Proof of "Burn"

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drllau
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Proof of "Burn"

Post by drllau »

Looking over the new exchange Counterparty https://www.counterparty.co/why-proof-of-burn/ they claim that by setting aside a block of public keys, that "chance of anyone guessing the private key to spend the burnt BTC at that address is the same as the chance of guessing any private key for any other bitcoin address: practically zero".

It seems a point of trust ... (creating permanent collateral) and I can imagine an attack where you guess 2-3 private keys, put out a private heist, then threaten blackmail unless Counterparty coughs up ... the most vulnerable time being just before IPO. All you need is at least one public heist, then suddenly your value proposition evaporates as nobody can know whether their collateral will be the one going missing (unless Counterparty expressly guarantees replacement).

So I'm interested in opinions whether the Hiroshima Option (recall they worked out that they only needed 2 bombs with threat of more in reserve to get capitulation) is credible?

John Kenney
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Re: Proof of "Burn"

Post by John Kenney »

Good luck guessing those keys.

Here's an introduction... https://en.bitcoin.it/wiki/Proof_of_burn

virtual_master
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Re: Proof of "Burn"

Post by virtual_master »

Sorry but my mind is a little bit slower so i don't understand what does it have Hiroshima with Counterparty.
And why should we blame somebody who is burning Bitcoins or Namecoins ?
The remaining coins will have more value. So in that sense they are doing a community work in the interest of the others and they must know if this has a sense for them or not.
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drllau
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Re: Proof of "Burn"

Post by drllau »

virtual_master wrote:Sorry but my mind is a little bit slower so i don't understand what does it have Hiroshima with Counterparty.
And why should we blame somebody who is burning Bitcoins or Namecoins ?
The remaining coins will have more value. So in that sense they are doing a community work in the interest of the others and they must know if this has a sense for them or not.
it's a rather obscure ref to how many atomic bombs you need to show credible threat. I believe they did some political calculus back in WW2 and figured out 2 was the minimum. Basically my interpretation is that this XCP is akin to a bunch of people depositing gold (or other commodity) into the Bank of England and then allowed to draw upon it using another instrument (though trying to free-ride on the 80byte field seems arguable). So long as everyone "knows" the gold is there, it can be used as settlement via netting. So long as the mathematics support a fixed unit issuance (no inflation and future burns issued under the same terms) then XCP can remain credible.

Another interesting bit of trivial, Xxx is set aside as experimental currencies, they have no legal basis and are actually used in mock war games or such like. Most currencies are based on territorial aspect (see argentina as it went through multiple incarnations) so whether XCP stays as an informal pair or gets de-facto recognition is an open legal question. It is possible as EUR has shown.

John Kenney
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Re: Proof of "Burn"

Post by John Kenney »

You can find all the keys you need on this website: http://directory.io/

georgem
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Re: Proof of "Burn"

Post by georgem »

John Kenney wrote:You can find all the keys you need on this website: http://directory.io/
lol, what a crazy project.

Page 1 out of 904625697166532776746648320380374280100293470930272690489102837043110636675

Not many pages seem to be available though,...
even page 100 doesn't exist... :lol:
let alone 904625697166532776746648320380374280100293470930272690489102837043110636675

http://directory.io/100
Last edited by georgem on Thu May 22, 2014 9:02 pm, edited 1 time in total.

drllau
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Re: Proof of "Burn"

Post by drllau »

According to Singapore authorities (http://www.coindesk.com/singapore-gover ... x-bitcoin/)
if the bitcoins are used to exchange for virtual goods or services within the virtual gaming world, as a concession, the supply of bitcoins will not be taxed until the bitcoins are exchanged for real monies, goods or services.
A plausible interpretation is that if the proof-of-burn creates a purely internal self-enclosed economic system, then there is no further govt transaction tax unless ownership of the address passes to a GST registered entity. Since the ownership is theoretically immobile/immotile, such would not exist though any derivatives created within the self-enclosed ecosystem (using a potentially faster update cycle as in Litecoin). For all practical definitions, this may fall into the definition of "capital" ... most tax codes have complicated rules to distinguish between capital and revenue with the minimum being typically 1 year holding period (in case of proof-of-burn == infinity).

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