what's your answer again to the argument that all these billions of SC's are stealing tx fees away from Bitcoin miners?
Are you concerned about revenue or block size? Isn't the point of SCs to allow Bitcoin to scale by mitigating its transactions through other chains? Sure if you ensure that dynamic. But why would anyone do their tx's on Mc if they can do them better on SC? |
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Think of it, govSC may use compromised cryptographic primitives giving them a back door on all the money.
Then they essentially own key escrow on all the coins and can also automatically tax them as needed. Seize criminal assets etc.
That pretty much solves all the government's problems.
I agree with you. I'll not keep my BTC in govSC. But I would rather trade on gov secured exchange than on MtGox. If SC are implemented in Bitcoin then Bitcoin is my first choice. what's your answer again to the argument that all these billions of SC's are stealing tx fees away from Bitcoin miners? |
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scenario: SC + sidecoin + innovation faster tx times + MM + scBTC
is it possible for scBTC to take advantage of the innovation
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but a scBTC could diverge to a higher price vs BTC. or it can be manipulated to rise at a faster pace than BTC. both could be a result of a speculative pump by a whale thru the peg. and why not? the 2 way peg in a 1:1 scenario acts like a risk free put. remember, it's all upside and no downside being on the SC. both scenarios would result in volatility and doubt about whether the SC is taking over.
i would be really interested to hear some of your responses to my posts in my thread.
If, on a normally functioning sidechain, a 'whale' decides to arbitrarily inflate the price of sidechaincoin (SCC) by buying up the order book on some exchange platform, so that let's say SCC are temporarily trading at 1.3 BTC / SCC on said exchange, any existing holder of SCC will simply sell their SCC for BTC, realising the 30% risk free profit (arbitrage), and then if desired, transferring those 1.3 BTC back to 1.3 SCC (because there is an algorithmic peg enforced at the cryptographic level that allows you to make this transfer - you do understand that this is the concept, right?). There is no put or call here, there is just arbitrage. The principle of no arbitrage gives you the approximate stable price - 1 to 1. Any delta from that is due to second order effects of the type that Back refers to in the above post. Only in cases of catastrophic failure would there be a large divergence (and that's OK too, because "joining" a sidechain is entirely voluntary), and such an eventuality can only be temporary (either the sidechain 'crashes' entirely, or it comes back into quasi-equilibrium). are you saying that it's not possible for a rising scBTC price in fiat terms to drag upwards the BTC price in a pump and dump? what might cause this is if a whale is persistent enough to transfer a signif number of BTC thru the peg into scBTC causing other speculators to follow thinking the SC may take over. as more scBTC appear on the SC steadily over time, wouldn't/couldn't that drag up the price of both scBTC and BTC despite the fact that the relationship of the two remain close to 1:1? what could drive this is the "illusion" that the SC is taking off in usage and utility. |
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Now, I'm getting paranoid. :-)
SC's architecture:
<bitcoin>
<us-govSC>
<govscBTC />
<govscUSD />
<exchangeSC>
<mergerSC />
</exchange>
</gowSC>
<china-govSC />
<!-- wild-wild-west -->
<exchangeSC>
<mergerSC />
</exchange>
</bitcoin>
govSC is asymetric 2wp => GOV can veto if you can go in/out
all govSC are secured by GOV mining HW (cetralized servers)
What a shitfest. This is precisely the problem we have today with altcoins multiplied by a thousand. |
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brg444, did you ever address the concern that a utility chain has the chance to permanently attract all tx fees to itself in the long run at the expense of BTC miners who need those tx fees? or is your answer simply that Bitcoin will pre empt that by adopting said innovation before that happens?
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i know that. i never claimed that a sidecoin needed to be exchanged for BTC. those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.
to be honest I don't see it. from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate. if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.sidecoins create no incentive for the user, only additional risk. if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time i actually see your point. what did you mean by the bolded part? |
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you're not reading properly. a SC with a sidecoin can also accept scBTC. it's the scBTC that have the 2wp, as you say. therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards. this is why they will MM and eventually directly mine if enough scBTC appears on the SC.
I don't believe this is quite exact. A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC. For that reason, sidecoins are exactly like altcoins the dev can design the peg and the SC with any properties he wants. he could design the exact scenario i outline; a SC with a 1:1 peg for BTC <--> scBTC that also issues a block reward for a new sidecoin while at the same time processing scBTC and sidecoin tx for fees. this would definitely attract MM initially, and if highly successful, defecting Bitcoin miners who direct mine the SC. The moment an additional coined is issued on the sidechain that cannot be redeemed 1:1 with BTC ALL the coins on that sidechain become sidecoins. i know that. i never claimed that a sidecoin needed to be exchanged for BTC. those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it. |
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you're not reading properly. a SC with a sidecoin can also accept scBTC. it's the scBTC that have the 2wp, as you say. therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards. this is why they will MM and eventually directly mine if enough scBTC appears on the SC.
I don't believe this is quite exact. A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC. For that reason, sidecoins are exactly like altcoins pg 11 Complexity: On the level of assets, we no longer have a simple “one chain, one asset” maxim; individual
chains may support arbitrarily many assets, even ones that did not exist when the chain was first
created. Each of these assets is labelled with the chain it was transferred from to ensure that their
transfers can be unwound correctly. |
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you're not reading properly. a SC with a sidecoin can also accept scBTC. it's the scBTC that have the 2wp, as you say. therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards. this is why they will MM and eventually directly mine if enough scBTC appears on the SC.
I don't believe this is quite exact. A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC. For that reason, sidecoins are exactly like altcoins the dev can design the peg and the SC with any properties he wants. he could design the exact scenario i outline; a SC with a 1:1 peg for BTC <--> scBTC that also issues a block reward for a new sidecoin while at the same time processing scBTC and sidecoin tx for fees. this would definitely attract MM initially, and if highly successful, defecting Bitcoin miners who direct mine the SC. |
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brg444,
the difference btwn an altcoin as it exists today and a sidecoin that could exist on a SC tomorrow is a direct link to the Bitcoin network via the 2wp. b/c the 2wp guarantees that scBTC can get back to BTC (theoretically), users will be encouraged to migrate to the SC to utilize the innovation and pay scBTC tx fees. and they will be incentivized to stay there b/c of the 2wp. initially, i believe these scBTC will be valued lower than BTC in fiat terms b/c they are indeed less secure and arbing can be expected to drag down the BTC price. however, as time advances and if the innovation is significantly proven to be useful and confidence in security of the SC increases, more and more ppl will convert to scBTC. you yourself concluded this should drive up the fiat price and i agree. this should feed on itself to the point that everyone will perform their tx's on the SC if the Bitcoin core devs do nothing to update the MC with the innovation. this would destroy Bitcoin miners over the long run as their block rewards diminish along with defecting tx fees. how and when will they devs decide to upgrade the protocol? they need consensus which you've already said is impossible. will they do it under pressure, panic? when 40, 50, or 60% of all BTC have become scBTC? maybe it will be too late or maybe it gets blocked by Blockstream core devs b/c their biz model depends on SC development and success? can you imagine how many $millions it would be worth to Blockstream if all BTC hodlers ended up having to move to a SC they had helped conceive and build? who knows, i don't see it as guaranteed and i surely see the process as potentially being conflicted.
MM an altcoin as it's defined today is seriously risky and not worth the trouble for Bitcoin miners. MM a sidecoin adds additional badly needed revenue to struggling smaller miners who will be more willing to defect to a sidecoin. the revenue stream will be more easy to envision for these miners. the other difference is that no, Bitcoin miners can't just simply start mining an altcoin today if they wanted to. the altcoin's protocol has to be specifically modified by the altcoin devs to accept Bitcoin DMMS. i don't see them offering this to Bitcoin miners so that's why it's not happening. since sidecoins represent a direct link to the Bitcoin MC for BTC users to convert to scBTC, the process is simpler and worth more to miners b/c they can mine not only sidecoin reward & tx fees but scBTC tx fees as well.
 You were wrong by your first sentence, should I continue reading? Sidecoins do NOT guarantee that the scBTC can get back to the BTC. Sidecoins have a floating peg and not a 1:1 2wp. you're not reading properly. a SC with a sidecoin can also accept scBTC. it's the scBTC that have the 2wp, as you say. therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards. this is why they will MM and eventually directly mine if enough scBTC appears on the SC. |
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brg444,
the difference btwn an altcoin as it exists today and a sidecoin that could exist on a SC tomorrow is a direct link to the Bitcoin network via the 2wp. b/c the 2wp guarantees that scBTC can get back to BTC (theoretically), users will be encouraged to migrate to the SC to utilize the innovation and pay scBTC tx fees. and they will be incentivized to stay there b/c of the 2wp. initially, i believe these scBTC will be valued lower than BTC in fiat terms b/c they are indeed less secure and arbing can be expected to drag down the BTC price. however, as time advances and if the innovation is significantly proven to be useful and confidence in security of the SC increases, more and more ppl will convert to scBTC. you yourself concluded this should drive up the fiat price and i agree. this should feed on itself to the point that everyone will perform their tx's on the SC if the Bitcoin core devs do nothing to update the MC with the innovation. this would destroy Bitcoin miners over the long run as their block rewards diminish along with defecting tx fees. how and when will they devs decide to upgrade the protocol? they need consensus which you've already said is impossible. will they do it under pressure, panic? when 40, 50, or 60% of all BTC have become scBTC? maybe it will be too late or maybe it gets blocked by Blockstream core devs b/c their biz model depends on SC development and success? can you imagine how many $millions it would be worth to Blockstream if all BTC hodlers ended up having to move to a SC they had helped conceive and build? who knows, i don't see it as guaranteed and i surely see the process as potentially being conflicted.
MM an altcoin as it's defined today is seriously risky and not worth the trouble for Bitcoin miners. MM a sidecoin adds additional badly needed revenue to struggling smaller miners who will be more willing to defect to a sidecoin. the revenue stream will be more easy to envision for these miners. the other difference is that no, Bitcoin miners can't just simply start mining an altcoin today if they wanted to. the altcoin's protocol has to be specifically modified by the altcoin devs to accept Bitcoin DMMS. i don't see them offering this to Bitcoin miners so that's why it's not happening. since sidecoins represent a direct link to the Bitcoin MC for BTC users to convert to scBTC, the process is simpler and worth more to miners b/c they can mine not only sidecoin reward & tx fees but scBTC tx fees as well.
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SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.
Why is it so hard for you people to understand this
why is it so hard for you to read?: 5.2 Issued assets
To this point, we have mostly been thinking about sidechains which do not need their own native
currency: all coins on the sidechain are initially locked, until they are activated by a transfer from
some other sidechain. However, it is possible for sidechains to produce their own tokens, or
issued
assets
, which carry their own semantics. These can be transferred to other sidechains and traded for
other assets and currencies, all without trusting a central party, even if a trusted party is needed for
future redemption.
440
Issued asset chains have many applications, including traditional financial instruments such
as shares, bonds, vouchers, and IOUs. This allows external protocols to delegate ownership and
transfer tracking to the sidechain on which the ownership shares were issued. Issued asset chains
may also support more innovative instruments such as smart property.
These technologies can also be used in
complementary currencies
[Lie01]. Examples of
complementary currencies include community currencies, which are designed to preferentially
boost local businesses; business barter associations, which support social programs like education
or elderly care; and limited-purpose tokens which are used within organisations such as massive
15
multiplayer games, loyalty programs, and online communities
12
.
A suitably extended scripting system and an asset-aware transaction format would allow the
450
creation of useful transactions from well-audited components, such as the merger of a bid and
an ask to form an exchange transaction, enabling the creation of completely trustless peer-to-peer
marketplaces for asset exchange and more complex contracts such as trustless options[FT13]. These
contracts could, for example, help reduce the volatility of bitcoin itself. |
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how will Bitcoin miners ever make make money when SC's are attracting all the tx's?
Nobody ever imagined that SC's would "attract all the tx's". Just the opposite else the two-way peg is meaningless. why wouldn't a SC with an innovation like faster tx times attract all the tx's? and why wouldn't the scBTC stay scBTC with the perceived risk free put (2wp)? and if i'm right, they will be rewarded by staying on the SC b/c the price of scBTC on that SC will start to rise faster in fiat terms as the SC becomes more and more successful. People keep talking about a peg. As if there were such a thing. One of these days there will be an SC with some very useful feature, but the devs used compromised cryptographic primitives, and can factor out SC private keys and run off with all the BTC that moved into that chain. If this is done as a long enough con, it could become an existential risk to bitcoin, yes? (both the SC and Bitcoin could be essentially destroyed). i've brought up a number of times that this SPV proof is unproven and untested no matter what you call it. they can vet it all they want but no one knows it will work until it's been tested live under market conditions. |
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@cypherdoc - SC is not simple to understand
transacting in SC can be separated in 3 steps
1. entering SC
2. using SC
3. exiting SC
steps #1 and #3 => entering and exiting is 2-way-peg
a) 2-way-peg can be done by
- trusted entity (human or server will convert between MC and SC) => it can be you (cypherSC)
- Federated peg (N humans or oracles will create transactions on MC and SC -> locking and unlocking BTC and scBTC)
- Co-signed (N humans or oracles ) and SPV proof from SC will be required to convert between MC and SC
- bitcoin (bitcoin protocol wlll exchange BTC <-> scBTC)
- ... and many more
b) Then there is step #2 "using SC". This is separated from creating 2wp.
Using SC will require mining. This can be done by
- MM merge mining
- trusted entity (server will confirm blocks)
- using Federated miners (those can by differnet from those who created Federated peg)
- Oracle/s
- bitcoin timestamping
- SNARK
- ... and many more
c) Block in SC can be new blockchain concept (aka, 'faster transactions', 'different monetary policy', 'better privacy', 'more extensive scripting', 'contracts', 'different cryptography', 'different mining models' and so on).
edit:
2wp, mining, blockchain concept are orthogonal. They create new 3-dimensional world.
that is how i understand it. but as far as you pumping the Federated server model, this is from the paper itself pg 7: Although it is possible to use a simple trust-based solution involving fixed signers
(see Appendix A) to verify locking of coins, there are important reasons to avoid the introduction
of single points of failure:
Trusting individual signers does not only mean expecting them to behave honestly; they must
also never be compromised, never leak secret key material, never be coerced, and never stop
participating in the network.
Because digital assets are long-lived, any trust requirements must be as well. Experience has
shown that trust requirements are dangerous expectations even for timespans on the order of
months, let alone the generational timespans we expect financial systems to last.
180
Digital currencies were unable to gain traction until Bitcoin was able to eliminate single
points of failure, and the community is strongly averse to the introduction of such weaknesses.
Community mistrust is reinforced by financial events since 2007; public trust in the financial
system and other public institutions is likewise at historical lows. |
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how will Bitcoin miners ever make make money when SC's are attracting all the tx's?
Nobody ever imagined that SC's would "attract all the tx's". Just the opposite else the two-way peg is meaningless. why wouldn't a SC with an innovation like faster tx times attract all the tx's? and why wouldn't the scBTC stay scBTC with the perceived risk free put (2wp)? and if i'm right, they will be rewarded by staying on the SC b/c the price of scBTC on that SC will start to rise faster in fiat terms than BTC itself as the SC becomes more and more successful. |
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Sounds like he is saying, in effect, 'a reserve currency'. That is exactly what BTC would be in a solution involving more than one sidechain.
tv, how can Bitcoin act as a reserve currency in the presence of multiple SC's that are sucking BTC and miners away from the MC thus decreasing it's security model and therefore it's value? think about 2140 when the block reward has gone to 0 and Bitcoin miners are supposed to rely on tx fees exclusively but they are being outcompeted by a SC that is processing all their tx's b/c everyone has migrated over to it b/c of an innovation? edit: i know some will say that the MC will just incorporate the innovation. maybe, maybe not. the whitepaper says everyone can/should move over. also, if consensus is so hard to get now, what changes then? and what about the conflict of interest that the Blockstream devs might use to block the innovation being added to MC b/c they have an interest in SC's being successful? |
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pg 7
If, in the medium term, there
were wide agreement that the new system was an improvement, it may end up seeing significantly
more use than Bitcoin. As there are no changes to parent chain consensus rules, everyone can switch
in their own time without any of the risks associated with consensus failure.
they never address the problem of mining tx fee fragmentation as a result of increasing usage of the SC. how will Bitcoin miners ever make make money when SC's are attracting all the tx's?
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so they moved this to pg 5:
The core observation is that
“Bitcoin” the blockchain is conceptually independent from “bitcoin” the asset: if we had technology
to support the movement of assets between blockchains, new systems could be developed which
users could adopt by simply reusing the existing bitcoin currency
wrong
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pg 5:
The fact that functionality must be broadly acceptable to gain adoption limits participants’
personal freedom and autonomy over their own coins.
this is inflammatory as far as i'm concerned. if it bothers you, sell them and don't participate.
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