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1  Bitcoin / Development & Technical Discussion / My idea for a working sidechain, without mods. Consortium-peg, proof-of-authori on: November 12, 2017, 05:51:41 AM
I know that this is going to sound similar to the Fed-Peg model, so don't whine about that.  It's not the Fed-Peg model, not quite, and the differences are critical, I believe.

Every proposal that I've seen so far require some kind of soft or hard fork to the current bitcoin model, but I think that I've come up with a way to make a sidechain work without new modifications to the running bitcoin protocol.

I think I will call it the Confederation-Peg model.

Imagine a confederation of large corporations, all of which would benefit from the ability to process a large number of bitcoin transactions for net zero or near zero transaction fees.

These corporations would, most likely, have to have the following characteristics...

1) Multi-national in scope, with employee bases in several different nations using several different fiat currencies.
2) Have a rather large employee base.
3) Not in direct competition with each other
4) and not dependent upon any particular government.

With just a bit of google-fu, I will use the following corporations in this example...

Wal-Mart, with more than 2 million employees worldwide.
Volkswagon, with more than half a million employees worldwide.
General Electric, with about 300K employees worldwide.
and Johnson & Johnson, with More than 100K.

Let's call these corporations the confederation sponsors.  These sponsors would decide most of the sidechain's rules by consensus amongst themselves, but let me lay out, in general, how I think that such a sidechain can be set up so that the sidechain is secure while also contributing to the overall security of the main blockchain.

First, these sponsors agree upon a deposit/escrow amount that they will each commit to a multi-sig address on the main blockchain; for a round number, let's say they all contribute 10 BTC to the cause.  Next, they all agree that they must each either build or contract out bitcoin mining capability of a minimum standard; high enough that the collection of sponsors can mine a block on a regular interval. Let's say once each day.  But when they mine a main blockchain block, they place into the 100 byte large "2nd nonce" space of the coinbase transaction the following data.

1) a code that identifies the sponsor who mined this block to the other sponsors,

2) the merkle tree root hash of the sidechain block that the sponsor is about to release on the sidechain network.

3) a cryptographic signing of the two prior pieces of data.  (this might be unnecessary, I'm not sure)

Once a sponsor's mining agent releases this block to the network, and it's accepted as valid by the main blockchain,  The sponsor then releases the sidechain block to the other sponsors.  This block can be of an arbitrarily large size; enough to accomodate all of the transactions that all of the sponsors (and their clients) have produced in the past day.  Since it's likely that every sponsor has seen every valid transaction, this block might only include the merkle tree created by the most recent mining sponsor.

This looks a lot like merged mining, but it's not, because the side chain doesn't use proof-of-work, and doesn't require it.  It uses proof-of-authority.  Specificly, releasing a valid block onto the main blockchain is the proof of authority to release the next sidechain block.  This achieves several things for the sponsors.

1) It contributes mining power to the main blockchain, thus supporting main chain security regardless of the profitability for those sponsor miners, since their incentive is to reduce the costs of their own transactions, not win mining rewards or fees.
2) It creates a definate timeline of the blockchain on the sidechain, without need for cryptographic proof-of-work, by tying each sidechain block to a known main chain block.  Thus leveraging the main chain's security model without needing to attract miners willing to drop the main chain work to mine the sidechain.
3) It establishes a definitive authority amonst the sponsors about who has the right to publish the next block, as well as claim any sidechain transaction fees.
4) It allows all sponsors to keep each other honest, because if any sponsor were to cut back on their main chain mining responsibilities, they would all be able to tell.
5) It allows the sponsors to chose to accept as many free transactions as they like, which may or may not benefit themselves,
6) as well as keep any transaction fees that might have been issued on the sidechain, for which odds are high that they would have had to pay.  Thus transaction fees most likely travel in a circle (for the sponsors, not the clients)

In order to add btc to this sidechain, a main chain bitcoiner would have to send funds to one of the sponsors, after aquiring thier agreement to issue sidechain coins using a special sidechain coinbase transaction that...

1) creates or destroys sidechain bitcoins
2) references the main chain transaction that would permit it
3) and identifies the sponsor creating the sidechain funds

In this way, bitcoins can flow into the sidechain, and each of the sponsors can watch the other sponsors to make certain that they aren't creating more sidechain funds than their main chain holding would permit. I would imagine that the rule would be that a sponsor can't issue more side chain bitcoins than it has in it's public main chain addresses, and if that were to be violated, the other sponsors would automaticly ignore their (otherwise valid) sidechain blocks.

This security model requires more trust than the trustless model of the main blockchain, but permits the sidechain to structure itself in any way necessary to permit safe referencing of unconfirmed transactions, thereby permitting nearly instant follow-up transactions.  Sponsors could also detect, and potentially punish, double spend attemps.  Any other rapid transaction model, such as the Lightening Network, could be permitted to work on the sidechain; but I doubt they would be necessary.

Sponsors could attract "clients" by a number of incentives.  For example, Wal-mart could offer free sidechain transactions to any paying customer, as well as a limited number of main chain transactions to their own employees; whereas Johnson & Johnson might only offer free transactions to their employees and associated businesses.  I can even imagine a deposit & (fully BTC reserve backed) sidechain credit system, complete with interest rates.

Paid for transaction fees could be based upon whatever the sponsors agree to, including a transaction fee based upon a percentage of the transfer value instead of the byte-size of a transaction.  This would make the fee model much closer to how current day credit card transfer fees work, but would almost certainly be less.

Getting BTC back out of the sidechain (via the main chain) would work like a sponsor's coinbase transaction with a negative value, also referencing a valid transaction (which may or may not be confirmed yet) that can be seen on the main bitcoin network.  Alternatively, in a world where several such sidechains exist, sponsors of one sidechain could be clients on another, potentially permitting value to transfer from one sidechain directly to another without creating a main blockchain transaction at all.  The details of the rules of both sidechains would matter in this possibility.

Since declaring weeknesses of one's own ideas is a convention in the cryptocurrency world, let me begin...

Since this is a some-trust model; i.e. individuals have to trust an institution, at least a little bit, in order to get onto the sidechain.  It's possible that a sponsor might take your main chain BTC and claim you never sent them, but you'd still have the transaction you produced, so you'd still have recourse through traditional courts.

Moving funds in the other direction, it's possible for your leaving transaction to be blocked, but only if all of the sponsors refuse to deal with you.  Likewise, as a client, your ability to transact on the sidechain could be hindered or blocked by the sponsors, but only if all of them blacklist you.  But that only risks the possibility that you can't spend your bitcoins on the sidechain, not that the sponsors could take them from you without your participation.

This is a move towards some centralization, yes; but not for bitcoin as a whole.  For the most part, "clients" choose wether the lower transaction costs & convience at these institutions is worth the re-addition of trust to some portion of their bitcoin activities.  Perhaps employees don't get a choice about being a client on this sidechain, but they still get to choose if they work for a sponsor.

This low-trust model depends upon the idea that the sponsors don't entirely trust one another, and will keep an eye on each other for bad behavior; much in the same way that the banks of the free banking era would occasionally challenge one another to produce the gold for the currencies they issued, either driving them out of business or harming their businesses should they misbehave.  It also depends upon the idea that, for the "clients", no one on the sidechain has more to lose from getting caught defrauding a client than the sponsors themselves, because the integrity of the sidechain and of their own reputations are of great value to the sponsors.  It's possible that all sponsors turn to the dark side at once, crash the sidechain & steal all of the main chain bitcoins in their reserve addresses.  Since this isn't one trusted authority, but many in a trust-distrust relationship (and in different industries) this possibility seems remote to me.

2  Bitcoin / Development & Technical Discussion / Really not understanding the Bitcoin XT thing... on: August 27, 2015, 07:41:57 AM
I know I have been out of the loop for a while, but I've started to hear about this Bitcoin versus Bitcoin XT "code fork" from semi-mainstream news sources.  I sounds like FUD, so I have checked out the Bitcoin XT website and searched a bit around this forum for details.  One thing that I don't understand is why does Bitcoin XT have the other features, such as auto-dropping of TOR nodes?  And can the Bitcoin XT node be forced into the 'quiet' node format?  From what I have found out, it looks like it leaks the node's IP address while it's supposed to be hidden.

As for the big block mod.  I guess I just don't see the value in it. jumping to 8megs on start, then auto-adjusting for transaction volumes would undermine the transaction fee market that is supposed to develop to priortize transactions.  Also, where are these overlay networks that were supposed to absorb the majority of the lower security transaction volume?  This bitcoin network proper was never supposed to be how Joe Average transacted in the currency, Joe should be using a light client on an overlay network; like Electrum was developing or M-Pesa style light client networks on smartphones.  Why are we still doing the majority of retail business using full clients anyway?

Someone with more intimate knowledge is welcome to correct me on the technical details, but please don't come to me with complaints about how the fee market would never have worked or that Bitcoin proper actually needs to scale to Visa levels; I've been here too long for those arguments to still have any merit.
3  Other / Politics & Society / Get off the stage on: September 16, 2014, 03:24:02 AM
"All the world is a stage, and the people, merely players..."

-As You Like It, Act II; by William Shakespeare

We live in a world full of fictions.

Government is one such fiction.  Governments are merely an idea, given
form by those people who choose to work towards that idea.

No matter how well intentioned, nor how well written, the documents that
define the ideas of government; they are still just words on a page.  A
well formed fiction.

So what is a government, then?  It is that group of people who give their
time and their resources towards the fiction.  Like any group of people;
there are those among them with strikingly different views in interpreting
that fiction.

And, like any group of people, the flaws of those people will reflect in
the institutions that they create.  If the people are corrupt, the
institution will be corrupt.  If the people are violent, the agency will
be violent.  If the people are flawed; the government will, also, be
So, no matter how well written that fiction may be; no institution, no
bureaucracy, no government; can ever hope to be a more perfect union, than
that of the people themselves.

Worse yet, every institution declines as the first generation; those who
truly believe in the fiction, pass control of the fiction to others.  In
part, because younger generations do not have first-hand knowledge of life
prior to the fiction, and so they come to expect that the fiction will
endure.  The grandchildren of the founders look at the buildings and
monuments of the fiction; and fully expect that the fiction is as certain;
is as permanent, as the concrete and stone of those monuments.

The institution also declines, in part, because the fiction has very real
influence on how the people think & act; and those that control the
narrative, also control those people.  This tends to attract the kind of
person who doesn't believe in fictions, but who is willing to play a part
to gain influence over the narrative.  These are exactly the wrong kind of
people necessary to maintain the best storylines.

So, before you go to the voting booths this fall, in an effort to choose a
new narrator, please remember that all storytellers are telling you more

Perhaps it's time to write your own story?

4  Other / Politics & Society / Mark Steyn on the core issue with Common Core... on: April 25, 2014, 01:36:37 AM
ďThe average American in 1940 had an 8th grade education. The post-war prosperity of this country was built by 8th graders. 8th grade America won the Second World War, and then had that big post-war 1950s prosperity. Now we stay in school twice as long, have twice as much attention from school teachers, and for no purpose. The longer you keep people in education ó if you pretend that college is universal, it becomes middle school. If everybody goes to college itís middle school, thatís what it is, thatís what it will be. You take away so many peopleís most productive years. It leads to later economic contribution, later family formation, it has all kinds of consequences. And the education that matters is still K through 8. Because if you screw up K through 8, you can spend the next 20 years trying to play catch-up, and it doesnít really make any difference. And thatís what Iíd like to see. Iíd like to see a stronger telescope education. Iíd like to see a return back to the spirit of single-town school districts, and Iíd like to see American education delivered out of the hands of the present educational establishment, and Common Core does none of those things, which is why itís to me part of the problem, not the solution.Ē

5  Other / Off-topic / Can a namecoin address point to a TOR hidden service? on: March 25, 2014, 08:13:10 PM
I really don't understand how namecoin works, so I'm asking this question openly.  If true, how can it be done?
6  Economy / Service Discussion / Were MtGox's reported even real? on: March 19, 2014, 11:49:30 PM
Looking at and regularly since the collapse of MtGox, I've come to question whether or not their reported trade volume was even real towards the end, or if they had done something underhanded to prop up their status as the 'premier' bitcoin currency exchange.  If so, for how long has this been going on?  I have long suspected that the role of speculation within the bitcoin economy isn't nearly as significant as it appeared, but now I suspect that it wasn't even real for some time.
7  Other / Politics & Society / Penny Arcade explains bitcoin.... on: March 03, 2014, 07:48:55 PM

I think they actually did a fair job.
8  Bitcoin / Development & Technical Discussion / New Digital CB "band" for cryptosystems, i.e. offline bitcoin transactions on: February 11, 2014, 08:43:35 PM
I've been thinking about this one for some time, and I have an early proposal that I'd like to flesh out with the brainiacs to see if there are any glaring errors that I've made, before I make a formal purposal to the FCC.  No, I'm not joking.

My proposal is to carve out a tiny 'band' about 12 kilohertz wide, centered at 27.095 Mhtz.  The radio heads will notice straight away that this is in the gap between channel #11 and #12 in the old Citizens' Band in the United States.  The reason there is such a gap there at all is because there is still a licensed remote controlled device frequency there.  I'm pretty sure that no serious remote controlled devices still use this frequency, since there are newer and more useful remote control bands in the 440 Mhz range.  If you have a device that uses this channel, it likely has one of those control pads with the huge pull out antenna.  If it has a "rubber ducky" antenna, or is shorter than 2 feet long, it's probably a 440 Mhz channeled device.

I propose that Quadrature Phase Shift Keying be employed, with forward error correction.  Between 27.089 Mhz and 27.091 Mhz would be as set of live "keyboard to keyboard" channels, each using a 100 Hz wide spectrum using transmission mode of PSK31 or QPSK31.  This yields 20 distinct channels within this 2 kilohertz wide band.  Transmittion powers would be limited to 1/2 watt peak envelope power in this section.

In the remaining 10kHtz wide section, between 27.091 and 27.101 would be a set of five 'datagram' channels wherein automatic rules based transmission and encoding would be required.  Each of these channels would be 2KHtz wide, and require the use of QPSK1000.  Within these channels, node to node or node to many broadcasts would be permitted; but a basic set of crash avoidance rules, similar to packet radio, would be expected of all players.  A single packet broadcast would be limited to 20 seconds, including preamble data and payload data, followed by a short postcode to let all other nodes know that the transmission is complete.  This should be large enough of a packet size that a normal sized transaction could fit into a single packet.  Other forms of datagrams would be permitted as well.  Peak Envelope Power in this section would be limited to 2 watts.  Packets do not require a destination node address, and any node listening that hears a datagram (such as a bitcoin transaction) can act upon that datagram depending upon it's configuration.  Alternatively, packets can contain gps directional information, and nodes would be permitted to "digipete" datagrams that it sees if it lays within 15% of the great circle path between the sender's gps code and the destination node's expected GPS code and/or the repeating node is within 100 kilometers of the destination node's expected GPS code.  This service would be "bursty" by design, and network protocols that require that content-less datagrams be broadcast (for the purpose of maintaining a virtual "circut" or persistant data connection, for example) are prohibited. 
9  Other / Off-topic / This article is hilarious now.... on: January 11, 2014, 04:44:49 AM
10  Other / Politics & Society / James Howard Kunstler on Bitcoin and other ongoing issues.... on: January 07, 2014, 07:56:54 PM

This man is insightful, even if he has his own biases.  (We all do, though)
11  Economy / Marketplace / Any soapstone carvers out there? on: January 06, 2014, 11:07:14 PM
I'd like some soapstone "happy rocks"...

But they must be smooth, and they must be real soapstone.  Alternatively, I'd be willing to buy scrap soapstone of that size so that I can carve them smooth myself.
12  Economy / Economics / Mish on deflation on: December 26, 2013, 02:31:53 PM
Economic illiterates will tell you that deflation (for this example defined as falling prices) is a bad thing. They will tell you that when prices fall, people will delay purchases waiting for still more falling prices, and then consumers will not buy goods and employment will drop and a downward economic spiral will ensue.

That is the theory of people in ivory towers who read books and articles by economists who cannot find their ass with two hands and a road map.

If falling prices stopped people from buying goods, no computers, TVs, monitors, or electronic goods would have been purchased for years.

Just yesterday I bought a 27 inch high-end NEC monitor for $800. It was one of the top-rated monitors for digital photography display that I could find.

It beats hands down my Dell 24 inch monitor I bought a few years ago for $2400. Will monitors be better and cheaper next year. Of course. Did that make me wait? Not in the slightest.
13  Other / Politics & Society / DUI lawyer near me now accepting Bitcoins on: December 19, 2013, 10:20:44 PM
14  Other / Politics & Society / I just got a link to an infomercial called "Edison's Revenge" on: December 11, 2013, 10:18:22 PM
Somebody produced a professional bitcoin ad...

EDIT:  It's full of investment bullshit, but it's very well done.
15  Bitcoin / Development & Technical Discussion / Is anybody working on pruning on the main client? on: December 07, 2013, 12:48:37 AM
Just curious, because I've been getting a lot more questions about the resident size of the blockchain.
16  Bitcoin / Bitcoin Discussion / Bitcoin "bumper sticker" mottos on: December 05, 2013, 09:15:45 PM
Let's start a thread for Bitcoin related mottos that one might see on a bumper sticker.  Short and to the point.  Anything that you put here is going to be free to use by anyone who actually does print bumber stickers.  So keep that in mind if you are into keeping your ideas for your personal profit.

I'll start....

Bitcoin: The Revolution Will Not Be Centralized!
17  Other / Politics & Society / Any other Americans considering a claim against the FBI over SilkRoad? on: December 04, 2013, 01:40:31 AM
I was using SilkRoad only to store a selection of bitcoins offsite.  I've never bought any drugs from the site, and I'm sure that I'm not the only one.  They took about 30 bitcoins from me when they snatched Silk Road, and I'm considering sueing them now considering their present value.  Anyone else thinking about this?  Anyone here have any experience with such a claim?
18  Bitcoin / Bitcoin Discussion / Bitcoin overtakes Paypal for first time ever. on: November 23, 2013, 09:17:59 PM

I didn't realize that we had already bested both Discover Card and Western Union.
19  Bitcoin / Bitcoin Wallet for Android / HELP! Mycelium wallet sealed up into a locked cell phone! on: October 12, 2013, 08:44:28 PM
My toddler got ahold of my phone, and spent over an hour playing with the unlock patterns, until it hit it's max attempt limit and sealed my phone up without internet access turned on.  I've been trying to use android SDK to either fix those settings or backup the entire phone (which I failed to do since upgrading to Mycelium wallet) and both paths have been failures.  The phone is well sealed.

Any ideas as to how I can get the secret keys off of the phone using ADB connections over USB?
20  Bitcoin / Development & Technical Discussion / accessing an old, cold storage wallet.dat on: September 12, 2013, 09:52:46 PM
I recently cleaned out my safety deposit box, and found an old thumbdrive inside it.  It was inside an envelope that was marked "bitcoin drive, cold storage" in my own handwriting.  The file descriptor says that the wallet.dat file was saved in October of 2011, so it predates the native wallet encryption.  I need to install it into a new client (I have an Imac) so that I can send whatever may be on it to my new addresses.  Does anyone have some recommendations?  Has anyone already done this, and have some warnings for me?  I'm afraid of downloading an old client version to install it into, because I know that it would be exposed during the bootstrapping process.
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