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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2009964 times)
cypherdoc
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October 29, 2014, 11:42:21 PM
 #14861

@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.


that's a shitty solution to my speculative attack.  no one wants their BTC/scBTC locked up in some private proof where i have to rely on just you to change my position.  i want access to public open market exchange for maximum price discovery.
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cypherdoc
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October 29, 2014, 11:54:29 PM
 #14862

the other major flawed assumption of SC's is that it will allow calm, rigorous, controlled evaluation of an innovation.  i ask, how is this possible in the face of the speculative attack i have just outlined?  or even in the scenario where a true innovative SC is produced as BTC in the form of scBTC floods into the SC?  it is my belief that many of these technical geeks, as you might call them, fail to consider that Bitcoin is just as much about money and economics as it is a technology.

as an early adopter and speculator myself beginning in Jan 2011 when the price was still under a dollar, i have observed first hand the response of the developer technical community to Bitcoin in the days before the price took off and then crashed during 4-5 bubbles.  MOST of them were skeptics of the economic concepts back then.  even some of its core developers continue to be so today.  only as the price took off did they sit up and listen.  there's nothing like a >1000% increase in the price of something to catch peoples attention and technical geeks are not to be excluded from the human emotional aspects of trading.  i believe SC devs would view a price increase in the exchange value of their particular scBTC to be validation that their innovation is working. and i don't believe they will be able to differentiate between the speculative attack i have just outlined from a real benefit market response. 

at the very least, SC attacks will cause volatility.  and volatility usually means most investors in an asset get hurt while a few that understand or exploit said volatility get rich.

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October 29, 2014, 11:56:21 PM
 #14863

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

Since Bitcoin shares gold's property of scarcity, would not that be a good thing for Bitcoin?
cypherdoc
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October 30, 2014, 12:01:38 AM
 #14864

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

Since Bitcoin shares gold's property of scarcity, would not that be a good thing for Bitcoin?

it is.  and it works better as money than gold.
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October 30, 2014, 12:02:29 AM
 #14865

the other major flawed assumption of SC's is that it will allow calm, rigorous, controlled evaluation of an innovation.  i ask, how is this possible in the face of the speculative attack i have just outlined? 

Calm rigorous controlled evaluation?  Is that even a thing anymore?

Maybe someone should try this on an alt?
Nah...

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October 30, 2014, 12:15:08 AM
 #14866

the other major flawed assumption of SC's is that it will allow calm, rigorous, controlled evaluation of an innovation.  i ask, how is this possible in the face of the speculative attack i have just outlined? 

Calm rigorous controlled evaluation?  Is that even a thing anymore?

Maybe someone should try this on an alt?
Nah...

Innovation is disruptive, especially when accelerated to the speed of Bitcoin.

I don't think (the overlords pushing) scamchains can be stopped at this point, so we're going to find out what effect the risk-free Satoshi Put will have, whether we want to or not.

After all the Maximalist vitriol spewed at innovation in the altcoin space, I'm looking forward to watching Bitcoin be hollowed out by parasitic sidecoins.   Cool


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Monero
"The difference between bad and well-developed digital cash will determine
whether we have a dictatorship or a real democracy." 
David Chaum 1996
"Fungibility provides privacy as a side effect."  Adam Back 2014
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smooth
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October 30, 2014, 12:18:16 AM
 #14867

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 don't think there is any predicament at all. If the side chain is objectively a better chain as determined by stakeholders, then it is simply time to move on. There is not necessarily any reason try to try to backport everything to the original chain. BTC will have fulfilled its useful purpose of giving birth to the improved scBTC/BTC2.



solex
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100 satoshis -> ISO code


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October 30, 2014, 12:19:51 AM
 #14868

Since Bitcoin shares gold's property of scarcity, would not that be a good thing for Bitcoin?

I think that public debate about a return to the principles of sound money is very good for Bitcoin. The Swiss vote will help kick-start debates which will hopefully spread wider.

The problem is that the vast majority of the population (even in OECD countries) are unaware that 100 years of out-of-control command-and-control central bank lunacy has wrecked the world's financial system. It has created trillion dollar trade imbalances, bankrupt governments, Peak Debt, pay-later consumer culture, anti-savings bias, wealth inequality, commercial inefficiency, zombie banks, rigged markets etc, etc, ad nauseum.

In the same 100 years living standards have improved due to exponential gains in science and technology, which has masked the effects of the world's dysfunctional financial system. However, things could be so much better.

That's why I like Bitcoin. It is sound money, as is gold, but fit for the 21st Century. Now the Swiss might make a lot more people learn how important these matters are.

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October 30, 2014, 12:37:11 AM
 #14869

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.
How sure is anyone that the 7.6% figure is actually correct?
iCEBREAKER
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October 30, 2014, 12:44:15 AM
 #14870

Meanwhile, Gold collapsing,  bitcoin (also collapsing)

Oil too.

What is up? Just USD?

The USD is entering the 'red giant' phase, having exhausted its primary fuel of gold and silver backing and now being powered by the less dense energy source of hydrocarbon hegemony.  Although less productive, the economic bloat of malinvestment results in a higher apparent magnitude via the financialization process. 

That is why gold/silver/BTC (stuff you have) are collapsing, while insurance/food/medicine/education (stuff you need) costs are soaring.

While less massive bodies of fiat may ultimately wind up as harmless white dwarfs, the USD is so large it will enter a phase equivalent to carbon-burning when runaway debt-monetization overcomes the hydrostatic equilibrium provided by petrodollars.

This will result in a supernova of hyperinflation, and finally a black hole will remain where the global reserve currency once existed.


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Monero
"The difference between bad and well-developed digital cash will determine
whether we have a dictatorship or a real democracy." 
David Chaum 1996
"Fungibility provides privacy as a side effect."  Adam Back 2014
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marcus_of_augustus
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October 30, 2014, 12:51:19 AM
 #14871

Meanwhile, Gold collapsing,  bitcoin (also collapsing)

Oil too.

What is up? Just USD?

The USD is entering the 'red giant' phase, having exhausted its primary fuel of gold and silver backing and now being powered by the less dense energy source of hydrocarbon hegemony.  Although less productive, the economic bloat of malinvestment results in a higher apparent magnitude via the financialization process. 

That is why gold/silver/BTC (stuff you have) are collapsing, while insurance/food/medicine/education (stuff you need) costs are soaring.

While less massive bodies of fiat may ultimately wind up as harmless white dwarfs, the USD is so large it will enter a phase equivalent to carbon-burning when runaway debt-monetization overcomes the hydrostatic equilibrium provided by petrodollars.

This will result in a supernova of hyperinflation, and finally a black hole will remain where the global reserve currency once existed.

that's good  Cheesy

da2ce7
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October 30, 2014, 12:58:28 AM
 #14872

Meanwhile, Gold collapsing,  bitcoin (also collapsing)

Oil too.

What is up? Just USD?

The USD is entering the 'red giant' phase, having exhausted its primary fuel of gold and silver backing and now being powered by the less dense energy source of hydrocarbon hegemony.  Although less productive, the economic bloat of malinvestment results in a higher apparent magnitude via the financialization process. 

That is why gold/silver/BTC (stuff you have) are collapsing, while insurance/food/medicine/education (stuff you need) costs are soaring.

While less massive bodies of fiat may ultimately wind up as harmless white dwarfs, the USD is so large it will enter a phase equivalent to carbon-burning when runaway debt-monetization overcomes the hydrostatic equilibrium provided by petrodollars.

This will result in a supernova of hyperinflation, and finally a black hole will remain where the global reserve currency once existed.

that's good  Cheesy

Really good analogy! (Except I would expect to see a deflationary collapse of the red-giant, before an hyperinflationary super-nova explosion.)

One off NP-Hard.
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October 30, 2014, 01:18:07 AM
 #14873

Meanwhile, Gold collapsing,  bitcoin (also collapsing)

Oil too.

What is up? Just USD?

The USD is entering the 'red giant' phase, having exhausted its primary fuel of gold and silver backing and now being powered by the less dense energy source of hydrocarbon hegemony.  Although less productive, the economic bloat of malinvestment results in a higher apparent magnitude via the financialization process. 

That is why gold/silver/BTC (stuff you have) are collapsing, while insurance/food/medicine/education (stuff you need) costs are soaring.

While less massive bodies of fiat may ultimately wind up as harmless white dwarfs, the USD is so large it will enter a phase equivalent to carbon-burning when runaway debt-monetization overcomes the hydrostatic equilibrium provided by petrodollars.

This will result in a supernova of hyperinflation, and finally a black hole will remain where the global reserve currency once existed.

that's good  Cheesy

Really good analogy! (Except I would expect to see a deflationary collapse of the red-giant, before an hyperinflationary super-nova explosion.)

That's so good, I have to quote it again. Cheesy

I hope it will not take too long before we can watch this stellar event... hopefully we won't be destroyed by it.

ya.ya.yo!
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October 30, 2014, 01:29:33 AM
 #14874

(New & Improved!  Hat tip to da2ce7.)

The USD is entering the 'red giant' phase, having exhausted its primary fuel of gold and silver backing and now being powered by the less dense energy source of hydrocarbon hegemony.  Although less productive, the economic bloat of malinvestment results in a higher apparent magnitude via the financialization process.  

That is why gold/silver/BTC (stuff you have) are collapsing, while insurance/food/medicine/education (stuff you need) costs are soaring.

The red giant will eventually implode in a Kondratieff Winter deflationary holocaust:



While less massive bodies of fiat may ultimately wind up as harmless white dwarfs, the USD is so large it will enter a stage equivalent to carbon-burning when runaway debt-monetization overcomes the hydrostatic equilibrium provided by petrodollars.

This will result in a supernova of hyperinflation, and finally a black hole will remain where the global reserve currency once existed.


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Monero
"The difference between bad and well-developed digital cash will determine
whether we have a dictatorship or a real democracy." 
David Chaum 1996
"Fungibility provides privacy as a side effect."  Adam Back 2014
Buy and sell XMR near you
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October 30, 2014, 01:57:44 AM
 #14875

@Cypherdoc

Your scenario is pretty far fetched.  I'm not sure a whale will be able to cause enough panic to do much damage given that side chains will be pegged at the protocol level.  A better test would be during natural panic such as the panic buying in 2011 and 2013 and subsequent crashes.  At worst, people might panic in and out of side chains during such periods  of volatility given the "risk free put" scenario, but arb bots should keep assets aligned in price for the most part.  I highly doubt that all market participants would completely abandon one chain for another.  As long as bitcoin has a block subsidy, it will not be abandoned by miners.

Counterfeit:  made in imitation of something else with intent to deceive:  merriam-webster
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October 30, 2014, 02:24:50 AM
 #14876

@Cypherdoc

Your scenario is pretty far fetched.  I'm not sure a whale will be able to cause enough panic to do much damage given that side chains will be pegged at the protocol level.  A better test would be during natural panic such as the panic buying in 2011 and 2013 and subsequent crashes.  At worst, people might panic in and out of side chains during such periods  of volatility given the "risk free put" scenario, but arb bots should keep assets aligned in price for the most part.  I highly doubt that all market participants would completely abandon one chain for another.  As long as bitcoin has a block subsidy, it will not be abandoned by miners.

the whale could amplify the effect by buying scBTC on the open mkt exchange with fiat to assist the price rise.  remember, speculators like growth, and this would be no different than investing early in a start up currency that has the added potential of not only the MC but an added innovation that theoretically should make it better and eventually superior.

your point about the block subsidy being a differentiating factor is a good one though.  perhaps the SC could introduce a sidecoin block reward equivalent to Bitcoin at the height in the SC when it is introduced.
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October 30, 2014, 02:52:59 AM
 #14877


the whale could amplify the effect by buying scBTC

Then it wouldn't be a risk free put.

Quote
perhaps the SC could introduce a sidecoin block reward equivalent to Bitcoin at the height in the SC when it is introduced.

The SC reward wouldn't be fungible with bitcoin like the pegged coin.  However, I could see the SC reward becoming a problem if the side chain became popular.  It would provide further incentive for miners to mine the SC vs the MC.

Counterfeit:  made in imitation of something else with intent to deceive:  merriam-webster
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October 30, 2014, 02:56:17 AM
 #14878


the whale could amplify the effect by buying scBTC

Then it wouldn't be a risk free put.


yep, but under the right conditions could be quite effective.  like in a price ramp to offset the arb bots.

Quote
Quote
perhaps the SC could introduce a sidecoin block reward equivalent to Bitcoin at the height in the SC when it is introduced.

The SC reward wouldn't be fungible with bitcoin like the pegged coin.  However, I could see the SC reward becoming a problem if the side chain became popular.  It would provide further incentive for miners to mine the SC vs the MC.

no it wouldn't be fungible but would cause mining competition especially when the sidecoin is cheap along with the potential for significant price appreciation.
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Let's talk governance, lipstick, and pigs.


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October 30, 2014, 02:58:22 AM
 #14879

A Side Chain must be 1:1 otherwise it's a merge mined (or not merge mined) altcoin.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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October 30, 2014, 02:59:29 AM
 #14880

A Side Chain must be 1:1 otherwise it's a merge mined (or not merge mined) altcoin.

that is the underlying assumption in my base case.
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