Gold collapsing. Bitcoin UP.

[brg444]

The former: After time N for the whole chain, global exchange rate goes to 1 BTC = 0 Sidecoin. I see nothing preventing the exchange rate function from being able to be specified this way.

So a one-way peg with limited supply

I don't see this type of scheme gaining much traction at all so I see no value in entertaining this proposition.

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[brg444]

I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.

which is why scBTC is better implemented as an altcoin.

if you have the network and the miners on your side what's stopping you ?

[Melbustus]

The former: After time N for the whole chain, global exchange rate goes to 1 BTC = 0 Sidecoin. I see nothing preventing the exchange rate function from being able to be specified this way.

So a one-way peg with limited supply

I don't see this type of scheme gaining much traction at all so I see no value in entertaining this proposition.

Well, a two-way peg that degrades into a one way peg, but yeah, I agree it probably wouldn't gain much traction in the first place. It'll be interesting to see what sidechains start getting proposed and what their exchange rate functions look like. I expect they'll be pretty straight-forward.

[cbeast]

The Blockstream team has made it CLEAR they have NO interest into alternative currencies built on a sidechain. This is absolutely not their vision of sidechain and it is explained repeatedly in the white paper.

Adam Back
sidechains are a generic extension mechanism. we hope many people make use of the sidechain extension mechanism to add innovative new features centered around the bitcoin currency.

from the White Paper Appendix C

Atomic swaps
Once a sidechain is operational, it is possible for users to exchange coins atomically between chains,
without using the peg.

It sounds like altcoins to me.

[smooth]

I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.

which is why scBTC is better implemented as an altcoin.

if you have the network and the miners on your side what's stopping you ?

Since I don't really see much difference between altcoins and side chains other than how they are being marketed, I guess I agree with you.

[brg444]

The Blockstream team has made it CLEAR they have NO interest into alternative currencies built on a sidechain. This is absolutely not their vision of sidechain and it is explained repeatedly in the white paper.

Adam Back
sidechains are a generic extension mechanism. we hope many people make use of the sidechain extension mechanism to add innovative new features centered around the bitcoin currency.

from the White Paper Appendix C

Atomic swaps
Once a sidechain is operational, it is possible for users to exchange coins atomically between chains,
without using the peg.

It sounds like altcoins to me.

Yes of course it is possible to create "altcoins" or, commonly referred to in the paper, Issued Assets.

My point is the main innovation they are trying to put forward, if we can trust their writing, is using application specific features of altcoins without having to issue a new currency.

The altcoin approach of creating a new cryptocurrency just to introduce new features creates uncertainty for everyone looking at cryptocurrencies from the outside. There seems to be no natural stopping point, each fork can be forked again, ad infinitum. This creates both market and development fragmentation. We think that for cryptocurrencies to be successful as a whole we must build network effect, not fragmentation.

To accomplish this we propose technology to enable new cryptocurrency networks that do not need new cryptocurrencies

http://www.blockstream.com/2014/10/23/why-we-are-co-founders-of-blockstream/

The whole point of this exercise is to leverage Bitcoin's network effect and sound economic foundations while fostering innovation from within.

[brg444]

I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.

which is why scBTC is better implemented as an altcoin.

if you have the network and the miners on your side what's stopping you ?

Since I don't really see much difference between altcoins and side chains other than how they are being marketed, I guess I agree with you.

Have you read the "Applications" section of the white paper?

The first application, already mentioned many times, is simply creating altchains with coins that
derive their scarcity and supply from Bitcoin. By using a sidechain which carries bitcoins rather
than a completely new currency, one can avoid the thorny problems of initial distribution and
market vulnerability, as well as barriers to adoption for new users, who no longer need to locate
a trustworthy marketplace or invest in mining hardware to obtain altcoin assets.

It essentially allows for Bitcoin to be used on altcoin chains while able to move back and forth to the original, parent Bitcoin blockchain

[Hunyadi]

If the conflict of interest can be addressed clearly, the sidechains will be good for Bitcoin ecosystem and the exchange rate of it. Cryptocurrency like Bitcoin will need its own infrastructure for trading and debt proof and share proof to circumvent the legal restriction from government without trusting too many 3rd exchange service.  The better infrastructure will make Bitcoin more usefully money, which is a better money.

I agree. Also, I think if bitcoin doesn't adopt sidechains perhaps litecoin will. After that, litecoin would be IMO the main crypto.

[NewLiberty]

I'm in justusranvier's camp on this one. Not raising blocksize, *at least* roughly allowing for Moore's Law, seems insane, and would just drive some alt to gain significant marketshare.

Bandwidth doesn't increase according to Moore's.
At best, Neilson's
http://www.nngroup.com/articles/law-of-bandwidth/

Your source says "10% less than Moore's law." That's not really much difference. Still a lot and still exponential, for now.

Right, That is just the first of many criticisms I have of the current proposals.  
I don't like extrapolations used for predictive purposes.
They assume too much.
I'd prefer a method of rightsizing max block size through use of the data of the future which may be derived from the block chain through sums of fees or block size.
This can be done much in the same way that difficulty is generated.
The risks of doing it in this better way may be that it could create some perverse incentives for folks that wanted to "game" the metric.
I'd like to see a proposal that doesn't come with what amounts to a guarantee that it will be wrong because it relies on a guess made years ago.

[Dusty]

if i were setting up a SC, i'd just fork Bitcoin, add an anonymity function, then let it run.  there'd be a good chance i could get a full on rush into my SC.

And since the SC is two-way pegged, that would be great.

In fact, I hope this will be one of the first SC ever made, that would be the right way to add an anonymization layer onto bitcoin. I tried to setup something similar in the past but I could not solve all the details that the paper instead correctly addresses.

Ultimately, SC are what will completely destroy all altcoins and will give more and more value to Bitcoin, exactly because to the hard-pegging of the currency: what happens now is that for each new scamcoin that is launched every bitcoin holder must choose if part some of his bitcoin stash to buy some of the new coins because they may become more useful and hence more valuable of bitcoin in the future.

But with sidechains there is not such dilemma: since a well defined protocol to switch coins to/from every SC is in place I can wait to enter the SC only when, and if, the thing is useful for me, and not a moment before (and with the possibility to come back, too).

With sidechains we can hope that a new one will be highly successful without the fear that we have not bought his coins in time, because we already have them (of course supposing we are invested in bitcoin), and for all of them (all of the sidecoins that will ever be made).

So, people like Satoshi, Cypherdoc and other highly invested in Bitcoin should be very, very grateful for sidechains because that's the best opportunity we have to maintain the relevance of bitcoin (and hence his value) in the future.

[smooth]

Ultimately, SC are what will completely destroy all altcoins and will give more and more value to Bitcoin, exactly because to the hard-pegging of the currency: what happens now is that for each new scamcoin that is launched every bitcoin holder must choose if part some of his bitcoin stash to buy some of the new coins because they may become more useful and hence more valuable of bitcoin in the future.

Oh come on. Alts in the aggregate are only 10% of Bitcoin's value, and the biggest alt has no innovative features at all. It clearly exists for some completely different reason other than that addressed by side chains and therefore is unlikely to be affected.

This obsession with alts is very unhealthy and unhelpful. Focus on the value that sidechains (or anything else) could potentially add to Bitcoin by allowing faster and safer development. There is a lot more than 10% to be gained there.

[solex]

Ultimately, SC are what will completely destroy all altcoins and will give more and more value to Bitcoin, exactly because to the hard-pegging of the currency: what happens now is that for each new scamcoin that is launched every bitcoin holder must choose if part some of his bitcoin stash to buy some of the new coins because they may become more useful and hence more valuable of bitcoin in the future.

Oh come on. Alts in the aggregate are only 10% of Bitcoin's value, and the biggest alt has no innovative features at all. It clearly exists for some completely different reason other than that addressed by side chains and therefore is unlikely to be affected.

This obsession with alts is very unhealthy and unhelpful. Focus on the value that sidechains (or anything else) could potentially add to Bitcoin by allowing faster and safer development. There is a lot more than 10% to be gained there.

That 10% was 5% for a long time, until recent months. So alts are gaining ground. Bitcoin needs the enhanced features SC promises, but importantly, scope for scalability as well.

[cbeast]

SC won't solve Bitcoin's scalability because they will optimize spamming Bitcoin for metadata. We'll be right back to the block size argument again. In fact, they will make it happen much faster.

[sickpig]

Ultimately, SC are what will completely destroy all altcoins and will give more and more value to Bitcoin, exactly because to the hard-pegging of the currency: what happens now is that for each new scamcoin that is launched every bitcoin holder must choose if part some of his bitcoin stash to buy some of the new coins because they may become more useful and hence more valuable of bitcoin in the future.

Oh come on. Alts in the aggregate are only 10% of Bitcoin's value, and the biggest alt has no innovative features at all. It clearly exists for some completely different reason other than that addressed by side chains and therefore is unlikely to be affected.

This obsession with alts is very unhealthy and unhelpful. Focus on the value that sidechains (or anything else) could potentially add to Bitcoin by allowing faster and safer development. There is a lot more than 10% to be gained there.

That 10% was 5% for a long time, until recent months. So alts are gaining ground. Bitcoin needs the enhanced features SC promises, but importantly, scope for scalability as well.

just for add a few more data points:

[smooth]

Ultimately, SC are what will completely destroy all altcoins and will give more and more value to Bitcoin, exactly because to the hard-pegging of the currency: what happens now is that for each new scamcoin that is launched every bitcoin holder must choose if part some of his bitcoin stash to buy some of the new coins because they may become more useful and hence more valuable of bitcoin in the future.

Oh come on. Alts in the aggregate are only 10% of Bitcoin's value, and the biggest alt has no innovative features at all. It clearly exists for some completely different reason other than that addressed by side chains and therefore is unlikely to be affected.

This obsession with alts is very unhealthy and unhelpful. Focus on the value that sidechains (or anything else) could potentially add to Bitcoin by allowing faster and safer development. There is a lot more than 10% to be gained there.

That 10% was 5% for a long time, until recent months. So alts are gaining ground. Bitcoin needs the enhanced features SC promises, but importantly, scope for scalability as well.

I'm not sure what time frame you are using. At one point it was 0%, so certainly on that basis they are gaining, in some sense.

Ignoring the extreme peak in late 2013, for several months over the past year BTC was roughly $8 billion and LTC was $300-400m, which makes LTC almost 5% by itself.

I'd like to see those numbers though.

My intuition is that the opposite has happened, that alts are slowly losing ground, at least over the past year or so. I can't believe anything close to a doubling of share has happened in recent history.

EDIT: I see from the graph in a subsequent post that my intuition was correct. It isn't entirely up to date but shows alts at 4%. It's really quite silly for that to motivate anything at all about Bitcoin development. For sidechains to be a good idea they had better be a good idea independent of alts.

[tvbcof]

Nice to see someone standing up for the cause on that SC AMA there Cyph.  Go get 'em

[solex]

SC won't solve Bitcoin's scalability because they will optimize spamming Bitcoin for metadata. We'll be right back to the block size argument again. In fact, they will make it happen much faster.

Oh. I completely agree! My sentence earlier was poorly worded, I meant that scaling is important (whether or not SC happens).

EDIT: I see from the graph in a subsequent post that my intuition was correct. It isn't entirely up to date but shows alts at 4%. It's really quite silly for that to motivate anything at all about Bitcoin development. For sidechains to be a good idea they had better be a good idea independent of alts

Yes, the graph is interesting, but for a month, at least, it has been hovering near 90%, where it still stands (4832M / 5342M).
http://coinmarketcap.com/#USD
Assuming the same underlying data is used by both sources.
Note: if Bitshares, Counterparty and Mastercoin are included in Bitcoin, then it is 91%

[Erdogan]

My understanding, and I might be wrong :

- I'm not sure about the concept of scBTC trading on exchanges for reasons that buying a 4$ share of BTC and transferring to SC will give you 4$ share of scBTC. Value of BTC and sBTC are correlated, no matter the 1:x peg.

- My assumption is the share of scBTC pie you can claim is representative to the share of BTC you own. In that sense, if a SC is so superior that there are clear incentives for people to transfer their BTC to this chain, it does not matter when they do it for their stake in BTC, even while on BTC's blockchain, is simply a stake of scBTC they have not claimed YET.

- If this assumption is true then automatically the value of a Bitcoin will rise will the value of its "to-be-claimed" stake in sBTC and be redeemable for the same USD exchange rate

edit : Maybe this makes no sense but this is how I understand it.

ah, that does make sense actually.  but what happens if, as it becomes clear that a SC is going to win over Bitcoin, miners begin to jack their mining tx fees just b/c they can to create the SPV proof tx required to make the switch to scBTC?

also, there still is the question of Blockstream creating an additional asset on the winning SC ahead of time that stands to profit from a rush of BTC to scBTC.

Here is your arb channel:

BTC -> SCbtc ->USD -> BTC

rinse and repeat


So if BTC=$500 and SCbtc=$1000:

I buy BTC for $500, convert to SCbtc, sell SCbtc for $1000, pocket $500, take the other $500 and buy BTC that can then be converted to SCbtc and be sold for $1000, ect, ect, ect


As you said, the waiting periods and tx fees come into play.

This is not even a possibility.

500$ in BTC = 500$ in SCbtc.

Yes it is.  BTC and SCbtc are not necessarily fungible because they are on separate chains with separate tech and the market may value them differently.  The spread I gave was wide to illustrate the point.  Spreads will likely be much smaller.

Still, as you can see of the above, eventually every BTC is converted to scBTC.

[Dusty]

Ultimately, SC are what will completely destroy all altcoins and will give more and more value to Bitcoin, exactly because to the hard-pegging of the currency: what happens now is that for each new scamcoin that is launched every bitcoin holder must choose if part some of his bitcoin stash to buy some of the new coins because they may become more useful and hence more valuable of bitcoin in the future.

Oh come on. Alts in the aggregate are only 10% of Bitcoin's value, and the biggest alt has no innovative features at all. It clearly exists for some completely different reason other than that addressed by side chains and therefore is unlikely to be affected.

You don't know the future, and the trend could certainly change, so better proactive.

This obsession with alts is very unhealthy and unhelpful. Focus on the value that sidechains (or anything else) could potentially add to Bitcoin by allowing faster and safer development. There is a lot more than 10% to be gained there.

That's exactly the point: this is the right way to experiment new coins, and to progressively add new features to Bitcoin without the need to risk to buy some stupid scamcoin.

I think that we will see a lot of hate toward sidechains from all the altcoiners, and you will know why: sidechains take from them the opportunity to make some profit pumping new coins.

[Odalv]

...
Inca, the number of BTC that are put on the sidechain is irrelevant.  As long as there is a single Satoshi left "unlocked" on the bitcoin chain, that satoshi can be transferred into the sidechain for SCBTC.  So that Satoshi is worth its value in SCBTC.  As long as SCBTC has value, BTC would be a store of that value.
...

...
Value of BTC and sBTC are correlated, no matter the 1:x peg.
...

Are these statements actually true? You are both assuming that bitcoin is perpetually transferrable to the sidechain at some perpetually fixed exchange rate.

But, IIRC, the Blockstream crew said in the AMA that the exchange rate can be "any deterministic function", with the constraint that no more BTC can get transferred back to the bitcoin blockchain than got transferred out to begin with. That basically means anything. The rate can change with time, or any other input...as long as it's deterministic. For example:

Say a microtransactions sidechain is developed with a fixed supply of one-billion Micros, and an exchange rate of 1 BTC = 1 million Micros. That means that 1000BTC *total* will ever be able to move to the sidechain. Say the sidechain is very successful; ie, Micros work really well and start to gain a lot of real-world economic traction and value. So the 1000BTC gets transferred over.

Now say that Micros continue to see more use. Their purchasing power goes up, but this has no effect whatsoever on the purchasing power of bitcoin because the max has already moved in. Now all we have is another alt that *used to* have an easy decentralized way of buying it with bitcoin.

I'm frankly struggling to see how sidechains are anything more than an optional decentralized exchange mechanism between BTC and alts.

Then I'll create clone of microtransactions sidechain ... will have same properties as original, only no fixed supply.