June 12, 2015

Issuance of assets, Genesis of transactions, contracting for swaps - all the same stuff

Here's what Greg Maxwell said about asset issuance in sidechains:

So the idea behind the issued assets functionality in Elements is to explicitly tag all of the tokens on the network with an asset type, and this immediately lets you use an efficient payment verification mechanism like bitcoin has today. And then all of the accounting rules can be grouped by asset type. Normally in bitcoin your transaction has to ensure that the sum of the coins that comes in is equal to the sum that come out to prevent inflation. With issued assets, the same is true for the separate assets, such that the sum of the cars that come in is the same as the sum of the cars that come out of the transaction or whatever the asset is. So to issue an asset on the system, you use a new special transaction type, the asset issuance transaction, and the transaction ID from that issuance transaction becomes the tag that traces them around. So this is early work, just the basic infrastructure for it, but there's a lot of neat things to do on top of this. *This is mostly the work of Jorge Tímon*.

Jorge documented all this back in 2013 in FreiMarkets with Mark Friedenbach. Basically he's adding issuance to the blockchain, which I also covered in principle back in that talk in January at PoW's Tools for the Future. As he covers issuance above, here's what I said about another aspect, being the creation of a new blockchain:

Where is this all going? We need to make some changes. We can look at the blockchain and make a few changes. It sort of works out that if we take the bottom layer, we've got a bunch of parameters from the blockchain, these are hard coded, but they exist. They are in the blockchain software, hard coded into the source code.

So we need to get those parameters out into some form of description if we're going to have hundreds, thousands or millions of block chains. It's probably a good idea to stick a smart contract in there, who's purpose is to start off the blockchain, just for that purposes. And having talked about the legal context, when going into the corporate scenario, we probably need the legal contract -- we're talking text, legal terms and blah blah -- in there and locked in.

We also need an instantiation, we need an event to make it happen, and that is the genesis transaction. Somehow all of these need to be brought together, locked into the genesis transaction, and out the top pops an identifier. That identifier can then be used by the software in various and many ways. Such as getting the particular properties out to deal with that technology, and moving value from one chain to another.

This is a particular picture which is a slight variation that is going on with the current blockchain technology, but it can lead in to the rest of the devices we've talked about.

The title of the talk is "The Sum of all Chains - Let's converge" for a reason. I'm seeing the same thinking in variations go across a bunch of different projects all arriving at the same conclusions.

It's all the same stuff.

Here's today's "legathon" at UBS, at which the banking chaps tried to figure out how to handle a swap of GBP and Canadian Dollars that goes sour - because of a bug, or a lapse in understanding, or a hack, who knows? The two traders end up in court trying to resolve their difference in views.

In the court, the judge asks for the evidence -- where is the contract? So it was discovered that the two traders had entered into a legal contract that was composed of the prose document (top black box) and the smart contract thingie (lower black box). Then some events had happened, but somehow we hadn't got to the end. At this point there is a deep dive into the tech and the prose and the philosophy, law, religion and anything else people can drag in.

However, there's a shortcut. On that prose on the whiteboard, the lawyer chap who's name escapes me wrote 3 clauses. Clause (1) said:

(1) longest chain is correct chain

See where this is going? The judge now asks which is the longest chain. One side looks happy, the other looks glum.

Let's converge; on the longest chain, *if that's what you wrote down*.

Posted by iang at June 12, 2015 05:34 AM
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