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Topic: We need smart contract based exchange - page 2. (Read 2838 times)

kjj
legendary
Activity: 1302
Merit: 1026
September 25, 2012, 08:55:01 AM
#7
From a PM I sent a month ago...

(I thought about sending something like this last night, but right now I don't remember if I did or not.  Insomnia for the win!  Sorry if this is a duplicate, been up late a couple of nights in a row thinking on this.)

So, I happened to be working on setting up litecoin mining on my rigs and registering for MPEX at the same time, and it gave me an idea.  Mind if I bounce it off you before I inflict it on the world?

Basically, for all of MPEX's fancy cryptography, I'm still not buying shares, I'm buying entries in a ledger.  This seems wrong, the world deserves better.

I'm thinking of an altchain for recording securities (stocks and bonds).  For now, I'm thinking it should be called securitycoin, or S-coin, or STC.

Say we add a payload field to the TxOut structure.  (It'll likely be a blob of DER)

If you want to create a new stock, you encode a bunch of information (the name of the issue, the number of shares, some other stuff and a hash of the prospectus) and call it the issue.  Then you hash the issue along with a secret and call that a registration.  Then you create a payload including the registration and burn a few S-coins in fees to embed it in the chain.  Then, when you feel it is deep enough, you redeem the transaction with the registration to create a new transaction with the issue as a payload (also the secret, to prove that it was you.  This is anti-front running stuff).

Now you can redeem the issue with a send to a bunch of brokers.  The brokers can redeem those as usual, and send the shares to clients.  Clients can redeem their transactions and send them to other people, if they so desire.  *

Once the issue is done, every share has a provable owner, and the owner owns the shares, not the issuer, not the broker, and not some exchange.  Even better, if we use regular bitcoin addresses on this network, the issuer can query the chain and get a list of addresses and holdings to send dividends to (on the bitcoin chain).

The system could even handle splits, merges and votes.  The only trick there is to encode the payload in a way that the network can validate the payload cheaply.  For example, in addition to enforcing coin_out < coin_in, it also needs to verify that shares_out = shares_in (paying network fees with shares seems silly, but replace the = with < and it can happen).

Since this system isn't for buying packs of gum at the store, we could slow the network down, maybe to 1 block per hour, to keep the size small.  And we could keep the value of the coins high-ish, giving an incentive for people to merge-mine it, by charging high fees for things like registrations, issues and vote requests, and small fees (or none) for sends and votes.

* I don't think it is possible to take the brokers out of the system.  I don't see any obvious way to make a pair of transactions on different chains that redeem each other.  If there is such a thing, you and your broker could create such a contract and make the trade atomic.  Until then, one of you needs to trust the other.  Then again, if we are using the same keys in both places, maybe multi-sig can do it, don't know.  At worst, it is no worse than any other bitcoin/world interaction, and you still get the benefits of recording stock ownership in the chain.

Also, see this thread and search for pybond.

When I got to thinking about Open Transactions the other night, I was thinking it might be possible to do everything in a distributed provable exchange using that system.  Talking to Fellow Traveller about it is on my todo list.
sr. member
Activity: 377
Merit: 253
September 25, 2012, 08:28:15 AM
#6
It's just to start the discussion.
At first I thought it wont work because because of no profits for developers, but..

Mechanism is there, there is just need to create web interface, so it would be for only way people will do it because its to complicated to do it without human friendly interface.
So I, or anyone who dare can make website which will let easy make trade with smart contracts making it bitcoin safe (transactions) and website could add to each contract an trade fee included to contract, then you could avoid fee by typing your contract manually which would be hard.
And with minimal fee you would be as GLBSE but, resistant to creators and makers, operators mistakes.

Wow, how brilliant I am. It is so obvious tech to write (code)
Who is with me (want to join and write it, and start it?)
I'm HPC admin and beginning software designer but I'm familiar with python nginx etc. Is there any programers who want to start with me.

Its not as easy as it first appears or someone would have done it by now. But good luck  Smiley



Yes, I know that, but it is possible, and lucrative.

I just earn less than **BTC (after a second I decided not to disclosure that) a month at my current job, and that idea looks like worth considering changing it.
sr. member
Activity: 377
Merit: 253
September 25, 2012, 08:24:53 AM
#5
The future of Bitcoin is new types of businesses that have never exited before, not replicas of existing models.

Otherwise, what's the point of all these exotic transaction types?

It would be completely new, it's not an classic exchange, its just an interface to create it without centralisation.
Decentralization steps is future of bitcoin.
hero member
Activity: 686
Merit: 500
Wat
September 25, 2012, 08:24:36 AM
#4
It's just to start the discussion.
At first I thought it wont work because because of no profits for developers, but..

Mechanism is there, there is just need to create web interface, so it would be for only way people will do it because its to complicated to do it without human friendly interface.
So I, or anyone who dare can make website which will let easy make trade with smart contracts making it bitcoin safe (transactions) and website could add to each contract an trade fee included to contract, then you could avoid fee by typing your contract manually which would be hard.
And with minimal fee you would be as GLBSE but, resistant to creators and makers, operators mistakes.

Wow, how brilliant I am. It is so obvious tech to write (code)
Who is with me (want to join and write it, and start it?)
I'm HPC admin and beginning software designer but I'm familiar with python nginx etc. Is there any programers who want to start with me.

Its not as easy as it first appears or someone would have done it by now. But good luck  Smiley

sr. member
Activity: 377
Merit: 253
September 25, 2012, 08:22:18 AM
#3
It's just to start the discussion.
At first I thought it wont work because because of no profits for developers, but..

Mechanism is there, there is just need to create web interface, so it would be for only way people will do it because its to complicated to do it without human friendly interface.
So I, or anyone who dare can make website which will let easy make trade with smart contracts making it bitcoin safe (transactions) and website could add to each contract an trade fee included to contract, then you could avoid fee by typing your contract manually which would be hard.
And with minimal fee you would be as GLBSE but, resistant to creators and makers, operators mistakes.

Wow, how brilliant I am. It is so obvious tech to write (code)
Who is with me (want to join and write it, and start it?)
I'm HPC admin and beginning software designer but I'm familiar with python nginx etc. Is there any programers who want to start with me.
legendary
Activity: 1400
Merit: 1013
September 25, 2012, 08:16:42 AM
#2
The future of Bitcoin is new types of businesses that have never exited before, not replicas of existing models.

Otherwise, what's the point of all these exotic transaction types?
sr. member
Activity: 377
Merit: 253
September 25, 2012, 08:12:34 AM
#1
We need smart contract based exchange instead GLBSE, with only a web interface, or multiple web and soft exchanges to operate on it.

Do you agree?
This is why the samrt contracts wear created to eliminate additional risk of exchange holders cheating etc.
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