i think the true answer is, "it's impossible to know". a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs. in that sense, the BTC price could tank. i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario. or, yes, it could "make all our BTC more valuable!" that's certainly the conventional thinking around here.
the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic. today, we have the internet and the media would be all over it.
that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme? If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable." Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable. Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity. 1) Some BTC is SPV'd to scBTC 1. 2) Some scBTC 1 is SPV'd to scBTC 2. 3) scBTC 1 is discovered to be a scam (or just a bad implementation) whereas scBTC 1coin massively inflates so that no one on scBTC 2 has any incentive to SPV back from scBTC 2 to scBTC 1 and so no way to return to MC. (Yes, you can create a side chain from a side chain.) complexity risks... Edit: Is there a way to have such an event without sidechains, or is this a "new" risk? well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.
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breaking the link btwn BTC the currency, from BTC the blockchain?
The "breaking the link" is pure marketing. You may be right that it is harmful marketing try to promote the idea of breaking that link. I consider it deceptive at best. BTC-the-currency still has all 21 million on the main chain with or without sidechains. Some may be locked, some lost, some not yet mined, but they never go anywhere. They are on the main chain ever and always. If you've read every post here Justice nailed it with this post. https://bitcointalk.org/index.php?topic=68655.msg9448208#msg9448208I don't for a second believe Austin Hill thinks like you do. Never has it been said anywhere that the link between the blockchain and BTC should be broken. What Blockstream, and Adam Hill, are proposing is to allow the BTC to move between subchains and not be restricted to Bitcoin's blockchain features. In the end, the BTC locked on a sidechain is still accounted for on the mainchain, as rocks has discussed.
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i think the true answer is, "it's impossible to know". a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs. in that sense, the BTC price could tank. i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario. or, yes, it could "make all our BTC more valuable!" that's certainly the conventional thinking around here.
the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic. today, we have the internet and the media would be all over it.
that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?
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not to some around here. didn't you get the memo? SC's can only make the BTC price go up, be they scam or legit.
![Roll Eyes](https://bitcointalk.org/Smileys/default/rolleyes.gif) do you want us to revisit some of your doomsday scenario made in the first couple of pages of this discussion. your amount of backpedalling has been quite impressive and obvious to anyone following since the beginning. the argument was not that there weren't any risks. it was that those you were coming up with were completely farfetched and improbable
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Let's say someone created a centrally managed sidechain, received 1M BTC as 1M scBTC on that sidechain, but then artificially increased the supply of used scBTC on that sidechain to 10M scBTC over time.
Someone would need to come up with one hell of an explanation to incite people to transfer 1M BTC to a centralized sidechain. This doesn't seem to me like a scenario that sidechains introduce. On the contrary, now that they introduce the opportunity for any one to set up decentralized platforms, proponents of a centralized scheme would be hard pressed to explain their reasoning behind the creation of a centralized structure on top of a natively decentralized sidechain.
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Right now low bitcoin price causes larger and larger bitcoin numbers to be dumped by miners to compensate for their costs. This is a vicious cycle that, in my opinion, will be broken only when higher cost producers are eliminated from mining OR there is a sudden increase in buying with the latter being unlikely.
Miners dumping all dumping a majority of their coin is a myth that I have repeatedly proven to be wrong.
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That's a good point.
You seem to understand Economics. What's your opinion of we lose 50% of all BTC to a SC failure?
A sidechain that supports 50% of the Bitcoin economy would probably be as extensively reviewed, secured and protected than Bitcoin's own blockchain so it seems to me these type of scenarios are far out there. I would much rather see such important amount of BTC on a community supported sidechain than on a centralized off-chain scheme ala Mt. Gox.
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https://cdn.panteracapital.com/wp-content/uploads/Pantera-Bitcoin-Letter-November-2014-1.pdfPantera is very bullish on sidechains The most promising aspect of sidechains is that they can support decentralization of anything that couldn’t previously be decentralized because of limitations of the Bitcoin protocol. They have nailed it down perfectly. Both sidechains' opportunity and Blockstream's mission. There needs to be only one true ledger, one blockchain to rule them all. Sidechains enables Bitcoin to truly realize's its promises as the TCP/IP of money. They effectively confirm the layer idea on top of which other decentralized value applications of the future should be built. Because Bitcoin's chain is the only truly decentralized blockchain in crypto, other attempt at creating similar mechanisms to support different applications was always going to be imperfect. Bitcoin is the only trustable decentralized value transmission protocol. Blockstream is trying to build the main applications that will be used on top of this protocol Sidechains are a major step forward in the Bitcoin network effects sequence. They are one of Bitcoin’s network effects, in that they are the product of developers attracted to Bitcoin and inspired to build on its technology. At the same time, sidechains cause further Bitcoin network effects by enabling unimaginable and facilitating theoretically difficult sidechain-based applications. We are curious to see how sidechains will exponentiate Bitcoin’s disruptive force in the next few years. +1
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the way i understand the github process is that while you may be able to put patches up there freely, nothing can be written to the source code w/o consensus from the core devs themselves. b/c the vast majority of them now work in one company, there is a potential for them to possibly insert what they want and definitely to block what they don't want.
JR has asked the question about technology that might obsolete the need for SC's and how that might get blocked. he doesn't think his question got answered satisfactorily. it is a potential problem that the community needs to address and talk about as it does have real world implications if abused. they're basically saying "trust us". it's up to you.
this part is not true. 2 out of 5 is not the majority. Only Greg & Peter are at Blockstream and can write to the source code i went back to a quote from gmax: Blockstream's cofounders include 2 of 5 of the people with commit access to the bitcoin core github repo. Or, if you count people with non-trivial contributions to Bitcoin we have 5 people out of hundreds.Which confirms what I was saying. Contributions can be proposed by everyone. This only mean they have 3 other person with them who have made "non-trivial" contributions.
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the way i understand the github process is that while you may be able to put patches up there freely, nothing can be written to the source code w/o consensus from the core devs themselves. b/c the vast majority of them now work in one company, there is a potential for them to possibly insert what they want and definitely to block what they don't want.
JR has asked the question about technology that might obsolete the need for SC's and how that might get blocked. he doesn't think his question got answered satisfactorily. it is a potential problem that the community needs to address and talk about as it does have real world implications if abused. they're basically saying "trust us". it's up to you.
this part is not true. 2 out of 5 is not the majority. Only Greg & Peter are at Blockstream and can write to the source code
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it's b/c they have 5 (?) guys who have commit privileges, 3 of which are core devs and all of which could derail any upgrades to Bitcoin from SC innovations for Blockstream profit motives. that's if you believe it's not critical that Bitcoin stays around while a SC takes over in the long run.
I'm not certain how exactly github commit work but given the hypothesis that an open source feature becomes so obviously valuable all of the community agrees it should be implemented into the mainchain I don't see how even the Blockstream devs could stop it from happening. As far as I know they don't have veto power. the pessimistic view would be they could all make alot of noise and deception to disrupt consensus if they had enough financial motivation to do so. Two developer can only make so much noise over a community of others. I don't see it. Remember also that they have ethics clauses in their Blockstream contract. Bottom line is the Blockstream team is not there to invent altcoins that compete with Bitcoin's cryptomoney function. Unless you want to paint malicious intent on them without probable cause. This in itself is not very ethical if I might say.
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it's b/c they have 5 (?) guys who have commit privileges, 3 of which are core devs and all of which could derail any upgrades to Bitcoin from SC innovations for Blockstream profit motives. that's if you believe it's not critical that Bitcoin stays around while a SC takes over in the long run.
I'm not certain how exactly github commit work but given the hypothesis that an open source feature becomes so obviously valuable all of the community agrees it should be implemented into the mainchain I don't see how even the Blockstream devs could stop it from happening. As far as I know they don't have veto power.
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So I have a hypothetical situation, and I’m interested in this community’s input, this is the economic speculation thread after all.
lets say someone has 1% of all Bitcoin. lets say they create a Bitcoin ETF, and sell shares to that ETF on the NASDAQ. It takes off. Over time the holding in the ETF go up and down the total holdings never Drop below 1% In this scenario the ETF Charter promise to back the ETF with Bitcoin it guarantees on redemption to pay in USD at market rate and only under special circumstances will it pay out in BTC. --- In this hypothetical situation an SC-coin-it has been created, it is Open Source, it has proven utility and security, faster transfer times, it is highly liquid, in fact it is the preferred transfer of value coin for salary’s and typical larger expenses like TV’s and high end consumer goods because of its faster confirmation times, People still use Bitcoin for purchases like cars and houses – and even pay their loans in BTC – yacht for BTC are selling will in this hypothetical scenario, in fact BTC is used for larger deals where instant transfer times are not a risk. But the SC-coin-it is the preferred means of exchange for anything of value that is relinquished at the point of sale.
What happens when the ETF, knowing they have 1:1 2wp redemption capability with the SC-coin-it, and 1% of all bitcoins that are stagnant start to leverage their BTC, they are still in theory backed by BTC, but start lending out SC-coin-it to AAA rated entities, they haven't broken there charter due the technicality that the BTC is secure, and they are not lending their BTC ?
Yes they have broken their charter because an investor cannot cash out his stake that has been lent and is being used by the borrower. The BTC is not secure, it can be spent through the use of the SC coin.
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actually, that may not be true. hardware is entering commoditization and the cost of hashing has dropped 10 fold in the last year. so there may be some hope for solo mining still. or at least for individuals holding hardware that want to pool mine.
did you see this: over $3.6M in hardware, one of the risks of centralized mining, the guy was consuming 5.5MW of power and only had 2 security grads. link? wow, that looks like that Chinese mine with huge fans in opposite walls? http://www.reddit.com/r/Bitcoin/comments/2lexl2/here_is_why_the_hash_rate_jumped_and_took_a_dive/ I flowed up on BT last night and there are a few other threads. goes to show you there are risks to centralization. I think that's more a case of a wealthy amateur job going wrong After seeing some more pictures I have to take that back. It is suggested the fire did not originate from the miners. Setup looked fine
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brg444, how do you want to implement fastBTC using MM ?
In all honesty that type of design question is out of my technical range. I understand from your posts there are different ways to go about it and I'm certainly not knowledgeable enough to pretend to know which one would be best. I'm certainly interested in hearing what you have in mind though..
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actually, that may not be true. hardware is entering commoditization and the cost of hashing has dropped 10 fold in the last year. so there may be some hope for solo mining still. or at least for individuals holding hardware that want to pool mine.
did you see this: over $3.6M in hardware, one of the risks of centralized mining, the guy was consuming 5.5MW of power and only had 2 security grads. link? wow, that looks like that Chinese mine with huge fans in opposite walls? http://www.reddit.com/r/Bitcoin/comments/2lexl2/here_is_why_the_hash_rate_jumped_and_took_a_dive/ I flowed up on BT last night and there are a few other threads. goes to show you there are risks to centralization. I think that's more a case of a wealthy amateur job going wrong
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The problem that me, and seemingly a couple others, have with Cypherdoc's concerns is that most of them boil down to the creation of altcoins, something that sidechains did not introduce and do little to enable. I hope you have come to understand this part because the accusation that you make of SC proponents being "unreasonable" can equally be applied to most, if not all, of the SC opponents in this thread.
You seem to be a reasonable person who has a great ability to distill his ideas in thoughtful and concise manners. Maybe you want to share with us notable weaknesses of the 2wp and what considerable risks you can foresee?
I don't know that there are any SC opponents in this thread. I also don't claim there are any weaknesses in the SPV mechanism, and find it weird that you would see that anywhere in anything I wrote. I like SC's, I think it works and does pretty much what it says it does is the blockstream white paper. There are however risks, some of which have been discussed here already. Most of the more interesting risks fall into two main categories. 1) Economic risks (changes to miner incentives, centralization issues, and practical concerns, ZB's is one of these) 2) Confidence risks (both "cons" in the scam sense, and misplaced confidence in the mechanism as a panacea, or else misplaced confidence in any particular SC - what you call the altcoin risk, and loss of confidence in Bitcoin generally due to its new ease of change). As mentioned upthread, the SC mods present a new upgrade path. Introducing upgrade paths is something to do carefully, and I like that there is this discussion to work through some of the more obvious issues. There are all sorts of dystopian varieties of these two categories. Some may imagine a distant future where with a click of a button (or it is done automatically) where one upgrades their bitcoins from Bitcoin 17.4 to 17.5 moving to yet another new chain, and something goes horribly wrong and they find themselves on Central Banker Inflation Coin of something. Or what is more likely historically, they do this willfully because the news is telling them that it is necessary to do it for their survival in the new important war of the day. Edit: there is a 3rd category of risk, technical risks (of which SPV brokenness would be an example, but these haven't been much discussed here). Now these are reasonable, sensible remarks that do not rely on hyperbole scenarios and generally address the situation in a non-biased manner. Thank you. While there are some issues presented that I don't see as a problem, some definitely merit attention. Of course, due diligence on the part of the user is always one of the main concern but while sidechains might introduce new forms of scams, I will continue to say that fools, no matter the mechanism, will find a way to part with their money.
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I just really wish that there were more folks doing what they do so that we didn't have to suffer through these sort of conflicts.
I'm afraid this is the source of the problem. There are only so many highly qualified crypto-developers out there who are willing to work on Bitcoin projects. We should expect to have more in the future but meanwhile a project requiring industry experts only have so many candidates to pick from.
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While I don't necessarily agree with all of your constructs over the years here, I appreciate that you the potential for and disposition toward thinking.
It does seem to me that Bitcoin infrastructure provisioning is designed such that it will always approach unprofitably no matter what the growth rate, inflation rate, fee structure, etc.
It is worthwhile to note that different classes of entities can accept different levels of profit. So, an independent enthusiast class individual might be happy to break even and occasionally make a few bucks while this is not an option for a large commercial. Whatever the case, Bitcoin as implemented simply does not promote the individual class actor very well.
The take-away is that Bitcoin's only realistic hope is for infrastructure providers to monetize some other aspect of Bitcoin's existence. For large corporate actors this is a no-brainier. Monetize the intelligence stream as has been a well proven model over the last 15 years. The big down-side of this is that actors who are able to monetize in this way are distinctly under the thumb of governments, and governments have a very strong propensity to exercise fine-grained control over their citizens. Governments are inextricably linked to corporations and will be for the foreseeable future.
As I've mentioned before, sidechains would seem to provide a golden opportunity to monetize Bitcoin as a credible source of backing which they require in order to function. They thus have a significant interest in keeping it that way.
Right now Bitcoin is fairly credible to at least a cross-section of us in the community because it is free of interference (no 'red-listing', transaction discrimination at the mining level, etc.) Sidechains seem to me like the last best hope of keeping it that way.
My hope is that commoditization of ASICS and integration into heat recycling appliances distributed globally can solve that problem
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This is because successful sidechains would allow Bitcoin transactions to be disconnected from Bitcoin miners. Interesting read but considering this is the premise of your scenario I have no choice but to disagree with your conclusions. Txs fees are not escaping Bitcoin miners. As I've explained in another post, instead of miners sharing a % of the same pie, the txs fees are now split into different slices which are all available for miners to MM.
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