If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?
I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".
Again, why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over?
I love the idea, but I don't get how a dark 1:1 pegged SC can have a security incentive if you are only mining for fees. It will happen. There are plenty of good reason for a sidechain to use the anonymity feature of, say, Monero. What cypher fails to consider here is that a new currency is not necessary for this to exist. The altchain will leverage Bitcoin's currency and benefit from its network effect. Improved payer privacy, e.g. the ring signature scheme used by Monero, can reduce the systemic risk of the transactions of particular parties being censored, protecting the fungibility of the cryptocurrency. Improvements to this have been suggested by Maxwell and Poelstra
400 [MP14, Poe14b] and Back[Bac13a], which would allow for even greater privacy. Today, ring signatures can be used with Monero coins, but not bitcoins; sidechains would avoid this exclusivity I'm not sure about your security incentive question. Merge mining allows for hashing power of BTC to be shared with the anonymous altchain in a trivial way. So tell me cypherdoc, what is more likely to catch on? A 1:1 pegged sidechain with anonymity features or an anonymous sidechain issuing its own currency distributed in some malicious, hypothetic way that would benefit the Blockstream developer? IIRC pre-mines have never really been popular or successful. |
|
|
|
If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?
I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".
Again, why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over?
Who said so? The paper does suggest another altcoin can be spun off a sidechain. The difference is it also clearly states this is not where the ground for innovation lays. Altchain backed by BTC currency is what is important here. You chose to focus on the altcoin as if Blockstream's motivation is to create an altcoin using a sidechain which they have specifically explained why they have no interest and little purpose doing so. I still have yet to see you come up with a good incentive for core dev to maliciously fork Bitcoin in a way that would advantage them. No one is denying the existence of an apparent "conflict of interest". But like in all things Bitcoin you have to consider in an honest way what truly could go wrong. How long will you ignore the concept of open source and distribution? What else do I need to say to explain to you that a SC fork is bound to fail? Again, why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over?
To entertain your scenario the network then would be left with two options to consider.
1) The hypothetic Blockstream "pre-mined" altcoin
2) The community fork of the exact same altcoin with fairer distribution (hint : 1:1 peg)
Remember that a Bitcoin-like first mover advantage is inexistent in that case because of the open source development.
What's embarrassing is brg444 continuing to promise that no altcoins will be considered in SC's when there is an entire section dedicated to them in the paper.
What is embarassing is your continuing stubbordness in front of facts and arguments. Did you read my post at all? Is there anything you would like to argue? Do you not understand the idea that Sidechain are not an inherent threat to Bitcoin since Bitcoin is the parent chain? You have repeatedly supported the idea in this thread that altcoins can barely make a dent into Bitcoin yet packaged in a sidechain you are somehow worried it could threaten it? Do you recognize that scBTC have the SAME network effect challenge than any other altcoin? |
|
|
|
I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.
which is why scBTC is better implemented as an altcoin. if you have the network and the miners on your side what's stopping you ? other than how they are being marketed, I guess I agree with you. Have you read the "Applications" section of the white paper? The first application, already mentioned many times, is simply creating altchains with coins that
derive their scarcity and supply from Bitcoin. 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. It essentially allows for Bitcoin to be used on altcoin chains while able to move back and forth to the original, parent Bitcoin blockchain |
|
|
|
The Blockstream team has made it CLEAR they have NO interest into alternative currencies built on a sidechain. This is absolutely not their vision of sidechain and it is explained repeatedly in the white paper. Adam Back
sidechains are a generic extension mechanism. we hope many people make use of the sidechain extension mechanism to add innovative new features centered around the bitcoin currency. from the White Paper Appendix C Atomic swaps
Once a sidechain is operational, it is possible for users to exchange coins atomically between chains,
without using the peg. It sounds like altcoins to me. Yes of course it is possible to create "altcoins" or, commonly referred to in the paper, Issued Assets. My point is the main innovation they are trying to put forward, if we can trust their writing, is using application specific features of altcoins without having to issue a new currency. The altcoin approach of creating a new cryptocurrency just to introduce new features creates uncertainty for everyone looking at cryptocurrencies from the outside. There seems to be no natural stopping point, each fork can be forked again, ad infinitum. This creates both market and development fragmentation. We think that for cryptocurrencies to be successful as a whole we must build network effect, not fragmentation. To accomplish this we propose technology to enable new cryptocurrency networks that do not need new cryptocurrencies http://www.blockstream.com/2014/10/23/why-we-are-co-founders-of-blockstream/The whole point of this exercise is to leverage Bitcoin's network effect and sound economic foundations while fostering innovation from within. |
|
|
|
I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.
which is why scBTC is better implemented as an altcoin. if you have the network and the miners on your side what's stopping you ? |
|
|
|
The former: After time N for the whole chain, global exchange rate goes to 1 BTC = 0 Sidecoin. I see nothing preventing the exchange rate function from being able to be specified this way.
So a one-way peg with limited supply I don't see this type of scheme gaining much traction at all so I see no value in entertaining this proposition. |
|
|
|
This is open source software. Even considering stealth development of a rogue sidechain, the moment they commit the code to a sidechain, the code is out there for everyone to see.
the SC doesn't have to be rogue. it just has to be better. once it's determined the SC is better, the scBTC become more valuable than BTC. the arb can't work b/c the SC chain is superior and therefore the scBTC are worth more than the BTC. those who moved first will be in a better position. once other BTC holders detect this, they will start to migrate to scBTC. but the catch is: there's a cost to do so. mining fees. once miners detect this migration they will raise their fees to extortionist levels. they have to b/c accepting a devaluing BTC is risky. the reason this is more dangerous than simple altcoins is that you're building a system where there is a temptation for miners to merge mine these SC's thus providing them with the security they need to get up and running. we know from Peter Todd that Hill has been aggressively attempting to get mining pools to support SC's. A better scBTC code will be open for everyone to review the moment it is commited to a SC Pieter Wuille, bitcoin core developer
What we hope to accomplish is allow more innovation in the Bitcoin ecosystem, without needing a different currency.
If anyone premines (or otherwise inflates, even after the creation) coins on a sidechain, it would need to be encoded in the sidechain's rules. It seems unlikely people would move their assets to such a sidechain, and likely that even if there were benefits to using that sidechain, someone would simply fork it to remove the undesirable inflation. So it seems rather pointless to even implement - we certainly aren't planning to. Assuming someone does come up with a scBTC that is so evidently superior it could precipitate a mass exodus off the parent BTC chain they will most certainly end up creating an actual altcoin using their chain as the parent chain. This is because this new chain can only achieve Bitcoin's chain security if all nodes and hashing power switch over. A sidechain is inherently less secure than the parent, BTC blockchain. This, I believe also nullifies your concern of mining pool "hijacking" transplants. To entertain your scenario the network then would be left with two options to consider. Remember Good Money drives out Bad Money : 1) The hypothetic Blockstream "pre-mined" altcoin 2) The community fork of the exact same altcoin with fairer distribution (hint : 1:1 peg) Remember that a Bitcoin-like first mover advantage is inexistent in that case because of the open source development. Merge mining is a perfectly normal process and it can be extremely beneficial. Providing (almost) the same network security of BTC to altchains is a valuable and noteworthy contribution to their own development. What you seem to forget is that does not benefit them with the same network effect. Name me one altcoin that people would undoubtedly switch over to if it profited from Bitcoin's network security? I have spent some time reading the Reddit AMA and I'm sorry to say but it was disappointing to witness the childish stubbordness in your numerous comment in the face of considerably knowledgeable adversity. Your back must be aching from all this heavy lifting cause there were some serious moving of the goal post. You were corrected many time for different false assumption that you keep spreading around on this forum which I consider very concerning misinformation. The Blockstream team has made it CLEAR they have NO interest into alternative currencies built on a sidechain. This is absolutely not their vision of sidechain and it is explained repeatedly in the white paper. Adam Back
sidechains are a generic extension mechanism. we hope many people make use of the sidechain extension mechanism to add innovative new features centered around the bitcoin currency. |
|
|
|
a) scBTC have less value than BTC
If you are talking about a 1:1 peg I don't see this, really. If it persists then people will just flee the SC and it will become irrelevant (absent some short term uses like paying for coffee perhaps). If you are talking about a non-1:1 peg then it isn't clear to me that scBTC need necessarily be worth less than BTC. For example scBTC could pay dividends in some non-convertable asset. scBTC has almost same value as BTC (but there is little more risk. BTC == scBTC + riskOfConversion ) +1 |
|
|
|
My understanding, and I might be wrong :
- I'm not sure about the concept of scBTC trading on exchanges for reasons that buying a 4$ share of BTC and transferring to SC will give you 4$ share of scBTC. Value of BTC and sBTC are correlated, no matter the 1:x peg.
- My assumption is the share of scBTC pie you can claim is representative to the share of BTC you own. In that sense, if a SC is so superior that there are clear incentives for people to transfer their BTC to this chain, it does not matter when they do it for their stake in BTC, even while on BTC's blockchain, is simply a stake of scBTC they have not claimed YET.
- If this assumption is true then automatically the value of a Bitcoin will rise will the value of its "to-be-claimed" stake in sBTC and be redeemable for the same USD exchange rate
edit : Maybe this makes no sense but this is how I understand it.
ah, that does make sense actually. but what happens if, as it becomes clear that a SC is going to win over Bitcoin, miners begin to jack their mining tx fees just b/c they can to create the SPV proof tx required to make the switch to scBTC? also, there still is the question of Blockstream creating an additional asset on the winning SC ahead of time that stands to profit from a rush of BTC to scBTC. Here is your arb channel: BTC -> SCbtc ->USD -> BTC rinse and repeat So if BTC=$500 and SCbtc=$1000: I buy BTC for $500, convert to SCbtc, sell SCbtc for $1000, pocket $500, take the other $500 and buy BTC that can then be converted to SCbtc and be sold for $1000, ect, ect, ect As you said, the waiting periods and tx fees come into play. This is not even a possibility. 500$ in BTC = 500$ in SCbtc. |
|
|
|
i've given you a very plausible path to a scenario that could hurt Bitcoin. you can choose to hand wave it away, but i know human nature and if there is money to be made, ppl will go for it. especially since they are in a for-profit company with a financial guy like Hill. that's not a personal knock against him; it's his job to go for it.
this thread isn't for sticking your head in the sand. we flush things out here.
I'm sorry but it is not a plausible scenario. This is open source software. Even considering stealth development of a rogue sidechain, the moment they commit the code to a sidechain, the code is out there for everyone to see. You propose that once this happen, the traction and network effect of this sidechain is so fast that Bitcoin core can not adapt in face of a supposedly paradigm shifting implementation of crypto. Again, I'm sorry but this is a losing bet. There is already ENORMOUS money to be made by Blockstream while behaving in a community-minded, responsible way. Surely Hill is not trying to rule the world. Imagine Blockstream becomes some kind of RedHat for Bitcoin. Well my guess is he doesn't even dream of this measure of success. The economic interest you are putting forward in your previous post is a considerable RISK considering the open source aspect of crypto. They stand to lose their credibility, their carreer, and more if they even attempt such scheme. In reality, apart from a couple more million in their bank account, there is NO incentive for anyone in this group to behave like you suggest. Considering they already stand to make millions by having a stake in and improving the Bitcoin economy your scenario is a most farfetched one. |
|
|
|
Using SC, bitcoin can adapt ANY feature instantly. Bitcoin can test this feature in sandbox (SC) and make result
a) must to have -> feature is implemented
b) nice to have -> let's wait we will see latter, SC works good
c) scam -> feature RIP
It is one of 1,000 ... advantages of SC
that's right. sidechains are essentially a laboratory of innovation akin to altcoins but supported by and supporting Bitcoin's network effect |
|
|
|
you've avoided my question though.
besides, if you've ever did controlled studies, the best way to implement one of these SC's is to duplicate everything about Bitcoin and then add one killer function/variable, like anonymity, to definitively prove a difference. that's the whole purpose of these SC's as Erdogan says above, to create better features. and since both BTC and scBTC will be traded 24/7 they will reach their equilibrium values which WON'T be the same as the chains are by design different. your above theory of equal value doesn't apply b/c of mining fees to convert.
in fact, if there is a rush to get out of BTC and into scBTC, miners are going to HAVE TO charge extortionist tx fees b/c it would be clear that BTC will be going to zero so their risk of mining an SPV proof while being paid in BTC is high.
I've avoided it for the reasons I have stated : I cannot envision that scenario unfolding. The ONLY killer function you could add is indeed, anonymity. And by killer I mean it would steal part of Bitcoin's market share but nevertheless you would still be left two economies : a white market and a black market. Of course their value will not be the same because the sidechains in effect are apart of Bitcoin's economy. The value of Bitcoin will be represented by the value of all sidechains combined and of the standalone BTC blockchain. It seems you are putting forward a scenario that has mostly been dismissed ever since it existed from the presence of altcoins only because of your pessimism about sidechains. |
|
|
|
ah, that does make sense actually. but what happens if, as it becomes clear that a SC is going to win over Bitcoin, miners begin to jack their mining tx fees just b/c they can to create the SPV proof tx required to make the switch to scBTC?
also, there still is the question of Blockstream creating an additional asset on the winning SC ahead of time that stands to profit from a rush of BTC to scBTC.
I understand you are trying to poke holes into the concept and it is legitimate to consider these ideas BUT to me, suggesting that a SC is going to win over Bitcoin is essentially the same as entertaining the possibility that an altcoin would take over. The chances are slim to none, for the innovation required by this SC/alt would be so considerable that if we do reach this point, then to me it simply makes sense that Bitcoin core and their developers will recognize the innovation and adapt Bitcoin accordingly. I don't see the advent of sidechains bringing forward fundamental, competing, money-function blockchain. I think it is Risto or Aminorex that said there are only two liquidity market currencies can compete for : legitimate and dark market. Once one or two have established their dominance over these, any additional feature is superficial and will not attract anything more than situational/speculative use. I see sidechains as application specific uses of units derived from the Bitcoin ledger. IMO, any attempt at creating a sidechain that will compete with Bitcoin's money function will fail the same way alt coins have failed. |
|
|
|
Just finished reading this article: http://mobile.bloomberg.com/news/2014-10-21/bitcoin-miner-ditches-clients-to-chase-2-billion-coding-prize.htmlBasically the co-founder of KnC, Sam Cole talks about small-time mining operations becoming obsolete as their profit margins shrink and they get replaced by mega-mining farms. He continues to talk about the $2 billion in btc that will be mined in the next few years and expresses his company's intention to milk as much cash from this cow as possible. What is interesting to note here is that this guy is measuring the profits in $$$, which is indicative that his company doesn't care for btc and are in it for the potential fiat profits. He doesn't say that there's x amount of BTC up for grabs because he and his investors are only interested in the cash/fiat that can be made from mining BTC. Another thing to note is that he mentions their cost per unit is significantly below $400. So basically these scumbags have a lot of hashing power, fiat, and probably BTC to manipulate the market. This is speculative. He doesn't say there is X amount of BTC up for grab because the interviewer and his audience is not familiar with this unit of account. In reality, it is more probable that they hold a considerable amount of BTC. I have mentioned this in another thread but Bitcoin miners are some of the most bullish entities in the Bitcoin ecosystem. BitFury has confirmed that they hold most of their coins. DigitalBTC in a recent investors letter have confirmed they are not selling production from their mining farms "at these low prices". |
|
|
|
i'm missing something here.
why can't the scBTC develop an independent value in USD on their own on an exchange? and if that value starts going up relative to the BTC value b/c the SC turns out to be better functionally, then why wouldn't every BTC owner be forced to transfer their BTC over to scBTC along with a migration of direct mining hashpower to the SC? if the SC is better, the difference in value btwn BTC and scBTC can't be arbitraged away.
the end result being a destroyed Bitcoin and a "new" Sidechain dominance.
Because there is a MATH no 3D party -> how to convert(lock) BTC to scBTC Rule #1 You can anytime convert BTC to scBTC using this conversion function (if btc protocol is not broken) repeat( 1. Convert BTC -> scBTC 2. You sell scBTC for $ 3. buy more BTC at Bitstamp ) => scBTC has only value of BTC (SideChain has value based on BTC) this is where i still don't understand. remember, i'm trying to think of a scenario where SC's can hurt Bitcoin. presumably, both BTC and scBTC will be traded 24/7 on an exchange for USD. if a scBTC begins to exceed the value of a BTC in USD terms b/c the market perceives the SC to have a superior feature of whatever, then BTC will start to migrate to the SC as scBTC. why? b/c they're worth MORE in USD terms. at some point, you could even imagine where there could be a rush to make this conversion if the tech is that much better. mining power would also migrate to the SC. this cannot be arbed away b/c in this scenario, the SC is superior making the scBTC more valuable, no matter that a 1:1 peg exists. this could get quite disorderly and ecoomically disadvantageous for BTC holders with this confirmation and contest period of 1-2 days. what am i missing? My understanding, and I might be wrong : - I'm not sure about the concept of scBTC trading on exchanges for reasons that buying a 4$ share of BTC and transferring to SC will give you 4$ share of scBTC. Value of BTC and sBTC are correlated, no matter the 1:x peg. - My assumption is the share of scBTC pie you can claim is representative to the share of BTC you own. In that sense, if a SC is so superior that there are clear incentives for people to transfer their BTC to this chain, it does not matter when they do it for their stake in BTC, even while on BTC's blockchain, is simply a stake of scBTC they have not claimed YET. - If this assumption is true then automatically the value of a Bitcoin will rise will the value of its "to-be-claimed" stake in sBTC and be redeemable for the same USD exchange rate edit : Maybe this makes no sense but this is how I understand it. |
|
|
|
there is the potential to implement things that will benefit the company. why can't you see this? we should avoid if at all possible compromising situations. 5 devs under one roof is not the answer, imo. if they were split up individually, then fine.
there is potential they might try to. but anything that would be considered harmful to the main blockchain would be met with considerable opposition from other core devs, miners & nodes. the fact that they are 5 core devs does not give them vto over code implementation. if the community finds them to behave in an unethical way they will lose their place. simple as that. how can you assure that they won't? simply b/c they haven't? that's naive. Because they have no incentive to do so. End of the story. Care to share any incentive that would have them betray the trust of the community at large and potentially hurt Bitcoin? A pay raise? A patt in the back from CEO Austin Hill? Blockstreams success aligns with Bitcoin's success, not their sidechains. the fact that Hill and Back did miss early adoption of Bitcoin needs to be considered. they probably don't have much in the way of BTC. this could change all that for them so i don't blame them for taking this shot if they can get ppl like you to buy in. People like me ?  Are you suggesting they wish to implement sidechains so that they can scam people out of their BTC? Because that's surely what this sounds like. I'm quite sure even though they are not early adopters, they probably have enough BTC so that if it succeeds the way you & me hope they will be comfortable enough. |
|
|
|
This isn't "implying conspiracy."
 touché, sorry my english is a little rough sometimes  |
|
|
|
As for the bolded statement, this is true of any alt chain, sidechain or not. I don't see how sidechains would effectively assist and benefit pump & dump opportunities. A fool and his money are soon parted, no matter the way.
it could even accelerate the sidescams since it will now be so easy to slide BTC over to that SC. plus, this concept has the blessing of core devs, whom you so trust, right? Nonsense First, it is already easy as it is to convert BTC into any other coin. Altcoin exchanges are readily available and require know KYC/AML hurdle to jump through to register. Second, these devs are not responsible for the possibility that someone create "sidescams" and fool naive people into moving their BTC to this chain. What you are saying is akin to suggesting Satoshi is to be held accountable for creating the concept allowing for scamcoins to thrive. |
|
|
|
look, i don't know how old you are, but what we're talking about here is A LOT of money. the whole ethos of Bitcoin is as a trustless currency. that currency depends on it's source code. any changes to that code can change the economic assumptions and those correctly positioned can make LOTS. to have core devs under the employment of a for-profit company is ridiculous. it doesn't make any difference that they've behaved up to this point. look what happened in 2008 in the GFC. tremendous amounts of trust were lost in were supposed to be institutions to protect our form of capitalism. didn't work out when the shit hit the fan did it? are you willing to risk the entire Bitcoin system to have 5 devs who commit to the Bitcoin source while employed by Austin Hill, a hedge fund guy?
how is it ridiculous if the for-profit company in question works to IMPROVE the Bitcoin technology and has EVERY incentive to do so in a legitimate community approved way? comparison to 2008 is asinine. Bitcoin development is an open source process. I repeat, these 5 devs have every incentive to work in a transparent and community focused manner. You are suggesting they will go rogue and commit damaging code to the Bitcoin main core and that the community, the miners, and everyone running a node will play along? This is tinfoil hat status AFAIC. Attacking Austin Hill personally just because you dislike the guy isn't helping your cause either? I know some people who, contrary to you, have worked with Austin personally and can certainly vouch for him. It appears a great deal of industry people do so as well so right now, it seems to me you're alone in your corner, with Peter Todd maybe, trying to pin bad intentions to a person with nothing but words to back up your claims. |
|
|
|
What happens if one of these side chain alts becomes very successful (for example is supported by the banking system) and begins to draw a large number of bitcoins in circulation into lockdown. Will bitcoin value suddenly evaporate as all the coins sublime into the new chain in a mad rush? One can imagine some amazing pump and dump opportunities for clever side chain developers to acquire an awful lot of bitcoins through this 'two way peg' mechanism. (Early adopters again wahey!) Or to actually kill bitcoin with if a superior chain emerges.
Any successful SC will benefit the Bitcoin economy and therefore it makes no sense to suggest banking system would get behind a SC in particular. As for the bolded statement, this is true of any alt chain, sidechain or not. I don't see how sidechains would effectively assist and benefit pump & dump opportunities. A fool and his money are soon parted, no matter the way. |
|
|
|
|
Show Posts
