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From: Flavien Charlon <flavien.charlon@coinprism.com>
Date: Mon, 7 Apr 2014 10:49:55 +0100
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To: Mark Friedenbach <mark@monetize.io>
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Cc: bitcoin-development@lists.sourceforge.net
Subject: Re: [Bitcoin-development] Feedback request: colored coins protocol
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Thanks for the feedback Mark.

> (1) there is absolutely no reason to include asset tagging information if
it is not validated

Sure, there is a good reason to include it in the blockchain: so that
clients don't need external information to recognize colored coins. Also,
I'm not sure what you mean by "not validated", in that proposal, the tagged
transaction is the authoritative source of information.

> that just bloats the block chain

9 bytes is much less than what Mastercoin and counterparty are doing
(certainly under the 40 bytes allowed).

> Have you seen the padded order-based coloring scheme worked out here?

Yes I have seen it and find the padding quite clumsy and unintuitive. A
more general solution is the one I described in my original post, where the
color value is entirely separate from the satoshi value, and encoded
separately: if you have to have an additional "padding" value to calculate
color_value = satoshi_value - padding, you might as well have color_value
directly, independently from satoshi_value. But I don't even think it is
necessary:

> (2) And needing a capital of 54 btc for a million shares is totally
unacceptable.

An easy workaround is to have various scales, the same way you have $1
bills, $5 bills an $10 bills. I don't see that as a big problem. That way
the protocol is more lightweight and simple.

Also those 54 BTC (actually 5.4 BTC if the dust is now 540 satoshis) become
part of the capital of the company, and can always be recovered by
uncoloring the shares. It's an investment, not an expense, so I think it is
acceptable.

Best,
Flavien


On Mon, Apr 7, 2014 at 12:23 AM, Mark Friedenbach <mark@monetize.io> wrote:

> On 04/06/2014 01:59 PM, Flavien Charlon wrote:
> > Do you think this is the right approach?
>
> No, I'm afraid it has significant flaws. The two chief flaws are (1)
> there is absolutely no reason to include asset tagging information if it
> is not validated - that just bloats the block chain, and (2) you
> shouldn't be using fixed increments for share sizes either. It's not
> future-proof as the minimum output size changes based on the minimum fee
> (currently 540 satoshis, not 5,400, and it will float in the near
> future). And needing a capital of 54 btc for a million shares is totally
> unacceptable.
>
> Flavien, I know that I've seen you on the Bitcoin-X mailing list, where
> these issues have been mostly worked out:
>
> https://groups.google.com/forum/#!forum/bitcoinx
>
> Have you seen the padded order-based coloring scheme worked out here?
>
> https://github.com/bitcoinx/colored-coin-tools/wiki/colored_coins_intro
>
> Kind regards,
> Mark Friedenbach
>
>
> ------------------------------------------------------------------------------
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists.sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>

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<div dir=3D"ltr"><div>Thanks for the feedback Mark.</div><div><br></div><di=
v>&gt; (1) there is absolutely no reason to include asset tagging informati=
on if it is not validated</div><div><br></div><div>Sure, there is a good re=
ason to include it in the blockchain: so that clients don&#39;t need extern=
al information to recognize colored coins. Also, I&#39;m not sure what you =
mean by &quot;not validated&quot;, in that proposal, the tagged transaction=
 is the authoritative source of information.</div>


<div><br></div><div>&gt; that just bloats the block chain</div><div><br></d=
iv><div>9 bytes is much less than what Mastercoin and counterparty are doin=
g (certainly under the 40 bytes allowed).</div><div><br></div><div>&gt; Hav=
e you seen the padded order-based coloring scheme worked out here?</div>


<div><br></div><div>Yes I have seen it and find the padding quite clumsy an=
d unintuitive. A more general solution is the one I described in my origina=
l post, where the color value is entirely separate from the satoshi value, =
and encoded separately: if you have to have an additional &quot;padding&quo=
t; value to calculate color_value =3D=A0satoshi_value - padding, you might =
as well have color_value directly, independently from satoshi_value. But I =
don&#39;t even think it is necessary:<br>


</div><div><br></div><div>&gt; (2) And needing a capital of 54 btc for a mi=
llion shares is totally unacceptable.</div><div><br></div><div>An easy work=
around is to have various scales, the same way you have $1 bills, $5 bills =
an $10 bills. I don&#39;t see that as a big problem. That way the protocol =
is more lightweight and simple.</div>


<div><br></div><div>Also those 54 BTC (actually 5.4 BTC if the dust is now =
540 satoshis) become part of the capital of the company, and can always be =
recovered by uncoloring the shares. It&#39;s an investment, not an expense,=
 so I think it is acceptable.</div>


<div><br></div><div>Best,</div><div>Flavien</div><div><br></div><div><br></=
div><div><br></div><div><br></div><div class=3D"gmail_extra"><br><br><div c=
lass=3D"gmail_quote">On Mon, Apr 7, 2014 at 12:23 AM, Mark Friedenbach <spa=
n dir=3D"ltr">&lt;<a href=3D"mailto:mark@monetize.io" target=3D"_blank">mar=
k@monetize.io</a>&gt;</span> wrote:<br>


<blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0px 0.8ex;padding=
-left:1ex;border-left-color:rgb(204,204,204);border-left-width:1px;border-l=
eft-style:solid"><div>On 04/06/2014 01:59 PM, Flavien Charlon wrote:<br>
&gt; Do you think this is the right approach?<br>
<br>
</div>No, I&#39;m afraid it has significant flaws. The two chief flaws are =
(1)<br>
there is absolutely no reason to include asset tagging information if it<br=
>
is not validated - that just bloats the block chain, and (2) you<br>
shouldn&#39;t be using fixed increments for share sizes either. It&#39;s no=
t<br>
future-proof as the minimum output size changes based on the minimum fee<br=
>
(currently 540 satoshis, not 5,400, and it will float in the near<br>
future). And needing a capital of 54 btc for a million shares is totally<br=
>
unacceptable.<br>
<br>
Flavien, I know that I&#39;ve seen you on the Bitcoin-X mailing list, where=
<br>
these issues have been mostly worked out:<br>
<br>
<a href=3D"https://groups.google.com/forum/#!forum/bitcoinx" target=3D"_bla=
nk">https://groups.google.com/forum/#!forum/bitcoinx</a><br>
<br>
Have you seen the padded order-based coloring scheme worked out here?<br>
<br>
<a href=3D"https://github.com/bitcoinx/colored-coin-tools/wiki/colored_coin=
s_intro" target=3D"_blank">https://github.com/bitcoinx/colored-coin-tools/w=
iki/colored_coins_intro</a><br>
<br>
Kind regards,<br>
Mark Friedenbach<br>
<br>
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Bitcoin-development mailing list<br>
<a href=3D"mailto:Bitcoin-development@lists.sourceforge.net" target=3D"_bla=
nk">Bitcoin-development@lists.sourceforge.net</a><br>
<a href=3D"https://lists.sourceforge.net/lists/listinfo/bitcoin-development=
" target=3D"_blank">https://lists.sourceforge.net/lists/listinfo/bitcoin-de=
velopment</a><br>
</blockquote></div><br></div></div>

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