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why_markets.md

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WARNING

this is an old expired version of the documentation.

Please use the new documentation instead.

Here is the main page for the new documentation: https://github.com/zack-bitcoin/amoveo-docs

And here is the link for the newest version of the page you are currently looking at

cryptoeconomic explanation for why we need markets for all smart contracts.

  1. Cryptography tells us it is impossible for the owners of a channel to prove to anyone else the current or past state of their channel. This means it is impossible for anyone to prove how much they paid for a smart contract.

  2. Economics tells us that markets are innefficient if only pairs of people make contracts at a secret price, because it is harder to measure the market price of anything. It is better to have one big market with lots of traders, that way we can measure the price accurately and the average person gets a better deal on their contract.

(1) + (2) means that many channels will be connected together into markets. Any smart contract which isn't built as a market will be less profitable for the participants in comparison to a smart contract that is built as a market. Even contracts to play the game blackjack could be offered as a market, that way dealers and players are matched at a fair market price.