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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2010298 times)
Odalv
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October 29, 2014, 09:35:22 PM
 #14841

@cypherdoc

There is possible to build endless variation of SC's.

Let's talk about small group of them
 - Symmetric two-way peg
 - with conversion rate 1:1

a) We can verify they are Symmetric two-way peg b/c anybody can send anytime BTC to scBTC and back with conversion rate 1:1.
b) if (a) is not possible then this SC is not "Symmetric two-way peg with conversion rate 1:1"



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October 29, 2014, 09:35:58 PM
 #14842

sure.

remember, the scBTC will start out below the BTC when first introduced.  who knows, it could be close to zero, or may quickly elevate just below the BTC price.  then the speculator launches the attack by pumping BTC thru the peg. at the same time, he embarks on a forum blitz saying how great the SC is and how it will take over.  since these scBTC will be traded on an open exchange, the market will view a rising #scBTC and a rising price on the SC as validation of the innovation, just like you did when questioned.  if i saw that happening, i'd move a large chunk of my BTC into scBTC immediately b/c i also know there's a risk free put in place.  especially if the SC has been functioning bug free for a number of months.  as more and more ppl make the same conclusion, the scBTC will rise even more dragging up the BTC price as arbitration sets in.  but astute investors will see that the scBTC is leading the BTC price or at least rising faster.  this would indicate that the SC may take over.  as that happens, cold wallet hodlers are placed into a bind.  either follow or risk losing value as i think miners will also make the switch to the SC b/c their fees and block rewards paid in scBTC are higher.  once enough of this happens in a mass transition, i think it's logical to believe the Bitcoin will become the MM'd chain and the SC the MC.  this will occur if the added innovation is valid, say like perfect anonymity.

so the incentive is to move first or risk losing value by having the MC become obsoleted.

the problem is even worse when you have an innovation that is controversial; like faster confirmation times.  a speculator will pump the price until others follow, and then dump, whipsawing everybody.

 Huh

that is not an incentive to create a speculative attack. basically you just reiterated your mass exodus scenario but you didn't prove why someone would want to precipitate this exodus and how it would benefit them (other than the obvious "don't be left holding the bag")

"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 29, 2014, 09:38:21 PM
 #14843

@cypherdoc

There is possible to build endless variation of SC's.

Let's talk about small group of them
 - Symmetric two-way peg
 - with conversion rate 1:1

a) We can verify they are Symmetric two-way peg b/c anybody can send anytime BTC to scBTC and back with conversion rate 1:1.
b) if (a) is not possible this this SC is not "Symmetric two-way peg with conversion rate 1:1"





i'm perfectly aware of that.

my baseline case includes those assumptions mainly b/c i think that will be the most common variety of SC created.

but that doesn't invalidate what i've outlined to be an expected speculative attack.
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October 29, 2014, 09:43:29 PM
 #14844

sure.

remember, the scBTC will start out below the BTC when first introduced.  who knows, it could be close to zero, or may quickly elevate just below the BTC price.  then the speculator launches the attack by pumping BTC thru the peg. at the same time, he embarks on a forum blitz saying how great the SC is and how it will take over.  since these scBTC will be traded on an open exchange, the market will view a rising #scBTC and a rising price on the SC as validation of the innovation, just like you did when questioned.  if i saw that happening, i'd move a large chunk of my BTC into scBTC immediately b/c i also know there's a risk free put in place.  especially if the SC has been functioning bug free for a number of months.  as more and more ppl make the same conclusion, the scBTC will rise even more dragging up the BTC price as arbitration sets in.  but astute investors will see that the scBTC is leading the BTC price or at least rising faster.  this would indicate that the SC may take over.  as that happens, cold wallet hodlers are placed into a bind.  either follow or risk losing value as i think miners will also make the switch to the SC b/c their fees and block rewards paid in scBTC are higher.  once enough of this happens in a mass transition, i think it's logical to believe the Bitcoin will become the MM'd chain and the SC the MC.  this will occur if the added innovation is valid, say like perfect anonymity.

so the incentive is to move first or risk losing value by having the MC become obsoleted.

the problem is even worse when you have an innovation that is controversial; like faster confirmation times.  a speculator will pump the price until others follow, and then dump, whipsawing everybody.

 Huh

that is not an incentive to create a speculative attack. basically you just reiterated your mass exodus scenario but you didn't prove why someone would want to precipitate this exodus and how it would benefit them (other than the obvious "don't be left holding the bag")

the speculator would be converting to scBTC when the price was low.  as he continues to pump across the peg, the scBTC price will rise.  as the SC attracts more conversion of BTC to scBTC, the price will rise even more.  as miners and nodes switch to the SC, price should rise even more. at some point the price of BTC will drop below that of scBTC b/c the MC will become the MM'd one and therefore less secure.  the last ones out of the MC may get blocked by 51% attacks or their SPV proof fees might rise to very high levels.

in the scenario where the innovation is invalid and the MC is destined to stay the MC, he could just create a pump and dump of scBTC.
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October 29, 2014, 09:53:35 PM
 #14845

Back to the gold topic.

There is a referendum in Switzerland, in November, which is likely to secure a yes vote that the SNB holds 20% of its assets in gold (currently at 7.6%). As soon as this passes the bank will have five years to reach the 20% target. There is no legal escape for it. Considering that the SNB balance sheet has recently blown out Fed/BoE/BoJ-style - it will have to buy up to 1,700 tons of gold in the open market - and take delivery!

http://www.zerohedge.com/news/2014-10-28/things-make-you-go-hmmm-swiss-gold-status-quo-showdown

I really think this will put a floor under the current gold price, and maybe even spark another medium-term rally.

Odalv
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October 29, 2014, 09:55:03 PM
 #14846

@cypherdoc

There is possible to build endless variation of SC's.

Let's talk about small group of them
 - Symmetric two-way peg
 - with conversion rate 1:1

a) We can verify they are Symmetric two-way peg b/c anybody can send anytime BTC to scBTC and back with conversion rate 1:1.
b) if (a) is not possible this this SC is not "Symmetric two-way peg with conversion rate 1:1"





i'm perfectly aware of that.

my baseline case includes those assumptions mainly b/c i think that will be the most common variety of SC created.

but that doesn't invalidate what i've outlined to be an expected speculative attack.

In case STWP (Symmetric two-way peg 1:1)
 - you can deposit bitcoins to SC anytime (today, tomorrow ... in year 2140) by bitcoin transaction -> if you know private keys of your bitcoins.
 - you can withdraw bitcoins from SC anytime by bitcoin transaction -> if you know how to create proof you destroyed scBTC
 - if you deposit  X bitcoins then you can  withdraw X (minus transaction fees) -> you did not spent scBTC
cypherdoc
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October 29, 2014, 10:01:41 PM
 #14847

@cypherdoc

There is possible to build endless variation of SC's.

Let's talk about small group of them
 - Symmetric two-way peg
 - with conversion rate 1:1

a) We can verify they are Symmetric two-way peg b/c anybody can send anytime BTC to scBTC and back with conversion rate 1:1.
b) if (a) is not possible this this SC is not "Symmetric two-way peg with conversion rate 1:1"





i'm perfectly aware of that.

my baseline case includes those assumptions mainly b/c i think that will be the most common variety of SC created.

but that doesn't invalidate what i've outlined to be an expected speculative attack.

In case STWP (Symmetric two-way peg 1:1)
 - you can deposit bitcoins to SC anytime (today, tomorrow ... in year 2140) by bitcoin transaction -> if you know private keys of your bitcoins.
 - you can withdraw bitcoins from SC anytime by bitcoin transaction -> if you know how to create proof you destroyed scBTC
 - if you deposit  X bitcoins then you can  withdraw X (minus transaction fees) -> you did not spent scBTC

as i understand it, the SPV proof from BTC to scBTC has to be mined.  if enough miners switch over to the SC, say half, the MC could become more susceptible to a 51% attack that might prevent these SPV proofs from being constructed, no?

edit:  i know there's this federated thing that's possible but that's centralized.
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October 29, 2014, 10:06:12 PM
 #14848

i gotta go now, wife's B day.

back later.
brg444
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October 29, 2014, 10:19:30 PM
 #14849

"the core observation is that “Bitcoin” the blockchain is conceptually independent from “bitcoin” the asset: if we had technology
to support the movement of assets between blockchains, new systems could be developed which
users could adopt by simply reusing the existing bitcoin currency"

http://www.blockstream.com/sidechains.pdf

the basic problem is right here.  separating the BTC from its blockchain will allow exploits.

I consider that statement to be Marketing. As such, I'm not sure it is possible for a Marketing statement to have an exploit.

BTC can only exist on the Bitcoin chain. scBTC is an alt that is backed by BTC.

If scBTC defeats BTC it means an alt has defeated BTC. I don't have a problem with that, but some do, of course.

precisely, in which case the BTC core would likely implement features of the apparent improved sidechain so as to mitigate the risk that exist in the exodus of the whole ecosystem

"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
Odalv
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October 29, 2014, 10:22:48 PM
 #14850

@cypherdoc

There is possible to build endless variation of SC's.

Let's talk about small group of them
 - Symmetric two-way peg
 - with conversion rate 1:1

a) We can verify they are Symmetric two-way peg b/c anybody can send anytime BTC to scBTC and back with conversion rate 1:1.
b) if (a) is not possible this this SC is not "Symmetric two-way peg with conversion rate 1:1"





i'm perfectly aware of that.

my baseline case includes those assumptions mainly b/c i think that will be the most common variety of SC created.

but that doesn't invalidate what i've outlined to be an expected speculative attack.

In case STWP (Symmetric two-way peg 1:1)
 - you can deposit bitcoins to SC anytime (today, tomorrow ... in year 2140) by bitcoin transaction -> if you know private keys of your bitcoins.
 - you can withdraw bitcoins from SC anytime by bitcoin transaction -> if you know how to create proof you destroyed scBTC
 - if you deposit  X bitcoins then you can  withdraw X (minus transaction fees) -> you did not spent scBTC

as i understand it, the SPV proof from BTC to scBTC has to be mined.  if enough miners switch over to the SC, say half, the MC could become more susceptible to a 51% attack that might prevent these SPV proofs from being constructed, no?

edit:  i know there's this federated thing that's possible but that's centralized.

Yes, now You and me can agree and create private Federated aSymmetricTWP (private b/c it is not public information, aSymmetric b/c we do not allow free investing -> only you and me can withdraw).
We can create  2 of 2 MultiSignatureAddress MSA (next algho is only example, so it may contains errors .. just for illustration)
 - you want to participate with 3 BTC I will with 2 BTC
 - offline(by email) : I'll sign you transaction you are able to withdraw 3 BTC from MSA (and send rest to my address)
 - offline: You'll sign transaction for me I'm able to withdraw 2 BTC from MSA (and send rest to your address)
 - offline: we will both sign  I deposit 2 BTC and you deposit 3 BTC to MSA
 - online: we will broadcast MSA transaction (MSA will be funded with 5 BTC )

Now we can transact offline (we do not need miners on SC) but we have SC.
explorer
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October 29, 2014, 10:30:28 PM
 #14851

Back to the gold topic.

There is a referendum in Switzerland, in November, which is likely to secure a yes vote that the SNB holds 20% of its assets in gold (currently at 7.6%). As soon as this passes the bank will have five years to reach the 20% target. There is no legal escape for it. Considering that the SNB balance sheet has recently blown out Fed/BoE/BoJ-style - it will have to buy up to 1,700 tons of gold in the open market - and take delivery!

http://www.zerohedge.com/news/2014-10-28/things-make-you-go-hmmm-swiss-gold-status-quo-showdown

I really think this will put a floor under the current gold price, and maybe even spark another medium-term rally.


I'm very interested to see what spin and hype will be deployed toward a NO vote.  Or just plan old vote rigging. A YES vote would send a shockwave. ..
marcus_of_augustus
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October 29, 2014, 10:39:54 PM
 #14852

Back to the gold topic.

There is a referendum in Switzerland, in November, which is likely to secure a yes vote that the SNB holds 20% of its assets in gold (currently at 7.6%). As soon as this passes the bank will have five years to reach the 20% target. There is no legal escape for it. Considering that the SNB balance sheet has recently blown out Fed/BoE/BoJ-style - it will have to buy up to 1,700 tons of gold in the open market - and take delivery!

http://www.zerohedge.com/news/2014-10-28/things-make-you-go-hmmm-swiss-gold-status-quo-showdown

I really think this will put a floor under the current gold price, and maybe even spark another medium-term rally.


Will be interesting to watch the weasels at the SNB try to wriggle out of it ... after the shit they pulled with the EUR peg anything is possible.

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October 29, 2014, 10:45:23 PM
 #14853

I'm very interested to see what spin and hype will be deployed toward a NO vote.  Or just plan old vote rigging. A YES vote would send a shockwave. ..

I am sure that many Swiss voters think 20% is lowish, and some think it should be higher.

The SNB should be buying large in the futures markets right now, ahead of the vote, or be front-run by every commodities trader in the world afterwards.  (It can always unwind in the case of a No vote).

Will be interesting to watch the weasels at the SNB try to wriggle out of it ... after the shit they pulled with the EUR peg anything is possible.

They could ask UBS for the billions in bail-out funds back early.

There will undoubtedly be some scam accountancy off-balance-sheet tricks pulled to reduce the SNB assets.

smooth
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October 29, 2014, 11:09:26 PM
 #14854

again, it's more complicated than a simple upgrade b/c an upgrade just involves downloading an updated client.  my scenario requires a wholesale movement of all BTC to scBTC which exposes them to loss by hacking and identity exposure.

In order for there to be wholesale "movement" (I would say "exchange" or "locking" because I don't buy the notion of "moving" BTC), people would have to be adopting the sidechain, by downloading a client for it or using a web wallet or other intermediary client and using that mechanism to exhcnage/lock their BTC for scBTC. In other words, if most BTC is exchanged in that manner, then an economic majority has adopted the sidechain as a de facto replacement or upgrade for BTC.

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October 29, 2014, 11:19:29 PM
 #14855

again, it's more complicated than a simple upgrade b/c an upgrade just involves downloading an updated client.  my scenario requires a wholesale movement of all BTC to scBTC which exposes them to loss by hacking and identity exposure.

In order for there to be wholesale "movement" (I would say "exchange" or "locking" because I don't buy the notion of "moving" BTC), people would have to be adopting the sidechain, by downloading a client for it or using a web wallet or other intermediary client and using that mechanism to exhcnage/lock their BTC for scBTC. In other words, if most BTC is exchanged in that manner, then an economic majority has adopted the sidechain as a de facto replacement or upgrade for BTC.



do you not agree that in the face of such a predicament, BTC main chain would simply be adapted to fit the market need (feature implementation) and remove the need for any wholesale "movement"

"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 29, 2014, 11:25:41 PM
 #14856

Back to the gold topic.

There is a referendum in Switzerland, in November, which is likely to secure a yes vote that the SNB holds 20% of its assets in gold (currently at 7.6%). As soon as this passes the bank will have five years to reach the 20% target. There is no legal escape for it. Considering that the SNB balance sheet has recently blown out Fed/BoE/BoJ-style - it will have to buy up to 1,700 tons of gold in the open market - and take delivery!

http://www.zerohedge.com/news/2014-10-28/things-make-you-go-hmmm-swiss-gold-status-quo-showdown

I really think this will put a floor under the current gold price, and maybe even spark another medium-term rally.


Switzerland is one of the closest countries to a real democracy and this referendum could be a game changer for Gold; the market understanding that the FED can't raise interest rates, stop QE and unwind without creating a (much needed) crisis will crash the USD and benefit Gold

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October 29, 2014, 11:27:19 PM
 #14857


also, my prediction of a Dow Theory non-confirmation is looking good and is firmly on the table and in play as a major hint that we may be entering a period of severe volatility and perhaps recession as a bear cycle may be settling in.  we'll see how the next few days behave.
Stocks have held well in my opinion. In any case, you should wait at least a couple of weeks for Dow Theory confirmation.

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October 29, 2014, 11:32:42 PM
 #14858

"the core observation is that “Bitcoin” the blockchain is conceptually independent from “bitcoin” the asset: if we had technology
to support the movement of assets between blockchains, new systems could be developed which
users could adopt by simply reusing the existing bitcoin currency"

http://www.blockstream.com/sidechains.pdf

the basic problem is right here.  separating the BTC from its blockchain will allow exploits.

I consider that statement to be Marketing. As such, I'm not sure it is possible for a Marketing statement to have an exploit.

BTC can only exist on the Bitcoin chain. scBTC is an alt that is backed by BTC.

If scBTC defeats BTC it means an alt has defeated BTC. I don't have a problem with that, but some do, of course.

precisely, in which case the BTC core would likely implement features of the apparent improved sidechain so as to mitigate the risk that exist in the exodus of the whole ecosystem

but you've already said that it's almost impossible to get consensus in the current system.  why would that change under a speculative attack?  pressure?  panic?  at what % shift?  40,50,60% of BTC to scBTC?  maybe they act too late.  maybe the speculative attacker is Maxwell himself who created the SC and stands to profit from a wholesale shift into the SC and stymies adoption of the innovation into the MC.  point is, you won't know.

let me step back one step and say this:  as long as the speculative attacker can create volatility, both chains stand to lose as security is weakened across the entire ecosystem.  you yourself said that an increasing #scBTC and a rising price would indicate that the SC is succeeding.  and i agree.  and so will everybody else, including other speculators as they move to the SC and take advantage of the risk free put.
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October 29, 2014, 11:37:16 PM
 #14859

again, it's more complicated than a simple upgrade b/c an upgrade just involves downloading an updated client.  my scenario requires a wholesale movement of all BTC to scBTC which exposes them to loss by hacking and identity exposure.

In order for there to be wholesale "movement" (I would say "exchange" or "locking" because I don't buy the notion of "moving" BTC), people would have to be adopting the sidechain, by downloading a client for it or using a web wallet or other intermediary client and using that mechanism to exhcnage/lock their BTC for scBTC. In other words, if most BTC is exchanged in that manner, then an economic majority has adopted the sidechain as a de facto replacement or upgrade for BTC.



agreed.  but that would involve cold storage wallets being dug out all over the world and having to "exchange/lock" into scBTC which involves risk at multiple levels, not to mention the inconvenience.
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October 29, 2014, 11:39:34 PM
 #14860


also, my prediction of a Dow Theory non-confirmation is looking good and is firmly on the table and in play as a major hint that we may be entering a period of severe volatility and perhaps recession as a bear cycle may be settling in.  we'll see how the next few days behave.
Stocks have held well in my opinion. In any case, you should wait at least a couple of weeks for Dow Theory confirmation.



of course.  the non-confirmation has not had confirmation.  yet.
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