Bitcoin Forum

It already happened!

http://www.coindesk.com/blockstream-commercial-sidechain-bitcoin-exchanges/ (http://www.coindesk.com/blockstream-commercial-sidechain-bitcoin-exchanges/)

Blockstream really needed to prevent BigBlocks - and successfully did.  Now, there is greater need for their offering: side chains.  Side chains which they control, and they charge fees to use. 

This is just the start.  There will be many, many more features of 'advanced systems' pushed out of the core, pushed away from 'free', and controlled by profiteers. 

Why did everyone listen to Blockstream when they so vigorously fought 8MB?  now everyone gets to pay them fees!!!  With 8MB blocks, no extra fees!

Bitcoin is fucked now.

so does bitcoin price go up or down :P

No, it's not. Proposing to a woman to step in your car doesn't mean you fucked her already.


But seriously why the sidechain is a bad thing for BTC? If it is convinient you can use it, if not you ignore it thats all.

Bitcoin is a strong creature and it can't be fucked without consent.

Blockstream can do whatever they want. At the end of the day, it is the users who make the decision. Bitcoin is free for anyone to use and "sidechain" can't change this by charging a fee.

I will not pay them fees.

Your conjecture is flimsy at best.

Not true.  Blockstream and their core devs have put an artificial constraint on bitcoin 1MB blocks for the purpose of increasing the need for sidechains.  If 8MB blocks were used, there would be far less use of sidechains.  These core devs working on Blockstream have a conflicting interest.  Yet, the were able to shut Gavin and Mike Hearn down. 

Not saying you are right or wrong, but what this sidechain seems to offer is speed (like off-chain transactions) - so I don't see how the blocksize really affects this, on-chain you still have to wait ~10 mins (plus X confirmations, so probably 1 hour).

I don't understand how sidechains work, or how any fee system for them works, or if sidechains have been developed yet. Can someone post a really simple explanation of what they are?

There must be many other newbies like me who don't even know what a sidechain is, so we don't understand the fierce technical arguments for and against. If using sidechains involves paying a centralized service then they sound crappy.

Bitcoin is bigger than these groups but as with any good idea it is going to try by infiltrated by greedy bastards trying to steer it the way they want it for their own financial needs. This is why I have always been against the foundation and it was quite clear anyone with money could buy their way in which is always a bad thing.

IMHO what those type of things are doing  is to break the free original spirit of the bitcoin, where everything was doing "in other ways", so yes, after i read your comment i start to understand whats his real intentions, even if this can help to bitcoin in some ways.

Exactly this! No need to overreact in this way OP. Hearn and Anderson have proposed the XT and that all the XT ever did, got proposed. Many people will propose many different things, what community decides and uses is important.

Also, big blocks debate isn't finished yet.

Yes, Blockstream is working hard to push users away from the permisionless bitcoin blockchain to their private permissioned sidechains to make a profit.

Things are getting ugly.

This is how side chains work:

Let's say you and Fred are playing poker.  After every hand, you and Fred go down to the bank.  The loser of the hand, withdraws $100, and the winner of the hand deposits $100.  Pretty soon, you guys get tired of this shit.  So, you decide to just write the results of each hand down on a piece of paper that you keep on the 'side' (get it? 'side chain').  At the end of the night when you are all done with every hand, then you go to the bank to settle up.  Just one transaction - accounts for all the hands played.  

In Bitcoin, it is sometimes possible to 'play hundreds of hands of poker' - but just do one transaction at the end to finalize the action.

That is what side chains are all about.  They keep track of a shitload of transactions - but only settle on the main blockchain occasionally.

This would be totally fine and understandable, except...

They interfered with the 8MB debate.  AND, they used dirty tricks too.  They used censorship.  They used DDOS. They SLAMMED Gavin. 

Everyone has the right to build useful added services.  However, Blockstream had a huge personal interest to crush 8MB - and they did.  This was probably against the overall good of Bitcoin. 

Are you the newest paid retard sponsored to spread lies and misinformation here?

You need to update your talking points.

FTFY

Yes, ignorants are usually scared of what they don't understand

Would you rather prefer that exchanges remain dependent on centralized databases, which they currently use in order to move their clients coins?

I'm all ears: show me the "known and documented facts" for Blockstream "using dirty tricks", censorship, DDOS.

We perfectly understand that this first sidechain requires permission to use it. Thanks.

You do realize that this is a commercial service, that these exchanges are free to use or not, at will, right?

Yes and I also do understand that most Core devs are being on the Blockstream pay roll and are not interested to make the bitcoin permissionless blockchain scalable so their company can make a profit. Thanks.

You're really asking too much from him...

Quite the opposite, they have to create viable commercial products in order to generate revenues so that they can continue to get paid for the numerous innovations and scaling progress they bring tot the Bitcoin ecosystem.

So what is your solution?  You don't trust devs that are free to develop whatever they want, so what should be done?  Should we give Bitcoin development to some theoretically uncorruptible government of your choice, who will always do the right thing (in your opinion)?  Or should we just wait and let nature take its course, and see what happens?

I don't know what should be done but what I know is that if Core devs successfully impede on scaling the bitcoin blockchain for their own profits then one can conclude that bitcoin has been hijacked and is under control of a private company so the whole experiment is a failure.   

If it is possible for Bitcoin to be hijacked in the way you describe, then it deserves to die.

Personally, I think the imminent death of Bitcoin is being exaggerated a bit these days.

Maybe but things are already heading the way I am describing it though so its not looking good...

Ultimately I think the bitcoin blockchain will find a way to scale even if Core/Blockstream are trying hard to avoid that but this is yet to be seen. 

No shit.  Totally known and well documented.  Theymos is fully bullshit when it comes to censorship of things he doesn't agree with.  Blockstream is 100% out of business if 8MB comes.  Those guys only block BIP101 to cause a greater need for their for-fee permissioned side chain.  Fact.  Don't believe me?  Look it up on Factum.

I know the facts, you retard, and 8MB only favors Blockstream's business plan.

You are absolutely clueless, please abandon your own thread before you cause even more damage to your reputation.

I agree with you.  I also believe that Bitcoin will evolve as necessary.

I'm not as sure as you that Blockstream (and the Bitcoin devs that work for them) are acting in a purely self-serving manner here.

It seems to me that it is entirely possible that the Blockstream way of scaling Bitcoin may be a perfectly legitimate way to address the problem without sacrificing decentralization - which in my opinion, is an even more important consideration than scaling.

It seems wrong to me to presume that Blockstream is acting in a self-serving manner just because the possibility of conflict of interest exists.  We should at least give them some benefit of the doubt.  I think a good argument can be made that their solution is the best solution proposed, in that it addresses scalability AND preserves decentralization of the main Bitcoin network.  But I understand that some people disagree, and I am happy to just wait and see what happens as nature takes its course.

You may be right, and this may be the end.  But I remain optimistic for now.

Hell... this can't be happening. It seems we will have a new struggle in our hands. If this so happens it can be the beginning of Bitcoin's demise.

Blockstream has investors - $21 million.  Blockchain wants to charge fees and centralize their private chains.  Investors want returns.  The core devs associated with Blockstream are full of bullshit when they say there is no conflict.  8MB is a great idea for everyone - except those involved with Blockstream because their project won't make money if we go to 8MB.


This guy is just an idiot who says 8MB favors BS.  That is full bullshit.  Blockstream is totally dead and unneeded if bitcoin has 8MB blocks.  That is why only the blockstream core devs pushed Gavin/Hearn away. 

From their announcement, it looks like they have already made partner agreements with several exchanges, so it appears that they ARE going to use this.

You may be right - I don't know anything about Liquidity that was not in the announcement.

[Edit] Actually, after re-reading the announcement, it seems that Liquidity would only make sense for use by an exchange, or some other business making lots of Bitcoin transactions.  I don't see how selling the 'coins' to end-users would be viable.  Maybe I am misunderstanding what you are suggesting.

I think this is only what the name implies; a tool to make the exchanges more liquid. No alt coins involved, it's still all BTC denominated.

I'm kind of disappointed in a similar way to others though; they could be running this as a mined chain, open to anyone to start mining just like the main chain. Needs to be a good reason to do it like this (e.g. immature code for something like that).

If Bitcoin has 8MB Blockstream can fit more transactions in their sidechains without the arduous work of developing more advanced cryptography to reduce the size of their transactions.

Their new commercial product, Liquid, is an attempt at moving transactions which were already all happening off-chain, in centralized databases, to a more secure, distributed system where users will benefit from more liquidity, faster settlements, better privacy.

Again: this is an attempt at pushing transactions actually occuring off-chain (centralized) into a decentralized blockchain for the benefit of every Bitcoin users that trades on exchange.

Is it really decentralised if Blockstream are the only people running the chain? Or am I misunderstanding that detail?

Is this a joke?

Do you even understand what Liquid is?

Oh, here we going again.... the endless discussion with no clear answer to what is the best for Bitcoin and not for the groups pushing their own agenda.

For me, both proposals have hidden agendas and side projects with advantages for the developers backing it... The Core team are just the lesser of the two evils.

When a proposal is put on the table with no hidden agenda, everyone will be happy... until then, we will have these boring fruitless discussions.  ::)

Blockstream people are not the ones running the chain, the exchanges are.

Of course it is not as decentralized as Bitcoin is but there are several issues with merged mining that need to be reconciled before deployment.

The logic is that exchange users already trust them with their funds, Liquid attempts to diminish this trust by distributing it across the different fiduciary nodes in the sidechain.

It seems you are right: https://www.reddit.com/r/Bitcoin/comments/3ok8ga/blockstream_announces_liquid_bitcoins_first/cvy5mt1

Ok guys you need to slow the roll.

The way I see it people already have a choice to trust Bitcoin the network or trust 3rd parties to keep their bitcoins safe and the vast majority of Bitcoin users have chosen to use 3rd parties. The one thing I have learned from my many failed attempts to introduce bitcoin to people is that they don't want to take on the responsibility (and risk) of protecting their own coins. People are inherently more trusting in other peoples abilities then their own. This is human nature. This however dose not blur the line between Bitcoin and 3rd party participants, the line between Bitcoin and these 3rd party players is as clear as ever. These side chains will need to be secured and managed by the 3rd parties that operate them.

This is not Bitcoin changing or being taken over.  This is a experiment to draw users away from the main chain into separate Eco-systems very similar to bitcoin but not bitcoin.


(I am a 1MBTC block size supporter, I support all users using full node clients over VPNs like the TOR network)

I'm not really sure what Liquid does, it sounds all a bit complicated to me..

I agree with most of what you said but I don't see this as an attempt to draw people toward more centralized services.

It's actually a step forward toward diminishing the need to trust third-party services which, whether we like are or not, are an integral part of Bitcoin's ecosystem.

I see. This would be much better if merge mined; providing a diverse range of participants with a (newfound) diverse range of incentives to mine could strengthen the ecosystem, and disincentivise any possible collusion on the private chain (although not sure how feasible that is right now). Sounds balanced enough to make it worth any trade offs for now.

So, couldn't a decentralised exchange become a collective participant on behalf of it's users? I don't think a fully decentralised exchange is online yet, but I hope the protocol behind Liquid could allow something like that. That kind of capability would be another important part of proving that Liquid isn't implicitly an invite-only chain (either you're a licensed exchange or you're not, so that would be essentially a proxy privilege system)

The issue with merged-mining is you need a super-majority of the hashing power to securely deploy the chain.

If you don't have that it would be trivially suspect to attacks for large non-cooperating miners. It's a hard sell and I suspect unless a sidechain directly benefits a very large majority of Bitcoin users it will be hard to gather such support.

Moreover there certainly is a couple of legal issues with exchanges funds being, in some way, vulnerable to unidentified entities (miners).

Sidechains will only accumulate a lot of internal transactions to a small number of transactions to the core blockchain. I don't see any negative effect with this, but for the users of the sidechain, who cannot track their transactions on the blockchain.
All the rest of the FUD is bs, just like this topic.

One could ask why using bitcoin at all when banks are already working on their own permissioned blockchain.

I don't believe that is the goal here ie. Liquid transactions are not settled on the blockchain unless the coins need to be moved off-exchange to a user wallet.

Because I can use Bitcoin peer-to-peer. At least now with Liquid if I choose to use an exchange to trade or whatever then I expose myself to a more distributed risk model wherein if one exchange fails or gets compromised my funds are not at risk of vanishing.

How Liquid is this more P2P than banks permissioned blockchain again?

Je sais pas si c'est ton retard mental qui s'incruste dans ta grammaire, mais ta phrase fait aucun sens.

It makes absolute sense if you go reread my original question which you didn't answered at all.

Evening Ladies. Nice night for a fight. (..you 2 do make me laugh though I'll admit..)
..

I guess saying "We can't make the blocks bigger because it will cause centralisation!" and then in the same breath saying "The solution is to use centralised side chains!" just makes some of us feel funny..

Liquid is not meant to be used as a P2P transaction system, neither are permisionned blockchain.

The point is that using Liquid is entirely voluntary and if you choose to opt-out and use a purely peer-to-peer network (Bitcoin) you can.

https://en.wikipedia.org/wiki/Straw_man

For that you still need the bitcoin blockchain to scale properly.

With 8mb blocks = less and less people can deal with nodes and aren't able to run their own nodes = Bitcoin is fucked.

Sorry to burst your bubble but resources are limited, and a fee market seems like the only way to go about this unless you want to raise the block size until becomes centralized and only private organizations are able to afford nodes just like now only private organizations are doing mining.
We can't afford centralizing mining and nodes, and Lightning Networks seems like the best approach thus far.

Indeed.

Fortunately smarter minds have realized this is not done by simply raising the block size

So how then? AFAIK this is the only viable solution available right now.

Well obviously you've painted me into a certain corner by using the term "bitcoin blockchain".

The more correct interpretation and the more healthy alternative is to keep Bitcoin's blockchain at a minimal size and use additional, trustless layers (LN, voting pools), to scale the Bitcoin ecosystem

The fulltime BS shill captures also your thread. He's shilling everywhere, in every thread where somebody writes something against Blockthestream.

Hey!

We're trying to rid this thread of retards, we were doing good till now  >:(

Said the fulltime BS shill who's shilling everywhere, in every thread where somebody writes something against Blockthestream.

I'd much rather shill for BS than cypherdoc & his clowns posse  ;)

A fulltime volunteer ...

Preery great,thanks for sharing.Future is in btc with that,more liquidity,i hope it will be also available for ordinary people at low cost.Anyway it is great news

It was intended to work like that from the beginning.

You don't run your own email server, your own IRC server or your own bittorrent tracker and that doesn't mean they are centralized.

Bitcoin development as been hijacked by a company and companies only serve themselves...

Sound more drastic than it really is. Nothing prevent you from continuing to use the stock BTC and nothing will prevent it from getting a block size limit if that become the best path in the future.

If miners collectively agree that a block chain increase will be better than using the sidechains because of fees and such, then it will happen. Thats all.

There is no use running your own email, IRC or bitorrent tracker as there is no trust requirement.

Unless you run your own node you depend on an authority to validate the authenticity of the coins you receive.

A side chain is like an altcoin but it is linked to bitcoin.  You can send BTC to the sidechain and withdraw it from the sidechain.

You send bitcoin to a bitcoin address and then you get credit on the sidechain.  The money in the bitcoin address is held at a multi-sig address.

When you are done, you can transfer any credit back to bitcoin.  The functionaries that control the multi-sig address send you the BTC you sent back.

If a (super?-)majority of the functionaries conspire, they can steal that bitcoin.

You start with money on the bitcoin network.

BTC: 1.0 BTC
Side: 0 BTC credit

Transfer 0.5BTC to 3<some address> (multi-sig) on the bitcoin network.

BTC: 0.5 BTC
Side: 0.5 BTC credit

You can use your 0.5 BTC credit on the sidechain and send/receive on the sidechain.  They are proposing to use it for exchanges.

To withdraw your money, you tell your sidechain client to send it back to bitcoin.  This happens in 2 steps.

First you lose the sidechain credit

BTC: 0.5 BTC
Side: 0.0 BTC

Next the money in the 3<some address> address (yours and anyone who sent money to the sidechain) is used to send you the 0.5BTC back.

BTC: 1.0 BTC
Side: 0.0 BTC

Its important to remember that side chains are a 3rd party service; they are not part of the bitcoin network.
We should move all these threads under / Bitcoin services.

Don't see here anything like this sentence from topic.
Many companies do their bitcoin side-projects, that all.

Maybe you still don't know that most Core devs are being on Blockstream payroll?

Maybe you can see that all the Bitcoin is already owned by certain persons. It's a "blockchain" formed by so called investors who are behind the big exchangers. All the big exchangers are owned by the same persons and the developers who are working for them. What's so hard to admit that? :)

It's so simple. A gang of hipsters/geeks who created their own e-currency and some "crytomonkeys" who believed the Satoshy's story like the  myths of Inca who believed that a jaguar attacked and ate the moon on lunar eclipse. Yes, Bitcoin was made for everybody to get rich.

 It's so funny how the people can be manipulated !  ;D ;D ;D ;D

I'll keep it under observation myself
Not going to have a strong opinion till I see some execution.

"Zane Tackett, director of product development at Bitfinex, noted that the ability to move funds between exchanges in seconds would make arbitrage opportunities more accessible to the trading community."

For arbitraging, the biggest lag lies in fiat money transfer, which side chain can not help at all. However, traders can build liquidity pool in each exchange to reduce the lag regardless it is fiat money or bitcoin. The reduce of liquidity requirement for bitcoin is not a big benefit since 10 minutes is already lightning fast if you comparing with fiat money's 2-5 days delay

And to achieve zero delay, exchanges could just establish their clearing channel without involving all the technical complexities in side chain: Bitfinex opens an account of 2000 coins at Btcc and Btcc opens an account of 2000 coins at Bitfinex, it does not cost them a dime and will enable a channel for daily settlement immediately

What about the fees that will be charged for using the sidechains?

At the end you probably have something like 0.99 BTC left instead of 1.0 BTC.

Also, what would happen to your side credit if the main btc gets hacked somehow?

Still requires a lot of trust I guess.

Yes, but you only have to trust the money that you send to the sidechain.

You could store 90% of your money on the main Bitcoin blockchain and 10% of it on the sidechain.  The money on the sidechain can be used for fast payments (of whatever special feature that sidechain supports) and the money on the main chain is safer but less convenient.

Hopefully, with sufficient transparency, your money will still be safe on the sidechain.

How do they wanna push me? If I decide I will not use their sidechain and pay them they can not force me. It's my choice.If I wanna do my transactions on chain I will do so. And I don't believe we will see high transaction fees on chain in the future. The community will react if the core devs of Blockstream try to f*** us.

1 way does spring to mind..

They could push for a really REALLY small blocksize, and make it so you are competing with a BANK for space on the main chain. You have then lost any chance of getting on the main chain, and are forced to use a side chain..

Hmm.. I hope that doesn't happen..

It would be pretty hard to do, as you'd need to get all the core devs on your side... and destroy any challengers who tried to increase the size through some form of code upgrade/fork..

..

Oh.. wait a sec..

Wrong.  It is already happening.  Small blocks are making HUGE problems already today.  MasterXchange is so frustrated with problems related to small blocks - they are closing.  The pressure from 1MB block is hard to see - but it exists and it is already effecting many people.  Block size 1MB is a disaster.  The network is already under performance pressures.

Blockstream is raging bullshit.  They want to create a nightmare - and then offer a solution for a fee.  These guys are scammers.

It's all one big compromise.

Low value transactions are already excluded from Bitcoin today; anything less than 5430 satoshis or with a fee less than the current relay charge won't get mined. So Bitcoin already works more like an ACH or wire transfer system, buying things in pennies or less is not practical and never has been.

The idea is to just cement that role further; Bitcoin should remain ACH-like for big one-off payments, and low value or service payments will get packaged up in payment channels. It's the best overall compromise IMO, expanding the mainchain to accomodate a VISA type system is too crude, too one-dimensional.

What I wouldn't be happy with is if everything gets pushed into secondary payment networks: anyone running a full node should still be able to transact on the main chain, and there should remain a wide range of use cases to do so (i.e. it's not so expensive on the main-chain that it's impractical for anyone but the wealthiest)

I think you need to be intentionally close minded not to see the benefits.

 ::)

Bitcoin keeps performing like a champ for anyone that uses as it was intended to.

What the fuck is MasterXchange anyway.

What part of "resources are limited" you don't get? Seriously, is not that hard. *There's no way in earth that we can deal with a competitive amount fo transactions per second if it all happens on-chain if you want to keep the blockchain decentralized*, period.
Raise the blocksize, and we will then need to raise it again, and again, and again, and it will be impossible to run a node, and Bitcoin will become totally centralized. You seem to ignore this part.

If we don't let miners to compete for these resources, efficiencies will never improve. What part of the word "competition" you don't get?

Your logic and reading comprehension: it's broken.

looks like a centralized, private, permissioned, plain multisig driven transaction log sink for me.
what kind of innovation i am missing here, the mutation into blockripple/ripplestream?

the first private blockchain with cryptographically enforced proof of reserve pegged to BTC.

Their could be an infinite number of ways to implement side chains but its important to remember that these are 3rd party services that don't require any change to the Bitcoin network.
If a side chain is not properly protected and wealth is lost as a result it well be the responsibility of the companies running it to refund any money lost.
If a 3rd party charges a higher fee then the bitcoin network and dose not provide any service to the users over the Bitcoin network then their would be no reason to use these 3rd party services. It will be a choice between cost, security, privacy, convenience, reliability,  etc.

sounds good but also a pretty bold statement for something like liquid and i am not sure it is the first of it's kind btw.
however, soon we will see how the real beef looks like i guess.

Pretty sure it is the first blockchain with homomorphic encryption (Confidential Transactions)

sounds better now. although reduced but granted!

Dumbass, by blocking or severely limit Blocksize, Bitcoin wont be free for you to use.

Bitcoin was never meant to be free. Bitcoin is a fee based system; fees are part of the incentive to mine blocks (transaction processing) required for the network to function securely.
As block rewards diminish gradually with each 'halfing-day' transaction fees will be more and more important. We must balance network load and fees with the needs for security and network hardware. Without fees what would we do to motivate and encourage mining pools to spend vast amounts of money on hardware to secure our network?

You can do some calculation

Two exchanges A and B opening 1000 bitcoins account in each other, A's account at B will work as a mortgage, if A went down, his account at B will be forfeited, resulting zero loss for B, vice versa. So no trust is needed once a clearing agreement is made. And because the transaction volume between A and B is small relative to each exchange's total volume, the risk involved in each clearing channel is small. This practice has been tested for hundreds of years between financial institutions

Of course you can also go for a blockchain based solution like side chain, so that you don't need to have clearing agreement with each other. Then you will face some technical challenges which requires time and R&D investment, raised level of complexity typically cause the cost to rise, eventually make it more expensive than clearing based solutions

Anyway, in either solution, the key is to make B believe that those deposits to A's account at B is legitimate. However, only A knows if it is true because the original transaction is a customer at A sending coins to B. If A did not send this transaction to B, then the customer will not receive coins at B, regardless if A and B are using clearing based or side chain based solution. So the risk is really concentrated on A and B's business ethic, where side chain can not help at all

In fact, in a clearing based solution, exchange could just use bitcoin blockchain to do the transactions once every 10 minutes. Since each such transaction combines hundreds or thousands of transactions between institutions, they would still greatly reduce the amount of the total transactions in bitcoin network, why use side chain when you can use blockchain to reduce the transaction volume?

Yes it has but as you have illustrated it involves that a certain amount of capital be tied up. Moreover trust is definitely required to establish the clearing agreement.


The technology is developed by Blockstream and sold to the exchanges who only have to pay a subscription fees. It seems reasonable to assume that these costs are orders of magnitude less than having to tie up considerable capital reserves at different partner exchanges.


Essentially what you are saying is there is a risk that either participant is running a fractional reserve?

That is fair enough but from what I understand Liquid participants are cryptographically protected from this happening. Let me explain:

Units on the sidechain can only be created by sending real bitcoins to a special input.

One exchange might be running a fractional reserve on their own but they cannot assign "fake" bitcoins to the sidechain and trade them with their partners.