A simple, blockchain agnostic protocol which enables peers to issue and transact with assets.
PeerAssets protocol based assets can be utilized to represent any type of asset like bonds or equity. PeerAssets can also represent real life objects, and by doing so confirm their existence on the blockchain. PeerAssets is a light protocol, as it utilizes no extra layers over the underlying blockchain. It does not require external value tokens beside the blockchain's native currency, which is used to pay transaction fees. PeerAssets does not participate in organizing nor maintaining of the public ledger, but takes advantage of its stability and trustworthiness. PeerAssets can work on top of every cryptocurrency that is forked from Bitcoin and has kept a compatible codebase, which includes Peercoin, Litecoin and alike.
The PeerAssets protocol uses the blockchain to distribute messages and store them permanently. PeerAsset messages are written as metadata attached to transactions, which inseparably tie them to: sending address, transaction ID and block height. Issuing an asset is equal to writing a properly formatted message, then signing it with your unique signature and sticking it on the public bulletin board. After doing that, the entire network will know that you have issued this new asset, which can represent some real object or company stock. The transaction ID of the transaction that posted this message to the blockchain is now considered an asset ID. When you want to send a specific quantity of an asset to another peer, you just write another message stating that you (the issuer) transfer some quantity of the asset to a new owner and sign the message with your unique signature. Now everyone interested can see that you have given up control of said amount of the asset and transferred it to another peer. You can no longer claim that you have the full issued quantity of the asset under your control as everyone who has seen the message would know that you are lying. Instead of sending tokens of value which also represent assets, PeerAssets work by referencing the recieving addresses/peers in the messages posted publicly. PeerAssets security model works the same as card counting in casino card games.9 If you know the size and type of the card deck and you have those two queens in your hand, you are sure that the other guy is lying if he claims that he has three. Each time an asset is created, a new deck (of cards) is spawned and every transaction of a card (asset) is visible to all interested parties, so everyone can keep count of the cards in the deck.
PeerAsset protocol is based on four simple rules:
- Math is simple, 2+2 will always equal four (card counting).
- If it is wrong, ignore it (ignore bogus messages).
- Nature of the blockchain allows proof-of-timeline security model.
- "First come first served", protocol will always favor older message.
Terminology of PeerAssets
I have found this analogy with a deck of cards the easiest way to describe the protocol, so it is used throughout the paper to explain the internals of the protocol as well as the transaction types.
Deck spawning – A transaction which creates a deck.
Deck – A declarative message which describes the nature of the asset, and its quantity; contains cards.
Card – A quantifiable piece of the deck which effectively behaves like a single asset.
Card transfer – A transaction which transfers the ownership of a card to another owner.
Bogus transfer - A card transfer that does not have a legit timeline.