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dillpicklechips
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October 25, 2014, 11:36:48 PM
 #14581

When I think of "sidechains" I imagine "entangled bitcoins". Sidechains have no inital coins. By creating a special transaction in bitcoin we can program them to be stuck until the "entangled sidecoin" does a similar transaction making the entangled sidecoins stuck. By making the sidecoin stuck you are releasing the original bitcoins to be used again. This process of "entanglement" allows sidecoins to be created and destroyed as needed. This entanglement also means the liquidity of all sidechains will equal bitcoin giving it a huge advantage over altcoins who can not use this "entanglement".

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October 25, 2014, 11:52:41 PM
 #14582

When I think of "sidechains" I imagine "entangled bitcoins". Sidechains have no inital coins. By creating a special transaction in bitcoin we can program them to be stuck until the "entangled sidecoin" does a similar transaction making the entangled sidecoins stuck. By making the sidecoin stuck you are releasing the original bitcoins to be used again. This process of "entanglement" allows sidecoins to be created and destroyed as needed. This entanglement also means the liquidity of all sidechains will equal bitcoin giving it a huge advantage over altcoins who can not use this "entanglement".

At the same moment it will add new feature to bitcoin (fast transaction, distributed exchange) and remove dust from main blockchain (it saves disk space for full bitcoin node)
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October 26, 2014, 12:55:27 AM
 #14583

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?
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October 26, 2014, 12:57:38 AM
 #14584

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?

their 4% market share could help this Bitcoin market right about now  Wink

"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
dillpicklechips
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October 26, 2014, 01:00:18 AM
 #14585

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?
My guess: gambling in case an alt ever takes off. If it's a little bit you don't lose much but if it goes crazy you could make money. I think a lot of money in alts is not for actual use but hoarding in case it becomes popular. They want to be first like the people who were first for bitcoin.

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October 26, 2014, 01:02:34 AM
 #14586

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?
My guess: gambling in case an alt ever takes off. If it's a little bit you don't lose much but if it goes crazy you could make money. I think a lot of money in alts is not for actual use but hoarding in case it becomes popular. They want to be first like the people who were first for bitcoin.

I think he was asking why sidechains as a replacement for alts (or really anything about alts at all) is so compelling.

I don't think it is.

Fiat is 99+% of the market. Look that direction, and stop being distracted by the 4% in the other direction.

dillpicklechips
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October 26, 2014, 01:21:42 AM
 #14587


I think he was asking why sidechains as a replacement for alts (or really anything about alts at all) is so compelling.

I don't think it is.

Fiat is 99+% of the market. Look that direction, and stop being distracted by the 4% in the other direction.


A sidechain namecoin like blockchain would be interesting though. It would work for usernames, DNS, links, any data pairs etc and the coins to do the operations aren't floating on the free market prone to booms and busts. You don't have to hold namecoins just in case it's popular. You just create the sidechain and coin creation occurs when needed.

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Melbustus
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October 26, 2014, 01:23:45 AM
 #14588

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?


Because alts are the strongest theoretical argument for why bitcoin (and transitively, any crypto) may not retain value in the long run. In many people's eyes, alts represent an attack on bitcoin's core scarcity property. I (and you as well, I'm sure) have plenty of arguments for why it's likely that alts do *not*, in fact, represent a meaningful threat, but it's nevertheless a core reason why a lot of people who otherwise see the value of bitcoin fail to fully embrace it.

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 26, 2014, 01:24:40 AM
 #14589

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?
My guess: gambling in case an alt ever takes off. If it's a little bit you don't lose much but if it goes crazy you could make money. I think a lot of money in alts is not for actual use but hoarding in case it becomes popular. They want to be first like the people who were first for bitcoin.

I think he was asking why sidechains as a replacement for alts (or really anything about alts at all) is so compelling.

I don't think it is.

Fiat is 99+% of the market. Look that direction, and stop being distracted by the 4% in the other direction.



how is an anonymous (monero-type) sidechain backed by BTC not 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 26, 2014, 01:28:02 AM
 #14590

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?
My guess: gambling in case an alt ever takes off. If it's a little bit you don't lose much but if it goes crazy you could make money. I think a lot of money in alts is not for actual use but hoarding in case it becomes popular. They want to be first like the people who were first for bitcoin.

I think he was asking why sidechains as a replacement for alts (or really anything about alts at all) is so compelling.

I don't think it is.

Fiat is 99+% of the market. Look that direction, and stop being distracted by the 4% in the other direction.



how is an anonymous (monero-type) sidechain backed by BTC not interesting?



This was asked and answered before (credits to smooth).

In the wake of http://www.blockstream.com/ essentially making sidechains an inevitability - what is the point of holding XMR now? Wont all of the privacy Monero offers be available within the bitcoin blockchain?

I think the answer is no. First of all it is questionable whether you would really want to hold wealth long term on a sidechain. The security assumptions (even when it comes to things like network hash rate, but in other more fundamental respects as well) are questionable. It is more plausible you might want to use services or features on a side chain by moving your bitcoins there and then, relatively quickly, moving them back to the more secure main chain. For example, this might be be used for mixing, by moving your coins to a sidechain with ring signatures, transacting and then moving them back.

But this ends up being a lot like using a Bitcoin mixer, with many of the same issues such as simultaneity. For example, imagine you are making a donation to some controversial organization and you want to delink the bitcoins you are donating.

So you go ahead and move your coins to a ring-sig sidechain, move them around a few times, and then move them back. Unless other people are doing this at the same time, when you move your coins back to the main chain, you will get the same coins back that you started with.

Alternately, perhaps the organization wants to be all anonymous and stuff, so it publishes an address on the sidechain, and you donate to them there. They then withdraw the coins back to the main chain, and they get the exact Bitcoins you sent to the side chain.

Obviously if there are a few other people doing the transfers at the same time, there is a degree of mixing, but it is fairly limited.

I don't think a side chain with a specialized purpose can achieve the same degree of anonymity as a coin designed for that purpose, where the entire chain is being mixed and remixed continually. That is an emperical question though. It is possible that a Bitcoin side chain could get more usage and greater trust of its security for long term holdings than Monero will have. More usage would address the mixing issue to a some extent and trust in the security would address the need to constantly move coins back and forth (though there still may be a loss of network effect here). None of this is clear at all.

I also think it is possible the market may simply reject the notion of adopting the Bitcoin currency for everything. It will be an interesting experiment to decouple new features from using a different currency. We may well find that the reason for altcoins is not the features!






Privacy matters, use Monero - A true untraceable cryptocurrency
Why Monero matters? http://weuse.cash/2016/03/05/bitcoiners-hedge-your-position/
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October 26, 2014, 02:10:19 AM
 #14591

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?
My guess: gambling in case an alt ever takes off. If it's a little bit you don't lose much but if it goes crazy you could make money. I think a lot of money in alts is not for actual use but hoarding in case it becomes popular. They want to be first like the people who were first for bitcoin.

I think he was asking why sidechains as a replacement for alts (or really anything about alts at all) is so compelling.

I don't think it is.

Fiat is 99+% of the market. Look that direction, and stop being distracted by the 4% in the other direction.



how is an anonymous (monero-type) sidechain backed by BTC not interesting?



This was asked and answered before (credits to smooth).

In the wake of http://www.blockstream.com/ essentially making sidechains an inevitability - what is the point of holding XMR now? Wont all of the privacy Monero offers be available within the bitcoin blockchain?

I think the answer is no. First of all it is questionable whether you would really want to hold wealth long term on a sidechain. The security assumptions (even when it comes to things like network hash rate, but in other more fundamental respects as well) are questionable. It is more plausible you might want to use services or features on a side chain by moving your bitcoins there and then, relatively quickly, moving them back to the more secure main chain. For example, this might be be used for mixing, by moving your coins to a sidechain with ring signatures, transacting and then moving them back.

But this ends up being a lot like using a Bitcoin mixer, with many of the same issues such as simultaneity. For example, imagine you are making a donation to some controversial organization and you want to delink the bitcoins you are donating.

So you go ahead and move your coins to a ring-sig sidechain, move them around a few times, and then move them back. Unless other people are doing this at the same time, when you move your coins back to the main chain, you will get the same coins back that you started with.

Alternately, perhaps the organization wants to be all anonymous and stuff, so it publishes an address on the sidechain, and you donate to them there. They then withdraw the coins back to the main chain, and they get the exact Bitcoins you sent to the side chain.

Obviously if there are a few other people doing the transfers at the same time, there is a degree of mixing, but it is fairly limited.

I don't think a side chain with a specialized purpose can achieve the same degree of anonymity as a coin designed for that purpose, where the entire chain is being mixed and remixed continually. That is an emperical question though. It is possible that a Bitcoin side chain could get more usage and greater trust of its security for long term holdings than Monero will have. More usage would address the mixing issue to a some extent and trust in the security would address the need to constantly move coins back and forth (though there still may be a loss of network effect here). None of this is clear at all.

I also think it is possible the market may simply reject the notion of adopting the Bitcoin currency for everything. It will be an interesting experiment to decouple new features from using a different currency. We may well find that the reason for altcoins is not the features!







Yeah I didnt take the time to respond out of the respect for the developers of Monero, but this is a pretty flimsy answer.

 Unless other people are doing this at the same time, when you move your coins back to the main chain, you will get the same coins back that you started with.

-- this assumes a very low volume on the sidechain. It also assumes that they will keep the block processing length short enough for something like this to occur. This is not smart and therefore will not happen, especially immediately after release. They can short the block times down once enough volume has been achieved.

I also think it is possible the market may simply reject the notion of adopting the Bitcoin currency for everything.

-- The entire history of network effects says otherwise. This is totally baseless logic.

We may well find that the reason for altcoins is not the features!

-- This is equivalent to saying there is no reason to use Monero in the first place. Everyone there was there because they believed in a pure anonymous coin and the market it served. However now with that possibility achieved via sidechains, there remains no reason to be in Monero any longer (imo).

Bro, do you even blockchain?
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October 26, 2014, 02:16:50 AM
 #14592

When I think of sidechains I think of local currencies, mixers, and many Shamir's Secret Sharing type instruments. No change to Bitcoin is needed. Bitcoin cannot accommodate all the crazy notions that sidechains will concoct. Obviously you would be required "buy in" to sidechains using a "sendmany" transaction to give yourself multiple sidechain assets. Replace the term "entangle" with "encrypt/decrypt" because that's how sidechains must manage Bitcoins. Since the sidechains cannot actually transact in Bitcoin, only the whole units that are invested will be tradable. How the sidechains manage the keys for the invested bitcoins is entirely up to the sidechain's security scheme.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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October 26, 2014, 02:17:47 AM
 #14593

Bitcoin reaching to to to the Moon.

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October 26, 2014, 02:31:58 AM
 #14594

Quote
Unless other people are doing this at the same time, when you move your coins back to the main chain, you will get the same coins back that you started with.

-- this assumes a very low volume on the sidechain. It also assumes that they will keep the block processing length short enough for something like this to occur. This is not smart and therefore will not happen, especially immediately after release. They can short the block times down once enough volume has been achieved.

It was hyperbole for illustration, obviously. I don't literally expect people to routinely get back the exact same coins, although it is plausible that could happen occasionally. The point being that the utility of it depends on it getting a lot of usage, much like mixers. More than Monero, because Monero does not depend on simultaneity in the same way.

Also see below.

Quote
Quote
I also think it is possible the market may simply reject the notion of adopting the Bitcoin currency for everything.
-- The entire history of network effects says otherwise. This is totally baseless logic.
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We may well find that the reason for altcoins is not the features!

It isn't baseless. I observe that both the most successful alt by market cap (LTC) and the most successful alt by transaction volume and expansion of the crypto demographic (DOGE) have essentially no feature differentiation form BTC. The ability to create side chains that does little to nothing to reduce the appeal of these.

But my bigger point really is that none of these are that interesting, compared to improving Bitcoin and better competing with fiat. Monero has 0.1% of Bitcoin's market cap. That's seriously the reason for side chains?!  It had better not be.
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October 26, 2014, 02:37:49 AM
 #14595

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?"
Altcoins are 4% of the market.

Why are people so obsessed with them?


Because alts are the strongest theoretical argument for why bitcoin (and transitively, any crypto) may not retain value in the long run. In many people's eyes, alts represent an attack on bitcoin's core scarcity property. I (and you as well, I'm sure) have plenty of arguments for why it's likely that alts do *not*, in fact, represent a meaningful threat, but it's nevertheless a core reason why a lot of people who otherwise see the value of bitcoin fail to fully embrace it.

I think you misunderstand the argument. The argument is not that differentiated cryptos with superior features can compete with Bitcoin, because if that were the case, then the one with the best feature set would prevail and thus could not be competed against. The argument is rather that undifferentiated cryptos can compete, for example through marketing. For example:

Quote from: Tyler Cowen
the value of WitCoin should, in equilibrium, be equal to the marketing costs of its potential competitors. [link]

I don't agree with that argument, but sidechains don't help. Bitcoin-with-sidechains doesn't increase the marketing costs of potential competitors over Bitcoin-without-sidechains.


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October 26, 2014, 02:39:05 AM
 #14596


It isn't baseless. I observe that both the most successful alt by market cap (LTC) and the most successful alt by transaction volume and expansion of the crypto demographic (DOGE) have essentially no feature differentiation form BTC. The ability to create side chains that does little to nothing to reduce the appeal of these.

But my bigger point really is that none of these are that interesting, compared to improving Bitcoin and better competing with fiat. Monero has 0.1% of Bitcoin's market cap. That's seriously the reason for side chains?!  It had better not be.


Litecoin was successful because for awhile there was no innovation in alts. People drew a comparison of silver to gold.
Doge was an insanely successful meme.
Both have gone through their ideological usefulness and are now slowly dying once people realized how dumb it was to put money in them in the first place.

The point with sidechains is not to capitalize on the existing feature sets of the alts (anonymity, transaction time, etc), but to capture the future potential feature sets (turing complete + who knows what 3.0 will be...).


Bro, do you even blockchain?
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October 26, 2014, 02:45:09 AM
 #14597

Litecoin was successful because for awhile there was no innovation in alts. People drew a comparison of silver to gold.
Doge was an insanely successful meme.
Both have gone through their ideological usefulness and are now slowly dying once people realized how dumb it was to put money in them in the first place.

The point with sidechains is not to capitalize on the existing feature sets of the alts (anonymity, transaction time, etc), but to capture the future potential feature sets (turing complete + who knows what 3.0 will be...).

That's all well and good, but the numbers don't lie. LTC and DOGE are still in the top 10. There is no evidence at all that DOGE is slowly dying. It is #5, or #4 if you exclude Ripple as incomparable as I do. I'm not sure about BSTX because I haven't looked closely it at, possibly that that should be excluded as well, which would make the #2 and #3 alts non-feature coins.

Monero isn't in the top 10, neither is Ethereum (measured by its IPO value).

I agree that sidechains can be about improving Bitcoin. But maybe that has nothing to do with alts, other than the fact all the innovation happening on alts is a symptom of Bitcoin's development process being broken, and side chains are an attempt to improve it. If so we agree.

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October 26, 2014, 03:03:45 AM
 #14598



Yeah I didnt take the time to respond out of the respect for the developers of Monero, but this is a pretty flimsy answer.

 Unless other people are doing this at the same time, when you move your coins back to the main chain, you will get the same coins back that you started with.

-- this assumes a very low volume on the sidechain. It also assumes that they will keep the block processing length short enough for something like this to occur. This is not smart and therefore will not happen, especially immediately after release. They can short the block times down once enough volume has been achieved.

I also think it is possible the market may simply reject the notion of adopting the Bitcoin currency for everything.

-- The entire history of network effects says otherwise. This is totally baseless logic.

We may well find that the reason for altcoins is not the features!

-- This is equivalent to saying there is no reason to use Monero in the first place. Everyone there was there because they believed in a pure anonymous coin and the market it served. However now with that possibility achieved via sidechains, there remains no reason to be in Monero any longer (imo).

I agree.

It seems the main argument is Monero sidechain is problematic because it needs a large base of users.

The thing is if there's a market for monero than the same market can transfer to monero sidechain and make its privacy equally effective

"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 26, 2014, 03:10:13 AM
 #14599

The thing is if there's a market for monero than the same market can transfer to monero sidechain and make its privacy equally effective

Not entirely, because on a Monero sidechain your privacy is potentially influenced by other users moving to and from traceable Bitcoin. It may be that the nature of privacy is such that you don't really want any direct connection to something like Bitcoin. This is quite different from other features people might want, like microtransactions, asset exchange, etc. Those seem better fits for side chains, though microtransactions also suffers a bit from the network effect issue (you need your transaction counterparties on the same side chain, not just using Bitcoin generally).

We will see though. I pretty clearly said in my message that was reposted that if a high-privacy side chain becomes popular enough (particularly where doing anything useful doesn't require moving off the side chain), it can succeed.

Also I'd point out that by design Monero has slightly different monetary economics than Bitcoin. We rejected the mining-for-fees model and instead retain a perpetual maintenance mining reward. That can't ever be implemented in Bitcoin or a side chain (though demurrage could be).

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October 26, 2014, 03:26:00 AM
 #14600

I'm beginning to doubt Maxwell (nullc) has a grasp on the economics of money as a ledger, and he seemed like the best of the sidechain team on the economic aspects. This seems like a basic error:

http://www.reddit.com/r/Bitcoin/comments/2k7xwj/aantonop_sidechains_could_unleash_even_more/cliw3mi

What if sidechains, or a large part of their motivation, comes from not understanding the idea of spin-offs? Peter R has in places proposed spin-offs as a way to bootstrap an altcoin launch, but the relevance here is they serve many or perhaps even all the functions of sidechains, but without need to mess with Bitcoin.

I get a general sense from the sidechain crew that they don't understand Bitcoin as ledger, that the ledger is what matters, and that the protocol is secondary. To them, as coders, it must seem like the ledger and protocol are inextricably linked, but if you take Money as Memory seriously, the ledger is something outside the protocol and is merely updated by it. Understanding spin-offs requires fully internalizing this insight, and that is what I see no evidence of from the sidechain team.

This is good insight, in effect it's another manifestation of "the blockchain technology is innovative but I'm not sure Bitcoin the currency will survive" what we are seeing is a PR campaign that appeals to those who value the protocol over the economics that make it work, it's an attempt at leveraging Bitcoin the currency by launching protocol depending alt coins or economic dependent relationships.

It's prioritizing the chicken befor the egg. Bitcoin is amazing, and I think many miss out on the opportunity because they fear loss. For me I mind Bitcoin for about 9 months because I loved the idea and didn't buy any because I didn't trust it. It wasn't untill I had casascius coins shipped to my door that I realized this is real economic energy. Only then did I get it then I became a proponent and went out and invested in BTC, it was protocol first but only became money when I used it as a currency.  

These guys are still at the nervous to invest stage and are trying to leverage there skills to mitigate risk, they see the value in the network and why alts fail and can't out innovate Bitcoin so they've devised this mechanism to leverage the investment. For lack of understanding the economics that make the protocol fly.


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