It becomes clearer everyday that you either insist on ignoring facts or simply do not understand the dynamics at stake. we have achieved acceptance as a global, digital, cash money system that, imo, is in the process of replacing gold's function for the last 5000 yrs. to me, an Austrian leaning Bitcoin proponent, that's all we should strive to be. that's all we need to be. my goal is to have Bitcoin have its own ticker symbol on the Forex exchange. from there, as the only true Sound Money in the world, it can consume all fiat currency AND gold, which will take us To The Moon and way beyond as the sole globally accepted currency. merely replacing gold is a very shortsighted view that ignores the limitless innovations & true paradigm shift that the creation of an immutable, global, distributed ledger entail. I understand the idea to redefine the concept of money and its applications is a very powerful one by itself but the blockchain should not limit itself to money. Value, property & trade is what we are looking to decentralize. This concept has much greater implications than even money. to limit the blockchain to money implies that the need for trust in incumbent counterparties for anything but money is not significantly limited although we have a technology that absolutely can do that. So, for the first time in history, we (or those of us with signing authority, at least) can now directly control what gets entered on an exchange's (and, in this case, a Universal Exchange's) books and records on our behalf. We don't need anyone's permission to make an entry, nobody can bar us from entering a transaction on the exchange (though the system itself will prevent it if we don't have signing authority), and nobody can reverse or corrupt an entry once made.
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In short, in a world with a Universal Exchange, the need for trust in humans (be they counter-parties, third parties, auditors, or regulators) is significantly diminished. Not eliminated, but greatly lessened. In short, bitcoins are valuable not because you can trade things for them (as money), but rather because you can trade things with (via) them by simply entering a transaction into the Universal Exchange. Thus, bitcoins are not (yet) the medium of exchange, they are the method by which things are exchanged in exchange for the medium of exchange. Or, at least they will be once the Bitcoin infrastructure is more built out and widely known.
Bitcoins thus have value as a method for avoiding or diminishing the need for trust, and the expensive infrastructure built up to instill it, and not merely a collectible or as money. Trust is valuable, and few things are more demonstrably trustworthy than a public blockchain Sidecoins are, in a way, our best chance of fulfilling these promises of the blockchain. the Keynesian view is that Bitcoin needs to do more to gain acceptance and grow itself. the protocol needs to be changed to incorporate all other forms of asset options; stocks, bonds, assurance contracts, smart contracts, insurance, etc. nevermind that if Bitcoin succeeds at the Austrian Sound Money function, it will force all those assets to trade in terms of Bitcoin eventually as well. This is absolutely not a debate of Keynesian vs. Austrian. How do you propose we trade assets in terms of Bitcoin if they are not represented by units in the ledger? Remember that this scheme can only be implemented off the mainchain for obvious reason. What you seem to suggest is that those "off-chain" applications be conceded to the trust of third-parties which defeats the very purpose of the blockchain. The blockchain is where all trust reside and where all forms of value should be exchanged. Granted it may not be practical to do that or even desirable in some cases but we should absolutely expect this level of decentralization in a majority of our exchange. they try to change Bitcoin. change it by changing the source code which breaks the Sound Money function. to me, that is what the spvp does, it creates an offramp into all manner of these assets. I sure hope Satoshi is not reading that. The nature of Bitcoin is open-source code, to suggest changing its source code is not desirable or should not be pursued goes against any conceivable logic. Off-ramps a a reality of Bitcoin and exist already in numerous forms. We absolutely need off-ramps to scale the system and make it possible to reach mainstream adoption. For those of us who understand the implications, it is quite clear that sidechains are potentially the most secure and natural off-ramp possible. It offers the unique chance to preserve the integrity of the ledger and protect the Sound Money aspect of Bitcoin on the protocol level. so what is wrong with using SC's to incorporate all those assets? it breaks the Sound Money function. This comment in itself is so naive and ignorant of our present reality I'm not even sure where to begin... The desire to represent these assets in BTC and the demand for such applications has been crystal clear for everyone who has been paying attention. It is the sole reason why Bitcoin 2.0 projects exist. The problem with most Bitcoin 2.0 projects is that they introduce in the majority of cases an additional third-party that demands an increased level of trust. These third-parties are by all chances, the most dangerous risk to the Sound Money function. Bitcoin will no longer be viewed as solely a new form of money. it will be viewed as a "trading platform" with which you can use to move back and forth btwn assets and BTC. it would be like a Fidelity brokerage house, you deposit your money in a cash acct and then trade all manner of assets in and out. it also destroys the time preference of what money should be. you see, stocks, bonds, contracts, insurance, etc are long term investments. they are to be held. and they are not used to provide seamless, instant, liquidity type functions like Bitcoin would be if it stays in its current form as sound money. Aside from some erroneous details or assumptions this is EXACTLY what we should aspire Bitcoin to become. THE Universal Exchange by which ANY trade is facilitated. And this is especially true with the tool that makes all that possible, bitcoins themselves. Since bitcoins represent the universal, inalienable (though transferable) right to enter a transaction, any transaction, into the Universal Exchange, and since bitcoins themselves are readily tradable on the exchange itself, an exponentially increasing number of things will come to be bought and sold for bitcoins, and not just with (that is, via) them.
You can call such trading of good and services for bitcoins "barter" if you want (so that you don't have to acknowledge bitcoins as "real" money or currency), but the result is the same either way. They will be used to purchase goods and services regularly on the Universal Exchange.
In short, a Universal Exchange will facilitate a barter economy like the world has never seen. For the first time, barter transactions will be nearly as easy as cash transactions (and in many cases even easier). This will have a great many revolutionary impacts. It will impact "trusted" third parties the most and soonest, but it will also impact governments, human relationships, law, accounting, economics, and a great many other fields. And, perhaps most of all, it may just eventually make the whole concept of "money" unnecessary and obsolete. With a Universal Exchange, a common currency, in the traditional sense of the word, isn't hardly necessary. thus, we many NEVER see those assets be converted back to BTC in the future. or at least if we do, it won't be for a long time, and then what does that do for Bitcoins money function? answer: it slows it down if not outright destroys it. if that's true, where do Bitcoin miners get the tx fees they desperately need in the future to secure the mainchain? They get it from MM the sidechains. The alternative you propose (off-chain/federated solutions) is provably worse in this scenario because it effectively strips from the miners the power or access to claim these tx fees. they would have to stay as SC's and i dare say there mere existence destroys Bitcoins liquidity and money function. What you constantly fail to realize is that if this demand is not fulfilled by SC's it will be through other schemes that are necessarily more dangerous to Bitcoins liquidity and money function. |
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I don't have to rely on soundbites. Unlike most detractors in here, Adam Back and Austin Hill's track record speak for themselves. |
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On one end of the spectrum, if a sidechain's 2-way peg can be severed at the whim of the sidechain devs, it would essentially be an altcoin and would presumably attract about as much investment as altcoins do (not a threat to Bitcoin).
At the other end of the spectrum, if it's mathematically impossible to sever the 2wp, then it is a true sidechain and the value seems to always remain with the Bitcoin ledger (not a threat to Bitcoin, at least not for this reason). From the description of the SPV proof, to get out of the sidechain it seems like you need to be able to create transaction in the sidechain which burns some sidechain units. If it's possible to block transactions in the sidechains, then it would be possible to prevent sidechain holders from cashing out into the main chain. In that case I'd expect a lot of people to pretty wary of investing in sidechains, especially as a store of value. It seems like they should just be considered "fortified altcoins" in that case. For many altcoin proponents it may become THE way to launch altcoins, and it may provide a powerful boost, but it seems like it will take years without incident for people to gain enough confidence in the pegging system to rely on it as a store of value. To be able to block transactions would require centralization of the tx verification process or corruption of the miners. Considering the proposition of SPVP sidechains is to MM the more valuable sidechains on the same level as BTC it would mean a situation where a miner goes rogue and attack the network. Some have argued MM might open an incentive to do so that does not exist with Bitcoin itself. In my opinion the economic incentive for miners to behave is still very much in place and discourages most attempts. |
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I'm just trying to make incremental progress in my understanding by answering the question "on which ledger is the value stored?" The probability that the 2-way peg is severed is a different discussion. I think the probability of the 2-way peg being severed is actually central to the definition of "sidechain" vs. "altcoin," and for practical purposes determines investment behavior in the chain. On one end of the spectrum, if a sidechain's 2-way peg can be severed at the whim of the sidechain devs, it would essentially be an altcoin and would presumably attract about as much investment as altcoins do (not a threat to Bitcoin). At the other end of the spectrum, if it's mathematically impossible to sever the 2wp, then it is a true sidechain and the value seems to always remain with the Bitcoin ledger (not a threat to Bitcoin, at least not for this reason). For cases in between, we cannot really call it a true sidechain, and by the same token we cannot really expect substantial portions of the bitcoin holders to just jump over to the sidechain. In other words, there's a reasoning error to watch out for here: insofar as the value that could be funneled over to the sidechain relies on the certainty that the 2wp will remain, the concern is self-defeating. If there is any shadow of possibility that the 2wp could be broken, it won't attract that many bitcoins - not much more an any altcoin; and if any sidechain does attract a large portion of the bitcoins, it will only be because the 2wp is as certain of a thing in investors' minds as Bitcoin itself is, which is an extremely high bar.(This does still leave the possibility that the devs could hamstring Bitcoin deliberately to reduce confidence in Bitcoin to bring it in line with confidence in a not completely solid 2wp so that many people would switch despite some uncertainty. However, this is a much smaller argument to be making.) +1 good to see some reason and rationality in here. refreshing |
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http://blockstream.com/2014/11/17/blockstream-a-champion-of-bitcoins-core-values/http://blockstream.com/2014/11/17/blockstream-closes-21m-seed-round/we all share a demonstrated commitment to advancing an open source, cryptographically-enabled future that supports user’s rights and freedoms and creates lasting public benefit. These values are also core to the group of investors who participated in our seed round. Both Reid Hoffman and Vinod Khosla are well known for their deep commitment and generous contributions to companies, projects and causes that have benefited millions of people around the world. As Reid mentions in his post today, he sees Blockstream as similar to Mozilla (Reid is a board member of Mozilla). “And that’s why I’m participating in this first-round financing as an individual investor, and why Blockstream itself will function similarly to the Mozilla Corporation. Here, our first interest is maintaining and enhancing Bitcoin’s strong open ecosystem. And the structure we’ve chosen will give us the freedom and flexibility to prioritize public good over returns to investors.” We look forward to working with the community on fulfilling the potential of a faster pace of blockchain innovation, focussed and building on Bitcoin’s network-effect. “Can’t be evil.” That was the first thing Adam Back and I wrote on a whiteboard at the start of the year.
Blockstream is the first startup focused on advancements to the core technology underpinning Bitcoin.
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Blockstream is the first company extending the capabilities at the protocol level to support massive scaling of Bitcoin and blockchain technology to a broad range of asset types. Put another way, the extension mechanism of sidechains, the company’s initial area of focus, allows any number of so far unthought of developments to happen in an open and interoperable way. Blockstream: A Champion of Bitcoin’s Core Values
Sounds like bad guys  Sounds great, help me connect the dots. VC's invest $21M to improve Bitcoin, we assume it is going to add value to our Bitcoin holdings (at least you insist it will) yet BlockStream has no business plan, and the asset that is to go up in value as a result of this donation is not owned in large quantities by the VS's. What is it they havethat I don't... Vision. |
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Has anything interesting happened in the last month or two?
look up |
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Wedbush Securities Inc., the Los Angeles-based financial-services firm founded in 1955 by friends fresh out of college, took a stake in bitcoin venture Buttercoin and is using the platform to buy and sell the virtual currency.
The deal makes Wedbush, with offices from Manhattan to Honolulu, the first Wall Street firm to announce a stake in a bitcoin startup, Buttercoin Chief Executive Officer Cedric Dahl said. Buttercoin, with backers including Google Ventures and Y Combinator, helps businesses shift between cash and bitcoins to use the virtual currency or provide related services to clients.
“Wedbush will be bringing in their friends from Wall Street,” Dahl said in an interview. The Palo Alto, California-based startup plans to talk with potential investors in January about raising more than $25 million, he said, declining to specify the size of Wedbush’s holding. so in one day Bitcoin has attracted the investement of mostly anyone that matters in the tech world to a 20 million seed round (blockstream) and we learn that Wedbush Security are buying Bitcoins and investing in Google-venture backed Bitcoin company (Buttercoin)  more gentleman please |
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as i see it, SC's are a temptation to make fast money thru inflation thru the indirect method of breaking Bitcoin's Sound Money function using federated servers which allows transformation of BTC to all manner of speculative assets (anything not BTC). except that Blockstream will be in the best position to make USD's from that. the rest of us will have to scramble to figure out which chain contains the most value.
the bigger reward, but longer battle, will be achieved by maintaining a self contained Bitcoin financial system that inextricably links the currency unit to its blockchain. this will be much easier for us, all we have to do is hodl.
FTFY maybe. but those ppl are short sighted as the big column on the far right should be the goal. there should be a column for gold:  I'm afraid this, is actualy a very shortsighted way to see things. I'd like to suggest you this reading http://wefivekingsblog.blogspot.ca/2014/01/the-universe-wants-one-exchange.html if you haven't had the chance yet. you will understand that your complaisance with Bitcoin as merely Sound Money might be misguided. |
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http://blockstream.com/2014/11/17/blockstream-a-champion-of-bitcoins-core-values/http://blockstream.com/2014/11/17/blockstream-closes-21m-seed-round/we all share a demonstrated commitment to advancing an open source, cryptographically-enabled future that supports user’s rights and freedoms and creates lasting public benefit. These values are also core to the group of investors who participated in our seed round. Both Reid Hoffman and Vinod Khosla are well known for their deep commitment and generous contributions to companies, projects and causes that have benefited millions of people around the world. As Reid mentions in his post today, he sees Blockstream as similar to Mozilla (Reid is a board member of Mozilla). “And that’s why I’m participating in this first-round financing as an individual investor, and why Blockstream itself will function similarly to the Mozilla Corporation. Here, our first interest is maintaining and enhancing Bitcoin’s strong open ecosystem. And the structure we’ve chosen will give us the freedom and flexibility to prioritize public good over returns to investors.” We look forward to working with the community on fulfilling the potential of a faster pace of blockchain innovation, focussed and building on Bitcoin’s network-effect. “Can’t be evil.” That was the first thing Adam Back and I wrote on a whiteboard at the start of the year.
Blockstream is the first startup focused on advancements to the core technology underpinning Bitcoin.
...
Blockstream is the first company extending the capabilities at the protocol level to support massive scaling of Bitcoin and blockchain technology to a broad range of asset types. Put another way, the extension mechanism of sidechains, the company’s initial area of focus, allows any number of so far unthought of developments to happen in an open and interoperable way. Blockstream: A Champion of Bitcoin’s Core Values
Sounds like bad guys
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here's a clever reply on how Blockstream can make money devving SC's by asherp on Reddit:
[–]asherp 2 points 7 hours ago
My guess: it takes time to convert btc onto a given sidechain, and the weaker the chain the longer it takes to convert. The devs could have already started several sidechains that expand bitcoin's features, moving their own btc onto them. When they announce their new sidechain, they can offer to trade for coins on the main chain for slightly above the 1-1 peg. Those who want to use the sidechain can either a) convert their own coins which could take weeks or 2) buy premined sidechain coins for a small fee.
clever. who would've thought.  |
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as i see it, SC's are a temptation to make fast money thru inflation thru the indirect method of breaking Bitcoin's Sound Money function using federated servers which allows transformation of BTC to all manner of speculative assets (anything not BTC). except that Blockstream will be in the best position to make USD's from that. the rest of us will have to scramble to figure out which chain contains the most value.
the bigger reward, but longer battle, will be achieved by maintaining a self contained Bitcoin financial system that inextricably links the currency unit to its blockchain. this will be much easier for us, all we have to do is hodl.
FTFY |
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 my friend. the cost is not time or convenience but trust. if you want to maintain Bitcoin as Money only the trust for the ledger matters. to preserve the trust, you have to, as you say,discourage any inflation and devaluation of its value. by conceding the handling of transactions and proof verification to anyone but the network you forfeit trust. by conceding the trust to a significant portion of the economy to off-chain schemes and federation of servers/oracles/voting pools you necessarily create more risk and enable possibilities of fractional reserve schemes. nothing that happens on gox-like ledgers matters to Bitcoin and its future success. lol well I think *this* is where we disagree I don't believe that people who lost coins on Gox are glad they "remain in circulation somewhere in someones hands." Probably because that someone's hand is likely the same one who took it from theirs.. any scBTC that get lost in an attack or SC failure get lost forever. Well you see to me this is not necessarily a bad proposition. it encourages prudence and financial awareness. It instills respect first and foremost for the store of value. but the real problem is the offramp; the spvp which breaks the sound money function and ruins everything for everyone. the off ramp exists in many form and is not unique to spvp proof verification. |
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my position is that Bitcoin should only be used as Money. all other services should simply use Bitcoin as money. Bitcoin should not have to build in any other services.
is that consistent with your model? it doesn't sound like it.
Hmm... we are lacking the terminology here. Gold or USD is also money. Bitcoin is money with addtl features like guaranteed scarcity and simple transfer. These features make it better money. But exchange is not supported (atomic trustless worldwide). Changetip and lots of other services dont really use it. By this I mean other then the on and off ramp changetip might as well be using USD. I want BTC to be the universal electronic embodiment of value -- the final money. To do so it needs to truly be integral to the applications that require value. But I want the main chain to remain the safe low risk equivalent of holding FRNs or gold. I dont want tons of features thrown into the mainchain -- too dangerous. At the same time having every app use BTC equivalently to how it would use USD (centralized offline storage with individuals balance in a DB) is wasting btc's revolutionary technologies. Sidechains are the way to keep the core safe yet allow BTC to assume the role of the ultimate money.  +1 My man. This guy gets it. I don't want it to be money cypherdoc. We need it to be the internet of money. all other services should simply use Bitcoin as money. This 8 words sentence perfectly resumes you. After nearly 200 pages of discussion on this very issue. You did do not understand that sidechains (whether SPVP or federated) are the most natural and intuitive way to create services that use Bitcoin as money. They are potentially the optimal way to preserve BTC as a ledger. The SPVP proposal you so oppose is in reality emerging for the very nature of Bitcoin as a programmable open-source protocol. As stated, the reason its implementation would be ideal is to allow a more secure & decentralized proof mechanism to be available to sidechains that command these properties. i was thinking today this very point is what distinguishes our philosophies of the pro vs con of SC's you, zerg, odalv all want to see the Bitcoin protocol encompass all forms of asset trade; stocks, bonds, insurance, smart contracts, etc. you will accomplish by breaking the link btwn the currency unit and its blockchain. i, and many others on this thread, see Bitcoin as Money only. a digital form of gold. the SPVproof is the key to our opposing views. in our world view, Bitcoin as Money will eventually be used to trade these assets as well. but it will take longer and some patience. there is good reason for this outlook and desire. the real problem with the world today is with unfettered fiat printing. we need a better money like Bitcoin. imo, Bitcoin is the targeted silver bullet aimed at the heart of central banks at their core function of money printing. Forex markets trade of $5.3T per day. the gold market is $8T. if we can maintain Bitcoin as Money, with time we can subsume both of those markets which will take us to the Moon. but it relies on keeping the sound money function. there's the problem. my friend. the cost is not time or convenience but trust. if you want to maintain Bitcoin as Money only the trust for the ledger matters. to preserve the trust, you have to, as you say,discourage any inflation and devaluation of its value. by conceding the handling of transactions and proof verification to anyone but the network you forfeit trust. by conceding the trust to a significant portion of the economy to off-chain schemes and federation of servers/oracles/voting pools you necessarily create more risk and enable possibilities of fractional reserve schemes. |
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my position is that Bitcoin should only be used as Money. all other services should simply use Bitcoin as money. Bitcoin should not have to build in any other services.
is that consistent with your model? it doesn't sound like it.
Hmm... we are lacking the terminology here. Gold or USD is also money. Bitcoin is money with addtl features like guaranteed scarcity and simple transfer. These features make it better money. But exchange is not supported (atomic trustless worldwide). Changetip and lots of other services dont really use it. By this I mean other then the on and off ramp changetip might as well be using USD. I want BTC to be the universal electronic embodiment of value -- the final money. To do so it needs to truly be integral to the applications that require value. But I want the main chain to remain the safe low risk equivalent of holding FRNs or gold. I dont want tons of features thrown into the mainchain -- too dangerous. At the same time having every app use BTC equivalently to how it would use USD (centralized offline storage with individuals balance in a DB) is wasting btc's revolutionary technologies. Sidechains are the way to keep the core safe yet allow BTC to assume the role of the ultimate money. +1 My man. This guy gets it. I don't want it to be money cypherdoc. We need it to be the internet of money. all other services should simply use Bitcoin as money. This 8 words sentence perfectly resumes you. After nearly 200 pages of discussion on this very issue. You did do not understand that sidechains (whether SPVP or federated) are the most natural and intuitive way to create services that use Bitcoin as money. They are potentially the optimal way to preserve BTC as a ledger. The SPVP proposal you so oppose is in reality emerging for the very nature of Bitcoin as a programmable open-source protocol. As stated, the reason its implementation would be ideal is to allow a more secure & decentralized proof mechanism to be available to sidechains that command these properties. |
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Of course none of the elemental properties of gold were changed to create gold "side chains" and that is why we should go the federated route with bitcoin.
i think this is where we agree; if we are going to use SC's at all. of course, there's always OT as well. Yes. If it ain't broke, don't fix it. Bingo! we have a Winner! If you look at Peter R's three scenarios and my comments (I hoped someone else would point this out...) there is not really that much difference between sidechains and altcoins. The sidechains' promoters just want to get a flying start. In my opinion, they won't. The economics does not support it.  There is absolutely a most fundamental difference. Sidechains, unlike altcoins, derive their value and their scarcity from the Bitcoin mainchain. This enables users to claim a 1:1 stake in any sidechain they are interested in, unlike with altcoins The sidechain scBTS's are a different form of money. Much like the warehouse receipts for gold, just like you said earlier. They will have a different value if they are allowed to float. If not, as with the peg (there will always be a bit of resistance between the two, just like with gold certificates, it takes at least some time and some cost to deposit and retrieve the gold). The idea that you can take the bitcoins off the blockchain and shove them around, is wrong. You can only have the bitcoins, or deposit them, manually with trust as in a bank, or automatically with the sidechain. A different form is right. Currency issued out of a reserve chain. The difference in value that you propose (in the case of a peg) is experience equally by all the users of the sidechain. The point is whatever value is assigned to the chain is derived from a user's stake in BTC. Moreover atomic swaps in an optimal and liquid market will allow for near instant reversibility or transfer of assets. Also, if no user uses the chain then there are effectively no coins on the chain. That is very much unlike altcoins vers units are either premined or distributed following some parameters. |
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In this scenario miners will MM 100% of these chains because they have considerable economic incentive to do so. What you are suggesting is that they will forfeit a percentage of their revenue for obscure reasons. This is the same argument PoS systems to explain their security model. You've either proved that PoS is equivalent to PoW for distributed consensus, or you're advocating replacing Bitcoin with a PoS system under the guise of an upgrade. I guess so, except it takes considerably more resources |
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this is new, in Bitcoin land, to use 100% of your mining power you had to forfeit 100% of your income and pay for the energy needed to be a malicious miner, in the post SC BTC world you can use 100% of your mining power and attack the network, while still earning tx fees on other chains, these kind of speculative attacks went possible before, its just labour and gold rigging, on the protocol level. its will always be profitable.
I understand the risk but as I have suggested before, I envision that only chains supporting considerable value will use MM to secure themselves. In this scenario miners will MM 100% of these chains because they have considerable economic incentive to do so. What you are suggesting is that they will forfeit a percentage of their revenue for obscure reasons. It seems to me this is no more a valuable proposition than attacking Bitcoin itself. A chain that supports only 10% of the economy could possibly generate hundreds of thousands if not millions of dollars in potential revenue for the miners. Moreover, is it not possible for the network to eventually penalize malicious actors? If a pool finds it reasonable to attack a 10% of the ecosystem is there not a way for the network to effectively "ban" this pool from mining all of the chains to penalize them? |
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