Subject: Re: [Bitcoin-development] Decentralized digital asset exchange with honest pricing and market depth

From: Dan Carter <[email-masked]>
Date: Wed, 12 Feb 2014 08:34:48 -0800

I'm not sure how well this would work.

Sure it would provide honest historical pricing, but those who wait for 
publication confirmation may be at a disadvantage -- to get the best 
deal possible Bob would connect to as many nodes as he could, examine 
the stream of unconfirmed asks coming in and sign the best ones before 
someone else does.  The network would gravitate towards an O(n^2) fully 
connected network, because being fully connected means one is fully 
aware of all unconfirmed asks at any moment so one can make the best 
judgement and buy before someone else does.

The seller needs a guarantee that all bidders can act on the ask 
transaction simultaneously. Maybe the partial ask transaction could be 
time-locked with a network propagation delay, there would be multiple 
bidder responses and the winner is chosen by lottery (and fee priority) 
by the bitcoin/alt-coin miner who confirms the atomic transaction in 
their block.  That would eliminate the advantage to being fully 
connected as it would no longer matter that one can act first, so you 
have a more sane network.

On 2014-02-09 10:04 AM, Peter Todd wrote:
> Proof-of-publication(2) offers a solution. Alice can embed her
> incomplete transaction as data in a second, valid, transaction. She
> broadcasts this secondary transaction to some agreed upon blockchain,
> either the one the colored coin is in, or potentially a secondary system
> with suitable proof-of-publication security. Bidders such as Bob can now
> scan the blockchain for offers with an acceptable price. (the offers can
> make use of techniques like prefix filters to allow Bob to only scan
> part of the blockchain, although Bob needs to know the status of all
> assets of the type he is interested in anyway)