How to save Bitcoin

[Wary]

The sky is falling! Bitcoin leaders and visionaries, friends, allies and collaborators have turned into a pack of fighting rats. Bitcoiners are watching helplessly how their former semi-gods are destroying their  life-savings (Money is reputation and by killing reputation they kill bitcoin). And what is left will be taken over by NSA and replaced by banks' private chains.

Why?
Because of the consensus.

Anyone who ever run a business or just has some life experience, knows: There Must Be Only One Boss. Many bosses - receipt for disaster.
Because people tend to disagree.  It's in our nature.
What would happen if we demand consensus from core developers? It depend on how much do they care.
If they don't care a lot, it'll be stalemate. I.e. nothing will be done. It was yesterday.
If they do care a lot, it'll be a war. I.e. everything will be destroyed. It is today.

So, one boss. But one boss means centralization. The boss will work not for us, but against us, for himself. Or for NSA. Problem we have.

If we want anything done, there must be one boss.
If we want anything done for us, everybody must be the bosses.

How to resolve this dilemma?
The solution is known for thousand of years: The Free Market. And it already exist in coinspase: altcoins. If you feel you know the right way, create your alt. Or join (and obey) any other creator. Or use anyone's alt.  Creator is the boss because he is choosing what to create. And user is the boss because he is choosing what to use. The problem solved, hurrah!
-Want big blocks? Here is an altcoin for it.
-Want fast confirmations? Here is an altcoin for it.
-Want anonymity? Want blacklisting? Want micro-transactions? Want whatever you want, there will be an altcoin for it, tailored for your needs and tastes.

Except it doesn't work. We are not using this solution. Instead of sailing off happily on our favorite altcoin, we are all remaining hostages on this sinking bitcoin Titanic.
Why?

Because of cost of switching.
If switching costs are low, customer is a king. He is in control.
If switching costs are high, customer is a hostage. He is powerless.
Switching costs in bitcoin are very high. Buying an altcoin is a bet. And considering the number of possible wrong ways (and the most of ways are wrong) - almost guaranteed losing bet. Switching is too high risk. And this risk turns us from kings to hostages.

So, to make the free market to work, we have to eliminate the cost of switching.
Fortunately, it is possible. What's more, it is almost done. I'm talking about sidechains, of course. If you bet on a wrong sidecoin, you won't lose a dime, because you can always switch back to main bitcoin blockchain or to any other sidecoin. At the rate 1:1. Which means that the risk (i.e. the cost) of switching is zero.

As Antonopulos predicts, switching between sidecoins would be done directly in smartphone wallets. You may even don't bother to know, which exact sidecoins are used for this specific transaction.

So all what have to be done is to:
1. Complete the sidechain BIP (along with bigger blocksize, to cut paranoia level )
2. Freeze the bitcoin core code.

The frozen core will give stability and sidechains will give flexibility. And let a 100 flowers sidechains blossom! While the miracle of free market will turn fighting rats and evil gods back into our best friends.

tl;dr: Sidechains (i.e. blockstream) will enable free market in bitcoin development. It'll save Bitcoin.

[BitProdigy]

Edit to my initial reaction:

If we want anything done, there must be one boss.
If we want anything done for us, everybody must be the bosses.

I agree, everybody must be the bosses. We need a way of reaching consensus. We have the technology!!

I see too many people proposing centralization as a solution, that is why I overreacted initially...

[fenican]

Nearly all of the Alt coins were a copy/paste clone of Bitcoin with trivial modifications.

That garbage was not a free market.

If a good alternative to Bitcoin ever comes out, not the Alt trash, the market will be receptive.

[adamstgBit]

You should change your title to "How to DESTROY Bitcoin."

This is literally the worst idea I have ever heard. Bitcoin as the first decentralized method for reaching consensus is set to revelutionize the world by removing the need for a trusted authority, and you are proposing to introduce a trusted central authority and centralize bitcoin.

I am disgusted. And I see too many who have said similar things. Consensus begins with disagreement and overtime evolves towards agreement. We are currently in the disagreement stage and you people are losing your god damned minds. IMMEDIATELY the human mind wants to elect a KING a SAVIOR to come take control of the situation, someone we can TRUST. Fuck that.

We are the pioneers of the new world of decentralization. We pave the roads here, it is not easy, we all will have arrows in our backs before the end, but it is our duty to protect CONSENSUS and DECENTRALIZATION, if we don't have those things, we might as well just use VISA and MASTERCARD and give in to your Bankster overlords you dunce.

i dont think you read all of it.

[BitProdigy]

i dont think you read all of it.

I guess I misread it, edited. 

[Wary]

Edit to my initial reaction:

If we want anything done, there must be one boss.
If we want anything done for us, everybody must be the bosses.

I agree, everybody must be the bosses. We need a way of reaching consensus. We have the technology!!

I see too many people proposing centralization as a solution, that is why I overreacted initially...

I understand you feelings. Nowadays everything is polarized and first, automatic reaction is, unfortunately: "friend or foe? If foe, fire first, ask questions later"

I hope you see by now that I'm not proposing any centralization. In fact, I'm proposing removing centralization  in an area where it still remains: in bitcoin code development. With sidechains, there will be many independent developing teams, working on competing sidecoin projects. So bitcoin will become less vulnerable and the current nightmare won't be possible anymore.

As for technology of reaching consensus, the free market is one of such technologies, and quite successful one. The current split between core developers happened because this technology wasn't used.

[Wary]

Nearly all of the Alt coins were a copy/paste clone of Bitcoin with trivial modifications.
That garbage was not a free market.
If a good alternative to Bitcoin ever comes out, not the Alt trash, the market will be receptive.

It's OK. 90% of everything is crap(c). The problem is that it's hard, almost impossible to use the remaining 10%. Because:
-You can't switch to altcoin because of switching costs I was discussing in OP.
-You can't incorporate new good ideas in bitcoin because it's code is very rigid.

The code must be rigid, because money require stability. But it also have to be flexible because bitcoin is still in beta and must be improved in many many ways.
Sidecoins would allow to combine these two incompatible requirements and will speed up bitcoin progress tremendously.
Bitcoin will become more stable and more flexible at the same time. That is more reliable and more user-friendly. Both of this will boost up the mass adoption.

[Wary]

either btc will adopt automated hard fork proposal voting or find a community that has this built in user protection against unwanted hard forks               the solution to your problem has already been invented     u r complaining about polio in 2015        this issue that u currently suffer is not of structural violence but premeditated fetish because u think that this block size debate will earn u some positive publicity

You are not that good in mind-reading yet. Probably need more practice As for voting, it involves "structured violence"(c) against outvoted minority. While the free market doesn't.

[titulng]

if you want to interests from saving, that there is no safety place to safe.


BTC_BTC

[Wary]

if you want to interests from saving, that there is no safety place to safe.
BTC_BTC

Reasonably safe safe is safe enough to save savings. 

[guddu raj]

i think this is safe and some time unsafe because hackers can easily any thing. U can save bitcoin in andriod application  wallet but i not gureented it is safed.

[dachnik]

The sky is falling! Bitcoin leaders and visionaries, friends, allies and collaborators have turned into a pack of fighting rats. Bitcoiners are watching helplessly how their former semi-gods are destroying their  life-savings (Money is reputation and by killing reputation they kill bitcoin). And what is left will be taken over by NSA and replaced by banks' private chains.

Why?
Because of the consensus.

Anyone who ever run a business or just has some life experience, knows: There Must Be Only One Boss. Many bosses - receipt for disaster.
Because people tend to disagree.  It's in our nature.
What would happen if we demand consensus from core developers? It depend on how much do they care.
If they don't care a lot, it'll be stalemate. I.e. nothing will be done. It was yesterday.
If they do care a lot, it'll be a war. I.e. everything will be destroyed. It is today.

So, one boss. But one boss means centralization. The boss will work not for us, but against us, for himself. Or for NSA. Problem we have.

If we want anything done, there must be one boss.
If we want anything done for us, everybody must be the bosses.

How to resolve this dilemma?
The solution is known for thousand of years: The Free Market. And it already exist in coinspase: altcoins. If you feel you know the right way, create your alt. Or join (and obey) any other creator. Or use anyone's alt.  Creator is the boss because he is choosing what to create. And user is the boss because he is choosing what to use. The problem solved, hurrah!
-Want big blocks? Here is an altcoin for it.
-Want fast confirmations? Here is an altcoin for it.
-Want anonymity? Want blacklisting? Want micro-transactions? Want whatever you want, there will be an altcoin for it, tailored for your needs and tastes.

Except it doesn't work. We are not using this solution. Instead of sailing off happily on our favorite altcoin, we are all remaining hostages on this sinking bitcoin Titanic.
Why?

Because of cost of switching.
If switching costs are low, customer is a king. He is in control.
If switching costs are high, customer is a hostage. He is powerless.
Switching costs in bitcoin are very high. Buying an altcoin is a bet. And considering the number of possible wrong ways (and the most of ways are wrong) - almost guaranteed losing bet. Switching is too high risk. And this risk turns us from kings to hostages.

So, to make the free market to work, we have to eliminate the cost of switching.
Fortunately, it is possible. What's more, it is almost done. I'm talking about sidechains, of course. If you bet on a wrong sidecoin, you won't lose a dime, because you can always switch back to main bitcoin blockchain or to any other sidecoin. At the rate 1:1. Which means that the risk (i.e. the cost) of switching is zero.

As Antonopulos predicts, switching between sidecoins would be done directly in smartphone wallets. You may even don't bother to know, which exact sidecoins are used for this specific transaction.

So all what have to be done is to:
1. Complete the sidechain BIP (along with bigger blocksize, to cut paranoia level )
2. Freeze the bitcoin core code.

The frozen core will give stability and sidechains will give flexibility. And let a 100 flowers sidechains blossom! While the miracle of free market will turn fighting rats and evil gods back into our best friends.

tl;dr: Sidechains (i.e. blockstream) will enable free market in bitcoin development. It'll save Bitcoin.

Some good points here.
Would be interesting to see how it develops in the future.

[dachnik]

I do have some concerns though.
The idea of sidechains has a lot in common with how first banks operated.
You park your gold (bitcoins) with a bank in a vault (sidechain) and you get your IOUs to participate in the economy.
At first, those IOUs were 1:1 redeemable back to gold, but that didn't last very long.
We all know, that history repeats itself, so this analogy is really hard to overlook.

The questions that arise here are these:
1) How hard would it be to break the original 1:1 peg or steal parked bitcoins while everyone is using IOUs?
2) How will the network handle the load in case of a bank run, when a lot of people suddenly want to unpark their bitcoins from the sidechain they no longer trust? What would be the cost to switch here?
3) How tempting would it be for governments to create national sidechains and law-enforce them as legal tender, now that mechanism for such enforcement is shaping up (while the load on the mainchain would be such that it will be prohibitive for small players to use, so it would be of no value to them)?

[ashour]

I think that the core developers who work for BlockStream should be kicked out of the bitcoin core development team. They only work to benefit the BlockStream business model, BlockStream is trying to sell us their product with the help of the bitcoin core developers.

[dachnik]

Basically the main question boils down to this.

Do we want Bitcoin to be a single ledger that co-exists with current fiat and serves as a counter-balance to it?
Or do we want Bitcoin to eventually replace fiat entirely with sidechains?

My major concern is that once enough bitcoins are parked to sidechains, they will slowly but surely start to lose value, because no one is going to accept them directly and transact with them directly, as the time and cost of unparking them would make it prohibitive.

By the way, the single ledger idea doesn't necessitate that every coffee purchase is made on the blockchain.
The natural market for transactions shaped by the network's physical ability to process them will define what is in and what is out.

[Wary]

I think that the core developers who work for BlockStream should be kicked out of the bitcoin core development team. They only work to benefit the BlockStream business model, BlockStream is trying to sell us their product with the help of the bitcoin core developers.

Could you be a bit more specific? What product are they trying to sell you? What do they charge for it?

[Possum577]

Anyone who ever run a business or just has some life experience, knows: There Must Be Only One Boss. Many bosses - receipt for disaster.

You lost me when you implied that you prefer dictatorship over democracy.

I think you're involved in the wrong Project. The You'll-Do-What-We-Tell-You Project is three forums down.

Your rhetoric here directly contradicts what BlockChain says it's trying to do: "Sidechains are blockchains that are interoperable with each other and with Bitcoin, avoiding liquidity shortages, market fluctuations, fragmentation, security breaches and outright fraud associated with alternative crypto-currencies." Providing alternatives. You're against alternatives, you're for "one boss"...that boss is THE Blockchain in this case...

You're a joke, man. You insult us trying to make some grand statement about Bitcoin, that's really a thinly veiled sales pitch for Blockstream.

Don't be such a puss about it...if you want to sell us close us. If you're going to bullshit us you can leave.

[Wary]

I do have some concerns though.
The idea of sidechains has a lot in common with how first banks operated.
You park your gold (bitcoins) with a bank in a vault (sidechain) and you get your IOUs to participate in the economy.
At first, those IOUs were 1:1 redeemable back to gold, but that didn't last very long.
We all know, that history repeats itself, so this analogy is really hard to overlook.

The questions that arise here are these:
1) How hard would it be to break the original 1:1 peg or steal parked bitcoins while everyone is using IOUs?
2) How will the network handle the load in case of a bank run, when a lot of people suddenly want to unpark their bitcoins from the sidechain they no longer trust? What would be the cost to switch here?
3) How tempting would it be for governments to create national sidechains and law-enforce them as legal tender, now that mechanism for such enforcement is shaping up (while the load on the mainchain would be such that it will be prohibitive for small players to use, so it would be of no value)?

Good questions. I'll try to answer, but whoever knows sidechain technical details better (and epecially whoever knows the future ) is welcome to correct me.
0) Sidecoins are not IOUs. They are bona fide coins, just like bitcoins. I would compare them with dollars of different denominations. Like 100$ bills vs quarters coins, they are different, but they are both dollars. Bills are more convenient for big purchases, coins are more convenient for micro-transactions , but both are basically the same and can always be converted to each other, at 1:1 rate.
1) If there is no bugs in the cryptocode, stealing parked bitcoins without parking corresponding sidecoins must be impossible. The same about breaking 1:1 ratio. (I use 1:1 for simplicity,
the original ratio could be any. Like ratio of changing quarters for 100$ bills is not 1:1, but 1:400. What matters is that you can return it back at exactly the same ratio).
2) If I understand it correctly, no second party required for (un)parking. Converting bitcoins to sidecoins and back is basically sending them to some special addresses, that is, not much different from moving your bitcoin between two your addresses. How the network would handle it depends on network. If you are using the network for purchases several times a day then using it one more time to park all out should be no problem (the network doesn't care how much you are transferring, 0.1c or 1M$, the load is the same). However, it there is "main" blockchain that have to be used for unparking and if it that can handle only, say, one transaction per person per year, then congestion may happen. It would be good business opportunity for aggregation services although. Anyone can offer it: "send your sidecoin and I transfer it to any other sidecoin within an hour". Even at 7 transactions per second, there is 25,000 time slots in an hour, so 25,000 competing companies can offer such a service. With such level of competition, prices won't be too high.
3) The government is the permanent threat, with or without sidechains. Yes, sidechain will make creating NSA-coin or IRS-coin much easier. But it will also make make escaping from them to some state-resistant coins, like Monero, much easier too.
4) "We" want different thins, as the current core dev split shows. I personally want and hope for bitcoin to kill and replace fiat. Where will be the mail volume of transaction, in bitcoin or on some sidechain, IMO, can't be told at this stage and doesn't matter much.

[Wary]

Anyone who ever run a business or just has some life experience, knows: There Must Be Only One Boss. Many bosses - receipt for disaster.

You lost me when you implied that you prefer dictatorship over democracy.

You lost me when you've said I implied it. I think dictatorship is bad, because it involves forcing people to do what they rather wouldn't. Unfortunately, democracy has the same problem, arguably on smaller scale but nonetheless. That's why I prefer the free market system.

Say, you've created a forum and are moderating it.
Is it "Only One Boss" system? Yes, because it is you who has the last say on the rules in your forum.
Is it dictatorship? No, because nobody is forced to use your forum and if somebody is not happy, he is free to move to some other forum or open his own forum with his own rules.

Exactly the same system, IMO, should be in bitcoin development. Anyone is free to develop his own sidechain. And anyone is free to use it or move to any other one or create his own one.

[dachnik]

I do have some concerns though.
The idea of sidechains has a lot in common with how first banks operated.
You park your gold (bitcoins) with a bank in a vault (sidechain) and you get your IOUs to participate in the economy.
At first, those IOUs were 1:1 redeemable back to gold, but that didn't last very long.
We all know, that history repeats itself, so this analogy is really hard to overlook.

The questions that arise here are these:
1) How hard would it be to break the original 1:1 peg or steal parked bitcoins while everyone is using IOUs?
2) How will the network handle the load in case of a bank run, when a lot of people suddenly want to unpark their bitcoins from the sidechain they no longer trust? What would be the cost to switch here?
3) How tempting would it be for governments to create national sidechains and law-enforce them as legal tender, now that mechanism for such enforcement is shaping up (while the load on the mainchain would be such that it will be prohibitive for small players to use, so it would be of no value)?

Good questions. I'll try to answer, but whoever knows sidechain technical details better (and epecially whoever knows the future ) is welcome to correct me.
0) Sidecoins are not IOUs. They are bona fide coins, just like bitcoins. I would compare them with dollars of different denominations. Like 100$ bills vs quarters coins, they are different, but they are both dollars. Bills are more convenient for big purchases, coins are more convenient for micro-transactions , but both are basically the same and can always be converted to each other, at 1:1 rate.
1) If there is no bugs in the cryptocode, stealing parked bitcoins without parking corresponding sidecoins must be impossible. The same about breaking 1:1 ratio. (I use 1:1 for simplicity,
the original ratio could be any. Like ratio of changing quarters for 100$ bills is not 1:1, but 1:400. What matters is that you can return it back at exactly the same ratio).
2) If I understand it correctly, no second party required for (un)parking. Converting bitcoins to sidecoins and back is basically sending them to some special addresses, that is, not much different from moving your bitcoin between two your addresses. How the network would handle it depends on network. If you are using the network for purchases several times a day then using it one more time to park all out should be no problem (the network doesn't care how much you are transferring, 0.1c or 1M$, the load is the same). However, it there is "main" blockchain that have to be used for unparking and if it that can handle only, say, one transaction per person per year, then congestion may happen. It would be good business opportunity for aggregation services although. Anyone can offer it: "send your sidecoin and I transfer it to any other sidecoin within an hour". Even at 7 transactions per second, there is 25,000 time slots in an hour, so 25,000 competing companies can offer such a service. With such level of competition, prices won't be too high.
3) The government is the permanent threat, with or without sidechains. Yes, sidechain will make creating NSA-coin or IRS-coin much easier. But it will also make make escaping from them to some state-resistant coins, like Monero, much easier too.
4) "We" want different thins, as the current core dev split shows. I personally want and hope for bitcoin to kill and replace fiat. Where will be the mail volume of transaction, in bitcoin or on some sidechain, IMO, can't be told at this stage and doesn't matter much.

Thanks for the answers.

I'm interested to see how the hashrate would split between mainchain and various sidechains and what implications it would have on security of the whole system. I must admit, I haven't read sidechain's whitepaper yet, so maybe I will find my answer there.

I would like to evaluate the proposal on its technical merit (when it comes out officially) in order to estimate how much of a drastic change that would be to Bitcoin and whether I would be willing to support it or not. However, if best Bitcoin developers are convinced to work on it full time, it might be worth a look. Even if Bitcoin decides to go another route, one of the alts might want to adopt it. Time will tell.