From mboxrd@z Thu Jan 1 00:00:00 1970 Received: from sog-mx-2.v43.ch3.sourceforge.com ([172.29.43.192] helo=mx.sourceforge.net) by sfs-ml-4.v29.ch3.sourceforge.com with esmtp (Exim 4.76) (envelope-from ) id 1USOWs-0002SO-Do for bitcoin-development@lists.sourceforge.net; Wed, 17 Apr 2013 09:19:50 +0000 Received-SPF: pass (sog-mx-2.v43.ch3.sourceforge.com: domain of gmail.com designates 209.85.219.51 as permitted sender) client-ip=209.85.219.51; envelope-from=mh.in.england@gmail.com; helo=mail-oa0-f51.google.com; Received: from mail-oa0-f51.google.com ([209.85.219.51]) by sog-mx-2.v43.ch3.sourceforge.com with esmtps (TLSv1:RC4-SHA:128) (Exim 4.76) id 1USOWr-0003cP-8j for bitcoin-development@lists.sourceforge.net; Wed, 17 Apr 2013 09:19:50 +0000 Received: by mail-oa0-f51.google.com with SMTP id k14so1359644oag.24 for ; Wed, 17 Apr 2013 02:19:43 -0700 (PDT) MIME-Version: 1.0 X-Received: by 10.182.226.136 with SMTP id rs8mr2196422obc.50.1366190383823; Wed, 17 Apr 2013 02:19:43 -0700 (PDT) Sender: mh.in.england@gmail.com Received: by 10.76.167.169 with HTTP; Wed, 17 Apr 2013 02:19:43 -0700 (PDT) In-Reply-To: References: Date: Wed, 17 Apr 2013 11:19:43 +0200 X-Google-Sender-Auth: ovaUur7sRF4jRJ5SI37WBvIqziU Message-ID: From: Mike Hearn To: Kyle Schlansker Content-Type: multipart/alternative; boundary=001a11c3018a8602c304da8afc81 X-Spam-Score: -0.5 (/) X-Spam-Report: Spam Filtering performed by mx.sourceforge.net. See http://spamassassin.org/tag/ for more details. -1.5 SPF_CHECK_PASS SPF reports sender host as permitted sender for sender-domain 0.0 FREEMAIL_FROM Sender email is commonly abused enduser mail provider (mh.in.england[at]gmail.com) -0.0 SPF_PASS SPF: sender matches SPF record 1.0 HTML_MESSAGE BODY: HTML included in message 0.1 DKIM_SIGNED Message has a DKIM or DK signature, not necessarily valid -0.1 DKIM_VALID Message has at least one valid DKIM or DK signature X-Headers-End: 1USOWr-0003cP-8j Cc: Bitcoin Dev Subject: Re: [Bitcoin-development] Anti DoS for tx replacement X-BeenThere: bitcoin-development@lists.sourceforge.net X-Mailman-Version: 2.1.9 Precedence: list List-Id: List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Wed, 17 Apr 2013 09:19:50 -0000 --001a11c3018a8602c304da8afc81 Content-Type: text/plain; charset=UTF-8 > Or are you talking about some sort of new decentralized high frequency > trading system that is self-matching and self-clearing? (I'd be very > interested in hearing more if this is the case). > I'm using the term "high frequency trading" because Satoshi did. Like the way he used the word "contract" it is perhaps a bit misleading, but we lack anything better to describe this new concept. Today HFT typically means companies that submits tons of micro-trades to centralised asset exchanges to try and exploit statistically expected correlations. HFT using tx replacement has nothing to do this with - it is instead a way that N parties can negotiate amongst themselves as fast as they can compute and verify signatures. Here is how Satoshi explained it to me, in his words: An unrecorded open transaction can keep being replaced until nLockTime. It may contain payments by multiple parties. Each input owner signs their input. For a new version to be written, each must sign a higher sequence number (see IsNewerThan). By signing, an input owner says "I agree to put my money in, if everyone puts their money in and the outputs are this." There are other options in SignatureHash such as SIGHASH_SINGLE which means "I agree, as long as this one output (i.e. mine) is what I want, I don't care what you do with the other outputs.". If that's written with a high nSequenceNumber, the party can bow out of the negotiation except for that one stipulation, or sign SIGHASH_NONE and bow out completely. The parties could create a pre-agreed default option by creating a higher nSequenceNumber tx using OP_CHECKMULTISIG that requires a subset of parties to sign to complete the signature. The parties hold this tx in reserve and if need be, pass it around until it has enough signatures. One use of nLockTime is high frequency trades between a set of parties. They can keep updating a tx by unanimous agreement. The party giving money would be the first to sign the next version. If one party stops agreeing to changes, then the last state will be recorded at nLockTime. If desired, a default transaction can be prepared after each version so n-1 parties can push an unresponsive party out. Intermediate transactions do not need to be broadcast. Only the final outcome gets recorded by the network. Just before nLockTime, the parties and a few witness nodes broadcast the highest sequence tx they saw. --001a11c3018a8602c304da8afc81 Content-Type: text/html; charset=UTF-8 Content-Transfer-Encoding: quoted-printable

=
Or are you talking about some sort of new decentralized high frequency
trading system that is self-matching and self-clearing? (I'd be very interested in hearing more if this is the case).

<= /div>
I'm using the term "high frequency trading" b= ecause Satoshi did. Like the way he used the word "contract" it i= s perhaps a bit misleading, but we lack anything better to describe this ne= w concept.

Today HFT typically means companies that su= bmits tons of micro-trades to centralised asset exchanges to try and exploi= t statistically expected correlations. HFT using tx replacement has nothing= to do this with - it is instead a way that N parties can negotiate amongst= themselves as fast as they can compute and verify signatures.

Here is how Satoshi explained it to me, in = his words:

An unrecorded open transaction can keep being = replaced until nLockTime. =C2=A0It may contain payments by multiple parties= . =C2=A0Each input owner signs their input. =C2=A0For a new version to be w= ritten, each must sign a higher sequence number (see IsNewerThan). =C2=A0By= signing, an input owner says "I agree to put my money in, if everyone= puts their money in and the outputs are this." =C2=A0There are other = options in SignatureHash such as SIGHASH_SINGLE which means "I agree, = as long as this one output (i.e. mine) is what I want, I don't care wha= t you do with the other outputs.". =C2=A0If that's written with a = high nSequenceNumber, the party can bow out of the negotiation except for t= hat one stipulation, or sign SIGHASH_NONE and bow out completely.

The = parties could create a pre-agreed default option by creating a higher nSequ= enceNumber tx using OP_CHECKMULTISIG that requires a subset of parties to s= ign to complete the signature. =C2=A0The parties hold this tx in reserve an= d if need be, pass it around until it has enough signatures.

One = use of nLockTime is high frequency trades between a set of parties. =C2=A0T= hey can keep updating a tx by unanimous agreement. =C2=A0The party giving m= oney would be the first to sign the next version. =C2=A0If one party stops = agreeing to changes, then the last state will be recorded at nLockTime. =C2= =A0If desired, a default transaction can be prepared after each version so = n-1 parties can push an unresponsive party out. =C2=A0Intermediate transact= ions do not need to be broadcast. =C2=A0Only the final outcome gets recorde= d by the network. =C2=A0Just before nLockTime, the parties and a few witnes= s nodes broadcast the highest sequence tx they saw.
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