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that would mean that the current price is always 10 blocks old, right?

How would a order look like? You only define the amount to spend and the share type or a (maximum) price as well?

Who would get the safety deposit if the trade is not revealed? What % of the trade volume do you have in mind as a safety deposit?

Might be possible that I don't understand it yes. Maybe it would be useful if you write it down again to have something concrete to discuss on.

I read the hole thread and I mostly agree to Zacks arguments against a POW to avoide front runners.

To argue with unused CPU time of a desktop PC might help for mirco transaction but nothing more. (and even this is wrong - because if your unused CPU time is good for this you could rent it out insead)
I am not aware of any POW mechanism where the costs of work depend on the time in which it has to be done.

Just to quote it again:

What zack is saying, is that there isn't really a way to tell how long it took someone to compute a POW using the POW algos that we know of. 10 minutes of hashing on a cheap PC is a fraction of a second of hashing on a professional mining rig. A miner can still copy the contents of incoming transactions, perform his own POW, and then include his own transaction rather than the ones people send to him.

I would love to have a prediction market to predict on it. I would not hesitate to place a Bitcoin on "POW can not solve the front runner problem" Any suggestions how to resolve such a prediction?

What a pity.
I could have helped out with a place to stay.

Have you somewhere written down the conceptual details of slasher?
From Vitaliks latest post: https://blog.ethereum.org/2014/11/25/proof-stake-learned-love-weak-subjectivity/ - what of the option discussed here do you use? Or do you use different one?

I would be happy to attend the presentation this Tuesday.

Nice, this will become an interesting discussion. Zack, can you possibly join as well?

I agree to: money spend into mining (MSIM) = reward for miners (rfm).
This holds true for POW and POS.

However, for POW it is important that the MSIM is at least a decent fraction of the total coin market cap. For POS this is not necessary. Instead a high coin market cap helps to secure the consensus/network.

Might it be that you are assuming a POS implementation where you have to "burn" money to get votes? Note that this is not necessary - proof of control is enough.

I agree that most ethereum contract wich people have thought of so far are basically moving money based on certain conditions.

I guess that can all be done with a prediction market - even if I don't know if for some usecases manual verification of facts is to expensive. And forks with purely/mainly automated verification and low volumes are probably not reliable...

However, I think ethereum contracts can go beyond that.
I made a proposal for a "unconditional basic income" coin that is build up one a reputation system/ group verification system. I don't see how this can be implemented with truthcoin:
https://forum.ethereum.org/discussion/1598/basic-income-circles-reputation-market-based-approach-to-solve-the-identity-problem-sybil-attacs

By the way, I just agreed to give a presentation on POS here: http://www.meetup.com/BitDevsNYC/events/218781358/
Would be great to have you there...

Just to support Zack:

Some implementation will of PoS will clearly be the long term solution for cryptocurrencies. POW was good for the initial coin distribution but it is way too expensive for the consensus mechanism when block rewards converges to 0. (And if it would not be too expensive it would be to insecure) The incentive scheme has serious flaws.
I have given a talk on this meanwhile twice: http://de.slideshare.net/MartinKppelmann/miningwars. (I guess the slides are not self explaining and I have not found the time yet to write it all down)

For Truthcoin I see 3 possivle solutions:
1. as a sidechain on Bitcoin (but sidechains make the POW incentive flaws even worse: compare: https://www.reddit.com/r/Bitcoin/comments/2mkd0o/we_are_the_founders_of_counterparty_the_free_and/cm58upk)

2. on Ethereum

3. An own PoS solution

the attacking miner does not have to publish his transactions - he only does it if he finds the next block and includes the tx. directly in the block.

Well, maybe this is the reason why MSR is not used at all In traditional markets it is possible to increase the liquidity by placing "open" orders. So there are open orders in the book that lead to a kind of stability. With the pure MSR market maker model it is not possible to place an "open order".

That is why I am arguing it should be possible to place traditional orders.

It is! I mention it in the whitepaper somewhere as "transferring" shares...(e) Trading Activity Section (4)

Ok, even if a LMSR only approach is used: if you can place orders like Paul says here - how is that different than a order book? I argue it would have the same size/ blockchain bloat.

As far as I understand NXT, Counterparty, and BitsharesX are having exactly this: a decentralized marketplace/order book and a automatic matching by the blockchain/the consensus mechanism.

So I guess it is possible.

It might be even possible to use this infrastructure for the cashcoin / share trading part. The distribution of the cash coins than need to be interpreted with the help of the votecoin blockchain. And it would be still possible to reward votecoin holders in the way you proposed in the paper.

[all]

My major intuition for this is simply that all of our traditional markets (which do not use MSRs at all) become more liquid as there are more outstanding shares and a higher trading volume. Market liquidity seems to be directly a function of scale, at every other place, so why not here?

Well, maybe this is the reason why MSR is not used at all In traditional markets it is possible to increase the liquidity by placing "open" orders. So there are open orders in the book that lead to a kind of stability. With the pure MSR market maker model it is not possible to place an "open order".

That is why I am arguing it should be possible to place traditional orders.


To make it very concrete: Lets have a look at your cool xlsx demo - the first minimal Example with Hillary becoming president.

However, my opinion (nothing about equations) is that, in practice, as more shares are created, the distance between the Q(shares of min-share state) and Q(shares of max-share state) will increase, knocking the prices away from uniform (50% - 50%). This is why I bring up [4 6] vs [40 60] .... more activity means the distance is more likely to change from 2 to 20 (this is related to your earlier point about the market being "too" unstable (easier to get from the dull [4 6] to the more-extreme prices caused by [40 60]).

Lets say the real prob for Hillary is right now 40%. A [40,20] distribution or a [20,0] will result in a price of 0.054/ 5.4%. THIS IS NOT GOING TO HAPPEN. Or the person who buy so much shares is not action rational at all. The only way larger trade can be done is by a huge sequence of small "buy_state_1/buy_state_2/buy_state_1/buy_state_2/...".

Well, in theory this can be build on top of the blockchain (I would be an external program that buys shares as soon as a certain price is reached) However - I think it is clearly preferable to have this inside the blockchain.

Can't we run the same market in parallel? isn't that the same?

True, that would have the same effect as increasing the beta. Lets say you do a second market with the same Beta is would be the same as doubling the Beta since you can now buy at both markets. It can be covert by a UI so that users do not get bothered at all.

Good suggestions.

Buying more shares of all states does have the same practical effect as increasing b

I still think this is NOT true. The market never gets more "stable" when more shares are sold. The example you came up with [4,6] vs [40,60] is kind of misleading because it suggest that both markets result in the same price but the second on has a more stable one. But this is not true. In fact the first state is the same state as [0,2] and the second state is the same one as [0,20]. Thus the second one has a complete different price. And yes: it is true, the closer the price is to 0 or to 1 the more shares you need to buy to move it. But this is a hole different story than increasing the Beta.

All blame on me if I am wrong - but I am about 95% sure I am not.