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Here is a more precise analysis of how much more affordable the better design for truthcoin will be:
https://github.com/BumblebeeBat/FlyingFox/blob/master/docs/oracle_finality.md

I wrote the document in the format that Paul Sztorc suggested: https://github.com/BumblebeeBat/FlyingFox/blob/master/docs/hip_tip.md

Truthcoin Improvement Proposal #0

see below

Thank you for looking at my idea Paul

I probably shouldn't use the word "bond" to describe the big bond, but I am no wordist. I don't know what to call it.

Flying Fox has 2 types of bonds.

The first is an inaccessible safety deposit that the blockchain can take away at any time to punish a mistake. This small bond is a bond. It is used to punish validators who validate on contradictory blocks. This money is not in a channel, it is locked up and inaccessible.

The second bond is used for voting purposes. It is measures a distribution of users who are as  similar to the distribution of value holders as possible. This money is accessible. So "bond" probably isn't the best name for it.

Most proof of stake systems today use the same distribution of coins to act both as the small bond, and the big one.
I show in this paper, that using the same distribution of coins for both of these goals is inefficient. The portion of value being bonded is either too big for the first goal, or it is too small for the second goal.

https://github.com/BumblebeeBat/FlyingFox/blob/master/docs/2_types_of_bonds.md

I made this into a video: https://youtu.be/K7tzCmRbjNM

Don't rush your trade. That seems like a bad price to me.
Last I heard, it was 0.007 BTC per rep.

I have a working implementation in erlang, and plenty of documentation:

https://github.com/BumblebeeBat/FlyingFox/blob/master/docs/2_types_of_bonds.md

https://github.com/BumblebeeBat/FlyingFox/blob/master/docs/lightning_consensus.md

This video goes over the innovative features in Flying Fox.
https://www.youtube.com/watch?v=sEGyfg7AB0Q

I am trying to increase the readability of this document. I would appreciate any questions about what doesn't make sense.

https://github.com/BumblebeeBat/FlyingFox/blob/master/docs/2_types_of_bonds.md

This is an interesting idea. I will summarize.

Futarchy is often criticized because it depends on a metric like GDP that is optimized for. The people who calculate what the GDP is have a lot of power in such a system.

This paper introduces a new metric as an alternative to GDP: each citizen chooses a number between 0 and 1, and we take the average.
If the citizen is completely unsatisfied with the previous year, they choose 0. If they are completely satisfied, they choose 1.

My worry with such a system is that counting votes is an unsolved problem. There are 300,000,000 Americans.
Every system I have examined for collecting one vote per citizen has flaws in it to make cheating possible.

It sounds like Matt would prefer assurance contracts to dominant assurance contracts.
I am pretty sure that dominant assurance contracts will be easier to coordinate, and harder to censor.
Both types should be allowed.

I agree that the oracle doesn't need to participate in the assurance contract. It is for the purchasers to use.

The idea of everyone getting refunds for the price of their shares is interesting.
Augur is planning on doing this, so it is an idea we should explore. When the Augur oracle's result for a decision gets repeatedly challenged, the rep gets copied into 2 flavors. One flavor where the decision is true, and the other where it is false.
Is it actually safe to give everyone refunds at the current price? or can this be manipulated?

> Even if there are zero trades and zero trading fees, the oracle still gets paid to judge on the outcome.

Not enough.

You can set the funding target of a dominant assurance contract arbitrarily high.

> Mining power doesn't matter. A government sponsored blockchain could be the attacker.

Only by offering prediction market services to the public.

(Mission accomplished!)

The oracles would lie if they aren't paid enough.
What mission would a lying oracle accomplish?

Paying the oracle by some method other than trading fees is important, because eventually there wont be trading fees.
One method to pay the oracles could be a dominant assurance contract.

I wanted to try it out on ubuntu again, and I ran into trouble. I can't remember how I fixed this last time.

configure tells me I need the bekeley db c++ libraries, so I tried to install like this:

sudo apt-get install libdb5.1++-dev

It looks like it isn't in the ubuntu software repository any longer.

1) This is true

2) "bankrupting" isn't the failure mode we are afraid of. We need to pay the oracle enough, or it will lie.
All the rep in the oracle is sell-able all the time. If you can win X amount of money by getting the oracle to lie, and it costs Y amount of money to buy up enough rep to make it lie, and X>Y, then the oracle could profitably lie.
If there is a separate blockchain with a large volume of trading in parasite contracts, then the person doing the attack could earn money on both blockchains.
It sounds like Crystal and Hivemind are vulnerable to altcoin parasite contracts in the same way. Read some of my posts about it.

4) I agree with the voting mechanism being fragile because it can't adapt. You are right, miners are selected for computational ability first. Ability to censor is secondary.

5) True. Permissionless implementation makes it much less fragile.
Ethereum style smart contracts is not how permissionless implementation will be standardized. Smart contracts belong in the channels. Storing state on-chain is unnecessary and expensive.