Thanks for the feedback Mark.
> (1) there is absolutely no reason to include asset tagging information if it is not validated
Sure, there is a good reason to include it in the blockchain: so that clients don't need external information to recognize colored coins. Also, I'm not sure what you mean by "not validated", in that proposal, the tagged transaction is the authoritative source of information.
> that just bloats the block chain
9 bytes is much less than what Mastercoin and counterparty are doing (certainly under the 40 bytes allowed).
> Have you seen the padded order-based coloring scheme worked out here?
Yes I have seen it and find the padding quite clumsy and unintuitive. A more general solution is the one I described in my original post, where the color value is entirely separate from the satoshi value, and encoded separately: if you have to have an additional "padding" value to calculate color_value = satoshi_value - padding, you might as well have color_value directly, independently from satoshi_value. But I don't even think it is necessary:
> (2) And needing a capital of 54 btc for a million shares is totally unacceptable.
An easy workaround is to have various scales, the same way you have $1 bills, $5 bills an $10 bills. I don't see that as a big problem. That way the protocol is more lightweight and simple.
Also those 54 BTC (actually 5.4 BTC if the dust is now 540 satoshis) become part of the capital of the company, and can always be recovered by uncoloring the shares. It's an investment, not an expense, so I think it is acceptable.
Best,
Flavien