to think of it more in terms of duality myself.

+1

I wish more people would learn about OT before trying to bring forward their ideas of what needs to be changed to improve Bitcoin etc.

I have just a moment online today, and I thank you for all of your comments. I hope to write a detailed response soon addressing some of these concerns, and it may be a guest post on bitcoinmedia.com in which I will elaborate on why I did this and address a few of the thoughts I see here.

Please keep the feedback coming! I believe we all share a similar set of goals, but it sounds like we have a very wide variety of ideas about how to get there.

I have very little doubt that processing and network bandwidth capabilities will advance well in excess of the needs of Bitcoin.  Probably even if Bitcoin became the dominant currency solution of the world.

The problem is that these technologies will be available through and controlled by a very small number of powerful entities.  It will be decades before such technology becomes available at a consumer level, and will likely be restricted by law if not by normal economic factors.

When Bitcoin is an operational system only at the pleasure of Amazon, Google, AT&T, and a handful of other technology providers, my interest in the solution will long since have evaporated and my stash will have been sold off for a more promising store of value.

On the scalability issue, is it not possible that advances in networking and computer technologies may advance faster than Bitcoin adoption/use and at least delay the issue if not solve it?  Or allow a better mix of Banks to centralized data centers running the full protocol?

How about the talk about scalability?  I haven't interacted with you personally much to know you too well, but your name makes you sound like you understand the economics far more than the technology.  Bitcoin will only scale so far, and then that's it.  Period.

Did you ever use Gnutella?  When it came out, it was awesome!  You could find and pirate anything you wanted for free.  Then everybody heard about it, then it didn't work worth a damn anymore.  That's because it requires computing resources exponential to the number of participants.  It was a peer to peer network where nearly everybody had to hear about all activity on the whole network.

If Bitcoin gains in popularity, it will hit some limits.  You will know this is happening when downloading the full client is considered a joke due to the amount of bandwidth you need (isn't that already starting?).  Soon thereafter, only people with major computing infrastructure will be able to run the protocol (that's centralization), and people will start worrying about how much storage space the transactions consume since they will grow exponentially, and miners will start making sure people pay for it (that's centralization).

How is that not like a bank?


And of course, a protocol that consumes resources exponentially with respect to the number of participants (not scalable) just like Gnutella.  It is a peer to peer network where nearly everybody has to hear about all activity on the whole network.  Of all the possible solutions, I see (as a matter of opinion of course) bitcoin banks as being the most plausible and practical.

This post made me login for the first time since cosbycoin hacks...

First off: The problem with the internet and software in general is that at any given time there are 1000 different people all solving the same 1 problem with 1000 different softwares and 1000 different methods... This is no exception. Instead of making this you should be putting all your effort into supporting Open Transactions, it already is a layer on top of bitcoin that can do everything you want, plus a whole lot more. And it is already at least 50% done! (It does need alot of ease of use improvements still)

People mention the title of it... and that does say something about your character personally, but doesn't really portray any negative points about the idea itself.

So here is a negative about the idea itself:

YOU WANT TO CONTROL THE VALUE OF BITCOIN BY DESTROYING IT???

Jesus christ man, what a terrible idea. You didn't even come up with some elaborate scheme of hoarding and then releasing when bitcoin value is taking a slump... you just up and decided that you would DESTROY bitcoins incase value was growing too fast?

So you started out as a half decent idea: You just like bitcoins so much, you want more functionality and versatility... but with the idea of destroying bitcoin to control its value you have devolved into WORSE than alternate scam blockchain by actually destroying the original bitcoin... a finite resource underlying your own coins?

A slight aside,  my own opinion is that bitcoin is only amazing if there is ONLY one bitcoin... If anyone can up make their own blockchain, then every single of one them is valueless. There can be only one to be able to trust its value at all.

Once again, I urge you to scrap the idea, and do whatever you can for Open Transactions. All of the info is on his github wiki I think  https://github.com/FellowTraveler/Open-Transactions/wiki

This talk about establishing bitcoin-based banks is getting too old.
It's time to look at bitcoin for what it really is rather than for what it should be.
Enough trying to convince the public that bitcoin is just as conventional as fiat money.

From the marketing perspective alone, mimicking the banking system is a bad idea.
In order for it to succeed, bitcoin should be positioned as very different from the fiat money.
It's time everyone realizes that bitcoin is only a protocol upon which new currencies can be built.

we all should be working toward layering an existing, real world currency over the top of Bitcoin. 

THAT is the USD.

I think Blizzard's upcoming release of Diablo 3, featuring a real money auction house, is instructional. Currently, the global release of this game is being held up in South Korea due to their gambling laws. If instead of using "real money", they layered their entire system over the bitcoin technology, then it would most likely not be subject to the various legal hoops that prevent such highly anticipated products from being released to market. Blizzard is more likely to do this than not, having used bit torrent technology for years now in their World of Warcraft patching system.

It's highly improbable, but perhaps something they might do in the future.