Creation of BSQ

Hi all

AFAIK a BSW token is essentially a colored bitcoin, i.e. a bitcoin with certain metadata. I was wondering how the coloring is authenticated to prevent forged BSQs from circulating. Who/what holds the private key?

There is no “central private key” to BSQ, rather there is consensus among DAO seed nodes (run by trusted contributors who lock a bond, and in case of malicious intents would have to lose, other than the bond itself, also from “overprinting” BSQ, if that was possible, since that would inflate their stack), which in turn keep track of all the minted and circulating BSQ utxos

How do the seed nodes keep track of the genuine BSQs in circulation?

the same way bitcoin nodes do this for btc utxos. Do not forget BSQ is really btc onchain, there are verifiable minting transactions, after which every other follow up derives from those mints.

Sure, but how do the seed nodes distinguish between genuine and forged BSQs? How is the colouring authenticated?

Good question. I think the wiki page provides a bit of an overview:

https://bisq.wiki/DAO_technical_overview

You might need to dig into the code a little for a complete understanding.

The way I understand it is that every Bisq client has a BSQ node that authenticates the BSQ if the rules of the Bisq client have been followed. If the rules have not been followed then the BSQ would be invalid.

If one where to change the rules on their own client then they may fool their client into thinking then fake BSQ was real BSQ but then when trying to use that BSQ it would fail as other clients would not recognize their BSQ as valid.

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