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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?
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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1806233 times)
brg444
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October 25, 2014, 08:33:10 PM
 #14581

Would it not be possible to create spin-off coins through a sidechain?

Technically I suppose, but such a coin couldn't be backed by bitcoin or offer the 1:1 conversion feature.

Quote
This coin could benefit from spin-offs' idea of Bitcoin-blockchain distribution and also from sidechains' convenient, integrated, merge-mining.

I guess we should define some terms here. By "side chain" I mean the on-chain convertibility feature. This is usually described as 1:1 but doesn't need to be that, it could use some other fixed ratio or a non-fixed formula.

Merged mining can be done with or without this sort of side chain. They are independent.


Right, I also realise there is a fundamental error in my proposition. Sidechains issuing assets (sidecoins) are responsible for their security (through their own mining algo).

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

"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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brg444
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October 25, 2014, 08:38:58 PM
 #14582

Spin-of will create 13M worthless units ... it will take ages and millions(billions) $ until you build solid market cap. (so it never happen, or bitcoin must die)

Very valid point.

I recognize the value of sharing the same ledger but this does not necessarily mean the value is shared.


"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, 08:51:06 PM
 #14583


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)
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October 25, 2014, 08:52:28 PM
 #14584


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.





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October 25, 2014, 08:55:15 PM
 #14585

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.

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October 25, 2014, 09:00:43 PM
 #14586


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
a) some will end up holding scBTC but this cannot be converted to BTC
b) SC must implement some conversion ratio -> consensus of SC participants
brg444
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October 25, 2014, 09:03:04 PM
 #14587

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

"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, 09:04:26 PM
 #14588


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
 #14589

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.
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
 #14590

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.

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October 25, 2014, 09:06:17 PM
 #14591

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!
brg444
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October 25, 2014, 09:10:03 PM
 #14592

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
 #14593

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 :-) )
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October 25, 2014, 09:26:28 PM
 #14594

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.
But Bitcointalk & /r/bitcoin are heavily censored. bitco.in/forum, forum.bitcoin.com, and /r/btc are open.
Best info on Casascius coins: http://spotcoins.com/casascius
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October 25, 2014, 09:29:22 PM
 #14595

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
 #14596

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
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October 25, 2014, 09:51:02 PM
 #14597

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
 #14598

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.
But Bitcointalk & /r/bitcoin are heavily censored. bitco.in/forum, forum.bitcoin.com, and /r/btc are open.
Best info on Casascius coins: http://spotcoins.com/casascius
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October 25, 2014, 09:58:40 PM
 #14599

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
 #14600

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.
But Bitcointalk & /r/bitcoin are heavily censored. bitco.in/forum, forum.bitcoin.com, and /r/btc are open.
Best info on Casascius coins: http://spotcoins.com/casascius
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