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Messages - nxtgt

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1
Judgement System / Re: Rules and karma
« on: July 06, 2014, 03:54:39 am »
Maybe if trust percentages were given rather than a black and white all or none system where the guideline was "how much of your NXT would you trust this person with."

This is kind of a half formed BS idea but what if we actually enforced that by, every now and then, granting someone else the ability to spend the person that trusted them's NXT. That would keep people from fooling around with their trust network. But if we were to do that, we would need a way to keep people from gaming trust then cashing out on it big time.

Yup we'd definitely need a way to keep people from building the trust and running off with a big scam. That's where it's tough to kind of think of incentives to keep people honest but my one workaround is this: if information about who you can and can't trust somehow flows between individuals in localized networks, and this information can be cut off from bad nodes, it seems to me this is like a good incentive to stay honest because it's difficult to build trust relationships again in a new account and difficult to transact when you don't have any or bad information. It's sort of a network effect that creates high switching costs. This sounds rudimentary but it would kind of be like if everyone defriended you on Facebook, except instead of not receiving pictures and videos you would be barred from trust information and your reputation would be nonexistent on the network, making it difficult to execute financial transactions for you and with you.

Regarding your trust percentages point, I imagine it would amount to something like that but I haven't figured out exactly how to quantify it. It would need to be simple and intuitive for people to understand, and I think it should come from information that exists on the blockchain. For example, the strength of your trust connection could be quantified using number of transactions between nodes, or number of smart contracts successfully completed, and this number could be an input into a localized trust rating. If we were to approach globalized trust ratings, that would involve complexity beyond what I'm able to think about at this point.

2
Judgement System / Re: Rules and karma
« on: July 05, 2014, 11:07:27 pm »
Self-enforced? Tell me more.

My thinking is along these lines:

The single greatest tradeoff in going from a centralized hierarchy to a de-centralized network is sacrificing central authority to govern and regulate for autonomy. Where NXT and crypto is revolutionary is in de-centralizing trust from central authority (NOT from each other, trust is still necessary for humans to interact with one another). As a result, we are free to interact and transact currency as we please, but this exposes us to greater risk because no one is looking out for us, as a good government should look out for its citizens.

Since we are left basically to fend for ourselves, we need to find a way to reduce the risks of fraudulent behavior and breaches of contract, and there are a few approaches to this. One is the judgment system that's been proposed, but I'm having trouble seeing why it would be necessary to implement this on any level other than local. If judges are self-picked or random there are a slew of incentive issues, not to mention we are entering into territory where we're giving an individual or group of individuals authority to meddle in personal affairs, which suffice to say is a slippery slope if we're aiming for full de-centralization. This method can be easily subverted through forgery or plain non-compliance, since there's no real reason to submit to a judgment anyways. This is something that individuals can do on a local level without any system to go through, so why not just keep it there?

Going back to the point about non-compliance, the only reason anyone may subject themselves to something like this is if there is a reputation system backing resolutions, but as it stands none exists in NXT. Ideally, we want a scenario where if A breaches their contract with B, A is punished by a reduction in "reputation" of some sort that would signal to others "don't deal with this guy". This introduces more problems to the judgment system, since more care would be needed in the role of a judge to resolve the conflict to avoid wrongful damage of reputation. Then can we really have randomly selected judges? Or if they're chosen, can't they be chosen with bias towards your case and to damage the reputation of the other person?

So it seems to me like we're getting ahead of ourselves by trying to create a judgment system before a reputation system, and why I said we might be talking about two different things at the moment. A reputation system is vital for the AE to function if we're looking at it as a serious option for a real capital market. There are a few ways to create a reputation system that I've researched a bit. One method is basically through ratings and rankings, which doesn't make a lot of sense in financial transactions. So what I was thinking was along the lines of creating a mechanism that makes it easy to visualize one's own local trust network, to add and remove trusted nodes and allow for trust information to flow within trusted connections, and to quantify the strength of our connections. To some extent, this is how we operate as humans when dealing with strangers in our own networks. I trust my friend A, who trusts his friend B, I don't know B but he needs something from me, and my friend A vouches B to me and I grant him this sort of half-trust so that the transaction can happen.

What I'm thinking would be similar to "adding friends" and removing them like we do on Facebook, Twitter, etc., or trust lines like in Ripple, but we would have to be much more careful since we're talking about money here and not just media content. We would also need to give people incentives to manage their networks carefully, since one of the criticisms of Ripple's trust lines is that people don't know how important their input is with these kinds of systems.

3
Judgement System / Re: Rules and karma
« on: July 05, 2014, 10:34:44 pm »
Can someone please walk through a dispute resolution step by step, beginning with the breach of contract and ending with the resolution? I think it would make it easier to discuss things moving forward.

4
Judgement System / Re: Rules and karma
« on: July 05, 2014, 05:03:15 pm »
Did you read this and the next answer of CfB?

https://nxtforum.org/judgement-system/what-is-judgement-system/msg1874/#msg1874

Yes I've read this but his answer is vague so it would be helpful if you can clarify.

I agree with this. The de-centralized network structure requires us to be self-regulating and organizing. To introduce laws or a regulatory body would just be bring old hierarchies into NXT. We need to devise a practical and intuitive way to manage our own personal networks within the nxt ecosystem in such a way that builds strong ties between individuals (nodes) and signals trustworthiness to others in the network.

What is law? Laws describe complex phenomena from rules in traffic to constitution of a nation state. "Laws" are not related to hierarchies at all. That's only because most people assume laws are something which comes from some untouchable authority. A law can be something as trivial as parents telling their kids to do the homework before supper or two people making a business agreement.

Yes, laws can exist absent authority, but without centralized enforcement then things need to be self-enforced, and there are a number of ways to do so, which is why we should discuss more.

5
Judgement System / Re: Rules and karma
« on: July 05, 2014, 12:41:21 pm »
I understand the judgment system can't be perfect, but maybe we're talking about two different things at the moment. How does the reputation system work first, then how do we expect the judgment system to operate on top of this?

6
Judgement System / Re: Rules and karma
« on: July 03, 2014, 11:28:22 pm »
Correct but as it stands there's no way to enforce any type of restitution in any crypto in the tradition of law. Opening the doors to a judgment system involves granting power to individuals that may not even be competent to judge an arbitration. How would a judge be selected? If it's random, how can we assure that the trial is fair, thorough and just? Same goes for it it isn't random.

The idea behind what I was thinking is to build strong enough trust networks so that the risk of bad behavior becomes smaller and smaller because acting poorly will shut you out from information on who can and can't be trusted. Also you can't just go and start a new NXT account because in theory it would take time to build up that network again.

7
Judgement System / Re: Rules and karma
« on: July 02, 2014, 07:09:28 pm »
Another member posted this in the general discussion forum:

http://www.zerohedge.com/news/2014-06-27/networks-vs-hierarchies-which-will-win

I believe it's important that we think along the lines of network organization with respect to regulation and reputation management. The challenges are to devise a way to strengthen the so-called "fragile" network structure, signal trustworthiness so that transactions flow, and organize ourselves well. Fragmentation and inaction are our biggest threats, not hierarchy, or any other cryptocurrency for that matter.

I almost agree. I think we can avoid hierarchy and still have a judgement system. The system would not judge how people use NXT but whether of not they follow through with contractual agreements they made relating to NXT. The only real law would be "be honest and follow through with your agreements." Take for example my asset, NXTMetalsAl. I said I would ship people their aluminum is they turn in the asset and pay for shipping. If I didn't do that, yes it would hurt my reputation in the long run, but it would also hurt anyone who owns the asset because they cannot get their money back.

A good way to do things would be to have a system for filing a complaint, once the complaint is filed, the account filed against is frozen for the period of the trial. There would be a system so that someone could only file a complaint once a day or week, or whatever so as to prevent complaint spamming to freeze an account indefinitely. The jury would assess weather or not the person did what they said they were going to do. If found guilty, that person's account will pay both the jury's compensation for their time and will pay back the person they cheated. If they are found innocent, the person who filed the complaint will pay the jury (also to prevent complaint spamming).

The judgement system would not exist to decide what people can and can't do with NXT, it would just decide if they owe someone some NXT. This would keep escrows and asset issuers honest but that isn't the point. The point is that people can't get swindled.

It seems like this is workable, however what I imagined is a little different. I think using contracts like you mentioned is a great way to assess good behavior, and smart contracts can make this even easier and verifiable. What I was thinking was along the lines of the trust pathway such as the one used in Ripple, where you add people into a trust network. Once someone was added into your trust network, trust information from your network would flow to the other node, and if they added you, their trust information would flow from their network to yours. This would be an incentive for people to manage their networks carefully, since it would give you an idea of who can be trusted to interact with. The strength of your ties could be quantified in some way, for example using # of transactions executed or # of contracts successfully completed between each node. Some mechanism could be designed such that the strength of your trust network grows as the strength of the ties increase, and this could be used to signal to others on the network.

Bad behavior could be dis-incentivized by removing the bad node from your network, thus cutting off your trust information to them. Others might be able to see this and remove them as well, effectively leaving the bad node blind to trust info as punishment. This would create huge switching costs for someone who builds a lot of trust and then decides to act poorly, because they would have to rebuild a new network on an entirely new account. It would also prevent gaming in a traditional reputation management system where nodes collude to give each other high ratings.

Another mechanism could be designed for nodes within the same trust networks who aren't directly tied to have a mutually known party to vouch for one or the other, similar to how you can request introductions on LinkedIn.

8
Judgement System / Re: Rules and karma
« on: July 02, 2014, 04:13:55 pm »
Another member posted this in the general discussion forum:

http://www.zerohedge.com/news/2014-06-27/networks-vs-hierarchies-which-will-win

I believe it's important that we think along the lines of network organization with respect to regulation and reputation management. The challenges are to devise a way to strengthen the so-called "fragile" network structure, signal trustworthiness so that transactions flow, and organize ourselves well. Fragmentation and inaction are our biggest threats, not hierarchy, or any other cryptocurrency for that matter.

9
Judgement System / Re: Thread: Main
« on: July 02, 2014, 02:39:54 pm »
Two guys exchange drugs on the Internet. they might as well use private email for their transaction. Question is if the email service will ban such activities. What is illegal in one man's judgement is perfectly proper in another. There is a great many of activities I would never support. Somebody starting a decentral exchange, better think well about what kinds of activities he considers immoral and declare this upfront.

The idea of the decentralized exchange is that there is no controller. No one can decide what activities can or can not go on there. There's no moral code or center. The decentralized exchange doesn't censor or provide moral guidance. It's just a tool, like a knife is a tool. The knife can be used to butter bread or stab someone in the eye. The knife makes no moral judgement on the action either way.

I agree with this. The de-centralized network structure requires us to be self-regulating and organizing. To introduce laws or a regulatory body would just be bring old hierarchies into NXT. We need to devise a practical and intuitive way to manage our own personal networks within the nxt ecosystem in such a way that builds strong ties between individuals (nodes) and signals trustworthiness to others in the network.

10
Assets Board / Re: [ANN] ShortBTC
« on: June 27, 2014, 03:55:47 pm »
What incentives are there to short BTC or NXT using these assets as opposed to selling on exchanges with much more liquidity? Seems like the reward doesn't match the risk here?

11
Judgement System / Re: What is judgement system?
« on: June 17, 2014, 06:37:56 pm »
IMO the reputation management system needs to come before any form of judgment system

12
BOOST / Re: NXTBank Credit Rating System
« on: June 17, 2014, 06:28:24 pm »
Does it make sense to start with localized reputation management using the network/trust line model rather than global ratings? For example, a mechanism could be developed such that if A "trusts" B, trust information contained within A's network would flow to B. Then level of trust can range from strong to weak based on history of on-blockchain transactions or hypothetically, completion of "smart" contracts between A and B?

13
Judgement System / Re: What is judgement system?
« on: June 13, 2014, 02:46:30 pm »
There's a whole mess of incentive problems and conflicts of interests in what's been proposed. Let's think this one through - this is perhaps the holy grail of P2P networks.

14
BOOST / Re: NXTBank Credit Rating System
« on: June 13, 2014, 02:15:19 pm »
yes, this sort of 'stickyness' does contribute to NXT value and yes... price.

-bm

That whitepaper was interesting but it seems like we're getting ahead of ourselves with issuing bonds as mechanism for deposits and withdrawals. Bonds are rather complex instruments and the market would just be a mess if all people are trying to do is deposit and withdraw their money, or borrow. I'll save you the lengthy technical explanation but pricing bonds involves a lot of financial mumbo jumbo that isn't as forthcoming as understanding a fixed interest rate. Changes in interest rates impact bond value, as well as term to maturity, timing of interest payments, duration, convexity, etc. We'd have a scenario where people are trying to redeem bonds and not getting all the money they deposited and not understanding why.

15
BOOST / Re: NXTBank Credit Rating System
« on: June 12, 2014, 09:34:58 pm »
all you say is 100% correct.

have you ever seen this paper on P2P bonds?  http://www.altchain.org/?q=whitepapers/paper3.html

an interesting point is that yes, the credit ratings grow over time, but they can also be computed against a declaration of relationship to some other long-standing account(such as in a social network).  I think a simple factor is that you can't do business without identifying yourself to some degree.

-bm

Thanks for the link I will read it when I get home later tonight.

Something interesting about the trust network idea too that kind of relates to the "keeping people on one account" notion is that as that trust network grows bigger, it becomes a bigger dis-incentive to "leave the network" so to speak by opening a new NXT account. Very very interesting, need to think more.

16
BOOST / Re: NXTBank Credit Rating System
« on: June 12, 2014, 09:01:14 pm »
a good point, but I do foresee the need for management functions.  Consider how many ways a business loan can go wrong and how much information needs to be reviewed.

All true but given the nature of the system you can go through all of that and still get a very sophisticated scammer that disappears with your money and you can't go after him. Then we can flag his credit rating on his account but then he just transfers the money to a DGEX account, sells it and opens a new NXT account, slowly builds a decent credit rating and then boom another big scam. We'd need perpetual NXT identities for a credit rating system to be worth anything, no?

The vouching system seems more compelling, but as jl777 described it, it doesn't seem intuitive enough for people to use or understand how important it is for the overall functioning of the trust line. I'll think more about where we can innovate on that one.

17
BOOST / Re: NXTBank Credit Rating System
« on: June 12, 2014, 08:39:26 pm »
I don't see the real need to have one of these NXTBank DAC's. If the tech is truly P2P why not let people loan to other people like on Prosper or LendingClub without all the strings attached? It's high risk but you can charge higher interest

18
With regards to a DAC bank, how would the bank generate interest to pay back to depositors?

Commercial banks make money by charging fees, and making loans and investments to grow their pool of funds while maintaining a fraction of total deposits. This allows them to pay interest. Without these, the bank doesn't make money and would be paying other people's money to cover interest and it becomes a Ponzi scheme.

I'm not sure how investments could be automated. Loan approval could be to an extent but that would require a robust set of historical credit data and the automation of loan approval sounds extremely risky to me. All that's left seems like generating fees but that would make this bank nothing more than a forging pool.

19
Nxt Asset Exchange / Re: ASSET EXCHANGE - Asset Listings
« on: June 11, 2014, 08:31:20 pm »
I Plan on Launching a few Assets one that will be used to help us Fund the Development of our own Crypto Coin that will
be used in many unique ways in terms of our Organization.

We have Plans also to launch another Asset that people will be able to Share in the Money we Receive from the Millions
of Potential Customers we believe we will have at ADSactly when we are Ready for the Masses.

PM me here if you are a Seasoned Forum Expert We need to get ADSactly into the Crypto Forums and meet the people
who will be able to help us make all this a reality.

I don't know much about Crypto Coins however I know many people through my Networking Efforts and I have many
people that are serious about helping us make ADSactly a Decentralized Autonomous Organization that is designed
from the Ground up to keep the Scammers out. While connecting experts and professionals from various fields
together with Customers and Clients that are interested in ADSactly what you Provide!

Just take my money

20
I was researching a bit and brainstorming all the risks that I could think of that are specific to P2P capital markets like NXT's Asset Exchange. Here are a few:

  • Less sophisticated investors
  • Less sophisticated businesspeople
  • Limited or fraudulent information
  • Non-existent regulatory oversight
  • Inability to recover lost funds
  • No protection of ideas through non-disclosure and non-circumvention

I think the first three points are vital and actionable. The fourth and fifth go hand in hand, and are at this point somewhat assumed in this space so are not as actionable at this point in time. The sixth is worth mentioning but again is an assumed risk.

What I believe we currently have in this space is a dark hole of uninformed investors that have little or no financial/economic background, unsophisticated/unproven/seedy businesspeople, and a lack of information in an unregulated environment. The question then becomes how do we self-regulate?

A few ideas:
  • Ricky James-type enforcement
  • Math based regulation
  • Making disclosure simple, understandable and accessible in a highly visible location

The first is an "We are Legion" type of internet justice which I imagine is possible but not exactly implementable on any level. With regards to math based regulation, my thoughts are raw but something I can think of is automatic ratio analysis for certain financial ratios in company-issued disclosures that sort of tip people off on strange relationships between their numbers. The third in my opinion is the most actionable, at least on my part. The two key factors here are making disclosure as low cost as possible for issuers but with a high standard, and making them as understandable as possible for investors. I think taking educational standpoint on disclosure for both investors and issuers would benefit the market greatly. Something perhaps as little as explaining what revenues, P/E ratios, etc. are and including that in their disclosures to the public, and putting these disclosures in highly visible places like within the exchange or client itself. Again, I don't know how that would be implemented on the blockchain or if that would create too much bloat, but some basic ideas.

Thoughts?

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