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Truthcoin allows the victim of the court to bribe the jury into saying "not-guilty".
It is possible to make this bribe anonymously.
The court system wont have any legitimacy once truthcoin exists.

This post is a work in progress, it may change as info comes.
Zack is offering a 0.05 bitcoin prize to anyone who can prove that walled gardens are better before 1AM California time on Dec 12.
2 ways of implementing this have been described

1) Walled garden
*new juries have the same distribution of coins as an old jury, minus the people who choose not to accept the free reputations offered to them.
*the possible distributions that can be created are limited by the existing distributions and which people are willing to forgo their free reputation.
*the first crowd-sale for the first jury is special, there is never another crowdsale.
2) Free market
*new juries are completely owned by the person who paid for their creation.
*This reputation can then be distributed in any way possible.
*every crowdsale for every jury is the same.

There is an inefficiency in POW truthcoin. If more than one person learn the same valuable piece of information in the same block period, assuming they are both rich enough to completely leak the information, then only one of them can collect the prize for leaking this information.
They both try to bribe the miner, so that they can take the prize. Whoever offers more money to the miner will get their tx included first. The result being that the miner gets 90%+ of the prize, even though he did not leak any information.

Using a good proof of stake system, this money would not go to the miner. Instead it would get burned.

I will outline the mechanism of how it gets burned:

A block is only valid if more than 50% of the signers sign on it. Signers cannot sign on competing blocks.
So at every block height, there is at most 1 valid block.
Usually, cost to produce that block is small, about 10 cents.
But if there are no valid blocks at a particular height, then it costs R as much to skip it and make a block at the next height. (where R is a number > 1)

Skipping N blocks makes the next block cost R^N times as much as usual.

So it would cost (10 cents)*R^(block depth) to double-spend a transaction.

When 2 people are competing to leak information first, they will repeatedly skip each other's blocks, paying a higher and higher fee. Eventually the fee would exceed the reward. At that point, they stop skipping more blocks. If R=1.1, then then one of them ends up taking 5% of the reward on average, and the rest of the reward is burned.

of course, if the 2 people decided to work together instead of competing, they could have split the full reward 50/50.

Lets say the market is between outcomes A or B, and 1000 shares of each type have been sold.
You want to purchase 500 shares of A, so you write a transaction to do that.

The miner gets your transaction purchasing shares of A, and he writes 2 of his own.
The first tx purchases 10,000 of A, and the second sells 10,000 of A.

He sandwiches your tx between his 2 txs.

The attacker needs to own many times more money than the amount he can steal.

http://economicsdetective.com/2014/10/truthcoin-prediction-markets-and-anarchy-with-zack-hess/

This is a good introduction to truthcoin for beginners.

http://bitcoinmagazine.com/16748/truth-behind-truthcoin/

It would have been nice if this had mentioned the existence of the python minimal viable product. I am very desperate for testers.
https://github.com/zack-bitcoin/Truthcoin-POW

https://github.com/zack-bitcoin/Truthcoin-POW

This is a minimal viable product. It still has bugs and is not ready for serious investment with money.
It only supports binary markets, not scalars.
It works on Mac OSX now too!
I am currently looking for testers to go through the steps of making a prediction market, and testing the consensus mechanism.
If you can find a bug that I am able to reproduce, then I will put your name on the Scoreboard. Bug finders are the very best people, they deserve to be celebrated.

Paul Graham has been a major inspiration of mine since I was 15.
I am thinking of applying to Y Combinator with truthcoin as the project.
There are supposed to be more founders than just one, but I am not sure who would join me in Mountain View California from January to March.

truthcoin satisfies 8 of the 22 request for startups that they send out http://www.ycombinator.com/rfs/

Humans are better at playing the board game go than the best computers in the world by 3 stones.
A go game generally has less than 200 moves, each move has about 300 choices to choose between.

If we asked the prediction market which move is best, and each move was well funded, we could play the best game of go that has ever been played in history. We could be multiple stones better than the best player in the world.
This would require about 200 separate prediction markets, each with about 300 states.

This experiment would solve 2 problems at once. 1) distributing some initial coins. 2) bringing publicity to our project.

We would give free coins to all the best go players in the world before the game, that way the best go players in the world will be the ones making bets on the game.


If a prediction market can be better at playing go than any individual human, maybe it can be better for government too.

https://github.com/zack-bitcoin/slasher/blob/master/cancer.txt

https://blog.ethereum.org/2014/08/21/introduction-futarchy/

I was talking with Vitalik about using truthcoin to fund public goods, and he is convinced that it is no more effective than an assurance contract. This is his explanation: https://forum.ethereum.org/discussion/747/im-not-understanding-why-dominant-assurance-contracts-are-so-special

I had thought that Truthcoin is far superior at funding public goods compared to dominant assurance contracts for these reasons:

1) (the most important difference)
Dominant Assurance Contracts only pay money to the entrepreneur if enough money has been raised.
Truthcoin would only pay the entrepreneur upon successful delivery of the final product.

2)
Dominant Assurance Contracts can only reward a single entrepreneur. He has a monopoly on creating the final product.
Truthcoin would allow anyone to deliver the product and collect the reward.
It is free market competition.

3)
The reward for failure is a constant in Dominant Assurance Contracts. The first person to purchase a share pays the same amount as the 10th person. Buying shares on the first day is identical to buying them on the last day. There is an incentive to wait as long as possible, to reduce the chance that your money gets trapped for a long time.
Rewards in truthcoin are dynamically changing. On a day where it looks like the final product will succeed, then success shares get more expensive, and failure shares get cheaper. Usually, investors have better prices the earlier they invest.

4)
Dominant Assurance Contracts are off-chain. So it is easy to lie about the state of the contract.
Truthcoin shares are on-chain. So everyone knows exactly how much funds are invested.

Voter collusion is when over 51% of people who hold a particular type of votecoin work together to make a prediction's outcome contradict reality. For example: if Obama won the election, but the PM paid money to people who bet on Romney instead of paying to people who bet on Obama.

In order to collude, voters need to prove to each other how they will vote. When voters give an encrypted vote, they could privately decrypt it for the other voters. By privately decrypting, the voters can prove to each other how they voted, and this allows them to collude.

In order to stop this type of collusion, we create a punishment transaction. If I can prove how someone else is about to vote, then I can use the punishment transaction to steal all their votecoins.

The problem with the punishment transaction is that it has the exact same input data as the reveal transaction. Miners could choose to censor reveal transactions, and use the data to write punishment transactions. The miners would quickly steal all the votecoins.

To fix this problem, I added a new sequential step, so that everyone has to admit that they are unaware of cheaters. Once you have admitted that you are unaware of cheaters, you cannot change your mind, even if the block containing that transaction gets re-made.

Phase I
All voters can encrypted vote. They can replace their vote as often as they want.
Phase II
Cheaters are people who pre-emptively reveal how they voted.
All voters sign a single transaction listing all the cheaters they can prove had cheated.
If the voter fails to sign such a transaction, or a voter signs 2 contradictory transactions of this type, then they lose their votecoins and any people they wrongfully accused are un-punished.
If someone is caught for cheating, then their votecoins are transferred to the person that turned them in (but it takes a long time for that money to become spendable so that the wrongfully accused can be un-punished)
Phase III
voters reveal how they voted
Phase IV
if enough people have voted, then SVD is computed, otherwise we go back to Phase I

New transaction types:
1) turning in 0 or more cheaters who pre-emptively revealed how they voted. <---mandatory, can only be broadcast in phase II
2) punishing voters who failed to use (1) correctly.  <---- can be broadcast at any time.

a _spend_ transaction is a transaction that takes money from one person, and gives that money (minus a fee) to another.
We can secure an entire game of chess with a single spend transaction.

Alice and Bob put money into the pot, which is a 2x2 address that requires both of their signatures to spend from.

Each off-chain transaction in the chess game has the potential to spend all the money from the shared address. If someone wins the game then the final off-chain transaction can be broadcast to become an on-chain transaction. It would give money to the winner.

Usually, when the game ends, the computers do a final handshake producing a spend transaction that gives the money to the winner. This smaller transaction has a smaller fee.

https://www.youtube.com/watch?v=paEmkhl4sro&feature=youtu.be

I used to rpy2 library in python to make a python wrapper for the ConsensusMechanism.r program.

https://github.com/zack-bitcoin/Truthcoin-POW

ConsensusMechanism.py is the relevant file.

http://www.thomassmyth.com/blog.html

Sandy hook shooting officially happened on Dec 14th.
Here is a google search between Dec 11th-Dec 13th for "sandy hook donation".

https://www.google.com/search?q=sandy+hook+donations&biw=1301&bih=671&source=lnt&tbs=cdr%3A1%2Ccd_min%3A12%2F11%2F2012%2Ccd_max%3A12%2F13%2F2012&tbm=#q=sandy+hook&start=20&tbs=cdr:1,cd_min:12/11/2012,cd_max:12/13/2012

Truthcoin can prevent future events like this, but it cannot fix past events like this, correct?

Can any of these bribery situations occur? Why or why not?

If I am on trial for a crime, perhaps I could make a large bet that I will be declared guilty.
Someone on the jury could do this: http://en.wikipedia.org/wiki/Jury_nullification

If you send an application to a government regulator to start a controversial business, a prediction market bribe could help get regulators to ignore you.

If a researcher want to win a big research grant, he could use a prediction market to bribe the government officials into accepting his proposal.

I you want regulators to shut down a competing business, it should be easy. Health regulators, drug regulators, handicapped regulations... There are enough laws that law enforcement can get any business closed.

Many people hate this man, but some may choose to look at him as a hero.
Could a prediction market be used to fund a public good, where the public good is an underground-railroad to save Bourque from the cops who want him dead?