
Overstock.com Assembles Coders to Create a Bitcoin-Like Stock Market - PhantomPhreak
http://www.wired.com/2014/10/overstock-com-assembles-coders-build-bitcoin-like-stock-market/
======
alphonse23
This is sort of the idea I've been waiting to come out of the bitcoin universe
for some time now. A decentralized stock exchange seems like an obvious killer
application for bitcoin. Though, the only thing I don't like about it is
counterpart. Was never a fan of them, nor open transactions...

Why go to the SEC? I feel like the advantage of doing something like this
would be the ability to build a trading exchange without any authority over
looking it.. I'd say that's what's wrong with the current system
(NYSE,NASDAQ,etc).

~~~
slg
I am curious how someone can come away from the last decade of Wall Street
behavior and conclude the answer to the problem is less regulation.

~~~
awt
If there were a law that could prevent regulatory capture then I would say go
for it, more regulation.

~~~
chc
With or without regulatory capture, I can't see how the problem we face is too
much oversight on Wall Street.

~~~
lukifer
The counterargument is that regulation hurts small players more than large
ones. Citibank can afford an army of compliance officers; most of us can't.

I'm generally pro-regulation, if the details are sensible, but regulatory
capture is a real problem, and it is not an unreasonable stance that the cure
is sometimes worse than the disease.

~~~
chc
That isn't really a counterargument; it's just a factoid. A counterargument
would be something along the lines of "Regulation hurts small players more
than large ones, and the scarcity of small players has been the biggest
problem with Wall Street over the past decade because _____, therefore the
problem with Wall Street is too much oversight."

------
fnordfnordfnord
Given Patrick Byrne's history[1] with stocks, markets, regulators, etc. I am
not surprised to see him involved in this kind of project.

[1] [http://www.deepcapture.com/](http://www.deepcapture.com/)

------
bobjordan
This is great. Patrick Byrne is doing a great service here. Development of
crypto-security tools being pushed by an already successful publicly traded
company adds instant credibility to the project and will lead many more
successful business leaders to give it closer inspection, sooner.

------
ne0n
So what happens when somebody doesn't secure the private keys to their
Overstock shares well enough? A hacker steals your Overstock shares, and now
they own them? What happens if someone steals the shares from the CEO?
Obviously the hacker could never make use of those shares or else they would
get caught. In a system like this, it can't be truly decentralized, can it?

~~~
deweller
From a technical perspective, it can. See
[http://counterparty.io/](http://counterparty.io/) for a decentralized
exchange in action.

Do you mean you don't think people can be trusted to keep their own shares
safe? Securing a large value of cryptocurrency is challenging right now. But
if you don't trust yourself to do it, you can hire a third party that you do
trust to hold your shares for you.

~~~
ne0n
"Do you mean you don't think people can be trusted to keep their own shares
safe?" Well, to a degree, yeah. Most people don't know how to properly keep
them safe.

The main thing I'm trying to say is that it's potentially easier to steal
shares, and there is really no way of reversing it if it's decentralized. If
you know some shares are stolen, can you invalidate them, or reissue shares?
It's not really completely decentralized if you can. There is probably still a
central authority for creating and issuing shares, but they will allow you to
trade the shares in a peer-to-peer way.

~~~
ThomPete
Just thinking loosly here.

It my understanding that the decentralized part refers to the networked
validation.

I.e couldn't you imagine a setup where the network collectively invalidates a
set of shares and re-issue them back to the original owner. A kind of
distributed jury system.

Now the problem of course is that the jury could be wrong and I have no idea
about the actual implementation but it seems to me like a potential solution
in the future.

~~~
Kalium
Even if that's the case, how do you convince the network that the shares need
to be invalidated? How do you do that in a way that can't be faked?

That sounds a lot like another set of private keys to me. We already know
those are vulnerable to being stolen.

~~~
ThomPete
Because the protocol is transparent so you can trace what happened?

Ebay and Paypal solve 60million disputes a year using software.

[http://techcircle.vccircle.com/2011/02/08/ebay-paypal-
solve-...](http://techcircle.vccircle.com/2011/02/08/ebay-paypal-
solve-60m-online-disputes-a-year/)

I am not saying I know how to do this just saying that I don't think it's
going to be as hard as some might thing. But sure I could be wrong.

And keep in mind. No system is perfect. Neither is the crypto-protocol. But it
doesn't need to be. It just have to be good enough.

~~~
Kalium
Just because you can trace how shares/money moved doesn't mean you can
convince the rest of the network that the movement was improper.

This doesn't meet any sane definition of "good enough". It gives up a bunch of
protections for no real gains.

~~~
ThomPete
Perhaps perhaps not. It seems pretty early still to say anything with
certainty.

------
barnaby
A veritable explosion of innovation is coming our way. This decentralized
stock exchange is just a hint of what is to come. Technologies using bitcoin,
and technologies built on bitcoin, are the next thing that will change the
world. Don't get me wrong, I'm happy we're also democratizing taxi services,
but democratizing finance makes me so much more excited.

------
barisser
It's an exciting prospect to trade financial assets on a decentralized,
trustless network. Definitely the right direction.

But I'm not psyched about having to think about Counterparty's internal XCP
currency, even if it isn't used for most purposes. It's an annoying barrier to
have to transact in an altcoin to access certain functionality.

Other implementations use pure Bitcoin only, and are much less overwrought
with complexity than Counterparty:
[https://coins.assembly.com](https://coins.assembly.com)

~~~
PhantomPhreak
Quite generally, Counterparty functionality that requires the use of XCP
simply can't exist on platforms without their own currency. That's why it's
there.

~~~
jc123
Why didn't you join Overstock, why only Robby?

------
Cyther606
The issue I see is there's no avoiding putting your trust in the centralized
issuer. You can issue and trade inherently centralized assets on a global
ledger, but why? What is the advantage for the common man?

~~~
wmf
I guess the benefit is that you only have to trust the issuer one time. Once
the stock has been issued on the blockchain it cannot be manipulated. With a
centralized system you'd have to trust the issuer/exchange on an ongoing
basis. Whether this difference matters is kind of a philosophical litmus test
that divides the blockchain and non-blockchain (i.e.
Ripple/Stellar/OpenTransactions) camps.

------
NhanH
Can anyone knowledgeable (especially those that do not like bitcoin) weigh in
as to why this would be a bad idea ?

I'm asking this sincerely, and not being sarcasm, as I don't know enough about
either Bitcoin or stock market to make a judgement. And this seems ...
different enough that I'm not sure my reaction should be "damn the future is
here", or "what a bunch of craps".

~~~
frontline
stealth takeovers, stealth monopolies, the fact that its unregulatable and
illegal as fuck under US law

~~~
micah541
One easy solution is to force key holders to de-anonymize themselves if they
want to take any shareholder actions, such as voting. This wouldn't be an
issue for 99% of us - just because I own a few TSLA shares doesn't mean I'm
ever going to pound my fist on Elon Musk' desk and demand something - But if
someone does buy up a large portion of the corporation and tries to use it to
vote - they would have to declare "Hi, I am Carl Icahn, I own the following
private keys XYZ and I'm demanding that we liquidate our assets and build a
giant statue to the sky" or whatever. This prevents the Taliban or Chinese
hackers from seizing control of a US corporation.

------
Eliezer
Whether Overstock succeeds in this or not, it's coming and it will be huge; I
so predict.

~~~
eru
Interesting in puttings odds and money behind that?

------
danohuiginn
I'm nitpicking, but it's bizarre to see Karl Popper being described as an
"economist".

------
guiomie
With the current low price of bitcoins, wouldn't it be a good time to burn
bitcoins into XCP ?

~~~
eric_bullington
That opportunity was only available at the start of the Counterparty project.
The burn-in period ended a good 6 months ago, I believe.

------
izelnakri
check the overstock's original website, after few seconds it was evident that
I shouldn't be bothered reading the article.

~~~
nobleach
I'm confused by what that might mean.

~~~
seanflyon
I think izelnakri is saying that overstock.com is poorly made and concludes
that they will not be successful in this new project. (I disagree)

~~~
nobleach
Got it. Thanks.

------
PhantomPhreak
The title is misleading: the exchange will actually be built on top of Bitcoin
using Counterparty (counterparty.io).

~~~
IkmoIkmo
Indeed, the article does mention this later on.

