I was referring to this claim by cbeast, not any claims by the Blockstream team:

If side chains are proposed as a solution for Bitcoin scalability, then they must be actual Bitcoin transactions.

If side chains aren't actual Bitcoin transactions, then they are not a solution to the problem of enabling the network to perform more Bitcoin transactions.

In this case, they are solving some other problem entirely.

if that is the point, it won't work.

Sidechains only have SPV security. If the entire main chain network does not validate a particular sidechain, then the resources required to produce fraudulent SPV proofs that redeem sidechains units for locked bitcoin are fewer.

If every node in the main chain network needs to watch every sidechain, there is no scalability improvement.

If every node on the main chain network does not watch every sidechain, then the security of the sidechains is low.

There is a real problem here -  P2P networks are almost always designed with built-in tragedy of the commons problem because everybody is supposed to do everything for free, instead of designing a market that allows price discovery.

I'm optimistic about BitPay's new project in that regard. If somebody manages to build a P2P network that pays the people who provide infrastructure at a price based on supply and demand, then nobody will ever need to worry about too much demand consuming more resources than the infrastructure providers are willing to donate.

I agree the block subsidy is problematic.

Since we can't get rid of it, the only solution is to grow large enough that it stops distorting mining so much.

OT is a contract processing system. It's used for managing financial instruments (liabilities).

This is fundamentally different than Bitcoin, and most likely will not be used for the same things.

Sure, you can use something like it to pay for you groceries in a store. But anyone who added OT to their cash registers could just as easily add direct Bitcoin payments.

You'd be more likely to use OT to create, securitize, and repay a loan on a periodic schedule.

This is something completely disjoint than what you'd do with Bitcoin.

The FUD is that artificial production quotas are necessary to keep transaction fees "high enough".

It's the same economic fallacy every single cartel argues for - you can literally fill textbooks with the number of examples of people who run to the government to implement various methods for restricting supply because without a production quota some disaster or another will happen.


If you would have been paying attention, you'd have noticed that he said to broadcast your transactions over Tor, not download the entire blockchain over Tor.

That's a pretty simple and neat solution that should be obvious to anybody who was serious about solving the problem.

His proposal still has magic numbers in it, so it's no good.

Another fallacy here in the FUD camp is that without a hardcoded limit the size of blocks will rise to infinity.

Nobody tries to argue that we need a artificial limit on the number of loaves of bread that can be baked each day to stop bakers from producing an infinite number that nobody wants, but somehow when transistors are involved all well-known principles of supply and demand reverse themselves.

It really isn't the case that anything "technology" (as cbeast puts it) operates in some alternate bizarro world of reversed economics.

That's not how your stealth addresses work. 

So much FUD and misdirection in this post.

Bitcoin has grown in spite of the production quota on transaction processing because it hasn't reached the rate at which the quota becomes effective.

Allowing that artificial quota to limit the transaction rate is the radical experiment, taking us into uncharted economic territory.

There are no good economic arguments for magic constants that ration the transaction rate, just handwaving about "centralization".

Nobody in the "keep the blocks a 1 MB forever" camp has ever bothered to put out a clear description of what the problems with growth are, what are the precise causes, and all the possible ways to deal with them.

They just keep shouting their "centralization" fnord.

In the meantime, altcoins are dying even without sidechains, and by the time sidechains launch it might be the case that OT is being used for all the things use cases which has been proposed for sidechains.

All it does is move the censoring from the creation of outputs to the spending of outputs.

Except expose pubkeys in outputs prior to those outputs being spent.

P2SH should not be made mandatory, although it might make sense to make P2SH the default script type in regular clients instead of P2PKH.

Script types that include public keys are useful for applications that want to use Diffie-Hellman derivations (stealth addresses).

I wonder if somebody can try to legally force this outcome, for example in the case of central banks issuing their currencies as sidechains.

Before the arb bots can work, first there has to be people who hold sidechain units who are willing to sell them for fiat at a loss instead of converting them back to Bitcoin.

I'm not sure what the mechanism for this would be.

I'm still waiting

https://www.reddit.com/r/IAmA/comments/2k3u97/we_are_bitcoin_sidechain_paper_authors_adam_back/clhni79.

The thing about Bitcoin is that geography becomes less relevant.

You don't have to physically leave in order to economically leave.

The Federal Reserve official anthem: http://www.youtube.com/watch?v=zjedLeVGcfE

Anyone else get the feeling they might not keep the powder keg from blowing this time around?

No trolling.