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Merge pull request #6 from DZGoldman/master
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Fix typos
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snario authored Oct 24, 2018
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4 changes: 2 additions & 2 deletions README.md
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Counterfactual implements a general purpose protocol for using state channels, an important technique for reducing fees for blockchain users. Within their scope of applicability, they allow users to transact with each other without paying blockchain transaction fees and with instant finality, and are the only technique that securely realises the latter property.

With this approach, participants begin by depositing blockchain state into the possession of an n-of-n multisignature wallet. Then, they proceed to exchange cryptographically signed messages through an arbitrary communication channel. These messages are either pre-signed transactions to distribute the blockchain state or state updates relevant relevant to those commitments that change the distribution. The protocol that defines what kinds of messages are exchanged to ensure secure off-chain state updates is described in depth in the [protocol](/v0/protocols.md) section.
With this approach, participants begin by depositing blockchain state into the possession of an n-of-n multisignature wallet. Then, they proceed to exchange cryptographically signed messages through an arbitrary communication channel. These messages are either pre-signed transactions to distribute the blockchain state or state updates relevant to those commitments that change the distribution. The protocol that defines what kinds of messages are exchanged to ensure secure off-chain state updates is described in depth in the [protocol](/v0/protocols.md) section.

Through a challenge-response mechanism, on-chain contracts implement a method for participants to ensure the latest signed valid state update that pertains to their commitment can be submitted to the blockchain to guarantee fair adjudication of the state.

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## Limitations

1. **Conflict-free data structures.** Since state updates happen off-chain in state channels, there is a need to replicate the ordering property of a blockchain through a conflict-free data structure. In Counterfactual, we currently support turn-based state machines where the participant authorized to take their take (an action) is defined as a function of the state of an `App`.
1. **Conflict-free data structures.** Since state updates happen off-chain in state channels, there is a need to replicate the ordering property of a blockchain through a conflict-free data structure. In Counterfactual, we currently support turn-based state machines where the participant authorized to take their turn (an action) is defined as a function of the state of an `App`.

2. **Public auditability.** State channel applications cannot declare the state within the application to the public in a way that can be considered by the public as the latest state. For example, there is no equivalent to Etherscan for off-chain state since it is always possible for the participants of a state channel to falsify their claims.

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2 changes: 1 addition & 1 deletion v0/protocols.md
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Assume the multisig owns 20 ETH and that the Free Balance has recorded a balance of 10 ETH for both for Alice and Bob.

Running the install protocol to play a game of Tic-Tac-Toe where Alice and Bob both bet 1 ETH transitions the counterfactual state to
Running the install protocol allows them to play a game of Tic-Tac-Toe where Alice and Bob both bet 1 ETH transitions the counterfactual state to

![install](./img/install.png)

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