TechCrunch Article: Blockchain 2.0 - Unleash the Sidechains

[BittBurger]

Interesting article:

I took liberties to correct the title, as they will be calling it "Blockchain 2.0" not "Bitcoin 2.0".

http://techcrunch.com/2014/04/19/bitcoin-2-0-unleash-the-sidechains/

--------------------------------------------------
Bitcoin 2.0: Unleash The Sidechains
Posted 4 hours ago by Jon Evans (@rezendi), Columnist

“Cryptocurrencies will create a fifth protocol layer powering the next generation of the Internet,” says Naval Ravikant. “Our 2014 fund will be built during the blockchain cycle,” concurs Fred Wilson. And Andreessen Horowitz have very visibly doubled down on Bitcoin.

Even if you don’t believe in Bitcoin as a currency, and I’ll grant there’s plenty to be skeptical about, you should be thinking: huh, a lot of extremely smart and successful people think that its underlying technology is a pretty big deal. But as I wrote myself just a few weeks ago, there’s a big difference between blockchain technology and Bitcoin itself, right?

…Maybe not.

A brief technical refresher: “blockchains” are the distributed-consensus technology introduced to the world by the mysterious Satoshi Nakamoto, wherein a peer-to-peer network is used to codify and cryptographically verify transactions, without any central authority. What’s more, transactions can be orchestrated by programmable contracts.

Bitcoin is both the first and most successful blockchain application, but there are many, many other “cryptocurrencies,” known as “altcoins.” What’s more, there are numerous other, non-currency applications being built on new blockchains, notably Namecoin and Ethereum, and several proposals for expanding and evolving Bitcoin itself, eg ZeroCoin, MasterCoin, Colored Coins, etc.

I realize this all sounds like abstruse hair-splitting to those not yet mentally invested in cryptocurrencies; but as Ravikant put it at TC Disrupt seven months ago:

…so, continuing that metaphor, imagine for a moment that it’s 1995 and you’re just beginning to notice that, over the last year or two, those weird crusty techies who sit in the corner have all started talking excitedly about “HTTP” and “HTML” and “cookies” … which apparently power this thing called the “web.”

So. We’ve got Bitcoin and its blockchain; and we’ve got scores if not hundreds of other blockchains, powering various altcoins and Namecoin and (soon) Ethereum et al. But blockchains, like social networks, benefit from a network effect. The most popular becomes the most resilient, the most powerful, the most valuable; and Bitcoin’s blockchain is, by far, the big dog today. These two facts have provoked a certain amount of anti-altcoin vitriol.

On the other hand, other blockchains are where most of the interesting innovation is happening. Namecoin as a DNS replacement; Ethereum as a generic platform for any kind of blockchain technology; hopefully some kind of blockchain replacement for X.509 certificates; SolarCoin for solar power; Dogecoin for those of us who love absurdism for its own sake; etc etc etc. The Bitcoin blockchain, despite/because of the megawatts of power poured into it, has grown sluggish and slow to change, a victim of its own success, which impedes the pace of innovation…

…or so I thought, until I met with Austin Hill and Adam Back. Hill is the former founder and CEO of Zero-Knowledge Systems, a multi-million-dollar startup that was a good 15-20 years ahead of its time; Back is the inventor of the Hashcash algorithm which powers Bitcoin. They have considerable credibility, in other words — and they’re building a stealth “Blockchain 2.0″ startup, based in part on the notion of “sidechains.”

Sidechains are new blockchains which are backed by Bitcoins, via Bitcoin contracts, just as dollars and pounds used to be backed by cold hard gold. You could in principle have thousands of sidechains “pegged” to Bitcoin, all with different characteristics and purposes … and all of them taking advantage of the scarcity and resilience guaranteed by the main Bitcoin blockchain, which in turn could iterate to implement experimental sidechain features once they have been tried and tested.

If sidechains take off, though — which will require some changes to the core Bitcoin protocol — this probably bodes ill for the existing altcoins. Not surprisingly, the proposal has attracted a fair amount of skepticism, not least from Vitalik Buterin, the chief scientist of Ethereum, who argues that sidechains require not just protocol changes but “the permission and active assistance of 50% of all Bitcoin mining pool operators.”

Why should you care? Two main reasons. One: because if Ravikant, Wilson, Andreessen, Hill, Back, etc. are correct, then in the long run, blockchain-backed cryptocurrencies could become the substrate of entire economies. Hill says: “I want to build a blockchain that could support a nation-state putting its national currency and phasing out paper dollars.”

Or, as A16Z’s Balaji Srinivasan describes a different-but-similarly-ambitious notion:

Two: because, as Hill said to me,

    Never mind “don’t be evil”; we want to build a company that actually can’t be evil.

…by which he means, an organization which is limited by contractual obligations built into and enforced by its blockchain(s).

The distributed nature of Bitcoin has caused people to speculate about autonomous corporations powered by blockchains, which sounds like a creepy Kafka-meets-Gibson notion if I ever heard one. On the other hand, a company which committed to behaving in a particular way, not with a mere promise, but with an enforceable and cryptographically ironclad contract, might be much worthier of the public’s trust than your standard amoral corporation.

This is, of course, all highly speculative verging on cloud-cuckoo-land until people actually start shipping code which turns these notions into reality. What interests me most about sidechains is that, if implemented, they might bring that day closer, by aiding and accelerating the entire ecosystem of blockchain innovation. And I’m awfully curious about what Hill and Back still have up their sleeve (no, they didn’t tell me.) Interesting times indeed.

[cypherdoc]

I'll take the cautious side here being a stake holder in Bitcoin. Not being a dev my concerns are purely theoretical and mostly economic.

1. In general, a for profit company with a low to no stake in Bitcoin should not be trusted to make changes to the protocol that facilitate its profit making. Especially if it's gone out and hired core devs and comes at the expense of the competition.
2. I would like to know who these core devs are supposedly supporting the whole concept besides gmax who has gone on record saying Bitcoin needs to be "fixed". I don't understand the secrecy as I've asked for those names several times. I for one don't think Bitcoin needs fixing.
3. I've always conceptualized Bitcoin as being a self contained financial system so I am concerned that it's fundamental value units will be allowed to leave its system destined for what will inevitably be a weaker sidechain from a security standpoint. In that sense I don't see them as "the first app" overlaying the protocol like Andreas likes to say. I see them as fundamentally integrated into the network. Invariably, whatever token your bitcoin is transformed into will be worth less as a result.  We've spent 5 long years distributing those bitcoins throughout the blockchain in a fair and truthful manner based on free market trading. $600 million has been irreversibly spent to secure that process and the blockchain is delicately balanced as a result. Bitcoins are a fundamental value unit that was made for its network and only for that network in my opinion and now we want to let them move off that network potentially never to return. Satoshi never provisioned for this. That doesn't feel right to me.
4. What knock on effects would occur to the Bitcoin network if 20-30% of these tokens get lost from a sidechain failure thus wiping out all the associated bitcoins as a result? The answer could be way more complex than just "oh, my bitcoins will be worth more".
5. With merged mining it would be easier to attack and steal the tokens and thus bitcoins associated with them. What can be done to prevent this?
6. What if there was an economic way to solve the problem of scamcoins without touching the protocol? I reference Peter R's proposal of Spin Offs.
https://bitcointalk.org/index.php?topic=563925.0
7. Is there really a "problem"with Bitcoin that we need to risk the entire system like this? Why can't Bitcoin act like a reserve currency around which altcoins can orbit without touching/risking the protocol? I reference the fork we got from a simple non protocol change last year from just 0.7-0.8. The devs including gmax failed to anticipate this despite the best of intentions.
8. It's important to realize that we have intentionally lived with bugs in the system all these years because we're dealing with a form of money that you can't make mistakes with. Billions are at risk and damned straight I'm protective of this. Bitcoin has worked well so far imo. It seems we always get these proposals at the bottom of a price lull so be wary of people proposing changes who have no stake in the system.


I'm willing to wait until the whitepaper comes out for final judgment as maybe I'm getting too conservative in my old age but those are my concerns.

[BittBurger]

Just answering based on the little I do know, and understand:

1. In general, a for profit company with a low to no stake in Bitcoin should not be trusted to make changes to the protocol that facilitate its profit making. Especially if it's gone out and hired core devs and comes at the expense of the competition.

I don't think its necessarily bad that someone improves Bitcoin in such a huge way, and gains a profit off that effort.  
If Ethereum had done an IPO when they said they were going to, they'd all be sitting on hundreds of millions of dollars.
Profit doesn't automatically become evil just because it involves modifying the core code.
Especially in the setting of a worldwide audience and full public disclosure ahead of time.  The changes facilitate Bitcoins success too.

I don't understand the secrecy as I've asked for those names several times.

I don't think its secrecy.  Ethereum was "mum" before the Miami conference as well.  There were no ill intentions.  They just weren't ready to announce yet.   These guys did a podcast and said the info is coming soon.  Doesn't seem feasible to just assume something shady is going on.

I for one don't think Bitcoin needs fixing.

As a remittances tool you're right.  Or a store of value.  Or tax haven, etc.  If you want it to do anything other than the basics, it needs enhancing.  Not fixing.  I absolutely can not see Bitcoin, in its current form, being robust enough in features to facilitate a world economy.  That's exactly why Bitcoin 2.0 innovation began so quickly.  Are you an opponent of all the Bitcoin 2.0 efforts then?  (Mastercoin, Ethereum, Color Coins, BitShares, etc)

3. I've always conceptualized Bitcoin as being a self contained financial system so I am concerned that it's fundamental value units will be allowed to leave its system destined for what will inevitably be a weaker sidechain from a security standpoint. In that sense I don't see them as "the first app" overlaying the protocol like Andreas likes to say. I see them as fundamentally integrated into the network. Invariably, whatever token your bitcoin is transformed into will be worth less as a result.

This bothered me in a strange way too.  Is it accurate that the process involved in the proposed sidechain actually involves the destruction of a Bitcoin?  Proof of Death I believe its being called?   That's a little strange to me.  

We've spent 5 long years distributing those bitcoins throughout the blockchain in a fair and truthful manner based on free market trading. $600 million has been irreversibly spent to secure that process and the blockchain is delicately balanced as a result. Bitcoins are a fundamental value unit that was made for its network and only for that network in my opinion and now we want to let them move off that network potentially never to return. Satoshi never provisioned for this. That doesn't feel right to me.

Fair enough.  How do you feel about the value of Bitcoin being diluted by literally hundreds of idiots trying to get themselves rich though?  And a handful of legit groups making legit products, trying to do the exact same thing?   Seems like both situations have downsides.

4. What knock on effects would occur to the Bitcoin network if 20-30% of these tokens get lost from a sidechain failure thus wiping out all the associated bitcoins as a result? The answer could be way more complex than just "oh, my bitcoins will be worth more".

There's actually a company whose entire business model is to destroy Bitcoins.
http://www.minyanville.com/business-news/editors-pick/articles/The-People-Who-Burn-Bitcoins-bitcoin/4/16/2014/id/54627
I've heard more than one person say they're all for it, as it increases the value of their coin.  Morally that seems reprehensible to me, but financially its great, since BTC can be infinitely divisible.

I think a lot is being assumed before the information has even been released.  

-B-

[Peter R]

I for one don't think Bitcoin needs fixing.

As a remittances tool you're right.  Or a store of value.  Or tax haven, etc.  If you want it to do anything other than the basics, it needs enhancing.  Not fixing.  I absolutely can not see Bitcoin, in its current form, being robust enough in features to facilitate a world economy.  That's exactly why Bitcoin 2.0 innovation began so quickly.  Are you an opponent of all the Bitcoin 2.0 efforts then?  (Mastercoin, Ethereum, Color Coins, BitShares, etc)

I agree with Cypherdoc.  

Bitcoin is the best form of money presently available, already vastly superior to the legacy alternatives.

Average person: "If it ain't broke, don't fix it."

Consumer product designer: "If it ain't broke, it doesn't have enough features."

Many people in the bitcoin community seem to think the value of bitcoin comes primarily from its "features."  If you hold this belief, then I can see how you'd perceive alt coins as a threat.  In my opinion, a large part of bitcoin's value comes from the fact that it has been endlessly beaten-up since 2009 and remained resilient--bitcoin has in fact grown by leaps and bounds in spite the world's efforts to thwart it.  

The rest of bitcoin's value comes from our community's shared belief that the blockchain ledger is the legitimate record of value. Over 5 years, 3 crashes, and $600,000,000 of unrecoverable mining costs, bitcoins have diffused across our user base and the resulting distribution has been logged to the blockchain.  By tempting you with unimaginable wealth during a rally and then threatening to take it all away during a crash, the free market has become a highly-efficient computer continuously refining the answer to the question “what is the most efficient distribution of coins in a cryptocurrency?”  

People will realize that the value in bitcoin comes not from its features but from the fact that it has stood the test of time, along with our shared belief that the blockchain ledger is the legitimate record of value.  

Bitcoin is powerful because it is simple and robust.  

[Melbustus]

Ok, what am I missing here? I read that article earlier today and mostly just took away the notion that more people are (correctly, imo) viewing bitcoin as a credibly scarce, secure, asset which is therefore suited to serve as "backing" for other theoretical assets.

But it sounds like I'm missing some contentious proposals for altering bitcoin itself in a non-trivial way. Anyone wanna save me a little time by providing links to relevant docs/threads?

[Peter R]

Ok, what am I missing here? I read that article earlier today and mostly just took away the notion that more people are (correctly, imo) viewing bitcoin as a credibly scarce, secure, asset which is therefore suited to serve as "backing" for other theoretical assets.

Correct.  I agree this is a positive development.

But it sounds like I'm missing some contentious proposals for altering bitcoin itself in a non-trivial way.

There is debate over the true risks of implementing the two-way transfer of bitcoins between the blockchain and the side-chains (and I think people have mentioned some mining risks too).  Since this risk is only needed to permit experimentation of various features of unproven value, some are questioning whether side-chains are worth the potential loss of confidence that could result.

Anyone wanna save me a little time by providing links to relevant docs/threads?

And herein lies the source of the confusion: alas, there is no white paper!

Like Cypherdoc said above, I will reserve final judgment until I've read the white paper.  

[cypherdoc]

I don't think its necessarily bad that someone improves Bitcoin in such a huge way, and gains a profit off that effort.  
If Ethereum had done an IPO when they said they were going to, they'd all be sitting on hundreds of millions of dollars.
Profit doesn't automatically become evil just because it involves modifying the core code.

true, but the entire technical discussion from gmax has revolved around facilitating sidechains which benefits how many companies out there?  oh yes, one.  Adam's company.  if i were Mastercoin, ethereum, or protoshares i'd be screaming.  btw, i don't have a problem with those platforms as they leave the protocol alone and possibly bring innovation. Peter R's proposal for Spin Offs will be enough to challenge them from an economic standpoint.

i do have a problem with the scamcoins which tweek maybe one parameter of the open source Bitcoin protocol and call it an innovation then run a premine or IPO that just happens to benefit the dev.

I don't understand the secrecy as I've asked for those names several times.

I don't think its secrecy.  Ethereum was "mum" before the Miami conference as well.  There were no ill intentions.  They just weren't ready to announce yet.   These guys did a podcast and said the info is coming soon.  Doesn't seem feasible to just assume something shady is going on.

i just don't think core devs should be paid by a company when that company's profit will depend on sidechains being implemented by those same devs as a result of a protocol change.  there is potential for bias even if unintentional.  

I for one don't think Bitcoin needs fixing.

As a remittances tool you're right.  Or a store of value.  Or tax haven, etc.  If you want it to do anything other than the basics, it needs enhancing.  Not fixing.  I absolutely can not see Bitcoin, in its current form, being robust enough in features to facilitate a world economy.  That's exactly why Bitcoin 2.0 innovation began so quickly.  Are you an opponent of all the Bitcoin 2.0 efforts then?  (Mastercoin, Ethereum, Color Coins, BitShares, etc)

as i said above, i have no problem with those proposals.  i do with scamcoins.  plus, as it stands Bitcoin could be a reserve currency some day.  that by itself would be revolutionary.

3. I've always conceptualized Bitcoin as being a self contained financial system so I am concerned that it's fundamental value units will be allowed to leave its system destined for what will inevitably be a weaker sidechain from a security standpoint. In that sense I don't see them as "the first app" overlaying the protocol like Andreas likes to say. I see them as fundamentally integrated into the network. Invariably, whatever token your bitcoin is transformed into will be worth less as a result.

This bothered me in a strange way too.  Is it accurate that the process involved in the proposed sidechain actually involves the destruction of a Bitcoin?  Proof of Death I believe its being called?   That's a little strange to me.  

yes, old BTC get "burned" or inactivated when they're transformed into sidechain tokens.  this process may take up to 3 days or so which in and of itself is a risk due to the delay.  b/c the sidechain has to be secured by what sounds like merged mining, this introduces security risks technically.  these tokens then will be worth less than the associated BTC burned so i don't see the peg they seem to assume.  everyone seems to be excited about a Tron-like Effect of BTCRiders zooming back and forth via on and off ramps along blockchain superhighways.  from the way it's been described, it doesn't sound like that to me.  if a sidechain fails, any tokens caught on that sidechain are lost along with the corresponding BTC.  that's a risk depending on how many get lost.

We've spent 5 long years distributing those bitcoins throughout the blockchain in a fair and truthful manner based on free market trading. $600 million has been irreversibly spent to secure that process and the blockchain is delicately balanced as a result. Bitcoins are a fundamental value unit that was made for its network and only for that network in my opinion and now we want to let them move off that network potentially never to return. Satoshi never provisioned for this. That doesn't feel right to me.

Fair enough.  How do you feel about the value of Bitcoin being diluted by literally hundreds of idiots trying to get themselves rich though?  And a handful of legit groups making legit products, trying to do the exact same thing?   Seems like both situations have downsides.

if you're talking about scamcoins, i do think they are diluting investment interest in Bitcoin.  it's become a zero sum game.  but dealing with that problem via sidechains seems to risky to me.  once again, Spin Offs are an elegant, economically driven way to deal with this problem w/o effecting a protocol change.

4. What knock on effects would occur to the Bitcoin network if 20-30% of these tokens get lost from a sidechain failure thus wiping out all the associated bitcoins as a result? The answer could be way more complex than just "oh, my bitcoins will be worth more".

There's actually a company whose entire business model is to destroy Bitcoins.
http://www.minyanville.com/business-news/editors-pick/articles/The-People-Who-Burn-Bitcoins-bitcoin/4/16/2014/id/54627
I've heard more than one person say they're all for it, as it increases the value of their coin.  Morally that seems reprehensible to me, but financially its great, since BTC can be infinitely divisible.

even the dev claims the 2140 BTC burned is a drop in the bucket.  it's also a known quantity and expected by the market up front.  otoh, a popular sidechain that takes 20-30% of tokens and associated BTC with it upon failure could cause loss of confidence in Bitcoin itself.  just the technical implementations in the protocol required to facilitate sidechains could introduce vulnerabilities.

I think a lot is being assumed before the information has even been released.  

-B-

i've followed the proposal of sidechains pretty closely but you're right, everything is still up in the air until they publish their whitepaper.

[jabo38]

All technologies have their time and get updated or get overtaken by something better and I mean ALL.  If bitcoin isn't moving forward, then it is going backwards.  Many other 2.0 platforms are coming out or just came out.  None are that strong yet.  Bitcoin needs the Blockchain 2.0 to do for it what this next wave of 2.0s are doing for themselves if Bitcoin is going to remain relevant.  Yes, it has a huge market share right now, but a better technology can easily wipe it out.  With a strong and powerful 2.0 function added to it, it just became relevant for the next 5 years.  (If it works.  There have been lots of people with big money and big ideas fail.)

[Elwar]

Sidechains require destroying Bitcoin and making something different.

No reason to change Bitcoin to use it for things other than currency.

[franky1]

blockchain 2.0 is not going to live long or be worth using for many reasons

1. its centrally controlled
2. if backed by bitcoin, then the 'company' will hoard the coins. (are you starting to see this company as the Fed yet?)
3. its just an another altcoin being swapped for bitcoins.
4. it advertisment is that it is a 2.0, yet offers features of 'value version minus 0.1' (fiat)
5. its purely to devalue bitcoin as a decentralised currency to make a company value richer
6. where people can buy company shares.

this is trying to turn decentralised currency, back into the fake value known as fiat.

some of these Devs are smart people but it appears their greed due to being share holders of the company, has outweighed their ethics of what bitcoin is about, and is purely wasting their own time on this company where it could be used better expanding bitcoin itself..

and why will it ultimately fail.. because its following the rules of the fed, but not having the insurance of government for endless bailouts.

will people ever learn crypto is not meant to be following history, its suppose to be MAKING history

[cypherdoc]

All technologies have their time and get updated or get overtaken by something better and I mean ALL. 

Never has there been a technology created as money.  especially one that has the potential to change the global financial order.  and I mean NEVER.

and let me ftfy:

If bitcoin Blockchains 2.0 isn't moving forward, then it is going backwards.  Many other 2.0 platforms are coming out or just came out.  None are that strong yet.  In fact, they are getting weaker.  Bitcoin Blockchains 2.0 needsthe Blockchain 2.0 Bitcoin to do for it what this next wave of 2.0s are can't doing for themselves if Bitcoin Blockchains 2.0 is going to remain relevant.  Yes, it has a hugethey have a puny market share right now, but a better technologypiggybacking on Bitcoin can easily wipe fix it out.  With a strong and powerful 2.0 Bitcoin function added to it, it just became relevant for the next 5 years.  (If it works.  There have been lots of people with big money and big ideas fail.)

[cypherdoc]

1. its centrally controlled

thank you for adding this subtle point which even i seem to have missed.

who knows, sidechains could be a trojan horse.

[waxwing]

blockchain 2.0 is not going to live long or be worth using for many reasons

1. its centrally controlled

No, it is not.

2. if backed by bitcoin, then the 'company' will hoard the coins. (are you starting to see this company as the Fed yet?)

There are no new coins to hoard. That is the whole point.

3. its just an another altcoin being swapped for bitcoins.

There is no altcoin involved, only Bitcoin. Again, the whole point.

The other comments are equally far away from the truth.

[Peter R]

All technologies have their time and get updated or get overtaken by something better and I mean ALL.  

What you fail to grasp is that the value of bitcoin does not come from its technology.  Otherwise, every bitcoin clone would be equally valuable.  

The value of bitcoin comes from the shared agreement between its broad and diverse user base that the entries in the blockchain represent the legitimate ledger.  Money is memory.    

Bitcoin is both a means of exchange (the network) and a store of value (the blockchain).  If an undeniably better technology comes along¹, it will be assimilated by bitcoin.

Think about this: 50 years ago, most people used paper bills and metal coins to pay for most things.  The means of exchange was "physical exchange of bills and coins" and the store of value was "your balance in dollars."  As technology advanced, people slowly moved away from "physical exchange of bills and coins" to "electronic exchange of dollar balances."  No one sold Fiat 1.0 and bought Fiat 2.0--that idea would have been preposterous.  Instead, since "your balance in dollars" was considered legitimate, the original fiat ledger just assimilated the new electronic technology.  


¹Which I highly doubt to happen in the foreseeable future.  

[jabo38]

All technologies have their time and get updated or get overtaken by something better and I mean ALL.  

What you fail to grasp is that the value of bitcoin does not come from its technology.  Otherwise, every bitcoin clone would be equally valuable.  

The value of bitcoin comes from the shared agreement between its broad and diverse user base that the entries in the blockchain represent the legitimate ledger.  Money is memory.    

Bitcoin is both a means of exchange (the network) and a store of value (the blockchain).  If an undeniably better technology comes along¹, it will be assimilated by bitcoin.

Think about this: 50 years ago, most people used paper bills and metal coins to pay for most things.  The means of exchange was "physical exchange of bills and coins" and the store of value was "your balance in dollars."  As technology advanced, people slowly moved away from "physical exchange of bills and coins" to "electronic exchange of dollar balances."  No one sold Fiat 1.0 and bought Fiat 2.0--that idea would have been preposterous.  Instead, since "your balance in dollars" was considered legitimate, the original fiat ledger just assimilated the new electronic technology.  


¹Which I highly doubt to happen in the foreseeable future.  

US paper dollars were dollars, $1 coins were dollars, treasury bonds were dollars, travelers checks were dollars, and personal checks were dollars.  When credit cards came out, it was billed as a "digital check".  The idea that you mention credit cards being a fiat 2.0 is the silly idea.  It was just another end point in the dollar system, but it was all dollars. 

You think I don't grasp bitcoin.  Your argument is that the value of bitcoin is that it is a shared ledger and not its technology.  You agree that those shared agreements have to be recorded in the blockchain. What you fail to understand is that the blockchain IS TECHNOLOGY.  Not only that but as a technology it is slow, it wastes energy, and while the bitcoin platform means that in theory bitcoin is very safe, the reality means that moving bitcoins in and out of the system often isn't.  Even moving bitcoins in the system isn't safe.  Even trying to keep bitcoins in the system and not moving them isn't even safe.  So, yes, as a technology, it is very flawed.  You are 100% right that the value comes from shared agreement, but when people see a better technology they are more and more tempted to agree bitcoin is worth less and the new wave of technology is worth more. 

I love bitcoin and own bitcoin, but lets be real people here and call bitcoin what it is.  No point sticking heads in the cloud thinking that it will last forever or assimilate everything.  All technologies give room to 2.0 technologies.  You are right in your analogy of dollars that checks didn't make paper money irrelevant and that credit cards didn't make checks irrelevant.  But checks took market share away from bills, and credit cards took a huge market share from checks and bills.  Likewise, the next generation of crypto probably won't negate bitcoin, but it will take market share away and eventually completely overshadow it.  Satoshi was a genius.  He had a great idea and implemented it, but even he didn't know if it would work at first.  Now that it is working, many people are seeing lots of ways it can be improved.  It will be surpassed.  Calling bitcoin the end of crypto is like calling the early Ford's the end of cars.  Ford held its own for a long time.  Lots of people tried at first to overtake it and fail, but sooner or later other companies stepped up, produced better models and gained share.  Not just Ford, but EVERY case of technology.  Please, I beg you, name one instance where a technology was perfect in first incarnation and until today has fended off all challengers. 

[sickpig]

1. its centrally controlled

thank you for adding this subtle point which even i seem to have missed.

who knows, sidechains could be a trojan horse.

since there's still no white paper publicly available I've gathered info about Back's and Hill's project mainly from LTB E99, a few articles here and there and from Back's posts on reddit.

having said that I can't see how the system they're proposing would be centrally controlled, am I missing something obvious?

[Peter R]

All technologies have their time and get updated or get overtaken by something better and I mean ALL.  

What you fail to grasp is that the value of bitcoin does not come from its technology.  Otherwise, every bitcoin clone would be equally valuable.  

The value of bitcoin comes from the shared agreement between its broad and diverse user base that the entries in the blockchain represent the legitimate ledger.  Money is memory.    

Bitcoin is both a means of exchange (the network) and a store of value (the blockchain).  If an undeniably better technology comes along¹, it will be assimilated by bitcoin.

Think about this: 50 years ago, most people used paper bills and metal coins to pay for most things.  The means of exchange was "physical exchange of bills and coins" and the store of value was "your balance in dollars."  As technology advanced, people slowly moved away from "physical exchange of bills and coins" to "electronic exchange of dollar balances."  No one sold Fiat 1.0 and bought Fiat 2.0--that idea would have been preposterous.  Instead, since "your balance in dollars" was considered legitimate, the original fiat ledger just assimilated the new electronic technology.  


¹Which I highly doubt to happen in the foreseeable future.  

US paper dollars were dollars, $1 coins were dollars, treasury bonds were dollars, travelers checks were dollars, and personal checks were dollars.  When credit cards came out, it was billed as a "digital check".  The idea that you mention credit cards being a fiat 2.0 is the silly idea.  It was just another end point in the dollar system, but it was all dollars.  

Correct, fiat 2.0 based on a different ledger would have been a silly idea.  That was my point.  We just used the same dollar ledger and integrated whatever technology proved useful.  Bitcoin's blockchain is the most legitimate ledger in our community; we'll just use the same blockchain ledger and integrate whatever technology proves useful.  

[CryptoDomains]

block
side
what comes after sidechain...who decides these names

[kingscrown]

while i think BTC should be updated, sidechains sounds to me like gettign it controlled. totally no go.

[Carlton Banks]

Not sure if there's enough information about the actual proposal to write this off.

In principal, it sounds good to me. Create side chains for the purpose of testing out new networks. The MaidSafe idea, for instance, could be implemented as a sidechain instead of as an entirely separate network with it's own coin. I don't see the need for having one coin for a file storage blockchain and another for a web cert directory, that could end up with dozens of single purpose currencies that are distinguished by the which database they operate for. Sounds like a bad design when you put it in such simplistic terms.

Sidechains will let us have those different applications without the eccentricity of having everything from VideoStreamingCoin through to EmailServerCoin. Sure, some won't work, and maybe the way the overall scheme, or a given individual sidechain, is designed will burn the original BTC if that comes to pass. But it's not going to affect the functioning of the sidechains with a tried and tested application that people are using. I find it hard to believe that, if the overall concept is sound, that such prosaic applications as chains for file storage/serving or DNS lookup would be unviable. And I believe the idea is that the best design for a chain like those would win through open competition.

Now, there might be some more exotic sidechain application concepts out there too, for which there is no current webapp equivalent to compete against. Those chains would be much more risky to back with BTC. But like with current blockchain based technologies, don't invest more than you can afford to lose. The hidden strength here should be obvious; the running of successful, genuinely purposeful sidechains enhances the value proposition of the underlying asset: bitcoin 1.0. And the possibility that someone will create a chain that does something no-one has yet imagined has a lot of promise, and the potential of even further enhancement of bitcoin's value.