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The term used for this is coloured coins. It's possible to do, and there are forms of coloured coins in use. The question is not of how to do it, but whether

by Lerc 13y ago

The term used for this is coloured coins. It's possible to do, and there are forms of coloured coins in use. The question is not of how to do it, but whether it is desirable to have coloured coins. It's like adding a new rule to how a piece moves in chess. You could easily imagine some of the advantages caused by a change, but not all of the consequences.

waterlesscloud 13y ago
That's not what colored coins are. Colored coins are coins which have been used to mark ownership of another asset, like say a share of stock.
- TophWells 13y ago
  Whether or not it's the same thing, it uses the same mechanics. You can link the output of one transaction to the input of the next, and construct a chain of transactions that says "This 0.125 BTC transaction uses bitcoins that were originally stolen from MtGox / bitcoins that were originally in the pile designated as marking ownership of my shares of stock". The question is whether that's a meaningful thing to measure. If you have bitcoins that are more valuable than normal, because they're shares of stock, then you'll make sure they're not mixed with "normal" coins. That's the idea of the Coloured Coins project. But if you have bitcoins that are less valuable than normal, because they're stolen goods, then you'll try hard to disguise that fact. You'll immediately spend them on goods or currency, or deposit them into a Coinbase account and then withdraw them later (so you get different coins back), or just throw them into a mixer with the other coins that need to be laundered. The person who ends up holding the tainted coins could be perfectly honest, and have acquired them from a perfectly honest source, who in turn acquired them from a perfectly honest source. Is it fair to tell them that their money is suddenly worthless, when they had no way of knowing anything was wrong?
- Pacabel 13y ago
  What prevents a particular mark from being interpreted as some measure of validity, though? If such marking can represent ownership of another asset, could it not represent some other concept, too?
  - waterlesscloud 13y ago
    That's fine. But "colored coin" is a term that has a broader use than that.
rdl 13y ago
The term is probably "coin validation" -- it breaks the finality of bitcoin transactions, creates a single point of regulatory exposure, and IMO will destroy bitcoin if widely adopted.

by Lerc 13y ago

waterlesscloud 13y ago

That's not what colored coins are. Colored coins are coins which have been used to mark ownership of another asset, like say a share of stock.

TophWells 13y ago
Whether or not it's the same thing, it uses the same mechanics. You can link the output of one transaction to the input of the next, and construct a chain of transactions that says "This 0.125 BTC transaction uses bitcoins that were originally stolen from MtGox / bitcoins that were originally in the pile designated as marking ownership of my shares of stock". The question is whether that's a meaningful thing to measure. If you have bitcoins that are more valuable than normal, because they're shares of stock, then you'll make sure they're not mixed with "normal" coins. That's the idea of the Coloured Coins project. But if you have bitcoins that are less valuable than normal, because they're stolen goods, then you'll try hard to disguise that fact. You'll immediately spend them on goods or currency, or deposit them into a Coinbase account and then withdraw them later (so you get different coins back), or just throw them into a mixer with the other coins that need to be laundered. The person who ends up holding the tainted coins could be perfectly honest, and have acquired them from a perfectly honest source, who in turn acquired them from a perfectly honest source. Is it fair to tell them that their money is suddenly worthless, when they had no way of knowing anything was wrong?
Pacabel 13y ago
What prevents a particular mark from being interpreted as some measure of validity, though? If such marking can represent ownership of another asset, could it not represent some other concept, too?
- waterlesscloud 13y ago
  That's fine. But "colored coin" is a term that has a broader use than that.

rdl 13y ago

The term is probably "coin validation" -- it breaks the finality of bitcoin transactions, creates a single point of regulatory exposure, and IMO will destroy bitcoin if widely adopted.