Every single satoshi gets its own serial number

So, bitcoin is meant to be interchangeable, but you can actually give a unique serial number to every single satoshi. With that serial number, a satoshi can be worth more than just its basic value, like in cases of colored bitcoin or smart property. The serial number has two parts: the whole number is the block number where that satoshi was created, and the decimal part shows each distinct satoshi. For example, if we look at block 110000: http://blockexplorer.com/tx/4e10436ca8206a2dd760dd351210a5120a3824d4eb53011be0a7b9a33b368208 In this case, 50BTC were generated, which equals 5000000000 satoshis. So, the serial numbers for these satoshis would range from #110000.0000000001 to #110000.5000000000. The trailing zeros are kept for future use. Now, let's talk about the RULE OF INHERITANCE: when a transaction happens, the input is broken down into satoshis, each with its own unique serial number. The output then mirrors this sequence based on its own order. If there's a transaction fee (meaning input is greater than output), that fee is treated as the last output. For coinbase transactions, the fee gets sorted after the standard block reward, following the order of transactions in the block. Taking the previous example, if the 50BTC gets fully sent to a different address: http://blockexplorer.com/tx/3abed8a3aa728e881a9ef85062fe11b79b490c885295c3c55fc6a534199a5dc5#i398943 Then, the address 12WFtKBsRLtV8p1NwRqe7YwYdi1rjwTZhA now inherits satoshis #110000.0000000001 through #110000.5000000000. Next, say the 50BTC gets split into two outputs: one for 5.2BTC and another for 44.8BTC: http://blockexplorer.com/

Interesting approach, but there are some issues with this.  Since the supply of satoshis is limited, this means that penny stocks aren't practical, since the coins that record their ownership will become worth more than the stocks themselves.  Etc, etc.

Old ideas -- Search for "colored coins" and "smart property".

Another one claiming for "tainted Satoshis". We need urgently a coin melting mining pool in order to get protected for this kind of "visionaries".

lol then all of a sudden precision increases by one!

When people trade "penny stocks", they will also consider the face value of the colored coin. For example, if someones wants to buy 1 colored BTC with 0.1 BTC, he has to pay 1.1 BTC to the seller. If 1 satoshi stock worths less than 1 satoshi, it either means the stock is worthless (people may trade in bigger unit, e.g. 10000 satoshi), or 1 satoshi worths too much (we need a hard fork to add more zero after decimal place)

You always have the freedom to setup a coin melting mining pool, and I encourage you to do so. However, joining your pool is voluntary. Unless there is a protocol change, my proposal will still work.

There is no reason for someone who owns a coloured satoshi to melt it down. That only ensures the satoshi is sent to someone who does not recognize its value.

As I understand, this is largely compatible with order-based coin coloring, i.e. as long as transactions adhere to order-based coloring rules this proposal and order-based coloring will produce identical results. The only practical advantage I see is that it's possible to pay fees with colored coins, i.e. miner can take advantage of coins' color. However we I'm not convinced that we need this more complex system just to handle fees, since there are some ways to use colored coins for fees with order-based coloring.

I've been looking for a place to put this http://www.foopics.com/show/ebf4989def30ec9ef246ffe2c11359fa

It's more like "taint all the money!"

Because a technology can be used negatively, does not mean it is unacceptable. Colouring satoshis has many practical and useful aspects. The benefits outweigh the negatives.

Given an algorithm like this, one could effectively say that every satoshi is already numbered, it's just that nobody has yet bothered to calculate it.  That wouldn't change it. If I were going to number each satoshi, I probably wouldn't bother to number them with the block.  I'd just number them from 0, and consider the genesis block to be satoshis 0 thru 4999999999 (despite them technically being unspendable).  The proceeds of block 1 would be 5000000000 (5e9) thru 9999999999(1e10-1). The last satoshi of the block with 50 BTC reward would be 1049999999999999 (50*210000*1e8-1). Block 210000 would be 1050000000000000 - 1050002499999999, spanning a total of 25*1e8 satoshis.

Good. We may transform it to Base-58 format, which will take 9 characters. We may also add 3 characters as checksum

There is one more advantage: the color information won't lose if coins with different color are mixed.

Why do you think it's a good thing? If we don't want them to be mixed, they can be mixed only accidentally. So, if accident happens, with order-based coloring you get uncolored output, so information is destroyed. Now if they represented something valuable, issuer can issue a new token and give it to last holder after he learns about an accident. So accident is resolved by issuer. With your scheme, some random party might get ownership of valuable coins in case of accident. Yes, they won't be destroyed, but is lottery really a way to resolve this?

Then you should add this rule explicitly to your scheme: if a coin is decolorized, the last holder retains the value of the colored coin. The issuer may issue a new token to the last holder on request (service charge may apply).

Good point. But I work mostly on "low-level" stuff, I'll forward this consideration to people who work on app level.

I think my scheme provide (much) higher anonymity. Imagine a secret society use this system for some secret trading etc., they can embed some colored satoshis in a normal size transaction, and it will just look like an ordinary transaction. With some tailor made algorithm, they may even "swap" the color of two satoshis. You system has more strict requirements. The dust inputs and outputs with special order could be spotted out easily from the blockchain.

No -- losing color by accident (or intentional design) just means the property is lost.  Just like you can "burn money" today by throwing away a private key, or sending bitcoins to a non-existent key, or any number of other ways.