Gold collapsing. Bitcoin UP.

[brg444]

If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?

I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over?  

Who said so? The paper does suggest another altcoin can be spun off a sidechain. The difference is it also clearly states this is not where the ground for innovation lays. Altchain backed by BTC currency is what is important here. You chose to focus on the altcoin as if Blockstream's motivation is to create an altcoin using a sidechain which they have specifically explained why they have no interest and little purpose doing so.

I still have yet to see you come up with a good incentive for core dev to maliciously fork Bitcoin in a way that would advantage them.

No one is denying the existence of an apparent "conflict of interest". But like in all things Bitcoin you have to consider in an honest way what truly could go wrong.

How long will you ignore the concept of open source and distribution? What else do I need to say to explain to you that a SC fork is bound to fail?

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over?  

To entertain your scenario the network then would be left with two options to consider.

1) The hypothetic Blockstream "pre-mined" altcoin
2) The community fork of the exact same altcoin with fairer distribution (hint : 1:1 peg)

Remember that a Bitcoin-like first mover advantage is inexistent in that case because of the open source development.

What's embarrassing is brg444 continuing to promise that no altcoins will be considered in SC's when there is an entire section dedicated to them in the paper.

What is embarassing is your continuing stubbordness in front of facts and arguments.

Did you read my post at all? Is there anything you would like to argue?

Do you not understand the idea that Sidechain are not an inherent threat to Bitcoin since Bitcoin is the parent chain?

You have repeatedly supported the idea in this thread that altcoins can barely make a dent into Bitcoin yet packaged in a sidechain you are somehow worried it could threaten it?

Do you recognize that scBTC have the SAME network effect challenge than any other altcoin?

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[smooth]

One example does not prove this at all. It simply proved that no one wanted Freicoin. They might want something else with that property, but with some other differences.

I have to agree with Daniel on this one. He proved fairly rigorously why demurrage-based currencies must fail, and nobody has produced a refutation stronger than, "Maybe if I hope hard enough it will work!!!"

http://themisescircle.org/blog/2013/08/22/the-problem-with-altcoins/

Freicoin is an idea whose time will never come. Since it rebukes buyers, it resists ever having value. Freicoin is thus not so much a scam but more an abortion. Its ideals are so refined that they eschew the merest chance of affecting the real world. Perhaps it could be taken as some sort of absurdist parody, which would be brilliant. I hope that is true because otherwise it is just too sad.

That's essentially identical to the frequent argument that deflationary currencies can't work because no one will spend them (or, in his words, it rebukes sellers). Both are wrong.

Gold is deflationary, manure rots like demurrage. Try spending manure.

People sell manure all the time. It's a huge industry. That is the same as spending.

[smooth]

That's essentially identical to the frequent argument that deflationary currencies can't work because no one will spend them (or, in his words, it rebukes sellers). Both are wrong.

Your statement is only true if we don't care about reality. Or truth.

Both of these theories have been empirically tested, and only one of them demonstrated to be true.

Apparently you are a bit logic challenged. One example consistent with a premise does not "demonstrate" the premise to be true.

[cbeast]

I've been trying to wrap my head around the SC debate. I can only see a 1:1 peg working without it becoming an altcoin because fractional reserve. Transactions only supported by fees would preclude using them for micro-transactions. Competition for mining for the fees would reach equilibrium with Bitcoin mining. There's not much advantage to them except for minimal counterparty risk.

It sounds like a fairly safe way to create a decentralized exchange for designing Bitcoin's replacement.

[brg444]

If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?

I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over?  

I love the idea, but I don't get how a dark 1:1 pegged SC can have a security incentive if you are only mining for fees.

It will happen. There are plenty of good reason for a sidechain to use the anonymity feature of, say, Monero. What cypher fails to consider here is that a new currency is not necessary for this to exist. The altchain will leverage Bitcoin's currency and benefit from its network effect.

Improved payer privacy, e.g. the ring signature scheme used by Monero, can reduce the systemic risk of the transactions of particular parties being censored, protecting the fungibility of the cryptocurrency. Improvements to this have been suggested by Maxwell and Poelstra
400 [MP14, Poe14b] and Back[Bac13a], which would allow for even greater privacy. Today, ring signatures can be used with Monero coins, but not bitcoins; sidechains would avoid this exclusivity

I'm not sure about your security incentive question. Merge mining allows for hashing power of BTC to be shared with the anonymous altchain in a trivial way.

So tell me cypherdoc, what is more likely to catch on?

A 1:1 pegged sidechain with anonymity features or an anonymous sidechain issuing its own currency distributed in some malicious, hypothetic way that would benefit the Blockstream developer?

IIRC pre-mines have never really been popular or successful.

[brg444]

Transactions only supported by fees would preclude using them for micro-transactions. Competition for mining for the fees would reach equilibrium with Bitcoin mining. There's not much advantage to them except for minimal counterparty risk.

1:1 pegged sidechains using bitcoins has currency are not "only supported by fees".

Miners are essentially reward by the usual BTC issuance and additional transactions from sidechains

[cbeast]

Transactions only supported by fees would preclude using them for micro-transactions. Competition for mining for the fees would reach equilibrium with Bitcoin mining. There's not much advantage to them except for minimal counterparty risk.

1:1 pegged sidechains using bitcoins has currency are not "only supported by fees".

Miners are essentially reward by the usual BTC issuance and additional transactions from sidechains

Where are the block rewards bitcoin backing coming from if the chain is 1:1?

[brg444]

Transactions only supported by fees would preclude using them for micro-transactions. Competition for mining for the fees would reach equilibrium with Bitcoin mining. There's not much advantage to them except for minimal counterparty risk.

1:1 pegged sidechains using bitcoins has currency are not "only supported by fees".

Miners are essentially reward by the usual BTC issuance and additional transactions from sidechains

Where are the block rewards bitcoin backing coming from if the chain is 1:1?

From the Bitcoin blockchain.

So if I understand this correctly, think of the altchains as a multi-sig wallet.

If you wish to use some features of a sidechain (anonymity) you would essentially lock them to the altchain. From there, they would move within the altchain blockchain until you unlock them back to BTC. Any unit in the altchain is essentially a bitcoin that has been locked into the altchain. There is no issuance of new coins, no distribution model.

[cbeast]

Transactions only supported by fees would preclude using them for micro-transactions. Competition for mining for the fees would reach equilibrium with Bitcoin mining. There's not much advantage to them except for minimal counterparty risk.

1:1 pegged sidechains using bitcoins has currency are not "only supported by fees".

Miners are essentially reward by the usual BTC issuance and additional transactions from sidechains

Where are the block rewards bitcoin backing coming from if the chain is 1:1?

From the Bitcoin blockchain.

So if I understand this correctly, think of the altchains as a multi-sig wallet.

If you wish to use some features of a sidechain (anonymity) you would essentially lock them to the altchain. From there, they would move within the altchain blockchain until you unlock them back to BTC. Any unit in the altchain is essentially a bitcoin. There is no issuance of new coins, no distribution model.

Right. Then there is no mining in the SC? How are SC blockchains built?

[brg444]

Right. Then there is no mining in the SC? How are SC blockchains built?

Not quite, I too am having problem wraping my head about how exactly this would work but I believe this to be the relevant part in the whitepaper :

Because miners receive compensation from the block subsidy and fees of each chain they provide work for, it is in their economic interest to switch between providing DMMSes for different similarly-valued blockchains following changes in difficulty and movements in market value.
One response is that some blockchains have tweaked their blockheader definition such that it includes a part of Bitcoin’s DMMS, thus enabling miners to provide a single DMMS that commits to Bitcoin as well as one or more other blockchains — this is called merged mining. Since merged mining enables re-use of work for multiple blockchains, miners are able to claim compensation from each blockchain that they provide DMMSes for.

Note that the referred "block subsidy" exists only if the altchain issues its own native currency (not a 1:1 peg)

Subsidy. A sidechain could also issue its own separate native currency as reward, effectively forming an altcoin. However, these coins would have a free-floating value and as a result would not solve the volatility and market fragmentation issues with altcoins.

[cbeast]

Right. Then there is no mining in the SC? How are SC blockchains built?

Not quite, I too am having problem wraping my head about how exactly this would work but I believe this to be the relevant part in the whitepaper :

Because miners receive compensation from the block subsidy and fees of each chain they provide work for, it is in their economic interest to switch between providing DMMSes for different similarly-valued blockchains following changes in difficulty and movements in market value.
One response is that some blockchains have tweaked their blockheader definition such that it includes a part of Bitcoin’s DMMS, thus enabling miners to provide a single DMMS that commits to Bitcoin as well as one or more other blockchains — this is called merged mining. Since merged mining enables re-use of work for multiple blockchains, miners are able to claim compensation from each blockchain that they provide DMMSes for.

Note that the referred "block subsidy" exists only if the altchain issues its own native currency (not a 1:1 peg)

Subsidy. A sidechain could also issue its own separate native currency as reward, effectively forming an altcoin. However, these coins would have a free-floating value and as a result would not solve the volatility and market fragmentation issues with altcoins.

Yeah. The secondary currency would likely threaten the security of the entrenched bitcoins by having an effect on hashrate through price manipulation. I suppose if the altcoin was used only for microtransactions it might make sense since the mining is subsidized by merge miners.

[HeliKopterBen]

No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.

Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.

Explain to me how you price something that doesn't exist.  If ALL BTC are converted to SCbtc, then that means no more BTC exists.  If no more BTC exist then there are no more sellers.  Buyers can't buy when there are no sellers and the price is effectively 0.

[cbeast]

No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.

Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.

Explain to me how you price something that doesn't exist.  If ALL BTC are converted to SCbtc, then that means no more BTC exists.  If no more BTC exist then there are no more sellers.  Buyers can't buy when there are no sellers and the price is effectively 0.

Bitcoins still exist, they can be unlocked by destroying (or locking) your SC coins, effectively swapping keys with the bitcoins. Their location can still be seen on the blockchain. Really it would drive Bitcoin price up, not down because it is the only secure exchange between SC coins.

[HeliKopterBen]

No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.

Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.

Explain to me how you price something that doesn't exist.  If ALL BTC are converted to SCbtc, then that means no more BTC exists.  If no more BTC exist then there are no more sellers.  Buyers can't buy when there are no sellers and the price is effectively 0.

Bitcoins still exist, they can be unlocked by destroying (or locking) your SC coins, effectively swapping keys with the bitcoins. Their location can still be seen on the blockchain. Really it would drive Bitcoin price up, not down because it is the only secure exchange between SC coins.

Technically bitcoins still exist, but economically they don't exist until SCbtc is converted back.  You can't buy or sell BTC that is in the form of SCbtc, although the underlying peg should be understood by the market. 

[cbeast]

No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.

Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.

Explain to me how you price something that doesn't exist.  If ALL BTC are converted to SCbtc, then that means no more BTC exists.  If no more BTC exist then there are no more sellers.  Buyers can't buy when there are no sellers and the price is effectively 0.

Bitcoins still exist, they can be unlocked by destroying (or locking) your SC coins, effectively swapping keys with the bitcoins. Their location can still be seen on the blockchain. Really it would drive Bitcoin price up, not down because it is the only secure exchange between SC coins.

Technically bitcoins still exist, but economically they don't exist until SCbtc is converted back.  You can't buy or sell BTC that is in the form of SCbtc, although the underlying peg should be understood by the market. 

Sure you can. If you have a 1:1 SC coin, then an exchange can do the alchemy to convert the coin to sell in either form because exchanges are off blockchain.

[HeliKopterBen]

No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.

Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.

Explain to me how you price something that doesn't exist.  If ALL BTC are converted to SCbtc, then that means no more BTC exists.  If no more BTC exist then there are no more sellers.  Buyers can't buy when there are no sellers and the price is effectively 0.

Bitcoins still exist, they can be unlocked by destroying (or locking) your SC coins, effectively swapping keys with the bitcoins. Their location can still be seen on the blockchain. Really it would drive Bitcoin price up, not down because it is the only secure exchange between SC coins.

Technically bitcoins still exist, but economically they don't exist until SCbtc is converted back.  You can't buy or sell BTC that is in the form of SCbtc, although the underlying peg should be understood by the market. 

Sure you can. If you have a 1:1 SC coin, then an exchange can do the alchemy to convert the coin to sell in either form because exchanges are off blockchain.

I get what you are saying but Smooth says you can't arbitrage between SCbtc and BTC because if SCbtc is superior, then no one will own BTC.

[cbeast]

No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.

Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.

Explain to me how you price something that doesn't exist.  If ALL BTC are converted to SCbtc, then that means no more BTC exists.  If no more BTC exist then there are no more sellers.  Buyers can't buy when there are no sellers and the price is effectively 0.

Bitcoins still exist, they can be unlocked by destroying (or locking) your SC coins, effectively swapping keys with the bitcoins. Their location can still be seen on the blockchain. Really it would drive Bitcoin price up, not down because it is the only secure exchange between SC coins.

Technically bitcoins still exist, but economically they don't exist until SCbtc is converted back.  You can't buy or sell BTC that is in the form of SCbtc, although the underlying peg should be understood by the market. 

Sure you can. If you have a 1:1 SC coin, then an exchange can do the alchemy to convert the coin to sell in either form because exchanges are off blockchain.

I get what you are saying but Smooth says you can't arbitrage between SCbtc and BTC because if SCbtc is superior, then no one will own BTC.

You can't arbitrage 1:1. That's why I don't think non 1:1 SC will work.

[HeliKopterBen]

I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".

These are two perfectly good reasons and really the only reasons you need:
1)  open source code
2)  consensus execution of that code by miners voting with their processing power

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over? 

This is not so black and white.  I suppose there could be a real threat of a side chain taking over if there is little to no perceived risk by the market to move from chain to chain, but if the market perceives little to no risk then maybe there is little to no risk.  Savers will likely park their money in the safest chain, i.e. the chain with the highest hashrate and bitcoin could cease to be the dominant chain at some point.  I don't see why it couldn't happen.

[cbeast]

I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".

These are two perfectly good reasons and really the only reasons you need:
1)  open source code
2)  consensus execution of that code by miners voting with their processing power

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over? 

This is not so black and white.  I suppose there could be a real threat of a side chain taking over if there is little to no perceived risk by the market to move from chain to chain, but if the market perceives little to no risk then maybe there is little to no risk.  Savers will likely park their money in the safest chain, i.e. the chain with the highest hashrate and bitcoin could cease to be the dominant chain at some point.  I don't see why it couldn't happen.

Nothing will completely replace Bitcoin. They will have to have legacy support because multisig and lost coins. It doesn't matter if one becomes bigger than Bitcoin because it's pegged.

[cypherdoc]

I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".

These are two perfectly good reasons and really the only reasons you need:
1)  open source code
2)  consensus execution of that code by miners voting with their processing power

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over?  

This is not so black and white.  I suppose there could be a real threat of a side chain taking over if there is little to no perceived risk by the market to move from chain to chain, but if the market perceives little to no risk then maybe there is little to no risk.  Savers will likely park their money in the safest chain, i.e. the chain with the highest hashrate and bitcoin could cease to be the dominant chain at some point.  I don't see why it couldn't happen.

Neither do I. And it would be very disruptive to hodlers who make up most of bitcoin today. And it could be a never ending transition add new innovations take place. Some of us would rather just leave our coins in cold storage for a few decades.

brg444, I'm past the part  about core dev altcoin implementations. I do see how it would be a hard sell for them although not impossible to sell to noobs. You forget that we are witnessing the power of what they can do RIGHT NOW with this SC  proposal. They've banded together precisely to push this proposal through as a  for profit company which requires a fork for them to be successful. It's not a wild thought imagining them trying to implement a new currency some day. LukeJr has talked about demurrage coin on reddit. Why? I could see a day where he starts one on his own and claims its just him personally, not Blockstream. Unlikely but possible.

On planes all day so in and out