Re: proof of burn (re: bitcoin&anonymity)

Jeffrey,

not sure if you're still interested in this but.. to answer in a more =xplanatory way the question of how to remove anonymity from bitcoin, =ere it is:

The bitcoin network has a couple of things that are particularly =mportant for any crypto currency, the first one is that the network is =ig enough to prevent double-spending kind of attacks and the second one is that there's no way (I mean there is, but it's =ci-fi) to generate the private key for a random bitcoin identify/public =ey that is not yours.

A number of annoying things about bitcoin are:

1. It's deflationary, not just because the amount of coins is finite

=ut also because people lose wallets/keys so potentially a lot of the

=ined coins will never see the light of the day

2. You can create as many wallets/keys as you want, in theory this

=flows you to keep separate identities.. in practice this is not

=ntirely true

3. A little known fact is that you can mess with the blockchain/ledger =uite a lot, for instance somebody forced specific values into the =edger. For instance, these values could be virus signature, so antivirus would quarantine/delete the blockchain from people =omputers. Not only that, but people have been storing all sort of stuff =nto the blockchain and it's permanent you cannot undo it.
   See: http://pastebin.com/ct2WHUK5 and =ttp://www.righto.com/2014/02/ascii-bernanke-wikileaks-photographs.htm
   ok so here's what you do if you want to fix (1) and (2), I don't have = good solution for (3) unless you change the power forces inside the =etwork (eg: unless you allow a centralized unit to 'clean' the =lockchain)
   You create another crypto/alt currency that is inflationary so it =imics real money better, then you tell people: "everyone who has =itcoins can get them exchanged for this other currency".

The way this would work is that you actually require people to sign up

=or a *single• identify/key/wallet linked to their real identity and

=hen you do something called 'proof of burn', which in practice means =hat you tell people that to prove they 'exchanged' their bitcoins they =eed to send them to a non-existent address (remember that it's =mpossible to generate the private key of a random bitcoin =ddress/public key, so nobody can ever claim those coins and they are lost forever).

On the top of that, since the bitcoin network is flexible you can use =hat blockchain to record the transactions of your own currency without =ny major issues (there are some technicalities involved but nothing =uch).

This brings to the last and probably hardest point which is: Why =eople would do it?
So some people do it already to get on board new currencies, so it's =ostly a speculation/ideology/belief. But if say you're a government, =ou can sweeten the deal saying something like "your holdings in =itcoins will not be taxed if moved to this other currency".
If you're not a govt then things are more complicated, but well..

Anyway, this is in short how you go from bitcoin to another currency =with the properties you care for) while preserving the bitcoin network =nd its strengths. As I said, not sure if it's useful/interesting but I =igured I'd share it

Another thing: any chance I can crash at your place in Santa Fe say =ug 8-10? I'm still not sure whether I'm supposed to be there or not, =ut I figured that maybe it's worthwhile to go and visit anyway

ps: note that the moment you remove anonymity from bitcoin there's a =ignificant privacy problem. Meaning that now everyone knows what you =uy/sell through bitcoin, it's advertisers (among others) sweetest
dream =ut probably your worst nightmare

the goal is to creat a fully transparant currency, but secure, It =oes not need to replace dollars wuth complement them, for ex . =orporate cash. so corporations and gocts can transact transparantly, =much more like a game world. inflation is needed if there will be =oans, ( to compensate for risk). yes to santa fe. in addition it =ould be nice to tag the transaction with a code ( refund, loan, =dvance, income, sale etc).

no in the case I was sketching in my email you don't actually replace =he dollars, you just replace bitcoins. The only reason why you want to =eplace bitcoin is to get their network power which is needed to solve =he multiparty consensus problem (the double spending attack).

Now in one of the other potential options you don't even need that, if =ou enforce identities you can also guaranteed benign multiparty =onsensus on transactions as long as less than N/4 actors are malicious. =Filch in practice means you don't need to have that many people in your =etwork mining coins.

Also yes you can easily embed transactions descriptions/codes.

There's always the risk of actually losing or having your 'wallet' =tolen, but you cannot avoid that 100%. You can either do what some =itcoin services do (it's called called/hot storage) or have the govt as =n insurer of last resort.

I feel like that story you told me about you trying to decode hand =ignals back in the days, in the sense that I'm either missing something =ere or my pessimistic view of things is shaping my thinking too much - = don't see why anybody but governments would want to have this. In any =ase, forgetting that for a moment and assuming companies want to do =his then you can do it quite easily.

anyhow, it's probably worth to talk about this F2F in Santa Fe if we =anage to work that out