This is the privatization of Bitcoin - it already happened

[spartacusrex]

How do they wanna push me? If I decide I will not use their sidechain and pay them they can not force me. It's my choice.If I wanna do my transactions on chain I will do so. And I don't believe we will see high transaction fees on chain in the future. The community will react if the core devs of Blockstream try to f*** us.

1 way does spring to mind..

They could push for a really REALLY small blocksize, and make it so you are competing with a BANK for space on the main chain. You have then lost any chance of getting on the main chain, and are forced to use a side chain..

Hmm.. I hope that doesn't happen..

It would be pretty hard to do, as you'd need to get all the core devs on your side... and destroy any challengers who tried to increase the size through some form of code upgrade/fork..

..

Oh.. wait a sec..

[1714898098]

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[RawDog]

Yes, Blockstream is working hard to push users away from the permisionless bitcoin blockchain to their private permissioned sidechains to make a profit.

Things are getting ugly.

How do they wanna push me? If I decide I will not use their sidechain and pay them they can not force me. It's my choice.If I wanna do my transactions on chain I will do so. And I don't believe we will see high transaction fees on chain in the future. The community will react if the core devs of Blockstream try to f*** us.

Wrong.  It is already happening.  Small blocks are making HUGE problems already today.  MasterXchange is so frustrated with problems related to small blocks - they are closing.  The pressure from 1MB block is hard to see - but it exists and it is already effecting many people.  Block size 1MB is a disaster.  The network is already under performance pressures.

Blockstream is raging bullshit.  They want to create a nightmare - and then offer a solution for a fee.  These guys are scammers.

[Carlton Banks]

How do they wanna push me? If I decide I will not use their sidechain and pay them they can not force me. It's my choice.If I wanna do my transactions on chain I will do so. And I don't believe we will see high transaction fees on chain in the future. The community will react if the core devs of Blockstream try to f*** us.

1 way does spring to mind..

They could push for a really REALLY small blocksize, and make it so you are competing with a BANK for space on the main chain. You have then lost any chance of getting on the main chain, and are forced to use a side chain..

It's all one big compromise.

Low value transactions are already excluded from Bitcoin today; anything less than 5430 satoshis or with a fee less than the current relay charge won't get mined. So Bitcoin already works more like an ACH or wire transfer system, buying things in pennies or less is not practical and never has been.

The idea is to just cement that role further; Bitcoin should remain ACH-like for big one-off payments, and low value or service payments will get packaged up in payment channels. It's the best overall compromise IMO, expanding the mainchain to accomodate a VISA type system is too crude, too one-dimensional.

What I wouldn't be happy with is if everything gets pushed into secondary payment networks: anyone running a full node should still be able to transact on the main chain, and there should remain a wide range of use cases to do so (i.e. it's not so expensive on the main-chain that it's impractical for anyone but the wealthiest)

[brg444]

"Zane Tackett, director of product development at Bitfinex, noted that the ability to move funds between exchanges in seconds would make arbitrage opportunities more accessible to the trading community."

For arbitraging, the biggest lag lies in fiat money transfer, which side chain can not help at all. However, traders can build liquidity pool in each exchange to reduce the lag regardless it is fiat money or bitcoin. The reduce of liquidity requirement for bitcoin is not a big benefit since 10 minutes is already lightning fast if you comparing with fiat money's 2-5 days delay

And to achieve zero delay, exchanges could just establish their clearing channel without involving all the technical complexities in side chain: Bitfinex opens an account of 2000 coins at Btcc and Btcc opens an account of 2000 coins at Bitfinex, it does not cost them a dime and will enable a channel for daily settlement immediately

I think you need to be intentionally close minded not to see the benefits.

“There have previously been a number of attempts by different exchanges to try and realize something like this,” Hill said. “Customers were asking for it, and these companies wanted to test the benefits. But previously, all attempts to do this included some form of counterparty credit agreements, or agreements to accept transactions with no confirmations. Because of the required trust involved in these kinds of solutions, they were never actually launched. By using a federated consensus sidechain, we can give exchanges the control of their own funds, but with the added functionality of instant transactions.” - Austin Hill

[brg444]

Yes, Blockstream is working hard to push users away from the permisionless bitcoin blockchain to their private permissioned sidechains to make a profit.

Things are getting ugly.

How do they wanna push me? If I decide I will not use their sidechain and pay them they can not force me. It's my choice.If I wanna do my transactions on chain I will do so. And I don't believe we will see high transaction fees on chain in the future. The community will react if the core devs of Blockstream try to f*** us.

Wrong.  It is already happening.  Small blocks are making HUGE problems already today.  MasterXchange is so frustrated with problems related to small blocks - they are closing.  The pressure from 1MB block is hard to see - but it exists and it is already effecting many people.  Block size 1MB is a disaster.  The network is already under performance pressures.

Blockstream is raging bullshit.  They want to create a nightmare - and then offer a solution for a fee.  These guys are scammers.

 

Bitcoin keeps performing like a champ for anyone that uses as it was intended to.

What the fuck is MasterXchange anyway.

[RawDog]

What the fuck is MasterXchange anyway.

Just another one of the many people being totally fucking squeezed by blocksize limits.  Loads of people can't do things now that we are hitting the upper limit.  It only gets worse from here.  Gavin was right, it comes on slow and early - a solution was due by now.  Blockstream assholes are the guys who prevented a good reasonable solution - so their sidechains and fees could survive.  Idiots.  Idiots just like brg444

[pereira4]

What part of "resources are limited" you don't get? Seriously, is not that hard. *There's no way in earth that we can deal with a competitive amount fo transactions per second if it all happens on-chain if you want to keep the blockchain decentralized*, period.
Raise the blocksize, and we will then need to raise it again, and again, and again, and it will be impossible to run a node, and Bitcoin will become totally centralized. You seem to ignore this part.

[knight22]

What part of "resources are limited" you don't get? Seriously, is not that hard. *There's no way in earth that we can deal with a competitive amount fo transactions per second if it all happens on-chain if you want to keep the blockchain decentralized*, period.
Raise the blocksize, and we will then need to raise it again, and again, and again, and it will be impossible to run a node, and Bitcoin will become totally centralized. You seem to ignore this part.

If we don't let miners to compete for these resources, efficiencies will never improve. What part of the word "competition" you don't get?

[brg444]

What part of "resources are limited" you don't get? Seriously, is not that hard. *There's no way in earth that we can deal with a competitive amount fo transactions per second if it all happens on-chain if you want to keep the blockchain decentralized*, period.
Raise the blocksize, and we will then need to raise it again, and again, and again, and it will be impossible to run a node, and Bitcoin will become totally centralized. You seem to ignore this part.

If we don't let miners to compete for these resources, efficiencies will never improve. What part of the word "competition" you don't get?

Your logic and reading comprehension: it's broken.

[nexern]

looks like a centralized, private, permissioned, plain multisig driven transaction log sink for me.
what kind of innovation i am missing here, the mutation into blockripple/ripplestream?

[brg444]

looks like a centralized, private, permissioned, plain multisig driven transaction log sink for me.
what kind of innovation i am missing here, the mutation into blockripple/ripplestream?

the first private blockchain with cryptographically enforced proof of reserve pegged to BTC.

[Quantus]

Their could be an infinite number of ways to implement side chains but its important to remember that these are 3rd party services that don't require any change to the Bitcoin network.
If a side chain is not properly protected and wealth is lost as a result it well be the responsibility of the companies running it to refund any money lost.
If a 3rd party charges a higher fee then the bitcoin network and dose not provide any service to the users over the Bitcoin network then their would be no reason to use these 3rd party services. It will be a choice between cost, security, privacy, convenience, reliability,  etc.

[nexern]

looks like a centralized, private, permissioned, plain multisig driven transaction log sink for me.
what kind of innovation i am missing here, the mutation into blockripple/ripplestream?

the first private blockchain with cryptographically enforced proof of reserve pegged to BTC.

sounds good but also a pretty bold statement for something like liquid and i am not sure it is the first of it's kind btw.
however, soon we will see how the real beef looks like i guess.

[brg444]

looks like a centralized, private, permissioned, plain multisig driven transaction log sink for me.
what kind of innovation i am missing here, the mutation into blockripple/ripplestream?

the first private blockchain with cryptographically enforced proof of reserve pegged to BTC.

sounds good but also a pretty bold statement for something like liquid and i am not sure it is the first of it's kind btw.
however, soon we will see how the real beef looks like i guess

Pretty sure it is the first blockchain with homomorphic encryption (Confidential Transactions)

[nexern]

looks like a centralized, private, permissioned, plain multisig driven transaction log sink for me.
what kind of innovation i am missing here, the mutation into blockripple/ripplestream?

the first private blockchain with cryptographically enforced proof of reserve pegged to BTC.

sounds good but also a pretty bold statement for something like liquid and i am not sure it is the first of it's kind btw.
however, soon we will see how the real beef looks like i guess

Pretty sure it is the first blockchain with homomorphic encryption (Confidential Transactions)

sounds better now. although reduced but granted!

[meono]

Blockstream can do whatever they want. At the end of the day, it is the users who make the decision. Bitcoin is free for anyone to use and "sidechain" can't change this by charging a fee.

Dumbass, by blocking or severely limit Blocksize, Bitcoin wont be free for you to use.

[Quantus]

Blockstream can do whatever they want. At the end of the day, it is the users who make the decision. Bitcoin is free for anyone to use and "sidechain" can't change this by charging a fee.

Dumbass, by blocking or severely limit Blocksize, Bitcoin wont be free for you to use.

Bitcoin was never meant to be free. Bitcoin is a fee based system; fees are part of the incentive to mine blocks (transaction processing) required for the network to function securely.
As block rewards diminish gradually with each 'halfing-day' transaction fees will be more and more important. We must balance network load and fees with the needs for security and network hardware. Without fees what would we do to motivate and encourage mining pools to spend vast amounts of money on hardware to secure our network?

[johnyj]

I think you need to be intentionally close minded not to see the benefits.

“There have previously been a number of attempts by different exchanges to try and realize something like this,” Hill said. “Customers were asking for it, and these companies wanted to test the benefits. But previously, all attempts to do this included some form of counterparty credit agreements, or agreements to accept transactions with no confirmations. Because of the required trust involved in these kinds of solutions, they were never actually launched. By using a federated consensus sidechain, we can give exchanges the control of their own funds, but with the added functionality of instant transactions.” - Austin Hill

You can do some calculation

Two exchanges A and B opening 1000 bitcoins account in each other, A's account at B will work as a mortgage, if A went down, his account at B will be forfeited, resulting zero loss for B, vice versa. So no trust is needed once a clearing agreement is made. And because the transaction volume between A and B is small relative to each exchange's total volume, the risk involved in each clearing channel is small. This practice has been tested for hundreds of years between financial institutions

Of course you can also go for a blockchain based solution like side chain, so that you don't need to have clearing agreement with each other. Then you will face some technical challenges which requires time and R&D investment, raised level of complexity typically cause the cost to rise, eventually make it more expensive than clearing based solutions

Anyway, in either solution, the key is to make B believe that those deposits to A's account at B is legitimate. However, only A knows if it is true because the original transaction is a customer at A sending coins to B. If A did not send this transaction to B, then the customer will not receive coins at B, regardless if A and B are using clearing based or side chain based solution. So the risk is really concentrated on A and B's business ethic, where side chain can not help at all

In fact, in a clearing based solution, exchange could just use bitcoin blockchain to do the transactions once every 10 minutes. Since each such transaction combines hundreds or thousands of transactions between institutions, they would still greatly reduce the amount of the total transactions in bitcoin network, why use side chain when you can use blockchain to reduce the transaction volume?

[brg444]

I think you need to be intentionally close minded not to see the benefits.

“There have previously been a number of attempts by different exchanges to try and realize something like this,” Hill said. “Customers were asking for it, and these companies wanted to test the benefits. But previously, all attempts to do this included some form of counterparty credit agreements, or agreements to accept transactions with no confirmations. Because of the required trust involved in these kinds of solutions, they were never actually launched. By using a federated consensus sidechain, we can give exchanges the control of their own funds, but with the added functionality of instant transactions.” - Austin Hill

You can do some calculation

I have explained, two exchanges A and B opening 1000 bitcoins account in each other, A's account at B will work as a mortgage, if A went down, his account at B will be forfeited, resulting zero loss for B, vice versa. So no trust is needed once a clearing agreement is made. And because the transaction volume between A and B is small relative to each exchange's total volume, the risk involved in each clearing channel is small. This practice has been tested for hundreds of years between financial institutions

Yes it has but as you have illustrated it involves that a certain amount of capital be tied up. Moreover trust is definitely required to establish the clearing agreement.

Of course you can also go for a blockchain based solution like side chain, so that you don't need to have clearing agreement with each other. Then you will face some technical challenges which requires time and R&D investment, raised level of complexity typically cause the cost to rise, eventually make it more expensive than clearing based solutions

The technology is developed by Blockstream and sold to the exchanges who only have to pay a subscription fees. It seems reasonable to assume that these costs are orders of magnitude less than having to tie up considerable capital reserves at different partner exchanges.

Anyway, in either solution, the key is to make B believe that those deposits to A's account at B is legitimate. However, only A knows if it is true because the original transaction is a customer at A sending coins to B. If A did not send this transaction to B, then the customer will not receive coins at B, regardless if A and B are using clearing based or side chain based solution. So the risk is really concentrated on A and B's business ethic, where side chain can not help at all

Essentially what you are saying is there is a risk that either participant is running a fractional reserve?

That is fair enough but from what I understand Liquid participants are cryptographically protected from this happening. Let me explain:

Units on the sidechain can only be created by sending real bitcoins to a special input.

One exchange might be running a fractional reserve on their own but they cannot assign "fake" bitcoins to the sidechain and trade them with their partners.