Plan for introducing Privacy (STEALTH) Mode feature asap

[Thom]

So this guy clearly isn't Satoshi, but when the value skyrockets, privacy is going to be absolutely essential... As is fairly obvious by the below... Which might also be why there hasn't been a big influx of capital thus far.

http://www.coindesk.com/police-raid-home-of-alleged-bitcoin-creator-craig-wright/

Some impressive coincidence eh?

Very disappointing that this has to be privately funded to get done. Thankful to Onceaponatime to funding it of course but disappointed in the overall lack of foresight.

You mean this kind of lack of foresight?

What if BitShares could have perfect privacy?

on the doublespeak Stan. You mean like the "foresight" that is 4 days after the BIG announcement on June 8 of what BitShares 2.0 would include upon launch, which did NOT include any privacy, where everyone's balance was out in the open? Or perhaps you're referring to the "foresight" that was in the making while TITAN was the king of privacy features back in the 0.9X era?

Lots of "gee whiz" features, actually great innovations ... if only they were real rather than ideas that CNX will implement ... eventually, when not dreaming up other neat innovations rather than finding ways to finish up with the last set.

[Stan]

So this guy clearly isn't Satoshi, but when the value skyrockets, privacy is going to be absolutely essential... As is fairly obvious by the below... Which might also be why there hasn't been a big influx of capital thus far.

http://www.coindesk.com/police-raid-home-of-alleged-bitcoin-creator-craig-wright/

Some impressive coincidence eh?

Very disappointing that this has to be privately funded to get done. Thankful to Onceaponatime to funding it of course but disappointed in the overall lack of foresight.

You mean this kind of lack of foresight?

What if BitShares could have perfect privacy?

[onceuponatime]

Since @onceuponatime is paying we will do things how he wants.

I just wanted to chime in on the regulatory issue. Those who have followed us for a long time know I am very careful and have become increasingly so.  That said, based upon the SWARM working paper (http://www.scribd.com/doc/255347578/SWARM-Working-Paper-Distributed-Networks-and-the-Law)  produced by Members of policy group Coin Center, law firm Perkins Coie as well as Harvard and MIT we now have a much clearer idea on what constitutes a security and high risk. 

My proposed solution of implementing the feature and giving onceuponatime 100% of the STEALTH asset that gets bought back by the network over time.  If he is the only owner, then it is clearly not a security. It just gives him a different way to claim the fees to his account (by order) as well as a way of dividing up control (by dividing his STEALTH among multiple accounts).  So from the perspective of the law, no security has been offered to the public and everything is merely an accounting system on the blockchain for a single user. 

If onceuponatime wished to sell his revenue stream he could do so by transferring the stealth asset.  This is much more powerful than transferring control over an account and/or requiring a bot to automatically forward payments. It creates a far more trust free transfer of revenue (or fraction thereof) to a 3rd party.  Once again, this wouldn't be a security by any stretch of the imagination when selling to private parties because there was no PUBLIC offering. 

At this point I have believe I have demonstrated that we can design the feature to buy back a STEALTH asset while being so far away from regulatory issues that it wouldn't make sense to do it any other way.

All of that said, I believe that the STEALTH asset could be sold to the public AFTER the feature has been implemented and accepted by the network. This is based upon the Howey Test.

The tests for a security require *ALL* of the following properties:

1. Investment of money - token buyers pay money for their tokens.    80%
2. Common Enterprise - the funds received by the sale of STEALTH are not pooled, they become the private property of the seller.  Thus clearly not a common enterprise.  20% risk
3. Reasonable Expectation of Profit - buyers purchase it for speculative purposes in the belief that the value of the token will rise.  90% risk of being a security.
4. Derived Mainly from the Efforts of Others -  the value of STEALTH depends upon users of an existing system. No effort is required nor promised of other individuals for the token to receive automatic repurchases from the use of the system. In other words, the value of the token does not depend upon onceuponatime to take further actions.   10% risk

The combined risk for STEALTH is therefore less than 2% chance of being classified as a security and that is with me over estimating and then rounding up. 
The penalty risk is $35,000 (what satoshi dice paid + disgorgement of profits).   When discounting the penalty for the risk you can price the cost at $500.  Any profits would be calculated after recovering his $45,000 investment.

The risk is so low (in my estimation) that CNX will probably use this model to fund future features. 

So I am going to argue strongly that we implement this feature as a STEALTH asset, and then leave it to onceuponatime to determine whether or not to SELL the asset except for the purpose of claiming fees from the automatic buyback.

@bytemaster

Could you please explain how/by whom the STEALTH asset is to be created?

I like the idea of being a modern day Prometheus and bringing to BitShares the equivalent of the fire it needs for combustion. But I do value what is left of my liver 

I am ready to go with your suggestion. I would just like to understand the mechanics a little better.

[Myshadow]

So this guy clearly isn't Satoshi, but when the value skyrockets, privacy is going to be absolutely essential... As is fairly obvious by the below... Which might also be why there hasn't been a big influx of capital thus far.

http://www.coindesk.com/police-raid-home-of-alleged-bitcoin-creator-craig-wright/

Some impressive coincidence eh?

Very disappointing that this has to be privately funded to get done. Thankful to Onceaponatime to funding it of course but disappointed in the overall lack of foresight.

[onceuponatime]

The proposal and the initiative from onceuponatime  is 

My only proposal would be to adjust the fees in stealth transfers. We should have very low fees when visible transfers 10-30 bts irrespective of amounts as currently but when someone wants to make stealth transfers fees should be % and competitive to external exchanges. It doesn't make sense to make stealth transfer of 1 mil bts and pay a fee of 30 bts but it makes sense to have a fee of 0.1% i.e. 1000bts..

@mf-tzo
Yes, I like your idea. But I think it should be smaller. Say 3x the regular fee plus 0.01% of the amount of the transfer.

[Stan]

The 4-6 weeks to accomplish this stealth feature...does it means that basically all other works (DEX's core features) would be put in pause?

Bytemaster just made a post about the prediction market, that is available in the cli/blockchain, but not on the GUI yet.
I personally think that the Prediction Market could bring a lot more users than stealth, and I would prefer to head efforts on Prediction Market or others DEX's core feautures instead, at least for the time being.

If you've ever run a business, you know that you need a backlog of funded work to hire more people and then you hire more people to work off the backlog.  It's an endless growth cycle you try to sustain.

So, ask not how much work the current team can do.
Ask instead, how to fund a team big enough to do everything.

Get a backlog of work in the pipeline and let the entrepreneurs figure out how to get it done.

"If you fund it, they will come."

[Bhuz]

The 4-6 weeks to accomplish this stealth feature...does it means that basically all other works (DEX's core features) would be put in pause?

Bytemaster just made a post about the prediction market, that is available in the cli/blockchain, but not on the GUI yet.
I personally think that the Prediction Market could bring a lot more users than stealth, and I would prefer to head efforts on Prediction Market or others DEX's core feautures instead, at least for the time being.

[merivercap]

Question.

If someone wanted to create a competing Privacy Mode solution, what would be the steps required?

I assume confidential transactions already work in the CLI?

The additional blockchain code required is to allow the Privacy Mode owners to take a fee?  What else is required?

What part of this is UI/UX?  I assume a lot of the cost will be for that. 

If you guys are all for providing the best solution to the consumers, competition is good.  However for those that want to compete to provide the service they should be ready to compete.  The question is what is the real cost and exclusive nature of this worker proposal?  Will the voters in control vote to keep this particular Privacy Mode exclusive or open to competition?   It comes down to cost-benefit for businesses.  If it's cheaper to rebuild our own Privacy Mode (esp because UI/UX is probably the brunt of it) we'll probably build our own anyways.   

I rather have a blockchain API for Privacy Mode businesses to build their own UI/UX on and earn fees.  That opens it more, doesn't limit innovation and reduces @onceuponatime 's risk.  I don't want to just come in there and start from scratch and outcompete.  That seems to me a waste of resources.   We will most likely enter the Privacy Mode business so it's your call.   

[Xeldal]

Why not just make an FBA from the start? I don't see why we need anyone to completely fund it and then turn it into an FBA after the fact. Put the UIA on the market from the start?

But if not, then okay the last resort is to have the anonymous group of investors buy and issue it anonymously.

I don't understand this either.  It seems to me that the FBA can be put forward from the start.  I don't see why we need the private funding first.  It seems like a bit of extra complexity and wiggling around for no real benefit. 

The only thing I get from this is that the pre funding guarantees they keep as much of it as they desire and only IF they desire, will they sell the FBA to the public.

There could easily be an alternative worker proposal, identical in every way, except the FBA is offered from the start with no private pre funding.  I wonder which would have greater support.  If its publicly funded, are these private investors still interested.     

[bytemaster]

Do I understand right that 20% of all income from this feature is automatically burned?*

And all shareholders share this benefit without having to do or pay anything other than approving your proposal?

*well technically recycled (as network fees) but illiquid nonetheless. could still be burned though!

It is not BURNED, it is used to purchase MAKER and the MAKER is burned.   

[38PTSWarrior]

Hi, I am sorry. I have some anger issues especially after waking up and regret it the rest of the day. Onceuponatime, sorry for the personal attacks, I never met you and I sometimes just shout out things. Your hurtful posts in the brownie thread made me angry.

I don't want to be an obstacle here and go with the flow. I support Stan he was always friendly and knows what is good for everyone.

[luckybit]

Do I understand right that 20% of all income from this feature is automatically burned?*

And all shareholders share this benefit without having to do or pay anything other than approving your proposal?

*well technically recycled (as network fees) but illiquid nonetheless. could still be burned though!

It probably should be burned.

[luckybit]

It really doesn't matter whether the risks and rewards are high or low or whether @onceuponatime is generous or just being an entrepreneur, etc.  What matters is that many of us feel that we've already invested in this and other 2.0 features that it turns out have yet to be developed.  Fine, reasonable people can understand the funding challenges we've faced.  And if we're still here, we've mostly wrapped our minds around the fact that further investment is necessary.  But why should those of us willing to invest further now be cut out if it? 

I think some in the community will not stand for it. Sure, there's a strong possibility that it could get rammed down our throats anyway.  But the potential consequences of that should be considered very carefully.  The last thing we should want right now is for a chunk of the community to vote with their feet.  So let's not screw this up royally.  We've stumbled upon a very smart and powerful, new model that will allow for the immediate funding of features that not everyone is willing and/or ready to pay for.  So let's get it done without cutting out the people who ARE ready and willing to pay for it now.

Having said that, I think this proposal really only has one problem.  And that's the "private, unknown investor" who "might create an FBA and offer shares for sale on the DEX as a way for the Community to participate in that fee stream".  I'm sure most here can read between the lines, but I doubt anyone is comfortable with the idea of signing away 80% of stealth transfer fees forever based on "might" or "they have indicated that this is what they intend".  So let's build into the proposal some caps to make it VERY unattractive for the "private, unknown investor" NOT to sell shares to members of the community who are interested in investing.  That way everyone can feel comfortable moving forward with this ASAP.

Why not just make an FBA from the start? I don't see why we need anyone to completely fund it and then turn it into an FBA after the fact. Put the UIA on the market from the start?

But if not, then okay the last resort is to have the anonymous group of investors buy and issue it anonymously.

[roadscape]

Do I understand right that 20% of all income from this feature is automatically burned?*

And all shareholders share this benefit without having to do or pay anything other than approving your proposal?

*well technically recycled (as network fees) but illiquid nonetheless. could still be burned though!

[bytemaster]

Since @onceuponatime is paying we will do things how he wants.

I just wanted to chime in on the regulatory issue. Those who have followed us for a long time know I am very careful and have become increasingly so.  That said, based upon the SWARM working paper (http://www.scribd.com/doc/255347578/SWARM-Working-Paper-Distributed-Networks-and-the-Law)  produced by Members of policy group Coin Center, law firm Perkins Coie as well as Harvard and MIT we now have a much clearer idea on what constitutes a security and high risk. 

My proposed solution of implementing the feature and giving onceuponatime 100% of the STEALTH asset that gets bought back by the network over time.  If he is the only owner, then it is clearly not a security. It just gives him a different way to claim the fees to his account (by order) as well as a way of dividing up control (by dividing his STEALTH among multiple accounts).  So from the perspective of the law, no security has been offered to the public and everything is merely an accounting system on the blockchain for a single user. 

If onceuponatime wished to sell his revenue stream he could do so by transferring the stealth asset.  This is much more powerful than transferring control over an account and/or requiring a bot to automatically forward payments. It creates a far more trust free transfer of revenue (or fraction thereof) to a 3rd party.  Once again, this wouldn't be a security by any stretch of the imagination when selling to private parties because there was no PUBLIC offering. 

At this point I have believe I have demonstrated that we can design the feature to buy back a STEALTH asset while being so far away from regulatory issues that it wouldn't make sense to do it any other way.

All of that said, I believe that the STEALTH asset could be sold to the public AFTER the feature has been implemented and accepted by the network. This is based upon the Howey Test.

The tests for a security require *ALL* of the following properties:

1. Investment of money - token buyers pay money for their tokens.    80%
2. Common Enterprise - the funds received by the sale of STEALTH are not pooled, they become the private property of the seller.  Thus clearly not a common enterprise.  20% risk
3. Reasonable Expectation of Profit - buyers purchase it for speculative purposes in the belief that the value of the token will rise.  90% risk of being a security.
4. Derived Mainly from the Efforts of Others -  the value of STEALTH depends upon users of an existing system. No effort is required nor promised of other individuals for the token to receive automatic repurchases from the use of the system. In other words, the value of the token does not depend upon onceuponatime to take further actions.   10% risk

The combined risk for STEALTH is therefore less than 2% chance of being classified as a security and that is with me over estimating and then rounding up. 
The penalty risk is $35,000 (what satoshi dice paid + disgorgement of profits).   When discounting the penalty for the risk you can price the cost at $500.  Any profits would be calculated after recovering his $45,000 investment.

The risk is so low (in my estimation) that CNX will probably use this model to fund future features. 

So I am going to argue strongly that we implement this feature as a STEALTH asset, and then leave it to onceuponatime to determine whether or not to SELL the asset except for the purpose of claiming fees from the automatic buyback.