Ditto. They have waffled on proposed cryptocurrency rules more times than I can remember. And that's all we're discussing here -- changes to a proposed bill, which may never get passed.
 

It's certainly not like the US or China in terms of adoption, but Russia's OTC market is flourishing. Cross-border remittance is also becoming a significant market.

Your credit card issuer doesn't care about charges for hosting fees, SSL, or Fiverr -- those may be crypto-related to you, but they aren't to your bank. Your bank just sees them as web services, freelancing, etc.

When they see you charging credit to buy bitcoins through Simplex, that's a very different type of activity, which is prohibited by the bank.

You've been defrauded. The top mixers listed on bestbitcoinmixers.com are fake clone sites. They just steal your bitcoins. Coinmixer.es is one such clone. The original real mixer was Coinmixer.se -- they shut down in 2018.

There is a list of similar scam sites posted here. For a regularly updated list of legitimate mixers, see here.

Yes. The markets are expecting the pandemic to hinder growth and cause recession. That creates unfavorable investment conditions for stocks, commodities, and other investment assets. Investors are reducing market exposure and looking to government bonds and cash as a hedge.

That will always be the case, until there is a significant loss of confidence within fiat money systems. If major fiat currencies began to default and collapse, that would drive people en masse towards alternative forms of money that hedge against that risk. Gold or Bitcoin could be viable alternatives in that situation. In conventional economic crises, that won't happen.

I remember that, but they seem to have made a resurgence recently:


Apparently, they don't even charge merchants to use Coinbase Commerce. It's sort of a convenience. I'm sure most of their merchants send the cryptocurrency straight to Coinbase to cash out, which is why they offer the service.

Those are just projections and marketing narratives. We need to drop the expectations and just let Bitcoin be. People will either treat it as money -- currency, store of value, unit of account -- or they won't. In time, I believe they will.

Even if we're going to place those expectations on Bitcoin, it would never happen in 10 or 11 years. Establishing a new asset class worthy of replacing gold or fiat money won't happen overnight. People are understandably skeptical, and Bitcoin still has a lot of technological and UI concerns to overcome. This will take decades to play out.

Forking a drivechain into Bitcoin's consensus makes it part of the base layer. That's the issue.


Altcoins get 51% attacked all the time, and that's just to perform limited double spending attacks.

Why don't we fully trust SPV wallets? Because they trust miners to be honest. The same logic applies in this case, since Bitcoin nodes only SPV validate drivechains.

Such an attack would only destroy faith in drivechains, not Bitcoin, so the "Miners won't 51% attack because of long term incentives" argument doesn't apply. Presumably, transaction activity would not only return to Bitcoin, but at even higher fee rates.


Paul Sztorc admits it is true here.

I didn't realize that he later addressed this by increasing the withdrawal requirement to 13,150 ACKs.

That's one way of sidestepping the whole problem -- nobody will be interested in using this sidechain since it takes 3-6 months to withdraw your bitcoins! Therefore, there will never be enough value to on the drivechain for any of this to matter.



Sidechain theft is much easier than targeted double spend attacks. That's something you aren't accounting for.


The rules for sidechain withdrawals aren't enforced by Bitcoin full nodes. That's the difference. Miners can collude to steal all drivechain funds; it's simply a matter of waiting. This situation does not apply to Bitcoin or LN.

What you're suggesting is just attempted censorship and is probably virtually impossible already. It's completely impossible once we're transacting with LN via Taproot.

No argument there, but it's at least clear now that the RBI and India's executive branch do not have unchecked power to stop Bitcoin and VASPs with blanket bans. They can craft regulations within the existing legal paradigm, but effective meddling like the RBI ban will probably require the passage of new laws by the Indian Parliament.

I don't know how likely the passage of a bill like this is, but that's my biggest concern now.

Let me ask that question a different way.

What do you hope to achieve by forking a drivechain into the consensus? Offloading transaction throughput from the mainchain, cheaper fees? Altcoin interoperability?


I was thinking about this a bit more.

Consider this situation presented by Adam Back, except let's take it to the logical extreme. Say we're a couple decades down the road, the block subsidy is tiny and fees provide almost all block rewards. Mining has a 5% profit margin and drivechains provide 75% of total revenue.

This implies a super majority of transaction activity -- and probably a majority of bitcoin-denominated value -- is on drivechains. Meanwhile, a majority of miners can steal all funds held on drivechains at any time. There is nothing Bitcoin full nodes can do to stop them.

Is the incentive structure still the same as now?

There are some forex-specific regulations on US-based firms that presumably apply now. For example, capital requirements:


I assume Kraken meets those. However, US-based forex brokers are supposed to register with the CFTC and NFA, yet I can't seem to find Kraken's registration in the NFA's registry.

Kraken has always occurred to me as rather bold and unruly for a US-based company, operating on the margins regarding money transmission and CFTC margin regulations, not to mention that middle finger they gave to the state of New York.

Maybe they plan on skirting the law in this area too.

Where does this belief come from? It's commonly held among Bitcoin investors, but it makes no sense to me. Why would any investment be immune to real world events?

Bitcoin investors are real people and real institutions. They are affected by market panics and economic downturns just like stock and commodity investors are. At best, we could hope that bitcoins hold value better than stocks do during an economic crash. Gold seems to fit that niche, but it certainly isn't "immune" to the world economy.

I don't like commodities as safe haven assets. In a crash, demand for, and consumption of commodities tends to fall. Perhaps their prices fall less than stocks in this situation, but stable fiat currencies seem like a much safer financial hedge.

The last time I saw this on an exchange was several years ago on BTC-e. They used to have multiple fiat vs. fiat trading pairs. I always assumed it was to bridge the USD markets with their RUR and EUR-based payment processors.

I suppose this could come in handy during these turbulent economic times? Cryptocurrency traders who want to hedge the fiat value of their coins can now hedge against GPB, EUR, etc. devaluation too.


I assume it's because of the JPY's weakness against all the other currencies. The Yen is more equivalent to a penny than a dollar. Two less decimal places evens out that disparity.

We've been discussing that landmine since last year.

I assume at the very least that the IRS plans to cross-check 1099-Ks received from Coinbase, Kraken, et al. against taxpayer Form 1040 Schedule 1. Be careful answering no to this question if you've ever given your SSN or EIN to an exchange and transacted there, especially if you have received a 1099-K. That will probably put you on a fast track to getting one of these nasty non-compliance letters from the IRS.

Bitcoin nodes only SPV validate the drivechain. That's the security model. Full nodes may enforce the drivechain rules at the Bitcoin consensus level, but that can't stop miners from stealing drivechain funds. 51% of miners can always steal all drivechain funds, no matter what. The only thing Bitcoin nodes can do to stop them is a UASF after the fact that reverses the theft.


Drivechains, extension blocks, and similar mechanisms are block size increases by another name. They offload transaction throughput, bringing cheaper fee costs to users. Would the base layer actually be worth more to miners? That depends if overall combined throughput increases enough to account for the cheaper fees. We simply don't know, and it's dangerous to rely on that. This is the block size and fee market debate all over again.

If you had a choice between a block size increase (soft or hard fork) and a drivechain, which would you choose? Why?

This is a very interesting attack. It reverses Meltdown-style attacks, defeating all of the associated mitigations. https://lviattack.eu/



An attack does seem difficult to mount, at least presently:

Perhaps, or maybe they all ended up like this guy:



I got into Bitcoin in 2013 myself. I regrettably did not manage to hold onto most of my bitcoins from those days. Almost everyone from earlier years has a story like that -- spending, gambling, trading, or otherwise losing much of their bitcoin stash -- so don't feel too bad.

I can see the analogy you're making, but it's not entirely accurate. Segwit didn't fork a separate protocol into the consensus. I have doubts that Core would merge something like that, especially given the security trade-offs of a drivechain. Segwit was much less contentious than that.

I'm not particularly comfortable with the precedent of miners forking in sidechains, on which users blindly trust those miners. I think economically important drivechains may skew Bitcoin's mining incentives. I'm not sure. I'd like to see more convincing game theory suggesting drivechains are a good idea before considering enforcing them at the consensus level, that much is certain.

I'm a little concerned about the network security of Incognito.

My bitcoins would be secured by the "Bond smart contract" which is secured by Incognito network validators. Who comprises these validators? Is this like a Binance Chain or Ripple situation where the developers actually control most of the validators -- giving you ultimate control of all the cryptocurrency secured by the network?

Even if the project is legitimate, it sounds like an attacker controlling ⅔ of the network can probably steal everything:


What prevents that from happening?

No need to imagine, it's already been done -- at least with Delegated POS. https://twitter.com/VitalikButerin/status/1234522463129800709

Poloniex, Binance and Huobi were caught staking customer STEEM and using it to attack the existing DPOS consensus. They've done a pretty good job of brushing the attack under the rug, but the evidence is rather damning.

POS hasn't been solved yet. It may never be. POW is the best we have, for now and the foreseeable future.

These are two very different situations.

Lightning and Liquid can be thought of as off-chain or out-of-band. They have no effect on Bitcoin's consensus. The security trade-offs -- like needing to keep private keys online in LN, or trusting Liquid validators not to steal funds -- only affect LN users or Liquid users, respectively. Bitcoin users are unaffected no matter what.

With drivechains, Bitcoin users can't opt out. That's the difference. Drivechains are soft forked into the consensus by miners.