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

important 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

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

mined coins will never see the light of the day

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

allows you to keep separate identities.. in practice this is not

entirely true

3. A little known fact is that you can mess with the

blockchain/ledger quite a lot, for instance somebody forced specific =alues into the ledger. For instance, these values could be virus =ignature, so antiviruses 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 http://www.righto.com/2014/02/ascii-bernanke-wikileaks-photographs.html

ok so here's what you do if you want to fix (1) and (2), I don't have

a good solution for (3) unless you change the power forces inside the

network (eg: unless you allow a centralized unit to 'clean' the

blockchain)

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 for a single identify/key/wallet linked to their real identity

and then 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 and 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

significant privacy problem. Meaning that now everyone knows what you

buy/sell through bitcoin, it's advertisers (among others) sweetest
dream but 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).

oh also.. thanks for santa fe :)

I was taken by the discussion and I forgot that important detail.. my =om would be upset

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, =f you enforce identities you can also guaranteed benign multiparty =onsensus on transactions as long as less than N/4 actors are malicious. =hich 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