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Assuming it ever happens, which it won't.

Since you cannot get a new address,

What happens for all of the people who forget their passwords / password stolen and published to the internet?

I think they'll be lots of new addresses.

What effectively is the difference between trusting third party oracles and pool operators? There is a difference in what you trust them with / what they can do if they collude.... But no one can say that Bitcoin is trustless...

I can. We are using 'trustless' to mean "expect them only to act in their economic self-interest".

Its sophistry to say that "we are trusting that the laws of physics will continue to operate" or "we are trusting that we exist" or something stupid like that. Just because you can work the word "trust" into a sentence, doesn't mean that that sentence actually contains any ideas. Bitcoin miners are different from a mint or currency-issuing bank because the bank would make money (in this case, literally) if they broke their rules and fired up those printing presses.

When people say "trust me", they aren't saying "trust that I'll act selfishly and stab you in the back as soon as convenient", they're saying "I know I have every reason to stab you in the back, but please trust that I won't because I also care about X". This fine on a case-by-case basis, but is systemically unreliable because X's influence and context can change over time.

Oracles can make an above-market economic return by betraying user's trust, while pool operators cannot. Oracle-funds are stolen permanently, whereas a 51% is extraordinarily expensive and can barely do anything. Reverse a few 8 confirmation transactions, in exchange for losing your entire revenue stream? Is that a joke? The attack chain might not even succeed in becoming the longest, or the community could coordinate an emergency checkpoint. Theft-by-oracle would leave the oracle with still-valuable Bitcoins. 51% would leave the attackers with devalued Bitcoins. It doesn't even come close.

[involving a sort and filter to remove the smallest values]

Ok -- I do understand all that. The attack vector I'm describing here is less about collusion and more about the cost of mounting an attack to exploit the limited number of votes in a decision.

Page 21 of the whitepaper: "We may have to limit the total number of Voters (but not Owners) on a single blockchain to 100,000 or similar, involving a sort and filter to remove the smallest values."

- What is the minimum cost of casting a valid vote?
- What is the minimum cost of casting 100k votes?
- What is the minimum cost of securing all 100k votes with 99% probability, assuming 500 other voters?

Miner fee (possibly free), but you need Votecoins to do it.
You'd have to split your coins into 100,000 pieces, many of which would be removed by a pre-SVD a sort and filter.
For 100% probability, you'd need to own 100% of the Votecoins, then (pointlessly) split the total into 100k pieces. Otherwise, assuming the other 500 voters vote and have more than 1/100,000 of total Votecoins, the cost is infinite.

[entirely]

My lunch half-hour is already over, but just quickly glancing at this, you may have fallen victim to a common confusion.

There are two layers - a reputation layer and a currency layer. The votes are entirely weighted by the 'balance' of their "Votecoins" in the reputation layer. I expect >95% of those individuals in a mature Truthcoin ecosystem would have 0 votecoins of any type and thus never vote.

I hope I didn't misunderstand you, later tonight I'll catch up more. I can see from paragraph one that we have a lot in common.

[Into (reader can skip this)]

Into (reader can skip this)

Everyone has been picking on Etherium lately. To me, this suggests a growing fear that Eth may *gasp* be extremely useful, and *double-gasp* might, possibly uniquely have the ability to challenge and destroy Bitcoin's hard-won network effects.

Just for kicks, I'm going to propose my own Ethereplacement : Trutherium! No, its not a joke, but its pretty close because I have essentially no cryptography experience and barely-acceptable coding skills (especially compared to this crowd). Honestly, though, I've mostly been waiting patiently to say "Trutherium" for a few days now...they both contain "th"! My joke idea should be easy to criticize if you're knowledgeable, so please don't hold back.

Motivation
Gavin's Bit-Therium, is pretty cool (the same Bitcoin we know and love, with Etherium). However, he assumes a majority of trustable oracles, which I don't like. Oracles should have to buy-in/sell-out to discourage Sybil/retirement attacks, should suffer if they try to attack the network (successfully or otherwise), shouldn't know what other oracles plan to do, should have an incentive to hide what they plan to do..

Oh, I'm describing part of my own project there.

Sketch of the Idea
With Truthcoin, we have reports combined into a consensus via eigenvector. The economics of it were finely-tuned to prediction markets, but can substitute PM-States for contract-states, LMSR for arithmetic-accounting, and the user-generated 'Votes' for contract resolution reports made by oracles. Complex payouts could be built into the Market section, with several Decisions being assembled Wall-St-style into 'derivative' contracts (to build polynomial payoffs for example). The fee structure could be set to auto-.5 if not enough fees had been paid, or to predominantly rely on the listing fees (not trading fees).

Wednesdays are busy for me...might write more about this later. Again, I don't take this very seriously, having watched mission-creep steal the life out of many a good project. I just thought I would join the club, because I don't believe in trusting oracles.

Oh, my.

Is it any good? I'm too nervous to listen.

blockchains that I expect to exist in the future:
1) store of value (bitcoin)
2) prediction markets
3) bounty market/assassination market
4) anonymous mixing. use bitcoin which is tainted with your identity to buy anoncoin, participate in a mixer, then use your now anonymous anoncoin to purchase bitcoin.
5) forum/social network/blogging (bitmessage and twister are early examples)
6) p2p games of perfect knowledge, particularly games which are resistant to artificial intelligence: go, chess, 6-in-a-row, amirra, goofspiel, civilization
7) slot machine games: blackjack, satoshidice, etc.
lotteries
9) votecoin. one address per citizen. This type of coin is evil. My hope is that all the good developers will refuse to make it.

Not a bad list, although 6-9 I'm not sure about, and 4 might be redundant to CoinJoin contract. (People may even be able to use PMs to mix, or gamble). 3 I'm not sure anyone really wants, its "fun" to act threatening and impressive, but will any cool-headed developers debug that software? How will a long-term community form?

I think you may be correct about BitMessage (although its still unpopular), although I mention MaidSafe/clearskies to bring up the data-angle.

What blockchain still do is removing human related risks. My Facebook and Google data are vulnerable to the greed/ideology/incompetence/whatever of the top management of those companies whereas my data inside a blockchain is not.

Recall that there are firms providing zero-knowledge backup services (SpiderOak), and that blockchains can be (and have been) designed in ways vulnerable to greed/ideology/incompetence/whatever.

Yep, this is really the main selling point. If you could convince me ethereum would be as cheap and as decentralized (look at GHash.io for BTC....) as 1000 individual blockchains then I'd agree with you.

1000 firms may be even more efficient than 1000 blockchains. Still, I think this essay-attempt sketches out an argument against Etherium (that it wouldn't need to be used for anything). I do feel that Etherium is being hyped by coders because it glorifies code, but we'll see.

This will cost some $ but is more than worth it. If successful will it would make $$

How would it make money? Capital appreciation?

No, I am referring to the fact that Authors are rewarded with some of their Market's Trading Fees. I am saying that, although liquid markets would cost Truthcoin to start, they might net make more Truthcoin than was spent.

Now you need something analogous to capital infusion. I've suggested mastercoin/AGS style fundraiser as a way of initially allocated the initial <votecoins/truthcoins I forget>.

It was Votecoins. I think it is a good idea. Given the history of Altcoins, I personally am not comfortable taking anyone's money, which I have deliberately avoided doing for a long time. Perhaps some other individual can provide guidance/take-responsibility for this aspect.

[FIRM]

Thanks for reading!

So you are saying that this increase in efficiency may only be applicable to a very specific set of tasks but I don't see a convincing explanation of why it will be so.

A few people have expressed a similar thought. I hope to clarify this point in a revision of this draft: a FIRM can consist almost entirely of software! Google / Facebook are run in almost the same way as Bitcoin, a group of programmers meeting to collaborate on software.

I should emphasize more: people are confusing [technology / software / innovation] with [DACs / Etherium]. To say that the blockchain is an inefficient model is not to say that technology is inefficient.

A discussion of this essay has started here: https://bitsharestalk.org/index.php?topic=4942.0

[The Economic Value of the Blockchain]

Will a blockchain be useful for something other than Bitcoin / Truthcoin? What makes these two ideas special where other ideas are not?

The Economic Value of the Blockchain
A service provided by blockchain has two key differences from other service-providers: the service is codeable (digital information only, no physical products or services) and it is reliable (performs the same way regardless of the country, time of day, the user's age, race, religion, criminality, or morality).

With these differences in mind: for which services will the ROI for a software investment be maximized with a blockchain?

The market has spoken for Bitcoin; let us interpret its words: wealth transfers were easy to code (basic arithmetic), and the marginal reliability was extreme ( {taxes, inflation, bank hours, e-gold} were unreliable in the sense that you were treated worse if you were {high-income, unbanked/unpopular, day-job-employed, e-gold customer} ).

Why has Bitcoin, specifically, done so well? Many companies on the internet will sell services which are codeable and reliable (Google, Facebook, Amazon). These services are reliable because it is easy to be reliable. They do not store your value, they accept your value. Bitcoin is a distributed asset ledger, it keeps track of who owns what. Reliably storing value is very difficult, you are tempted to cheat, and you can be hacked/sued/closed down.

So, more precisely, blockchains win with services which are codeable and which store value.

What Can't Bitcoin Do?
For raw value-storage, one can use Bitcoin. With the introduction of colored coins / metacoins, Bitcoin can store custom digital assets. User-controlled multisig, nLockTime, and sequence numbers can greatly enhance the user's security and transfer experience.

At first glance, multi-party multisig would appear to open the door to every conceivable type of contract imaginable. Get together with your trading partner, and specify that a transaction will go through if some rules are followed. Using multisig, if you and your partner don't agree on the post hoc interpretation of the rules, both of you can turn to a trusted third party -- Wait! We went too far there: upon closer examination, multisig does not represent a powerful extension of Bitcoin, if anything it represents a contradiction to Bitcoin!

Bitcoin was supposed to eliminate the need to trust someone else with your money, yet this trust is precisely what multisig re-needs. Some may cheer at the shift from existing entrenched firms to hyper-competitive digital firms, but I don't (see "Comments"). Bitcoin is weak on purposefully storing value - instead it simply describes where value is currently stored. Those businesses which store customer's Bitcoin (namely exchanges and betting sites) routinely lose or steal those funds.

This weakness would imply the viability of a blockchain which could store up Bitcoin and conditionally pay it out (as would be required in betting markets, gambling/lottery, insurance, and at exchanges).

Truthcoin Trustless Escrow
Truthcoin enables individuals to participate in a prediction marketplace containing a trustless outcome-resolution service (ie, an escrow running entirely on greed and not on second-order abstractions such as 'honesty'). The prediction market concept is flexible enough to contain functions for gambling, insurance, and portfolio replication (currency exchange), as well as other functions.

Does a Decentralized Economy Need a Third Blockchain?
With Bitcoin and an internet connection, anyone can start a business selling anything. This takes an already-decentralized economy, and turns the decentralization up to 11. Some services require customers to escrow their Bitcoin, which may require the creative use of multisig, reputation, insurance, fidelity bonds, etc. Finally, there are business arrangements which are impossible without a trustless escrow. These services can use Truthcoin.

Assuming the existence of MaidSafe, ClearSkies, or similar, what is the economic case for any other "DAC"? Or for Etherium? Some feel that these designs are cheaper, but this is hard to see. Software development/maintenance requires a great deal of highly-skilled work, and then the software "rots" as it gradually becomes obsolete. Bitcoin is supported by users in forums, in lieu of salesmen/customer-service-reps. The work is done by volunteers, but it still requires effort. Open source software projects can thrive on community-autopilot, but they are also regularly abandoned (and many Bitcoin-projects have already achieved vaporware status). Bitcoin's unique status as money not only incentivizes development/maintenance but also co-opts money's-status-as-a-network-effect to onboard and coordinate programmers.

Unless you've come across another good to sell, which is codeable, value-storing, and timeless, blockchains aren't worth your effort! Just start a normal business instead! You can flexibly adjust your prices and service offerings as you, the manager and entrepreneur, see fit! Some things aren't codeable, and a lot of the time you'll want to be "unreliable". You'll want to treat some customers differently from others. Software bugs, miner attacks...these can crash blockchains permanently! Put those skills toward writing a great piece of software (which you sell for Bitcoin).

It is quite early in the game, but the empirical evidence is piling up on my side. Many firms have sprung up to use/accept Bitcoin, yet still (to date) no other useable "DAC" or "Ethereum" has been born, let alone seen its first birthday (Bitcoin is 5 and a half). How long will it be until that changes? 6 months? 5 years? Forever?

For this project to be successful, we must:

1. Build a Quality Product
2. Convince People to Use It

As far as 1 goes, my current experiences lead me to believe that more "buzz" must be created. Over the last few months, many people contact me via email to say the same thing: that they just heard about the project and are very excited about it and want to help. Not enough people have heard of Truthcoin.

For 2, we have several strategies available to us. To attract traders, we can create our own heavily-subsided markets, topically popular markets (sports, politics), or arbitrage-heavy markets (finance, stock prices). This will cost some $ but is more than worth it. If successful will it would make $$ (so may even be self-financing). The LMSR helps us a great deal in this area.

Hard to be more specific at this point in time. As we move farther down the road, we can more clearly see the next challenges.

This would allow the votecoin holders to verify decisions much more efficiently, if they do not have to read them.

I think that Voters would still glance at them, to make sure their software was working correctly.

Your comments lead me to believe that you might find the conversation at the beginning of this thread, between Edmund Edgar (proprietor of very cool service RealityKeys) and gwern (the gwern), to be interesting: https://bitcointalk.org/index.php?topic=475054.0

I am very excited to be working on a project that even Gavin cannot comprehend.

I'd hardly say that. He is probably too busy to actually read most of the projects out there. Which I think is very wise because most are a waste of quality reading time. I'm sure he would comprehend it if he tried, and I think he'll try sometime soon.