Do you not recognize there are applications that demand more decentralization than federation/oracles/OT can provide?
Would you trust any lesser decentralized schemes with money functions of Bitcoin that are not supported by the mainchain? That's not the point. You started out selling sidechains as an "equivalent level of decentralization and security" compared to the main chain. Are they or are they not capable of providing that? Sorry then, maybe equivalent was not the proper word. They surely are closer to Bitcoin's level of decentralization and security than any other option. As close as technically possible in fact. |
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The situation is probably akin to a typical serfdom |
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Do you not recognize there are applications that demand more decentralization than federation/oracles/OT can provide?
Would you trust any lesser decentralized schemes with money functions of Bitcoin that are not supported by the mainchain?
Please STFU this used to be a nice thread to follow. I agree, that is until cypherdoc polluted it with his FUD and misinformation. By the way there's at least 4 pages of discussion on sidechains that were created today without any of my participation so maybe you should stay away for awhile if you don't care to discuss them. |
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Does that make my argument any less true? You aren't making any arguments. You're inventing stories on the fly, without even bothering to maintain a pretense of consistency from post to post. Do you not recognize there are applications that demand more decentralization than federation/oracles/OT can provide? Would you trust any lesser decentralized schemes with money functions of Bitcoin that are not supported by the mainchain? |
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The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security. Can they really accomplish an equivalent level of security compared to the main chain? I don't believe you can secure sidechains at the exact same level as the mainchain simply because that would require all nodes to recognize this sidechain.
My opinion is that by securing the work of all miners to validate a sidechain you make it much more decentralized and secure than any other federated options.
Get your story straight. [/quote]  Is this all you have to say. Does that make my argument any less true? You are done with you driveby for now? |
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The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security. Can they really accomplish an equivalent level of security compared to the main chain? Do you know of anyone willing to go on record making that claim? This is pretty much how I understand it :  I don't believe you can secure sidechains at the exact same level as the mainchain simply because that would require all nodes to recognize this sidechain. My opinion is that by securing the work of all miners to validate a sidechain you make it much more decentralized and secure than any other federated options. |
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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 |
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Sidechains introduce a huge marginal value-add by providing services which people need and cannot achieve on the main chain. My seat-of-the-pants estimate is that this will easily account for any increase in value associated with scBTC on an ecosystem level and some of the value will probably back-wash into Bitcoin itself in a big way.
I agree that sidechains could introduce a "value-add by providing services which people need and cannot achieve on the main chain" and that this could increase demand to hold BTC. What I'm not convinced of is whether the value-add is "huge" or not, and whether providing support for SPV sidechains at the protocol level is worth the existential risk it creates. Let's see what happens with federated sidechains first... Is there not considerable value in more decentralization of our infrastructures? |
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who needs the MC to achieve all these services? to me, Bitoin is Money and only money. all these services can be created and just adopt BTC as their currency unit of exchange. this would be how to drive the price of BTC much higher.
How exactly do you propose they do this. Consider the two very desirable applications of privacy and instant confirmations. These are sidechains that operate a money function. Would you prefer that these be as equally decentralized and secure as Bitcoin or that they be conferred to a federation of servers/oracles/OT? |
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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. The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security. |
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I think, that value is always stored in MC. You can only put your bitcoins into "escrow" (lock them in main-chain) and use "value" on side-chain.
Shouldn't you then believe that the severing of 2-way peg would result in a scBTC value of zero in all cases? I think I've convincingly shown that this would not always be the case. Therefore, a % of the value must actually be stored on the sidechain's ledger. If 2wp does not work then pegged SC does not work. If we are talking about pegged sidechains then 2wp MUST be working. or maybe you want to talk about "pegged SC are not possible to create ?" => let's talk about why it is not possible to create functional 2wp SC SC does not have any value -> until BTC are locked(escrowed) to fund this SC how is it even possible to have thousands of spvp SC's when there are not enough resources to MM all of them? and even then, they're not secure. It is not a matter of resources but economic incentives. You are right : as I've mentioned repeatedly we can expect that only a certain numbers of sidechains be secured through MM and use the SPVP model. For many applications, the federated model is preferable |
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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. If you choose to use OT or Federated servers this is the decision that you are making : |
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There are plenty of examples of gold "side chains". The GLD ETF derives its value from gold. Egold once derived its value from gold. In fact anyone who owns any kind of note that is redeemable for gold is participating in a gold "side chain". Perhaps the most infamous example is the USD which has also lost its peg to gold. These pegs were eventually lost because of central points of failure, but the physical gold remained unharmed. Bitcoin distributes these central points of failure and if side chains fail, the bitcoin will remain. 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 don't necessarily agree with this. those ETF's and egold had to hold physical gold which "backs" those derivatives, whereas with SC's, BTC units are "transformed" into something totally different and then ride on less secure SC's. these speculative assets i think are worth less than the original BTC. if they get hacked or fail, those BTC are locked up forever, which i don't think necessarily translates into higher value for the rest of us still on MC. it could erode confidence. Just because GLD is supposed to be backed by gold doesn't mean that it is. At least with bitcoin we can have cryptographic proof that side chains are backed by a certain amount of bitcoin. I see these gold derivatives as precedent for side chains just as gold was precedent for bitcoin. Precisely |
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But I'm not sure that these arguments are strong enough to show that SPV sidechains hurt Bitcoin's sound-money property. In my opinion, this is only possible in Case #3, but, like Erdogan implied, it might be highly unlikely (impossible?) for a sidechain to obtain the status of #3. The problem for scBTC in case #3, is that it first will have to survive a period with less freefloating value, so it will have a problem achiveing the status of #3.
Others would claim that a #3 is ultimately inevitable due to the ossification of Bitcoin. At some point there would become a new SC that would be better in every way for everyone than Bitcoin and those that can exit do when then can do so. In this case, is it not preferable that the "better" chain is an SPVP chain? |
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an analogy to the self contained financial system that i envision with Bitcoin is gold.
there is a finite amount of gold circulating throughout the world. it's stored, it's used, it's supply is theoretically immutable. none of it gets "transformed" to other speculative assets at any time. and for 5000 yrs it served as the basis for a sound money system.
by promoting the transformation of BTC units over to "different less secure ledgers" which now seems to be accepted here by even brg444, how is Bitcoins Sound Money function sustained?
There are plenty of examples of gold "side chains". The GLD ETF derives its value from gold. Egold once derived its value from gold. In fact anyone who owns any kind of note that is redeemable for gold is participating in a gold "side chain". Perhaps the most infamous example is the USD which has also lost its peg to gold. These pegs were eventually lost because of central points of failure, but the physical gold remained unharmed. Bitcoin distributes these central points of failure and if side chains fail, the bitcoin will remain. 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. the bitcoin can be lost in a SC failure though. i think confidence is eroded in the entire system certainly in the case of those owners who lose their scBTC. Bitcoin can also be locked in for a length of time by the miners, remember merge mining can mine empty blocks on the SideChain locking it without forfeiting there mining revenue earned on other SideChains or Bitcoin. Which implies they forfeit the mining revenue of the chain they are attacking. If users decide that this chain is valuable to them it is in the miners best interest to preserve their economic incentives |
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[quote author=Peter R link=topic=68655.msg9573468#msg9573468 date=1416252764 But I'm not sure that these arguments are strong enough to show that SPV sidechains hurt Bitcoin's sound-money property. In my opinion, this is only possible in Case #3, but, like Erdogan implied, it might be highly unlikely (impossible?) for a sidechain to obtain the status of #3. The problem for scBTC in case #3, is that it first will have to survive a period with less freefloating value, so it will have a problem achiveing the status of #3.
which brings up my problem with Blockstream. they have a fiduciary duty aka financial incentive to make it happen regardless. and given their power positions in core dev, they may be able to make it happen. [/quote] That's incorrect. Their fiduciary duty is to create the infrastructure. They do not guarantee adoption. This adoption is dependent on the value proposition their client come up with. There will be plenty valuable enough to attract users. My bet is inflationary schemes supported by mischievous interests will barely make a dent in BTC. |
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...
In one of the previous examples we had:
MC
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SC1 SC3
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SC2
Where SC1 had rogue devs/miners who inflated it with new assets or subverted the proofs so no SC2 would convert back to SC1 and so convertibility was lost.
Subsequently SC3 is set up to restore convertibility because SC2 had such utility that it kept going and new owner folks wanted to (somewhat) regain the convertibility aspects (including new issuance from SPV).
So now you have SC2 with some BTC convertible back to MC and some not.
Some people who put their confidence in something (sc2) backed by a corrupt value backing (sc1) would lose. Sidechains are not some magic bullet which nullifies end-user stupidity and provider scammery. It just makes it possible for end-users to have an alternative to scammery if they want to put in the effort to do due dilligence. That alternative is found missing in almost every other financial instrument these days (except arguably physical PMs.) +1 |
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I think this is right. The same using other words: There is a separate value for the scBTC. When the peg is broken, this value is revealed. It also means that while the peg is intact, the holding preference would be with bitcoin in cases #1 and #2, and with scBTC in case #3. This will suppress the usage of scBTC #1 and #2, and may render them less and less liquid.
The problem for scBTC in case #3, is that it first will have to survive a period with less freefloating value, so it will have a problem achiveing the status of #3.
Blockstream are attracting big clients, they want to run entire countries on SideChains, one way to grow it is to do a 1934 Gold Reserve Act and have everyone convert, they could even do it at favorable rates above current exchange rates. you cant dismiss #3 is the point I'm making. We have been repeating this ad nauseam but countries willing to run their fiat economy in crypto will preferably issue their own altcoin which they can do now. Moreover, they could alternatively achieve this through federated server sidechains. In fact, this is the most likely outcome if they choose to bootstrap their fiatcoin on a sidechain. This scheme does not require SPVP because governements will have no interest in being dependent on miners for the security of their chain. Federated models provide far more control and oversight for their fiatCOIN. |
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Is confidence in the entire system not eroded from owners losing their value through off-chain, centralized schemes (gox). Sure the Bitcoin in Gox's case are still "on the blockchain" (I would argue BTC lost to a sidechain are also still on the mainchain, but burned and rendered unusuable) but the trust issue lays on the value lost by users.
its funny but that and the FBI-SR coin auction is what gives me confidence. the benefit to the community is to learn the value of real money and trust, two important skills knowing how to evaluate both. the more complex the relationships the harder it is to do. Well great, then you should be all for sidechains. May we all use the important skills of proper evaluation and due dilligence to determine the more legitimate sidechains offerings. I do not agree that sidechains are necessarily a more complex proposition than other off-chains schemes. The confidence erosion is not my argument btw but merely a twist on cypherdoc's comments. |
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There are plenty of examples of gold "side chains". The GLD ETF derives its value from gold. Egold once derived its value from gold. In fact anyone who owns any kind of note that is redeemable for gold is participating in a gold "side chain". Perhaps the most infamous example is the USD which has also lost its peg to gold. These pegs were eventually lost because of central points of failure, but the physical gold remained unharmed. Bitcoin distributes these central points of failure and if side chains fail, the bitcoin will remain. 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 don't necessarily agree with this. those ETF's and egold had to hold physical gold which "backs" those derivatives, whereas with SC's, BTC units are "transformed" into something totally different and then ride on less secure SC's. these speculative assets i think are worth less than the original BTC. if they get hacked or fail, those BTC are locked up forever, which i don't think necessarily translates into higher value for the rest of us still on MC. it could erode confidence. Maybe you don't agree because you don't understand it? Those ETF's, egold & BANKS were indeed supposed to "back" those promissory notes with gold in vault. History has shown us that this dependence on counterparty leads to abuse of trust and ultimately inflation of the value invested. SPVP Sidechains solve this problem by relegating the convertibility and "peg" to the protocol. Much like it was the case with BTC the counterparty risk is considerably reduced effectively guaranteeing that the "derivatives" are backed with BTC. I have already presented that example but sidechains are to Bitcoin what paper currency was to gold. Unlike paper currency, the trust does not reside in one central entity but in a federation of servers OR in more desirable cases in the Bitcoin network. |
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