i think Adam's goals are laudable, ie, wanting to expand the universe of assets traded for Bitcoin. The problem I've always seen with the "gold 2.0" viewpoint is that it relies on a bad understanding of history and a worse understanding of economics. Some people think that gold is an example of a free-market store of value that was not also a medium of exchange, but it's not true. During the era where gold was held as a reserve asset and people started exchanging gold-backed notes instead of the gold itself, the sole reason that arrangement worked is because central banks hoarded gold, and their activities were subsidized by the taxing capability of the state. The idea that it's possible to separate a store of value from its medium of exchange function is an illusion that can only be propped up with a substantial expenditure of institutional violence. The last thing I want to see is Bitcoin turned into a system that can only survive under those conditions. If that's Blockstream's plan... I don't get how this is somehow not a problem replicated but solved by sidechains. Why did gold-backed notes appear in the first place? Was it not because of market demand for a more liquid, transactional medium of exchange? Of course this was playing into the hands of banks but gold was not rid of its medium of exchange function so much as people found its natural properties in that regard to be inconvenient and cumbersome. I see the same thing happening now. Replace papernotes with sidechains and central bank for the Bitcoin protocol. In certain ways Bitcoin will function very well as a medium of exchange but the nature of its protocol also results some shortcomings with respect to its utility functions and flexibility as an asset class. What better, more natural, way to address this than sidechains? Unlike the gold/papernotes parallel there is considerably smaller counterparty risk; the "backing" mechanism is enforced on the protocol level. Institutional violence is replaced by maths. |
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Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.
Time will tell I suppose. Fwiw 2wpeg sidechains could be implemented now, without any changes to the btc protocol... I understand that the two-way peg ensures that no extra bitcoins can be created on the main chain by going through a side chain. But will the Bitcoin Network ensure that no extra SideCoins are generated on the side chain, before they are brought back? That is, can one implement MtGOX on a sidechain? EDIT: I see that someone partially answered this question above. The peg, that is, the exchange rate between the mainchain and the sidechain can be deterministic and one could create a inflationary sidechain but the network will not allow more coins to return to the mainchain than what got out. In other words, the Bitcoin protocol will not ensure that the SideCoins are pegged to the bitcoins that were transferred. The SideCoin protocol can do with SideCoins anything its designers choose to do. Correct? Will it be possible to create SideCoins after transferring 0 BTC to the sidechain? Or just 1 satoshi? The peg rate is a function of the sidechain's and is hard coded into the protocol. The sidecoin protocol can decide on whatever rate of exchange (peg) he desires. Yes, inflationary sidechains can be created |
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Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.
Time will tell I suppose. Fwiw 2wpeg sidechains could be implemented now, without any changes to the btc protocol... I understand that the two-way peg ensures that no extra bitcoins can be created on the main chain by going through a side chain. But will the Bitcoin Network ensure that no extra SideCoins are generated on the side chain, before they are brought back? That is, can one implement MtGOX on a sidechain? EDIT: I see that someone partially answered this question above. The peg, that is, the exchange rate between the mainchain and the sidechain can be deterministic and one could create a inflationary sidechain but the network will not allow more coins to return to the mainchain than what got out. |
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I don't think traditional currency peg apply. The mechanics behind these pegs are not solid and open to the failures you've illustrated.
The situation here is one where a sidechain unit has its equivalent in BTC collateral. A mathematically enforced 1:1 convertibility between both units. Each units' exchange rate value might differ but the protocol dictates that they are exchangeable 1:1 no matter their economic value. That is because for every unit on a sidechain there exist an equivalent amount of BTC locked in an "escrow" type transaction.
Theoratically, and I might be wrong, but even if the perceived market value of the unit on a sidechain would come to 0 one could still return is sidecoin for its equivalent in BTC.
If markets are efficient then market value of pure 1:1 sidechains should only ever be *higher* than BTC. They should never have the same market value. The time delay via SPV to use the sidechain makes it such that there should be a premium on no-delay (bought from market). I agree, in a sense the price of BTC should be the floor for the price of a 1:1 sidechain unit. The logic of this is if bitcoins can be algorithmically "redeemed" for an equivalent amount of sidechain units then the perceived market value of these units can not be lower than their collateral BTC units' value. |
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I don't see it that way. I see you were happy about coinlock saying this... Now super-risky-coin collapses, I lose my Bitcoin because the information about the relative risks was hidden in the deterministic rate.
To this I would say: you already lost your Bitcoins when you swapped them for super-risky-coins. That information isn't hidden at all. When you 'move' (it's debatable wether that's a good expression to use) BTC -> scBTC you're well aware you're swapping your bitcoins for sidechain coins, aren't you? If that's a real question, then, but of course. SC's mechanics are easy to understand. But economically do they work and will they be good for Bitcoin? The answer, I think, is more philosophical. I think Bitcoin is, and has always been, simply money. It has gotten to where it has based on economic assumptions of how the blockchain works currently. SC's change all those assumptions. That is a mistake, imo. SC's would change some assumptions but most certainly not all. It is also debatable whether those changes will hinder the Bitcoin blockchain or help it thrive. |
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nullc : About the only thing negative you can say about a system which is truly backed by Bitcoin is that it doesn't create huge incomes for traders. Many people wouldn't consider that much of a negative.Does he heard about Soros? When two things are pegged while they don't have the same economic features, then the pegged is temporary, and that creates profit opportunities and people prompted to accelerate the failure of the peg system. It looks like sidechains people think because two things are pegged they magically become the same thing. From 1984 to 1997 the thai bath was pegged with the US dollar, that doesn't mean that the bath was the same thing than the dollar. Sooner or later the market forces end up destroying the top down price fixation. Yep, that contorted remark by nullc is painfully naive. He totally neglects the fact that these SC assets will have a separate exchange price in fiat that certainly can and will be pumped and manipulated to all sorts of illogical levels. SC's don't solve any of those issues Please, we have been going over this times and times again. The exchange rate of a properly implemented 1:1 SC asset will, in time, closely track BTC prices for many logical reasons. |
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nullc : About the only thing negative you can say about a system which is truly backed by Bitcoin is that it doesn't create huge incomes for traders. Many people wouldn't consider that much of a negative.Has he heard about Soros? When two things are pegged while they don't have the same economic features, then the pegged is temporary, and that creates profit opportunities and people prompted to accelerate the failure of the peg system. It looks like sidechains people think because two things are pegged they magically become the same thing. From 1984 to 1997 the thai bath was pegged with the US dollar, that doesn't mean that the bath was the same thing than the dollar. Sooner or later the market forces end up destroying the top down price fixation. I don't think traditional currency peg apply. The mechanics behind these pegs are not solid and open to the failures you've illustrated. The situation here is one where a sidechain unit has its equivalent in BTC collateral. A mathematically enforced 1:1 convertibility between both units. Each units' exchange rate value might differ but the protocol dictates that they are exchangeable 1:1 no matter their economic value. That is because for every unit on a sidechain there exist an equivalent amount of BTC locked in an "escrow" type transaction. Theoretically (I may be wrong) but even if the perceived market value of the unit on a sidechain would come to 0 one could still return is sidecoin for its equivalent in BTC. |
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Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.
 They are not terribly hard to understand. Yes the math has to be vetted, the crypto validated and implemented but they are very much a reality and certainly not "vaporware". The proof of concept is in the whitepaper. |
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I understand it might be too soon because of utility concerns but has Monero at least caught any eyes or interest in SR-type business circles?
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No one can predict this. We have to have a lot of patience. It's the same with everything on the market. Suddenly it goes very much up or down. If you can predict the future, you should be very rich. By low and sell high is what everone wants.
I think best is to keep it for a long time and see and wait.
Yes I agree that people need to be patient, you see a lot of selling from people that thought they were going to do x2 or x10 in a few months. They bought a year ago and now they think Bitcoin is failing. They are wrong, the technology is still as good as before. Just because the technology is good does not mean that it will necessarily be useful. Bitcoin's biggest problem is the current lack of consumer and business adoption. It will only be when both businesses and consumers start to use bitcoin on a much larger scale that bitcoin (and blockchain technology) will have any major use. 10k+ levels of the price of bitcoin will likely not happen until we see the above kinds of adoption. You do need to be patient Bitcoin can very well reach 10k just by being adopted as an asset class the likes of gold. |
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Sure, appcoins will probably have some value but it will degrade over time, just like frequent flyer miles as they will inevitably be inflated away through promises broken.
i am guna laugh my god damn ass off if an "app coin" as you call them ever over takes bitcoin lol im not saying its likely, just that it would be the most hilarious event in crypto history for me to see so many "wise men" proven wrong all in one go  How could they as most of them have not guaranteed a fixed supply nor will function as a neutral SOV for an undefined purpose. The way this would happen is if one of them became extremely useful and popular first. Then it would be so widely used and accepted that it could start to be used as money by others even if they had no direct interest in the underlying service. It really wouldn't take a lot for something to become more widely used than bitcoin at this point. I don't really see this happening with something like storj (too limited in application), but something like ethereum or perhaps maidsafe has the (long shot) potential to develop in that manner. i can't think of anything more useful or popular than the function of money itself. not to mention exciting, as this is precisely where all the problems of the financial world lie, and hence the potential to disrupt. the problem when you try to intermingle or weave other assets classes into the structure of the money itself is that it quickly gets complicated and even political as we're seeing with Ethereum. poor boy Vitalik can't even decide how to secure the whole concept yet at this late stage of his game. Maidsafe is the goal for a decentralized internet, which is about the extent of my understanding of it. however, using Safecoins is problematic. When you try to solve all the problems you sometimes end up not solving a single one. |
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And from the looks of it both have yet to deliver any kind of working application |
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Sure, appcoins will probably have some value but it will degrade over time, just like frequent flyer miles as they will inevitably be inflated away through promises broken.
i am guna laugh my god damn ass off if an "app coin" as you call them ever over takes bitcoin lol im not saying its likely, just that it would be the most hilarious event in crypto history for me to see so many "wise men" proven wrong all in one go How could they as most of them have not guaranteed a fixed supply nor will function as a neutral SOV for an undefined purpose. The way this would happen is if one of them became extremely useful and popular first. Then it would be so widely used and accepted that it could start to be used as money by others even if they had no direct interest in the underlying service. It really wouldn't take a lot for something to become more widely used than bitcoin at this point. I don't really see this happening with something like storj (too limited in application), but something like ethereum or perhaps maidsafe has the (long shot) potential to develop in that manner. Bitcoin uses electricity, but any resource can be used to back honest money if it uses a one way function for consensus. Systems like storj and ethereum can be built on Bitcoin. The beauty of using energy is that it's abundant. You are looking at this in terms of what can be done (i.e. can be built on bitcoin), I'm looking at it in terms of what may actually happen. Systems like ethereum or maidsafe could possibly become vastly more widespread than bitcoin on an explosive basis (i.e. far faster than bitcoin can adapt, if there is even a desire by the bitcoin community to adapt). Vastly more popular means only tens of millions of users or possibly 100 million, which really isn't that many when you consider something a simple application like whatsapp with a billion users. At that point the liquidity argument usually made in favor of bitcoin applies strongly against it. To be clear I don't expect this to happen, but i recognize it as a possible low probability outcome. Maidsafe is interesting, but doesn't sound like it's good one way function. Also, it would be easy to clone and sell by storage technology companies. Unlike ASIC manufacturers, they could offer incentives and discounts for adopting their centralized storage systems. In that way it's a lot like PoS systems. Perhaps every hard drive manufacturer should develop their own storage coin. My understanding was that maidsafe was not just storage but more of a general purpose network services platform. If I'm incorrect about that, an I may be, then I would put it more in the category of storj. Perhaps. BitPay's Foxtrot seems to be a similar approach. They all think that they can be universal currencies but they don't realize they are merely planets revolving around Bitcoin. I believe Bitpay's foxtrot runs on Bitcoin |
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*14% of all bitcoins in existence were "mined" this year.
How else do you propose we distribute a new form of monetary commodity you genius |
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What incentive do I have to hold appcoinx to store value when BTC promises better return & better liquidity
Diversification. Why investors have a portfolio of stocks instead of just having the stock that has the better risk/reward? This is not diversification. These are all eggs of the same basket (cryptoSOV). Network effect dictates only one egg can survive. There is no comparison with stocks. That is exactly diversification. I'm sorry but I don't believe that purchasing assets subject to the same underlying risks is diversification. Bitcoin, real estate, stocks, PM : sure Bitcoin, Litecoin, Mastercoin, Storjcoin : not so |
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Sure, appcoins will probably have some value but it will degrade over time, just like frequent flyer miles as they will inevitably be inflated away through promises broken.
i am guna laugh my god damn ass off if an "app coin" as you call them ever over takes bitcoin lol im not saying its likely, just that it would be the most hilarious event in crypto history for me to see so many "wise men" proven wrong all in one go I'd also laugh my ass off if Obama would come on TV and announce the USD is getting converted into BTC. Not saying its likely, just that it would be the most hilarious event in economic history for me to see so many "Nobel prizes" proven wrong all in one go |
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On a more positive note, Bitcoin's been getting some recognition lately. What was it, "The worst investment of 2014"?
You win some you lose some  |
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... but holding Dollars now seem very risky...
Bro, over the past year the dollar has lost less buying power than BTC has over the past 24hrs. Learn life. Keeping Dollar instead of Bitcoin was a good trade this year but long term I don't think it will. Rich people have their wealth in assets not fiat. You need to look at a much longer time frame then just one year when determining how good of an investment something is/was. Looking at a one year ROI is an arbitrary short time frame. If you were to double that and look at a 2 year ROI you will see that someone who purchased bitcoin this time in 2012 would have grown their money by ~30x while the value of their dollar would have been roughly the same (there was very low inflation over the past 2 years) A year timeframe is far from "arbitrary." 37 days would be arbitrary. 2 years would be arbitrary, A year is a natural. A year is also far from "short" for Bitcoin--Bitcoin's entire history is 5 years, 3 of which were spent in single-digit obscurity. But hey, if Bitcoin is going to be huge in 9009, I think I'll pass on it for the time being. On a more positive note, Bitcoin's been getting some recognition lately. What was it, "The worst investment of 2014"? What the fuck does "natural" even mean? A year is absolutely arbitrary. The market doesn't care about the laws of the universe or how long the orbital period of Earth moving around sun is. |
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I am not taking about buying altcoins but about buying networks (via appcoin). Two networks which are not on the same market aren't competitors. Bitcoin is a competitor with Litecoin since they are both payment system network. But Bitcoin isn't a competitor which MaidSafe or Storj since the two latter are aiming to solve an entirely different problem than Bitcoin.
Your argument is like saying that Bitcoin will kill Facebook because there can only be one network in the economy because of the network effect. No, the network effect entails only one network per market. There are a lot of markets in the economy, and Bitcoin will not address all the market of the economy.
I see where you're coming from but IMO this is where your argument falls short : Concerning his argument that the appcoin will be dumped by the users as soon as they have finish to use the network: then how does he explain that bitcoins have value? Of course bitcoins have value because people use the token of the BTC network as both a store of value and a vehicle to speculate on the fact that the demand for the use of the network will skyrocket. Why do they do that? Because of the limited supply of the BTC tokens, not because bitcoins are the equivalent of cash and people want to have them to enjoy future random opportunities. Bitcoin, as money, aspires to become the most easily exchangeable good so that it can be traded for any goods or services on the market. For that reason Bitcoin is absolutely held, to some extent, because of its ability to be saved and maintain in exchange value so as to satisfy "future random opportunities" (the very definition of a SOV). Now Storjcoin, as an appcoin, only serves one purpose which is to (afaik) use storage capabilities of the Storj network. One will not hold Storjcoin to satisfy future storage needs. Presumably they will hold BTC and exchange for Storjcoin only when they want to use the Storj network. Given the frictionless nature of this exchange it is reasonable to assume that most people will prefer holding the more valuable, liquid asset instead of one that is restricted to use in only one market(network). |
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