I'm talking about centralization of mining and this crook Sam Cole milking BTC for fiat. Meanwhile, you're talking about BTC becoming the dominant world currency and decentralizing the global economy? I think we're on totally different pages.
And I'm saying centralization of mining is not happening and miners in majority are not dumping BTC for fiat. |
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I strongly disagree with that idea. The moment you see a regulation of who gets to post new valid blocks is a big red warning sign.
Correct, it does raise a dangerous precedent. You simply can't regulate this market, it's global and anonnymous, you don't know who is mining and where he is.
Yes and no. If we assume Bitcoin is behind the world's financial system then I can certainly envision a scenario where governments would want to use force to prevent some mining installations from approaching uncomfortable hashing %. Considering the advent of mining farms it certainly is possible to find out where the operations are located. This is not someone mining on his computer anymore. Of course this is all speculation. If Bitcoin achieves global reserve status then it is fair to question whether governments will have much power at all. |
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exactly.
I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.
I don't necessarily see it that way. Most likely there will be both, giant mining farms, as well as smaller enterprises that use local advantages such as cheap energy or technological advantages such as more efficient chip designs. The great thing about bitcoin is that the blockchain and mining was specifically designed around allowing an anonymous creation of new blocks/coins through PoW. At least for now it is pretty hard to regulate who can or cannot participate in mining. [edit] the irony in this is that we might observe something similar to the arms race of the cold war in mining if bitcoin gains wide adoption Cheap energy and technological advantage are things that can be leverage much more seriously by giant mining farms than smaller enterprises. One alternative that should be kept in mind is appliance mining where energy consumption/heat from the miners are effectively recycled for other purposes. This could certainly improve and increase decentralization. |
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exactly.
I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies.
Regulated by whom? A centralized authority? Syndicates aka mafias? I can only speak for myself, but I sure wouldn't trust them. [/quote] Regulated by each and everyone of the countries where they are based. Again, understand that I'm not referring to regulation that would allow for coercion of mining syndicates into maliciously using their power but regulation that would limit their hashing growth so as to secure the decentralization of the now global (in this scenario) Bitcoin economy. You'd have no choice but to trust them. |
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That only applies to the third question. Hackers don't care about the miner's incentive, and neither do governments. Besides what we're seeing right now is less companies building mega-mining farms and a more uneven distribution of hashrate.
Nope, wrong again. In reality there are more and more mega-mining farms being built. Just look at the hashing distribution right now and where we were this summer with GHash. As more of these continue being built the risk continues to be distributed effectively rendering hacking attacks and/or government takeover ineffective. Is GHash a mining farm or a pool? If it's a pool then your point carries no weight as miners simply pointed their machines to other pools thus decreasing GHash's hashrate. A giant mining pool is not the same as a giant mining farm. Ghash is a pool but I'm sure they have their own farms as well. Anyway, this irrelevant to the situation and I find it a bit strange for you to point this out since it effectively defeats your point as well. If Ghash is not a concern for you then we can safely say no private, unique entity's mining farm as even approached the necessary 51% hash rate. Considering more mining farms are being set up by other individuals we can safely say the danger of mining centralization is decreasing every day |
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What needs to be realized is that a high value bitcoin will give a tremendous economic incentive to invest into mining.
At 3600 coins a day even at current prices we are looking at up to half a billion dollars a year of new value created (until halving)
Now you can fill in the blanks on how much might be spent to gain a piece of that pie.
Lets face it. If bitcoin gains global adoption mining will be a multi billion dollar industry.
Does this mean the current value is unsustainable? I really don't know.
The numbers speak for themselves. Either we will see a very big change in mining or a very big change in value.
exactly. I know people hate Marc Andreesen for saying this but the likely scenario in the long run is enormous mining syndicates around the world being regulated in such a way as to PROTECT the Bitcoin network and discourage monopolies. |
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The main use case is not known yet. Creating sidecoins may not be (probably isn't) the intended use case but that's not the same thing at all. Unintended consequences happen all the time.
It is not, you are right. But it is pretty clear what the intended purposes are, at least in Blockstream's team mind, and that is not sideCOINS. By using a sidechain which carries bitcoins rather than a completely new currency, one can avoid the thorny problems of initial distribution and market vulnerability, as well as barriers to adoption for new users, who no longer need to locate a trustworthy marketplace or invest in mining hardware to obtain altcoin assets.
Sure the do put forward interesting use case of Issued Assets (native currencies) on top of a sidechain but I think it is made evident that there is not much interest creating such a currency to simply compete with Bitcoin. Considering all the facts it seems to me sidecoins are not inherently more dangerous to Bitcoin than altcoins. In fact, I find it more honest to consider how sidecoins could help Bitcoin's development If, in the medium term, there were wide agreement that the new system was an improvement, it may end up seeing significantly more use than Bitcoin. As there are no changes to parent chain consensus rules, everyone can switch in their own time without any of the risks associated with consensus failure. Then, in the longer term, the success of the changes in the sidechain would provide the needed confidence to change the parent chain, if and when it is deemed necessary to do so. |
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That only applies to the third question. Hackers don't care about the miner's incentive, and neither do governments. Besides what we're seeing right now is less companies building mega-mining farms and a more uneven distribution of hashrate.
Nope, wrong again. In reality there are more and more mega-mining farms being built. Just look at the hashing distribution right now and where we were this summer with GHash. As more of these continue being built the risk continues to be distributed effectively rendering hacking attacks and/or government takeover ineffective. |
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Competition only leads for the best fitted miners, like nature.
So yes, the system was designed around this concept.
If this is the case, then it's a flawed system. What happens when mining is controlled by a small handful of companies and governments decide to shut them down or seize control of them? What happens if they get hacked? What happens if they go rogue? They're not pools that people can just pull their hashing power away from. Remember that Bitcoin did not solve the Byzantine Generals problem but merely created an economic incentive for actors to behave. The fact is, ASICs and professionalized mining ultimately improves decentralization. https://gist.github.com/oleganza/bd14f60643395706efaaA reader asked me over email recently:
Have you posted anything or had any thoughts on Ghash.IO situation?
Nothing on this. I think it's just early volatility in bitcoin space. Some company (CEX) got serious about making a private mining farm and made a whopping share. Others will follow soon.
The dirty little secret of the blockchain is that it's not secure until increasing the hashrate by even 1% is an enormous economic feat. Currently it's not impossibly expensive to build your own farm with significant share - therefore the network is not very theoretically secure. Even if every existing pool had no more than 10%, you can't be sure that some guy does not unleash enormous hashing power at once and reverts some transactions.
When more companies start building private farms (and they will, it's the only cost-efficient way to mine; individual miners will soon disappear), you'll see more even distribution of the hashrate, but most importantly, the growth of hashrate will get slower. Because the slower it grows, the more robust the proof-of-work chain is. |
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i think we've identified numerous potential problems in different scenarios in the last several pages that need answering. i'm not going to repeat them yet again.
all of your potential problems depend on the creation of a sidecoin when this is not the main use case of altCHAINS |
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I don't understand how the peg will work.
Let's say 10 000 BTC are locked and give access to some sidecoin, if that Sidecoin is more succesful than BTC then the Sidecoin could be sell for more than the peg on the open market. If the sidecoin fail than the sidecoin holder can exit the sidechain and retreive their old BTC.
So basically a sidecoin is an option and there is a massive incentive to leave the BTC blockchain to the sidechain and enjoy you free option, so basically this will destroy Bitcoin. What I don't understand?
Careful about your speculation, it is possible for the feature of an altchain to become immensely successful but it is a completely different thing to suggest a sidecoin from an altchain would become more succesful than BTC. As I've mentionned above this is akin to saying an altcoin would become more successful than BTC. A possibility, but generally considered HIGHLY improbable. Also, you are confusing two possibilities. An altcoin could be created through a side chain using a non-deterministic exchange rate. If BTCs are pledged to that sidechain's altcoin then they are exposed to its exchange rate and volatility. In this scenario if the sidecoin fails than the holder CANNOT retrieve the same amount of BTC he put in, only the amount the exchange rate provides him in exchange for his failed coin. The alternative is for an altchain to provide a certain feature that could be accessed using your BTCs. You would lock your BTCs to this altchain and use it as you wish. Since the altchain uses BTC as a currency and not a native sideCOIN then there is effectively no floating exchange rate and if the sidechain is somehow compromised you would generally be able to unlock your BTC from the chain and go back to BTC main. |
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I really doubt anything will come along that is considered "better" for everyone. Anonymity, for example, is well below scarcity, security, and historical record on my list of priorities. But the thing with SC as opposed to altcoins is that bitcoin the currency stays the same. It is only bitcoin the blockchain that is in danger of being replaced. And even if it is replaced, bitcoin the blockchain will still be mined heavily at least until the subsidy dries up because new coins can be moved to whatever chain is successful.
SC also provides a way forward scalablilty wise that doesn't require a VERY controversial hard fork.
In the end, any opposition is irrelevant. This is a soft fork change, which means any single miner can choose to adopt it and remain compatible with the existing infrastructure. Other miners won't add the new transactions since they are "nonstandard", but they will validate blocks containing them. If use increases to the point that they are missing out on fees, you bet your ass they will jump on board.
+1 |
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I could go for that.
Smooth is right. SC'S are just sophisticated forms of altcoins.
Nop, only you focus on that. sideCHAINS are altCHAINS that allow for bilateral movement of assets (bitcoins) between them. sideCOINS are effectively altCOINS supported by the Bitcoin network. I suggest you read the paper again It appears that we desire a world in which interoperable altchains can be easily created and used, but without unnecessarily fragmenting markets and development. In this paper, we argue that it is possible to simultaneously achieve these seemingly contradictory goals. The core observation is that “Bitcoin” the blockchain is conceptually independent from “bitcoin” the asset: if we had technology to support the movement of assets between blockchains, new systems could be developed which users could adopt by simply reusing the existing bitcoin currency2
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brg444, I'm past the part about core dev altcoin implementations. I do see how it would be a hard sell for them although not impossible to sell to noobs. You forget that we are witnessing the power of what they can do RIGHT NOW with this SC proposal. They've banded together precisely to push this proposal through as a for profit company which requires a fork for them to be successful. It's not a wild thought imagining them trying to implement a new currency some day. LukeJr has talked about demurrage coin on reddit. Why? I could see a day where he starts one on his own and claims its just him personally, not Blockstream. Unlikely but possible.
They have banded together because they believe this proposal adds considerable value to Bitcoin's infrastructure. Nothing more. It is not a wild thought to imagine them try to implement a new coin. In fact they are free to do so. But as in all things alt coin, the free market will decide whether their proposition is worth switching over from Bitcoin. In the event this happens, their position as core developer would be of little help, if any at all. The whole idea of Bitcoin is that we do not care who created it, only that it works as advertised. The agenda you are trying to push is they would somehow leverage their position in the community as a way to influence the market to switch over to their coin. Sure, the community would carefully consider the proposition considering their status. The code would be reviewed, analysed and criticized the same way Satoshi's was. And if it turns out there is any unethical concern comes up or it is made obvious this coin would provide unfair advantage to some entrenched interest then the idea would be dismissed and everyone would move on. |
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This is not so black and white. I suppose there could be a real threat of a side chain taking over if there is little to no perceived risk by the market to move from chain to chain, but if the market perceives little to no risk then maybe there is little to no risk. Savers will likely park their money in the safest chain, i.e. the chain with the highest hashrate and bitcoin could cease to be the dominant chain at some point. I don't see why it couldn't happen.
I agree this could happen but not the way you suggest. For a side chain to "take over" it requires the whole network, nodes & miners, to come to a concensus that the side chain should become the main chain. As you have mentionned, it that were to happen, it would be because the market perceives little to no risk. Risk #1 being the conservation of value of their stake. In reality, ONLY a 1:1 peg that preserves Bitcoin's scarcity & overall economic model can provide this security. I have demonstrated in my previous post and some have come to an agreement that sidechains issuing a new native currency (no 1:1 peg) are effectively an altcoin piggybacking off Bitcoin's security. For that reason, the likelyhood that such a sidechain takes over is the same as any regular altcoin taking over. Having said that, if a sidechain's feature becomes so obviously superior that the whole market wants it then it is much more likely this feature is implemented into the Bitcoin main chain, either as a soft fork OR a hardfork. This makes much more sense for every market participant than having them all switch to the sidechain. In that scenario, hard fork are still a very tricky proposition but with the help of experimentation and beta implementation within a sidechain, the risk is considerably mitigated and consensus much easier to obtain. |
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No mate. They don't have to convince consumers. That's the point. They'll never know their money is being sent using the bitcoin network just like people don't know anything about http works when they're surfing the web now. To the consumer, the infrastructure and methodology they use will be the same as it is now. There's no leap of faith they have to make. https://stripe.com/blog/bitcoin-the-stripe-perspectiveOh I'm sorry but this is a wrong and myopic way to see Bitcoin's future. There is NO hiding Bitcoin from the consumer unless Bitcoin essentially becomes a Ripple adopted by banks and this is not the goal here. To fully realises the promises of Bitcoin they absolutely will have to convince consumers to use Bitcoin. Fortunately the arguments will be many and greed will do the heavy lifting. |
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Repeating yourself doesn't help to make your point. If the consumers don't "know their money is being sent using the bitcoin network," how are they learning about Bitcoin? How are they in a better position to use Bitcoin without relying on the infrastructure they have grown to trust, i.e. for-profit gateways providing it?
They will learn Bitcoin is better money, with more features and eventually the same security they have grown accustomed to. |
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Right. Then there is no mining in the SC? How are SC blockchains built?
Not quite, I too am having problem wraping my head about how exactly this would work but I believe this to be the relevant part in the whitepaper : Because miners receive compensation from the block subsidy and fees of each chain they provide work for, it is in their economic interest to switch between providing DMMSes for different similarly-valued blockchains following changes in difficulty and movements in market value.
One response is that some blockchains have tweaked their blockheader definition such that it includes a part of Bitcoin’s DMMS, thus enabling miners to provide a single DMMS that commits to Bitcoin as well as one or more other blockchains — this is called merged mining. Since merged mining enables re-use of work for multiple blockchains, miners are able to claim compensation from each blockchain that they provide DMMSes for. Note that the referred "block subsidy" exists only if the altchain issues its own native currency (not a 1:1 peg) Subsidy. A sidechain could also issue its own separate native currency as reward, effectively forming an altcoin. However, these coins would have a free-floating value and as a result would not solve the volatility and market fragmentation issues with altcoins. |
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Transactions only supported by fees would preclude using them for micro-transactions. Competition for mining for the fees would reach equilibrium with Bitcoin mining. There's not much advantage to them except for minimal counterparty risk.
1:1 pegged sidechains using bitcoins has currency are not "only supported by fees". Miners are essentially reward by the usual BTC issuance and additional transactions from sidechains Where are the block rewards bitcoin backing coming from if the chain is 1:1? From the Bitcoin blockchain. So if I understand this correctly, think of the altchains as a multi-sig wallet. If you wish to use some features of a sidechain (anonymity) you would essentially lock them to the altchain. From there, they would move within the altchain blockchain until you unlock them back to BTC. Any unit in the altchain is essentially a bitcoin that has been locked into the altchain. There is no issuance of new coins, no distribution model. |
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Transactions only supported by fees would preclude using them for micro-transactions. Competition for mining for the fees would reach equilibrium with Bitcoin mining. There's not much advantage to them except for minimal counterparty risk.
1:1 pegged sidechains using bitcoins has currency are not "only supported by fees". Miners are essentially reward by the usual BTC issuance and additional transactions from sidechains |
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