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Technical Question: Should the website hold LTBcoin balances for users?

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deweller

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Location: Nashville, TN

The ideal situation is that LTBcoin is only ever held in CounterParty.  No one wants to get Goxed.
But, as I started thinking through the implications of this, I realized that there are some real technical challenges to overcome.

Here are a couple that I thought of:
1) How do we handle the fees for weekly distributions?
Imagine distributing LTBcoin to 1,000 users every week?  How about 10,000? How about 50,000?  There are fees for each Counterparty transaction.  After implementing proof of tip and proof of comment, we could be paying fees on sending hundreds or thousands of small LTBcoin transactions every week.  

This is fundamentally a problem about micropayments.
Imagine a user who made one comment during the week.  Is it feasible to pay 5-10 cents in fees to send a couple LTBcoin to that user at the end of the week?

2) What about a user who comments but doesn't have a Counterparty address associated with their account yet?
Do they just lose their payment for the week?  Where does it go?

Posted on May 13, 2014 at 3:08 PM

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• deweller

  

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  Here is a possible answer to #1 (Funny how asking a question sometimes leads you to a possible answer):
  Perhaps automatic payouts are subject to a minimum.  So, if the weekly payout amount is less than 100 LTBcoin to a given address, then that payout is suspended and noted in an internal accounting system.
  All suspended payouts are lumped together and sent to an escrow address and the internal accounting system is updated.
  If at the end of any week, the sum for any suspended payout address becomes greater than 100, then it is included.
  

  Posted on May 13, 2014 at 3:30 PM
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• rotalumis

  

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  Regarding:
  
  1) if I remember correctly it was Adam who proposed having a minimum threshold for payouts during the hangout last Saturday, and also that if a user doesn't meet the threshold but wants their money anyway, they can send BTC to cover the transaction fee and the transaction goes through.
  
  2) People shouldn't lose their money just because they don't have an address associated with their account, but it should just accrue on the LTB system.
  
  It would be nice if each LTB account generated automatically had a hot wallet created and associated with it, but that's a bad idea from a security standpoint and with people likely to forget their passphrases to an account they didn't really create themselves.
  
  Storing small amounts of funds belonging to lots of users is an issue mining pools have to deal with, so maybe we could take a look at how they tackle it. I wonder if any in the community have experience with that.
  
  
  
  
  

  Posted on May 13, 2014 at 4:49 PM
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• deweller

  

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  Say I have 99 LTBcoin in my account (which is not enough to meet the threshold), but I want to be paid NOW!
  Perhaps we add a payout now option, but a 10 LTBc fee is charged.  That way, LTB recovers the fee in LTBc and the recipient doesn't have to send any BTC to the platform just to get paid.
  
  The user could verify that they own the recipient account by signing a message like "Please send me my 99 LTBcoin".  Counterwallet has the signing function built in.
  
  

  Posted on May 13, 2014 at 6:03 PM
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• deweller

  

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  Here's a crazy idea... 
  What if all distributions were subject to a fixed fee?  And users could decide whether to have funds automatically distributed (and pay the 10 LTBc fee) or held in their account for a later time and distributed manually.
  This way the platform is not responsible for covering all the Counterparty fees.
  What do you think?

  Posted on May 13, 2014 at 6:10 PM
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• rotalumis

  

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  deweller said: Say I have 99 LTBcoin in my account (which is not enough to meet the threshold), but I want to be paid NOW!
  Perhaps we add a payout now option, but a 10 LTBc fee is charged.  That way, LTB recovers the fee in LTBc and the recipient doesn't have to send any BTC to the platform just to get paid.
  
  The user could verify that they own the recipient account by signing a message like "Please send me my 99 LTBcoin".  Counterwallet has the signing function built in.
  
  

  I think that will definitely be feasible at a certain point once LTBCOIN actually has value and the platform can buy BTC for LTBCOIN on the free market, if necessary, to cover those costs. However, until then we need to make sure we don't end up in a situation where transaction fees are a huge drain on the network's BTC resources.
  
  The idea in your second comment could work, though again only once it is possible to figure out how much LTBCOIN to deduct to cover the fee. Users would be able to choose the threshold (within reasonable limits) at which their coins will be sent, to get more-frequent payments or save on fees.
  
  Still, I think we should identify some value above which the network would cover the fee and automatically send the funds, both as a courtesy to its users who have provided a certain amount of value, and also to prevent people hoarding too many coins on the LTB system.
  
  EDIT: Bitcoin has a "sendmany" command that lets you combine several recipients into a single transaction to save on fees, which will be more than a for a single transaction, but less than for individual transactions. The fees actually depend on the data size of the resulting big transaction. I've asked Xnova if it will be possible to do something like that with Counterparty at some point in the future. It would be another solution.
  

  Posted on May 13, 2014 at 6:37 PM
  Last Edited: May 13, 2014 at 6:48 PM
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• mmanvil74

  

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  My only thought was that we run it similar to the way Bitcoin exchanges like Cryptsy run.  The transactions are virtual until you make a deposit or withdrawal. A hot wallet could cover day-to-day withdrawals but most people might be comfortable just leaving their coins in their virtual account.  In this scenario, it would be easy to move coins around the system, send/receive from one user to the next, just like it is easy on Cryptsy to move coins around. 
  I don't know how easy or difficult that would be to secure relative to these other suggestions (I am no dev so rather clueless on what is easy or hard to build).  I doubt Adam wants to run a cryptsy like exchange but there might be a simpler version that suits our limited needs.  I think easy and convenient for both the users and admin has to be the priority.

  Posted on May 13, 2014 at 6:43 PM
  Last Edited: May 13, 2014 at 6:44 PM
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• deweller

  

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  I like the idea of a minimum and maximum payout thresholds.  In other words, once my account reaches the maximum (say 10,000 LTBc) threshold, then the coin is flushed out to Counterparty automatically with no fees.
  The transaction fee could be adjustable in the platform admin.  That way the platform can make sure to recoup its costs depending on the current market value of LTBc.
  
  
  

  Posted on May 13, 2014 at 6:43 PM
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• deweller

  

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  One more factor to consider is the cost to the user.
  If LTBc is held on-chain in the user's Counterparty wallet, then each tip action is going to cost 0.000386 BTC.  That is about 10-15 cents.
  Will $0.15 cents per tip negatively affect the tipping culture of LTBcoin?  I think it very well might.
  

  Posted on May 13, 2014 at 7:32 PM
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• rotalumis

  

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  It would in the same measure it affects any Bitcoin tips now.
  
  Regular users would probably want to keep some petty LTBCOIN in their "off blockchain" LTB account. With that in mind, it would make sense to have a withdrawal setting that can be ticked so it never completely drains your LTB account out to Counterparty, but leaves a specified amount of LTBCOIN on LTB for these purposes.
  
  We still need to be careful with how much funds we allow people to store on the LTB system and evaluate the risks of doing that, though.
  

  Posted on May 13, 2014 at 7:49 PM
  Last Edited: May 13, 2014 at 7:50 PM
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• deweller

  

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  So it sounds like a hybrid system, wherein:Users can choose to leave a small reserve of LTBcoin in their account for tipping and possibly other use in the network
  Users can tip off-chain directly from their account without using Counterparty (to save fees)We will discourage (or perhaps enforce) users from leaving significant amount of LTBcoin in their account.Does that sum it up?
  

  Posted on May 13, 2014 at 8:02 PM
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