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. |
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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. 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. |
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you still haven't answered how a SC can't hurt Bitcoin if the economic value of a scBTC starts exceeeding a BTC in USD terms b/c of a significant innovation.
Hmm, what about an alt-coin -> if the economic value of ALT starts exceeeding a BTC in USD terms b/c of a significant innovation. that's true but then why should we duplicate that exposure via SC's? in fact, this is worse b/c of all the other conflicts of interest involving core devs i've mentioned in this discussion. 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 but you haven't addressed JR's complaint in this scenario. b/c 5 of the devs who can commit (2 of which can write) are part of Blockstream, they have a financial incentive to perhaps surreptitiously dissuade thru fillibuster any SC innovations that might ported to Bitcoin Core while continuing to nurture the SC. the economic interest to do this would be if they pre-positioned themselves in some pre-existing SC asset. and you would never know since ownership would be anonymous. my point is you can't just say "they would never do this". history is riddled with such flawed reasoning. |
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you still haven't answered how a SC can't hurt Bitcoin if the economic value of a scBTC starts exceeeding a BTC in USD terms b/c of a significant innovation.
Hmm, what about an alt-coin -> if the economic value of ALT starts exceeeding a BTC in USD terms b/c of a significant innovation. that's true but then why should we duplicate that exposure via SC's? in fact, this is worse b/c of all the other conflicts of interest involving core devs i've mentioned in this discussion. |
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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. 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. |
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-> I'll only send bitcoin to sidechain if I can get some advantage e.g. fast transfer to buy coffe ( HOT wallet )
how are you gonna do this with a 1-2 day confirmation/contest period You would do it in advance of course. Keeping a small amount of spending money on the fast chain for these sorts of purchases. ok, fair enough. what if you need to move large #'s BTC from cold storage into scBTC quickly if it becomes clear the SC is going to dominate b/c of some innovative feature and the exchange price is fluctuating wildly in the meantime? You have a call option at a 1:1 price, so you really don't need to move quickly, as far as I can tell, at least not for economic reasons. If you expect the BTC blockchain to be abandoned or fail, you might be in a hurry. I think moving from BTC to SC is fast though right, just not the other way? not my understanding. there's a 1-2 day confirmation/contest period which i think would be bilateral. |
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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. 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. |
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SideChain is not same as AltCoins
-> SideChain does not require POW nor "blockchain" to work .. (but SC can use them, it is problem of SC-participants)
this is not true. everyone has been talking about how to secure a SC blockchain with the most common solution and criticism being merge mining. 1) SC will only set-up some address/addresses in Bitcoin-world (lock bitcoins to prevent double-spent) -> and create SideChain-world SC world need security or else attackers will steal the scBTC 2) In SC-world you can do SC-transactions (even by e-mail) -> build some hash-tree (you do not have to broadcast transactions to ALL WORLD and verify that ALL SEE THEM, b/c only participants matters)
3) SC-world has rules (Bitcoin users not affected) how to withdrawn/unlock bitcoins from scBTC (they must be able to create valid bitcoin transaction to unlock bitcoins).
you still haven't answered how a SC can't hurt Bitcoin if the economic value of a scBTC starts exceeeding a BTC in USD terms b/c of a significant innovation. |
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-> I'll only send bitcoin to sidechain if I can get some advantage e.g. fast transfer to buy coffe ( HOT wallet )
how are you gonna do this with a 1-2 day confirmation/contest period You would do it in advance of course. Keeping a small amount of spending money on the fast chain for these sorts of purchases. ok, fair enough. what if you need to move large #'s BTC from cold storage into scBTC quickly if it becomes clear the SC is going to dominate b/c of some innovative feature and the exchange price is fluctuating wildly in the meantime? |
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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) Rule #2 There is conversion function (MATH) how to convert scBTC to BTC (unlock your/anybody previously locked coins ... if SideChain is not broken => you cannot unlock more, than was locked) Those rules provide a 1:1 peg. It remains to be seen whether such a peg will be economically viable. It appears (somewhat) to be technically viable to implement. Those particular rules however, are not required by the side chain concept, as the side chain developers have stated on Reddit and elsehwere. Different rules are possible, which gives rise to all manner of altchains/altcoins. I think the side chain developers are wasting their time pathologically obsessing over scamcoins, both because scamcoin market value is tiny and because "killing altcoins" or "protecting scarcity" isn't the real value of side chains anyway. The value of side chains is as a safer and faster mechanism for extending and improving (though also damaging I suppose) Bitcoin, if they work. A lot of functions are possible but only few are viable -> I will not send bitcoin to sidechain if I'm not able to withdraw same amount. SC's will always be less secure. you may not get them back if 51% attacked. -> I'll only send bitcoin to sidechain if I can get some advantage e.g. fast transfer to buy coffe ( HOT wallet )
how are you gonna do this with a 1-2 day confirmation/contest period -> I can keep some coin in ExchangeSideChian to have advantage buy cheap coins -> then I'll store them to COLD BITCOIN wallet.
then you're speculating. introduces risk. |
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why don't you try giving me an answer to my post just above yours before i answer you?
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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? |
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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.
Why "forced" to transfer? Nobody is forced. But if BTC owners could sell their BTC for $400 (say) and scBTC for $425, then arbitragers would naturally buy BTC, convert it to scBTC and sell it, making $25 (or the opposite). So the price will never diverge significantly. forced b/c the SC has developed a better functionality that the market prefers. the arbitrage works in theory except for this confirmation and contest period of waiting. that delay of a day or 2 could have unpredictable effects on pricing. maximal slippage. |
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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.
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What's ridiculous is that large holders expect these people to work for free -- AND that there are so few core developers.
i don't. but spread their employment around if possible. |
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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? 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. 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.
how can you assure that they won't? simply b/c they haven't? that's naive. 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.
you're putting words in my mouth. i never said i don't like Hill. 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. |
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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? |
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you're missing the overall pt. it doesn't matter what the feature is that gives the SC an advantage. first off, the advantage could be gained b/c the Blockstream core devs have preferentially worked on that feature for the SC as opposed to the main chain. then if that SC takes off, as JR said, they might block that feature from being incorporated into the main chain. the problem is that there are too many of them working under the same roof. the scenario where that might happen is if that SC has its own altcoin that they've invested in that's riding along with the transferred BTC.
anything i say has bias as i'm invested in Bitcoin just like most everyone else around here. the difference being, that i'm not the one recommending changes. i invested under one set of assumptions and imo, this changes things potentially.
Everything they are developing is open source. They cannot block implementation of anything. It seems disingenuous to me, considering some of the answers given in the AMA, to suggest the BTC main core devs would implicitly hurt Bitcoin's development in favor of Blockstream's business. Additionally, any indication of unethical behavior by them could certainly lead to them losing their position as BTC main core developer. They have specifically stated in the AMA they will NOT create their own altcoin or currency. Also, your concern of financial incentives corrupting their actions is misguided. Do not forget that ALL of them have vested interest into Bitcoin already. They stand to make considerably more money creating sensible SC features that improve the Bitcoin economy. 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? |
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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.
many of us will have a bad time running around gathering up cold storage wallets to transfer to the new SC. possible privacy leaks galore, not to mention risk. |
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Why is this a problem if the code is all open source?
actually, this is very true. for all my ranting, in the end, i think they fail spectacularly. i could be wrong. but given Bitcoin's future price projections due to its fixed supply and liquidity as a new form of money, why on earth would anyone move BTC to a high risk, low security Sidechain? |
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