mjosephs



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SegregatedWitness-AllodialWitness exchange, implications for fungibility January 01, 2016, 06:10:38 AM #1 Hello folks, and happy new year.



If the Segregated Witness ("SegWit") softfork receives miner approval, I plan to launch an simple exchange where people can trade allodially witnessed coins (i.e. coins whose entire transaction history, back to the coinbase that mined them, is witnessed entirely in-chain) and SegWit coins (i.e. coins with at least one transaction not entirely witnessed in-chain).



My goal is to enable price discovery: how many SegWit coins will people pay to get an allodially witnessed coin?



A coin with entirely alloidially-witnessed lineage has a property that SegWit coins don't: its entire constructive proof is inseparably embedded in the ownership proof of every coin transmitted in any subsequent block [1]. The proponents of SegWit clearly believe that this property has zero value. I can't say I necessarily disagree with them.



But I have no doubt that there are people out there who do disagree -- people who assign some amount of value to this property. [2]



The most natural way to measure the market's value of this property is to offer an exchange, and see where the bid/ask spread winds up. Kinda like the curious "goxcoin" market that existed for about a month or so between withdrawals being frozen and Gox's total collapse. I found the information in the prices discovered on that exchange to be quite fascinating and useful information.



- mj



[1] Although Merkle-tree pruning is a useful local storage optimization it does not change this, since pruned Merkle trees aren't useful as proof to an untrusting counterparty that must do full validation rather than just SPV -- like, for example, an exchange. Without the full tree they can't know that you haven't pruned away the first half of a double-spend attack against them.



[2] These people can refuse to allow their allodially-witnessed coins to become segregated by refusing to sign the new witness program transactions. Certainly this will mean they must pay higher transaction fees, and might be ignored by some miners resulting in long transaction times.