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Author Topic: Coloring coins not really Coloring an uncolored coin?  (Read 3411 times)

sharpTrick

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Coloring coins not really Coloring an uncolored coin?
« on: June 25, 2014, 11:57:43 pm »
So from what I can gather playing around in my coinprism wallet. I can issue colored coins, transact, them and destroy them without losing or gaining any uncolored coins (actual bitcoins) other than the transaction fee. I have noticed small amount of "padding" that goes with each transaction and I beleive I understand that and it's effect on the anti-dust rule.

However I thought I was lead to believe that you had to or at least could assign existing bitcoins a color. I know that individual bitcoins do not exist and their value and ownership is only a product of inputs and outputs so of course you could not color a specific coin. But I did think that you could assign a certain value or amount of uncolored coin that had to stay or travel with It's defined coloring.

Don't get me wrong, I dig that you don't have to actually use any bitcoin (aside from the transaction fee and padding) to issue and transact any amount of colored coin. I understand that this fact removes obvious limitations to issuing colored coins. I do indeed like how it is. I can make thousands of whatever I want/need for less than ten cents. However I could see benifits to having the option to tethering a specified amount of bitcoin to a colored coin. It could inherently make your colored coin more valuable. Owners of said colored coins would have the option to uncolor your colored coins if your color lost it's value. More than nothing the option would just be cool.

My question: Did I really just misunderstand the concept of coloring coins? Is coinprism's rendition of colored coins not true colored coins? Or is this a future feature of coinprism's beautiful adaptation of colored coins?

If I really did misunderstand one must admit that the colored coin video http://youtu.be/fmFjmvwPGKU and many of coinprism's UI statments such as "You are about to uncolor colored coins to recover their weight in Bitcoin." are obviously a little misleading.




sharpTrick

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #1 on: June 26, 2014, 12:03:17 am »
Also I don't desire speculation. Any guesses as to what the answers may be will be, as always, a waste of text on my monitor.

Please only reply if you have an actual answer or if you felt like bumping this thread with a "I was wondering that too..."

Najska

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #2 on: June 26, 2014, 12:44:40 pm »
I think you cannot do the thing you want with the Open Assets protocol. As you know, coloured coins are issued by working with extra data on the blockchain. In Chroma Wallet, for example, you add a colour value to a coin, which is the extra data, and which is I think what you want, i.e., colouring a coin. But in the Open Assets protocol, there are two data fields that may be added to a coin, one is the colour value, the other one being the amount. That amount allows you to issue thousands of coloured coins on a unit of bitcoins.

I'm not competent on the protocols, but this is how I understand it. So, the information above might have some wrong parts. Any correction will be very welcome.

riclas

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #3 on: June 26, 2014, 11:30:16 pm »
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It could inherently make your colored coin more valuable. Owners of said colored coins would have the option to uncolor your colored coins if your color lost it's value.

Even if colored coins were able to work as you suggest, this would be a no-no. owners can't simply uncolor a coin because they want to. Only the issuer or trusted parties should have that ability. This goes for mistakes from the coin owner to prevent uncoloring something of value or for the issuer not to devalue its asset just because a part of it has vanished. However, this seems to be possible already by spending colored outputs through a color unaware wallet. IMHO this should be prevented, even if it requires changes to the bitcoin protocol handling.

sharpTrick

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #4 on: June 27, 2014, 03:24:53 am »
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I think you cannot do the thing you want with the Open Assets protocol. As you know, coloured coins are issued by working with extra data on the blockchain. In Chroma Wallet, for example, you add a colour value to a coin, which is the extra data, and which is I think what you want, i.e., colouring a coin. But in the Open Assets protocol, there are two data fields that may be added to a coin, one is the colour value, the other one being the amount. That amount allows you to issue thousands of coloured coins on a unit of bitcoins.

I'm not competent on the protocols, but this is how I understand it. So, the information above might have some wrong parts. Any correction will be very welcome.

I think that you are correct. The reason as to where this behaviour or lack of behaviour comes from the Open Assets protocol. Good answer.

I have looked read the Open Assets protocol https://github.com/OpenAssets/open-assets-protocol/blob/master/specification.mediawiki and I have read the colored coins white paper in progress https://docs.google.com/document/d/1AnkP_cVZTCMLIzw4DvsW6M8Q2JC0lIzrTLuoWu2z1BE/ and I have noticed that Open Assets is not a complete rendition of the white paper. For example the selected coloring techneqe in the official white paper is "tag based coloring" while the Open Assets protocol uses an seemingly obsolete "order based coloring". Is this because Open Assets is a different animal or is it because Open Assets is just a beta and plans to submit to officially selected Colored Coins protocols in future versions as Colored Coins ideas solidify into acceptance?

Quote
Even if colored coins were able to work as you suggest, this would be a no-no. owners can't simply uncolor a coin because they want to. Only the issuer or trusted parties should have that ability. This goes for mistakes from the coin owner to prevent uncoloring something of value or for the issuer not to devalue its asset just because a part of it has vanished. However, this seems to be possible already by spending colored outputs through a color unaware wallet. IMHO this should be prevented, even if it requires changes to the bitcoin protocol handling.

Ideally it would be awesome if nobody could uncolor a coin except for it's issuer. However this is not the reality because it is a concrete rule that states that any malformed transaction will result in the destruction of colored coins resulting in uncolored output. Because this is a fact, it would be ill-advised to only give a select few (those with enough knowledge to take advantage of of the system). It would be much better just to accept the reality as it is.

Coinprism

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #5 on: June 29, 2014, 08:58:05 pm »
I was lead to believe that you had to or at least could assign existing bitcoins a color. I know that individual bitcoins do not exist and their value and ownership is only a product of inputs and outputs so of course you could not color a specific coin. But I did think that you could assign a certain value or amount of uncolored coin that had to stay or travel with It's defined coloring.

This is still how it works, outputs are colored. There is however no relationship between the value of the output and the color amount.

Is coinprism's rendition of colored coins not true colored coins? Or is this a future feature of coinprism's beautiful adaptation of colored coins?

There is no "true colored coins". Colored coins is a general concept, of storing asset on a decentralized network such as Bitcoin. There is no colored coin Bible that dictates how it must work.

If I really did misunderstand one must admit that the colored coin video http://youtu.be/fmFjmvwPGKU and many of coinprism's UI statments such as "You are about to uncolor colored coins to recover their weight in Bitcoin." are obviously a little misleading.

Coinprism used to work differently during the early phases of the beta, with the asset quantity being calculated from the output value in Bitcoin. This has changed because it is impractical. If you want to issue a trillion coins, you need at least a trillion satoshis, which is a significant amount of money.

Coinprism

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #6 on: June 29, 2014, 09:02:18 pm »

Even if colored coins were able to work as you suggest, this would be a no-no. owners can't simply uncolor a coin because they want to. Only the issuer or trusted parties should have that ability. This goes for mistakes from the coin owner to prevent uncoloring something of value or for the issuer not to devalue its asset just because a part of it has vanished. However, this seems to be possible already by spending colored outputs through a color unaware wallet. IMHO this should be prevented, even if it requires changes to the bitcoin protocol handling.

Being able to uncolor coins is unfortunate, and like you are saying, could be prevented by changing the protocol, but unfortunately, this will not happen (as core developers have made it clear several times).

It's not really a big problem anyway: even if you couldn't uncolor coins, you could still blackhole them by sending them to an unspendable address. This has exactly the same effect.

Coinprism

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #7 on: June 29, 2014, 09:13:17 pm »
I have noticed that Open Assets is not a complete rendition of the white paper.

The whitepaper should not be taken as a Bible for how colored coin should be. It has been written by mostly one individual without the consensus of the community. It's not complete, and has many flaws, which open asset addresses. The author has since moved on to different projects and left the whitepaper unfinished and without any implementation.

It should be seen as an academic essay which describes the idea and concept of colored coins pretty well, but the technical details should be taken with a grain of salt.

For example the selected coloring techneqe in the official white paper is "tag based coloring" while the Open Assets protocol uses an seemingly obsolete "order based coloring".

Open assets uses a combination of order based coloring + metadata tagging, which is superior to tag based coloring.

The whitepaper was the starting point for open assets, it has many flaws that got fixed in open assets. For example, the fact that issuing a trillion colored coins will cost you at least 10,000 BTC. With open assets, it costs you only 600 satoshis.

Open assets also removed quite a bit of complexity from the whitepaper, which made it more cumbersome than necessary.

sharpTrick

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Re: Coloring coins not really Coloring an uncolored coin?
« Reply #8 on: June 30, 2014, 10:43:14 pm »
@Coinprism thank you for your reply. Your authoritative responses have indeed quenched my curiosities.