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Question: Will you support Gavin's new block size limit hard fork of 8MB by January 1, 2016 then doubling every 2 years?
1.  yes
2.  no

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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2011339 times)
smooth
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October 25, 2014, 09:04:26 PM
 #14561


This is only true for 1:1 side chains. Not all side chains need to be 1:1.


It works too for a sidechain  that is 1:1000 (to fund) and 1000:1(to withdraw)

If the ratio is higher than 1:1 then it does create new units. If it is lower than it destroys (or at least locks) units.

The number of units is irrelevant. What matters is the share of ownership.

SC cannot unlock more bitcoins than was locked.  If there is SC what will create new scBTC then

Correct, but "units" can be created.

For example, it has been stated that conversion may be a function. For example, a side chain may double its number of units every week while cutting its conversion ratio with Bitcoin in half every week.

No asset of any type can create units of Bitcoin (though changes to Bitcoin-itself could change the number of units as I described i.e. moving the decimal). Units of other assets can and will be created.






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October 25, 2014, 09:05:25 PM
 #14562

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Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

The purpose of side chains is not to increase security it is to provide a convenient mechanism for coins to serve as backing for other coins with automated exchange between them.

In fact side chains add an additional degree of insecurity (though ideally small) in that they are going to use SPV proofs for cross-chain transactions, which introduces a new vulnerability.



But it is only vulnerability for SC participants. Bitcoin users are not affected.
It is more secure than implement new features into bitcoin protocol where all users are affected.
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October 25, 2014, 09:05:48 PM
 #14563

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Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

But sidechains that do not create issued assets (additional coins) certainly are more secure than altcoins

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

I can't force anyone to use it, but that is true for any altcoin.

smooth
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October 25, 2014, 09:06:17 PM
 #14564

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Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

The purpose of side chains is not to increase security it is to provide a convenient mechanism for coins to serve as backing for other coins with automated exchange between them.

In fact side chains add an additional degree of insecurity (though ideally small) in that they are going to use SPV proofs for cross-chain transactions, which introduces a new vulnerability.



But it is only vulnerability for SC participants. Bitcoin users are not affected.

Same as any other altcoin

Quote
It is more secure than implement new features into bitcoin protocol where all users are affected.

Agree!
brg444
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October 25, 2014, 09:10:03 PM
 #14565

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

My understanding is that sidechains that do not issue their native currency are not mined but rather the movement of assets between them (transactions) are integrated into BTC's mining blocks

See this quote from the paper :

Quote
Furthermore, because sidechains transfer existing assets from the parent chain rather than creating new ones, sidechains cannot cause unauthorised creation of coins, relying instead on the
parent chain to maintain the security and scarcity of its assets.

Can you explain why this is not so?

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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October 25, 2014, 09:12:38 PM
 #14566

Quote
Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

But sidechains that do not create issued assets (additional coins) certainly are more secure than altcoins

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

I can't force anyone to use it, but that is true for any altcoin.


altcoin does not have Bitcoin market cap. and never/(not soon) will have ... so altcoin is useless for economy (is good for children to play with :-) )
Melbustus
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October 25, 2014, 09:26:28 PM
 #14567

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

My understanding is that sidechains that do not issue their native currency are not mined but rather the movement of assets between them (transactions) are integrated into BTC's mining blocks

See this quote from the paper :

Quote
Furthermore, because sidechains transfer existing assets from the parent chain rather than creating new ones, sidechains cannot cause unauthorised creation of coins, relying instead on the
parent chain to maintain the security and scarcity of its assets.

Can you explain why this is not so?


This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Again, back to the key thing sidechaining provides; ie, just a method to specify, at the protocol level, an exchange rate between assets on different sidechain-supporting chains. And back to this exchange rate being definable by "any deterministic function". There can therefore be many sorts of non 1:1 relationships. For example, maybe monero gets "side-chain enabled" for 20% of its future supply, but the other 80% still gets issued as it currently does... Why wouldn't that be possible?

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
Cryptoasset rankings and metrics for investors: http://onchainfx.com
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October 25, 2014, 09:29:22 PM
 #14568

Quote
Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of

So a sidecoin type spinoff is no more secure than a regular altcoin spinoff

A side chain is no more secure than any other coin that uses the same method of mining (and both side chains and others can use any method of mining).

The purpose of side chains is not to increase security it is to provide a convenient mechanism for coins to serve as backing for other coins with automated exchange between them.

In fact side chains add an additional degree of insecurity (though ideally small) in that they are going to use SPV proofs for cross-chain transactions, which introduces a new vulnerability.



But it is only vulnerability for SC participants. Bitcoin users are not affected.

Same as any other altcoin

Quote
It is more secure than implement new features into bitcoin protocol where all users are affected.

Agree!


What is even more interesting some side chain can create new scCurrency out of nothing e.g.
 - Central Bank can create scUSD and CB can create sideChain where only miner is CB server(who sign every transaction block).
 - Central bank can give you your salary in scUSD and you can use scUSD to pay taxes

If you will use CBSicdeChain is up to you.  But now we have trust-less exchange to BTC/USD.

edit:
CB will exchange you USD scUSD 1:1
brg444
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October 25, 2014, 09:43:36 PM
 #14569

This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Actually this passage does come with this footnote to be clear :

Quote
Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of. We mean to emphasise that they can only affect the scarcity of themselves and their child chains.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
smooth
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October 25, 2014, 09:51:02 PM
 #14570

Not necesasrily, no. If I create a side chain that isn't mined well, it may be subject to double spend or other chain attacks. It would likely be far less secure than Litecoin.

My understanding is that sidechains that do not issue their native currency are not mined but rather the movement of assets between them (transactions) are integrated into BTC's mining blocks

See this quote from the paper :

Quote
Furthermore, because sidechains transfer existing assets from the parent chain rather than creating new ones, sidechains cannot cause unauthorised creation of coins, relying instead on the
parent chain to maintain the security and scarcity of its assets.

Can you explain why this is not so?


This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Again, back to the key thing sidechaining provides; ie, just a method to specify, at the protocol level, an exchange rate between assets on different sidechain-supporting chains. And back to this exchange rate being definable by "any deterministic function". There can therefore be many sorts of non 1:1 relationships. For example, maybe monero gets "side-chain enabled" for 20% of its future supply, but the other 80% still gets issued as it currently does... Why wouldn't that be possible?

Any of this is possible. The question is what gets accepted by the market.

The side chain proposal has increased the breadth and scope of possible altcoins. Maybe quite the opposite of what they intended!

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October 25, 2014, 09:53:30 PM
 #14571

This is a key point I'd like better understanding on as well.

My understanding is that it is *not* a strict requirement that all units on a sidechains-utilizing ledger generate 100% of their unit-supply via locked bitcoins. I think the passage you quoted was poorly worded, and was just emphasizing that sidechaining can't result in effectively arbitrary asset creation.

Actually this passage does come with this footnote to be clear :

Quote
Of course, sidechains are able to support their own assets, which they would be responsible for maintaining the scarcity of. We mean to emphasise that they can only affect the scarcity of themselves and their child chains.

Indeed.

So here's where I'm landing on this:

1) Sidechains are just a way of defining an exchange rate function at the protocol level.

2) This function can have nearly any definition. Some definitions may serve to economically boost demand for bitcoin, some may not.

3) Sidechained ledgers can span a huge range of economic-entanglement with bitcoin, from just about completely separate (ie, like any other alt), to effectively being 100% "backed" by bitcoin-the-unit.

4) The *HOPE* of sidechain proponents is that many chains will be developed which use an exchange function that creates demand for bitcoin; eg, a function that defines 100% of the new chain's supply in terms of bitcoin.

5) Given that sidechaining makes it possible to create new protocols that are credibly "backed" by bitcoin, the hope is that new protocols which *aren't* backed by bitcoin (ie, "traditional" alts) immediately become suspected of pump-n-dump/profit motives as opposed to pure technological-experimentation motives.


It'll be interesting to see how strongly #4 holds in the market over time.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
Cryptoasset rankings and metrics for investors: http://onchainfx.com
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October 25, 2014, 09:58:40 PM
 #14572

3) Sidechained ledgers can span a huge range of economic-entanglement with bitcoin, from just about completely separate (ie, like any other alt), to effectively being 100% "backed" by bitcoin-the-unit.

Factually speaking it isn't really "backed' by bitcoin-the-unit. It is backed (no scare quotes) by Bitcoins, meaning actual Bitcoins on the Bitcoin blockchain that are locked as backing for the side chain until the protocol releases them.

The bitcoin-the-unit concept is marketing by the side chain advocates. As you say it will be up to the market to decide how much traction that concept gets.

This describes the whole thing quite well in neutral economic terms: http://konradsgraf.squarespace.com/storage/Monetary%20analsyis%20of%20sidecoins%20KG%2024Oct2014.pdf



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October 25, 2014, 10:11:21 PM
 #14573

3) Sidechained ledgers can span a huge range of economic-entanglement with bitcoin, from just about completely separate (ie, like any other alt), to effectively being 100% "backed" by bitcoin-the-unit.

Factually speaking it isn't really "backed' by bitcoin-the-unit. It is backed (no scare quotes) by Bitcoins, meaning actual Bitcoins on the Bitcoin blockchain that are locked as backing for the side chain until the protocol releases them.



Yeah, I'd say that in this case, "backing" = proof-of-lock. I agree with Kongrad that the market will determine how well the value translates, but those details are not really what I find most interesting. I think the impact for bitcoin demand will be mostly determined by how well my #4 holds; ie, if people really do mostly use sidechaining with the *intent* of creating exchange-functions that boost demand for bitcoin.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
Cryptoasset rankings and metrics for investors: http://onchainfx.com
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October 25, 2014, 10:22:50 PM
 #14574

3) Sidechained ledgers can span a huge range of economic-entanglement with bitcoin, from just about completely separate (ie, like any other alt), to effectively being 100% "backed" by bitcoin-the-unit.

Factually speaking it isn't really "backed' by bitcoin-the-unit. It is backed (no scare quotes) by Bitcoins, meaning actual Bitcoins on the Bitcoin blockchain that are locked as backing for the side chain until the protocol releases them.



Yeah, I'd say that in this case, "backing" = proof-of-lock. I agree with Kongrad that the market will determine how well the value translates, but those details are not really what I find most interesting. I think the impact for bitcoin demand will be mostly determined by how well my #4 holds; ie, if people really do mostly use sidechaining with the *intent* of creating exchange-functions that boost demand for bitcoin.

At least alt-development will be converted into sc-development. -> new features for bitcoin.
Bitcoin will successfully import all altCoin "features" and check them if they matters
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October 25, 2014, 10:36:54 PM
 #14575

At least alt-development will be converted into sc-development. -> new features for bitcoin.

It may. That is clearly the intent of the side chain developers and promoters.

What Melbustus and I and are saying is that it will be up to the market whether that is actually what happens in practice. His #4 states this more precisely.




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October 25, 2014, 10:40:34 PM
 #14576

At least alt-development will be converted into sc-development. -> new features for bitcoin.

It may. That is clearly the intent of the side chain developers and promoters.

What Melbustus and I and are saying is that it will be up to the market whether that is actually what happens in practice. His #4 states this more precisely.


I agree. Market will decide.

I'm fan of SD's so "give market a chance." :-)
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October 25, 2014, 10:55:40 PM
 #14577

At least alt-development will be converted into sc-development. -> new features for bitcoin.

It may. That is clearly the intent of the side chain developers and promoters.

What Melbustus and I and are saying is that it will be up to the market whether that is actually what happens in practice. His #4 states this more precisely.

Bottom line to me is the downsides to SC are rather limited and upside very interesting

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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October 25, 2014, 11:05:04 PM
 #14578

At least alt-development will be converted into sc-development. -> new features for bitcoin.

It may. That is clearly the intent of the side chain developers and promoters.

What Melbustus and I and are saying is that it will be up to the market whether that is actually what happens in practice. His #4 states this more precisely.

Bottom line to me is the downsides to SC are rather limited and upside very interesting

Bitcoin is very hard to understand, but blockchain 2.0 is at least one order of magnitude harder.
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October 25, 2014, 11:11:52 PM
 #14579

At least alt-development will be converted into sc-development. -> new features for bitcoin.

It may. That is clearly the intent of the side chain developers and promoters.

What Melbustus and I and are saying is that it will be up to the market whether that is actually what happens in practice. His #4 states this more precisely.

Bottom line to me is the downsides to SC are rather limited and upside very interesting


I think the most interesting part is that it forces alt-coin developers to have a good answer to: "Why do you need a new completely independent new unit?"

Unfortunately, I think we're going to get a bunch of weird hybrid exchange functions that don't map 100% of the alt's supply to locked-bitcoin-creation, and other sorts of stuff that doesn't yield a clear demand-path for bitcoin. Of course, barring various of cypher's concerns, that doesn't leave bitcoin holders any *worse* off than the current alt-circus does.

In any event, at least we'll be able to aggressively demand an answer to that first question from new alt projects, and I think that was a huge part of the goal of sidechains to begin with.

Bitcoin is the first monetary system to credibly offer perfect information to all economic participants.
Cryptoasset rankings and metrics for investors: http://onchainfx.com
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October 25, 2014, 11:21:28 PM
 #14580

At least alt-development will be converted into sc-development. -> new features for bitcoin.

It may. That is clearly the intent of the side chain developers and promoters.

What Melbustus and I and are saying is that it will be up to the market whether that is actually what happens in practice. His #4 states this more precisely.

Bottom line to me is the downsides to SC are rather limited and upside very interesting


I think the most interesting part is that it forces alt-coin developers to have a good answer to: "Why do you need a new completely independent new unit?"

Unfortunately, I think we're going to get a bunch of weird hybrid exchange functions that don't map 100% of the alt's supply to locked-bitcoin-creation, and other sorts of stuff that doesn't yield a clear demand-path for bitcoin. Of course, barring various of cypher's concerns, that doesn't leave bitcoin holders any *worse* off than the current alt-circus does.

In any event, at least we'll be able to aggressively demand an answer to that first question from new alt projects, and I think that was a huge part of the goal of sidechains to begin with.


Exactly, bitcoin is store of value and bitcoin protocol can transfer this value.
SC's can show us what is the added value of new features.
Let's battle starts -> the better feature the more bitcoins/miner-hash-power it will get.
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