What can we decentralize?

/ singlaarun
  1. Purely digital things.
    1.  Name mapping (Example NameCoin, Blockchain used a record of the current state of the mapping)
    2. Storage – Paying for storage
    3. Pay for Proof – Paying for computation
    4. Random Number generation (Using bitcoin as a Beacon)
    5. Lotteries (payment and payout denominated in the currency of the blockchain, lottery reduces to a random number generation problem, pick one input address as the output address)
  2. Things can be Represented digitally
    1. Real World currencies (Example Colored Coin, provides atomicity)
      1. Who will back the colored coin? Economic Problem: Pegging colored coin to a real world stock is a real challenge. Representation of currency on the block chain is not a challenge. 
  3. Smart Property and Atomic Exchange (discussion at beginning of lecture)
  4. Complex Contracts
    1. Crowd Funding
    2. Financial derivatives
      1. Derivatives is like to a conditional statement
      2. Requires price data feed unless underlying asset is traded on the chain
      3. Some of the more expressive alt coin based system are great vehicle for this
      4. Nuance: Conditional statements depend on price of the underlying, script should have a secure way of obtaining the price of the asset (data feed required). Price discovery possible on block chain? What about price manipulation?
  5. Markets and Auctions
    1. Features of centralized markets
      1. Used Bike store – buys your bike , sells it later
      2. EBay- Matches participants, routes payments
      3. Paypal – Processes payments, (some dispute mediation)
      4. Craigslist – matches participants
    2. How to Decentralize markets?
      1. Payment : use Bitcoin
      2. Transfer of goods: Use of smartproperty, atomicity
      3. Dispute handling: Use Escrow
      4. Matching Participants: ??
        1. Alice wants to sell her car
          1. Partial Transaction: Creates transaction with sale price, perhaps a link to the web-page to the car and broadcasts it, transaction wont get onto the blockchain
          2. Counterparty finds it, completes, signs and broadcasts
          3. Transaction gets complete
        2. Variant: Use Block chain instead of a P2P network, offers can be complete transactions which get onto the blockchain
        3. Variant: Auction: Buyer cannot finalize the transaction. Counterparty can’t complete directly
        4. Variant: Double Auction: Both sides simultaneously broadcast partial transactions
          1. Miners match orders, keep bid-ask spread (Avoids minor front running)
  6. Data Feeds: 
    1. Allow arbiters to assert facts about the world into the block chain
    2. Examples: Price movements, outcome of events
    3. Decentralization of prediction markets
    4. Use trusted hardware for security, parses finance data and creates data feed
    5. Arbiters have Big incentives to lie!
    6. Decentralization by voting
      1. Use multi-signature feature, two of three arbiters must agree, Transaction output is a 2 out of three address
      2. Levels of (de) centralization
        1. Single Mandatory Intermediary
        2. Multiple Competing intermediaries
        3. “Threshold” of intermediaries
        4. No Intermediary
  7. Autonomous Agents
    1. Key Features
      1. Contracts with other participants
      2. Data Feeds
      3. Agents might have shareholders,Voting as a way to change the rules in the way that the agent operates (key distinguishing factor)
      4. Some Variants: reproduction (mutating the code & improving with time)
    2. Challenges
      1. Keeping private state? Or purely execute on a transient basis on the miner nodes. Where does the private state come from?
      2. Hostile Takeover. Defenses against
  8. Exchanges
    1. Alice would like USD for BTC
    2. Carol would like BTC for USD
    3. They don’t trust each other, luckily they have a mutual friend Bob
      1. Bob sends Alice some kind of digital token worth $100
      2. Represented in the system as IOU
      3. Pairs of friends pre-declare how much debt they are willing to extend to each of their friends. Triangular debt cancellation means actual settlement may be rare
      4. Simple version of what ripple does

 

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