[Cryptography] Perth Mint to back crypto-currency with gold

Ray Dillinger bear at sonic.net
Thu Jan 25 19:10:50 EST 2018



On 01/25/2018 06:44 AM, Patrick Chkoreff wrote:

> As I understand it, a principal purpose of "blockchain technology" is to
> track ownership of assets on a ledger that is distributed among a large
> number of computers in such a way that it is not vulnerable to
> alteration or destruction at any single location.  With that in mind, I
> don't understand what is crazy about this particular application of
> blockchain technology.

A ledger recording disposition of assets is probably the most obvious
use for it, but those transactions can be anything.  Or, to think of it
differently, maybe you're exactly right about what it's for but you have
to think of "ownership of assets" in a much broader sense than real
property or money or liquid assets.

Having a document that you can prove is unaltered is good, but being
able to prove that you have the complete set of such documents (that
none have been withheld from your knowledge), day after day as elements
are added to the set, no matter who adds one or where, is better.

One of the first uses of it after bitcoin was namecoin, where the
purpose of the chain was to record cryptographic certificates for use in
the "deep net" .bit domain.  There were also coins on that chain, but
they were entirely tangential.

Another obvious application would be an inalterable record of votes
taken on various topics, or of diplomatic proceedings that it is very
very important that nobody should later be allowed to lie about.

Heck, maybe one day The Sororal Order Of Martian Clowns will use one to
record who has passed which of their membership levels and trials, and
then the membership will rest assured that nobody back at Candor Chasma
(or wherever they have their HQ) will be altering the records or
backdating them or striking someone who annoys or opposes them from the
rolls, or sneaking in their sister-in-law even though she's sane and
therefore unqualified.  And new members just joining will be able to
check it and see that nobody back at Olympus Mons ever had been allowed
to do so, because they can know that the record they receive, even
though they weren't there while it was being done, is the complete record.

> However, it is important to note that arbitrary "mining" of digital
> coins almost certainly cannot be allowed in this case, since the digital
> coins represent claims of redemption on a specific reserve of physical
> assets held on terms of bailment.  I would think that the custodian must
> remain in total control over the production of new authentic digital
> coins, and issue them only in response to and strictly commensurate with
> physical bailment activity.

Absolutely.  You can't have distributed production of coins unless you
have (provable!) distributed production of gold to back the coins and
(provable!) delivery of that gold whenever someone wants to redeem their
coins and take possession.  So this is going to be a block chain that
isn't completely decentralized in the way Bitcoin is. Anybody anywhere
can create a transaction, or see the record of all transactions. But
only Trent could create transactions that create or destroy coins on the
chain.   That's because it's Trent who oversees the holding and
redemption of the backing goods, and has to prove it, with audits and
inventories and affidavits and banking paperwork and KYC/AML compliance
inspections and all that entails....

Now, if there's a good reason to separate the creation and destruction
of coins from the creation of blocks, "mining" for the creation of
blocks could still be distributed.  But I don't know if there is such a
reason.

				Bear


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