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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1995722 times)
Adrian-x
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November 04, 2014, 05:00:27 AM
 #15561


if most of the transactions occur on OT then the danger is even greater for miners considering unlike SCs they do not get to mine and profit from OT, correct?
not really, just think of an exchange, they have many more transactions than the Bitcoin blockchain can process, they have there own servers and internal accounting system (it could there own PoS coin or somthing like the NASDAQ) all OT does is ensure that your balance is locked and released when cretin criteria are met with a N of M script your bitcoin can be moved.

in this application it is similar or indistinguishable from a decentralized exchange using SC.

An alternate currency for example - with OT would be a for profit company - say for example a micro transaction currency, what OT would provide is a trust free way to secure your BTC, there internal servers or blockchain ledger would manage the system - risk, demand and competition would keep scales appropriate, and there dev team could trim the block chain as needed. if there micro payment coin was in high demand there would be an exchange rate floated either on the market or set by the company.    

but the above example with a SC would run at the prototypical level, and be totally decentralized the design of the coin would most likely be merged mined to incentivise mining, over time it will generate more revenue for miners than Bitcoin, the result is there is a motivation to mine and secure the SC's as they grow, the Bitcoin chain can be MM but if it gets to a point where it docent generate enough revenue because the revenue is generated on the SC, it will leave bitcoin vulnerable to exploration or attack.

this is the trade off with SC, the trade off with OT is market competition, you have to earn you way to the top, you cant boot strap you way up by getting something for nothing (mining) and risking Bitcoins incentive sachem.  


and regarding inflation on a SC. yes indeed there could be, but if there is then it becomes much like any other altcoin and this inflation does not affect the BTC ledger.

to be taken in context with the previous discussion, if the SC is more valuable it is a reason not to transfer back.

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brg444
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November 04, 2014, 05:15:08 AM
 #15562


if most of the transactions occur on OT then the danger is even greater for miners considering unlike SCs they do not get to mine and profit from OT, correct?
not really, just think of an exchange, they have many more transactions than the Bitcoin blockchain can process, they have there own servers and internal accounting system (it could there own PoS coin or somthing like the NASDAQ) all OT does is ensure that your balance locked and released when cretin criteria are met with a N of M script your bitcoin can be moved.

in this application it is similar or indistinguishable from a decentralized exchange using SC.

An alternate currency for example - with OT would be a for profit company - say for example a micro transaction currency, what OT would provide is a trust free way to secure your BTC, there internal servers or blockchain ledger would manage the system - risk, demand and competition would keep scales appropriate, and there dev team could trim the block chain as needed. if there micro payment coin was in high demand there would be an exchange rate floated either on the market or set by the company.    

but the above example with a SC would run at the prototypical level, and be totally decentralized the design of the coin would most likely be merged mined to incentivise mining, over time it will generate more revenue for miners than Bitcoin, the result is there is a motivation to mine and secure the SC's as they grow, the Bitcoin chain can be MM but if it gets to a point where it docent generate enough revenue because the revenue is generated on the SC, it will leave bitcoin vulnerable to exploration or attack.

this is the trade off with SC, the trade off with OT is market competition, you have to earn you way to the top, you cant boot strap you way up by getting something for nothing (mining) and risking Bitcoins incentive sachem.  


and regarding inflation on a SC. yes indeed there could be, but if there is then it becomes much like any other altcoin and this inflation does not affect the BTC ledger.

to be taken in context with the previous discussion, if the SC is more valuable it is a reason not to transfer back.

so yes basically you just confirmed my two arguments.

1. OT is very much more centralized than SC
2. The danger of the majority of txs being handled off blockchain and removing the incentives for miners to mine any network is far greater than them potentially choosing to prefer mining a particular SC other than Bitcoin.

Here is an example where I will use your argument against you.

Consider two solutions : a fast transactions sidechain and a fast transaction OT coin.

Using the first solution, the sidechain, miners are incentivized to mine both chains, the mainchain and the sidechain. In my own, more pragmatic world, they benefit from both as both work in synergy and the potential for the sidechain to take over the main one along with its mining power is slim to none.

But just to entertain your scenario let us assume it does happen and an exodus to this new chain happen. Miners are still providing the security for a new mainchain and are incentivized to do so.

Now using the second solution, the fast transactions OT coin. It could indeed be a cool solution for awhile but since we have to consider both extremes, then we should also assume that by some strech of the imagination users would somehow have no use for the BTC mainchain and want to use only the OT fast transactions coin.

The problem with that scenario is that miners are left with no txs at all to mine. All the transactions are essentially occuring off-chain. Remember this is a scenario you have yourself championed and argued that once the block reward for BTC decreases or disappear then miners would be left with no incentive to secure the chain and would abandon it but this time, without any chain to turn to.

Don't you think that's a bit problematic. Do you see why SC is the better option?

"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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November 04, 2014, 05:16:57 AM
 #15563

to be taken in context with the previous discussion, if the altcoin is more valuable it is a reason not to transfer back.

FTFY

Can you see how no matter what direction you go your logic fails you?

"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
Adrian-x
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November 04, 2014, 05:42:23 AM
 #15564

to be taken in context with the previous discussion, if the altcoin is more valuable it is a reason not to transfer back.

FTFY

Can you see how no matter what direction you go your logic fails you?

OK you have to go around the sun a fiew more times,
Altcoins don't lock in Bitcoin - someone gets to spend them, if one fulfills a function like fast transaction speed and is adopted it's because of market forces. Actual value as at risk.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
iCEBREAKER
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November 04, 2014, 05:43:16 AM
 #15565

http://www.telegraph.co.uk/finance/economics/11206596/Dollar-smashes-through-resistance-as-mega-rally-gathers-pace.html

Quote
Dollar smashes through resistance as mega-rally gathers pace
HSBC says we are at the early stages of a dollar bull run that will change the world

You heard it here first, but nice of AEP to confirm.   Cool

(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....


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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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brg444
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November 04, 2014, 05:47:02 AM
 #15566

to be taken in context with the previous discussion, if the altcoin is more valuable it is a reason not to transfer back.

FTFY

Can you see how no matter what direction you go your logic fails you?

OK you have to go around the sun a fiew more times,
Altcoins don't lock in Bitcoin - someone gets to spend them, if one fulfills a function like fast transaction speed and is adopted it's because of market forces. Actual value as at risk.


and what has that got to do with the inflation debate?

how does 1:1 sidechain inflate Bitcoin?

"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
justusranvier
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November 04, 2014, 07:04:50 AM
 #15567

Pffft!  WTF do you think Bitcoin is supposed to run on when the inflation (block reward) is used up?

There is nothing 'radical' and 'experimantal' about transaction fees.  They were part of the design.  You, my friend, are engaging in the FUD here.

The FUD is that artificial production quotas are necessary to keep transaction fees "high enough".

It's the same economic fallacy every single cartel argues for - you can literally fill textbooks with the number of examples of people who run to the government to implement various methods for restricting supply because without a production quota some disaster or another will happen.

I just saw Gavin say in the same AMA summary that TOR was the answer for security (highly dubious to me, but anyway...) while he proposed increasing the block rate. He forgot to mention that the 1MB block size falls just under what seems to be supportable by TOR at the moment.

If you would have been paying attention, you'd have noticed that he said to broadcast your transactions over Tor, not download the entire blockchain over Tor.

That's a pretty simple and neat solution that should be obvious to anybody who was serious about solving the problem.

He forgot to mention that his proposal is exponential.  As I read Gavin's article here, I almost think he is saying "Remeber that CFR thing?  They got me.  Run for the hills fellow Bitcoiners"  It's that absurd to me.

Quote
Andresen posited that the 50% annual growth rate he suggested would enable the distributed network to facilitate as many as 400 million transactions per day if implemented now. After 12 years, the bitcoin network’s estimated transaction capacity would reach 56 billion transactions per day, according to Andresen’s initial calculations.

 - 12 years is about 2x the current age of Bitcoin.

 - 56,000,000,000 transactions is about 90,000x the current 600,000 TPD.

You can judge for yourself how much technology has advances between 2009 and 2015 and extrapolate that out then decide how, given the struggles Bitcoin has had meeting it's current 7TPS, it's going to swallow 650,000TPS.  But don't worry...it's just 'initial calculations.'
His proposal still has magic numbers in it, so it's no good.

Another fallacy here in the FUD camp is that without a hardcoded limit the size of blocks will rise to infinity.

Nobody tries to argue that we need a artificial limit on the number of loaves of bread that can be baked each day to stop bakers from producing an infinite number that nobody wants, but somehow when transistors are involved all well-known principles of supply and demand reverse themselves.

It really isn't the case that anything "technology" (as cbeast puts it) operates in some alternate bizarro world of reversed economics.
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November 04, 2014, 07:10:35 AM
 #15568


Another fallacy here in the FUD camp is that without a hardcoded limit the size of blocks will rise to infinity.

Nobody tries to argue that we need a artificial limit on the number of loaves of bread that can be baked each day to stop bakers from producing an infinite number that nobody wants, but somehow when transistors are involved all well-known principles of supply and demand reverse themselves.

It really isn't the case that anything "technology" (as cbeast puts it) operates in some alternate bizarro world of reversed economics.
I was just making test case for falsification there, not a position.
Bread (or more often corn) can have a "subsidy" attack and it is done often by governments.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 04, 2014, 07:12:38 AM
 #15569

how are those cheep coins working for you  Smiley OT can be as decentralized as using a BitTorrent client to assess the BitTorrent network, 100%  decentralized, and available without a prototypical change why so insistent SC are better?  

FYI inflation in value on a SC is what prevents one converting back into BTC, one want to use the value enabled by the SC, and if it isn't there you want to convert back the BTC.

I will be honest I haven't looked into OT in much details but if I understand it right, can the same concern you guys parade around not be applied to OT as well?

If OT gains traction and develops innovative utilities then is it not right that most txs would occur on their network and would be even more dangerous for the miners than SCs?
OT is a contract processing system. It's used for managing financial instruments (liabilities).

This is fundamentally different than Bitcoin, and most likely will not be used for the same things.

Sure, you can use something like it to pay for you groceries in a store. But anyone who added OT to their cash registers could just as easily add direct Bitcoin payments.

You'd be more likely to use OT to create, securitize, and repay a loan on a periodic schedule.

This is something completely disjoint than what you'd do with Bitcoin.
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November 04, 2014, 07:13:55 AM
 #15570

Bread (or more often corn) can have a "subsidy" attack and it is done often by governments.
I agree the block subsidy is problematic.

Since we can't get rid of it, the only solution is to grow large enough that it stops distorting mining so much.
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November 04, 2014, 07:22:30 AM
 #15571

Bread (or more often corn) can have a "subsidy" attack and it is done often by governments.
I agree the block subsidy is problematic.

Since we can't get rid of it, the only solution is to grow large enough that it stops distorting mining so much.
Okay I see your point, but you have to have some subsidy to bootstrap. It is on a predictable trajectory, so the math is known. Whatever projections you can design without a subsidy should be easy enough to adjust with a known math function.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 04, 2014, 07:28:48 AM
 #15572

...

It really isn't the case that anything "technology" (as cbeast puts it) operates in some alternate bizarro world of reversed economics.

Fair enough about Gavin's recent words, but broadcasting transactions can be done covertly in a variety of ways because they are tiny.  I wish to have it be the case that actually operating the infrastructure (you remember 'peer 2 peer', right?) is similarly defensible.

To wit, there is nothing 'artificial' about the transaction rate of the system.  This element in particular is key to both the makeup of the infrastructure providers and their ability as a group to thwart potential attacks.

Everyone has their own ideas about what the above means for block size.  I am on the radical low end of the spectrum to be sure.  Part of this is because I've had to fuck with network traffic for commercial enterprises which gives me my own perspective on how data moves around (and does not move around.)  I also happened to be proven dead right about some of the 'conspiracy theories' associated with traffic movement complements of Ed Snowden and his revolations did little to usher me into the gentle and loving arms of corp/gov.

At the end of the day I'll vote with my feet if I sense that Bitcoin is heading in the wrong direction.  That already happened to some extent at the beginning of the year.  Fortuitously I also wanted fiat for some other projects around that time as well...and I had hit a pre-determined target on liquidating some of my holdings so I cannot pin the whole thing on the threat of unhealthy growth.  But it absolutely WAS a factor and but for the fact that I didn't need the money I might have prematurely exercised some dumping due specifically to the activities of the Bitcoin Foundation group.


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November 04, 2014, 08:09:37 AM
 #15573

you're not reading properly.  a SC with a sidecoin can also accept scBTC.  it's the scBTC that have the 2wp, as you say.  therefore, any miner mining the SC gets 3 revenue streams; scBTC and sidecoin tx fees and sidecoin block rewards.  this is why they will MM and eventually directly mine if enough scBTC appears on the SC.

I don't believe this is quite exact.

A SC with a sidecoin will reward BTC locked into this sidechain with a deterministic amount of scBTC (not 1:1). For example 1 BTC will get you 5000 scBTC. From that point on these sidecoins have a floating exchange rate. If the sidechain fails to attract speculators/users than the exchange rate is more expensive ex: it now cost you 10000 scBTC to redeem 1 BTC.

For that reason, sidecoins are exactly like altcoins

the dev can design the peg and the SC with any properties he wants.  he could design the exact scenario i outline; a SC with a 1:1 peg for BTC <--> scBTC that also issues a block reward for a new sidecoin while at the same time processing scBTC and sidecoin tx for fees.

this would definitely attract MM initially, and if highly successful, defecting Bitcoin miners who direct mine the SC.

The moment an additional coined is issued on the sidechain that cannot be redeemed 1:1 with BTC ALL the coins on that sidechain become sidecoins.

What is the best way to assure that your SC dev does not change this 1:1 ratio after BTC have been burned to the SC, fork non-conspiring miners out, burst mine the ratio up to 1:100 and then having 99% of the SC coins, cash in 99% of the BTC on the chain?

Doesn't this make it just that much easier to scam BTC?

There is no peg.
There is no spoon.

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November 04, 2014, 08:15:25 AM
 #15574

@cypherdoc - SC is not simple to understand

transacting in SC can be separated in 3 steps
1. entering SC
2. using SC
3. exiting SC

steps #1 and #3 => entering and exiting is 2-way-peg
a) 2-way-peg can be done by
 - trusted entity (human or server will convert between MC and SC) => it can be you (cypherSC)
 - Federated peg (N humans or oracles will create transactions on MC and SC -> locking and unlocking BTC and scBTC)
 - Co-signed (N humans or oracles ) and SPV proof from SC will be required to convert between MC and SC
 - bitcoin (bitcoin protocol wlll exchange  BTC <-> scBTC)
 - ... and many more
 
b) Then there is step #2 "using SC". This is separated from creating 2wp.
Using SC will require mining. This can be done by
 - MM merge mining
 - trusted entity (server will confirm blocks)
 - using Federated miners (those can by differnet from those who created Federated peg)
 - Oracle/s
 - bitcoin timestamping
 - SNARK
 - ... and many more

c) Block in SC can be new blockchain concept (aka, 'faster transactions', 'different monetary policy', 'better privacy', 'more extensive scripting', 'contracts', 'different cryptography', 'different mining models' and so on).


edit:
2wp, mining, blockchain concept are orthogonal. They create new 3-dimensional world.

that is how i understand it.  but as far as you pumping the Federated server model, this is from the paper itself pg 7:

Although it is possible to use a simple trust-based solution involving fixed signers
(see Appendix A) to verify locking of coins, there are important reasons to avoid the introduction
of single points of failure:

Trusting individual signers does not only mean expecting them to behave honestly; they must
also never be compromised, never leak secret key material, never be coerced, and never stop
participating in the network.

Because digital assets are long-lived, any trust requirements must be as well. Experience has
shown that trust requirements are dangerous expectations even for timespans on the order of
months, let alone the generational timespans we expect financial systems to last.
180

Digital currencies were unable to gain traction until Bitcoin was able to eliminate single
points of failure, and the community is strongly averse to the introduction of such weaknesses.
Community mistrust is reinforced by financial events since 2007; public trust in the financial
system and other public institutions is likewise at historical lows.


Simplified version of exchange.

1. I can create bid/ask Merger as SC.
 - it can be implemented as central authority server  b/c it cannot move coins (I'll remove feature send coins from this mergerSC)
 - merger can only pair  bids and asks (new featue I'll add) => Merger will create proof (Merger creates signature that he found signed bid by A that match signed ask by B) => in fact merger mines blockchain as list of trades.

2. now I can create 2-way-peg  (Federated Peg, Oracle or by Bitcoin protocol)
 - I can deposit asset into Merger
 - I can withdraw asset from Merger because I can create proof from merger-blockchain.
 - Merger can be easy audited

3. Merger feature cannot be implemented on MC b/c it requires to remove feature "send coins" and new blockchain concept.
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November 04, 2014, 09:16:00 AM
 #15575

Fair enough about Gavin's recent words, but broadcasting transactions can be done covertly in a variety of ways because they are tiny.  I wish to have it be the case that actually operating the infrastructure (you remember 'peer 2 peer', right?) is similarly defensible.

There is a real problem here -  P2P networks are almost always designed with built-in tragedy of the commons problem because everybody is supposed to do everything for free, instead of designing a market that allows price discovery.

I'm optimistic about BitPay's new project in that regard. If somebody manages to build a P2P network that pays the people who provide infrastructure at a price based on supply and demand, then nobody will ever need to worry about too much demand consuming more resources than the infrastructure providers are willing to donate.
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November 04, 2014, 09:36:04 AM
 #15576


if most of the transactions occur on OT then the danger is even greater for miners considering unlike SCs they do not get to mine and profit from OT, correct?
not really, just think of an exchange, they have many more transactions than the Bitcoin blockchain can process, they have there own servers and internal accounting system (it could there own PoS coin or somthing like the NASDAQ) all OT does is ensure that your balance locked and released when cretin criteria are met with a N of M script your bitcoin can be moved.

in this application it is similar or indistinguishable from a decentralized exchange using SC.

An alternate currency for example - with OT would be a for profit company - say for example a micro transaction currency, what OT would provide is a trust free way to secure your BTC, there internal servers or blockchain ledger would manage the system - risk, demand and competition would keep scales appropriate, and there dev team could trim the block chain as needed. if there micro payment coin was in high demand there would be an exchange rate floated either on the market or set by the company.    

but the above example with a SC would run at the prototypical level, and be totally decentralized the design of the coin would most likely be merged mined to incentivise mining, over time it will generate more revenue for miners than Bitcoin, the result is there is a motivation to mine and secure the SC's as they grow, the Bitcoin chain can be MM but if it gets to a point where it docent generate enough revenue because the revenue is generated on the SC, it will leave bitcoin vulnerable to exploration or attack.

this is the trade off with SC, the trade off with OT is market competition, you have to earn you way to the top, you cant boot strap you way up by getting something for nothing (mining) and risking Bitcoins incentive sachem.  


and regarding inflation on a SC. yes indeed there could be, but if there is then it becomes much like any other altcoin and this inflation does not affect the BTC ledger.

to be taken in context with the previous discussion, if the SC is more valuable it is a reason not to transfer back.

so yes basically you just confirmed my two arguments.

1. OT is very much more centralized than SC
2. The danger of the majority of txs being handled off blockchain and removing the incentives for miners to mine any network is far greater than them potentially choosing to prefer mining a particular SC other than Bitcoin.

Here is an example where I will use your argument against you.

Consider two solutions : a fast transactions sidechain and a fast transaction OT coin.

Using the first solution, the sidechain, miners are incentivized to mine both chains, the mainchain and the sidechain. In my own, more pragmatic world, they benefit from both as both work in synergy and the potential for the sidechain to take over the main one along with its mining power is slim to none.

But just to entertain your scenario let us assume it does happen and an exodus to this new chain happen. Miners are still providing the security for a new mainchain and are incentivized to do so.

Now using the second solution, the fast transactions OT coin. It could indeed be a cool solution for awhile but since we have to consider both extremes, then we should also assume that by some strech of the imagination users would somehow have no use for the BTC mainchain and want to use only the OT fast transactions coin.

The problem with that scenario is that miners are left with no txs at all to mine. All the transactions are essentially occuring off-chain. Remember this is a scenario you have yourself championed and argued that once the block reward for BTC decreases or disappear then miners would be left with no incentive to secure the chain and would abandon it but this time, without any chain to turn to.

Don't you think that's a bit problematic. Do you see why SC is the better option?

I'm sure that OT is SC (it looks to me as Federated 2-way-peg)
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November 04, 2014, 10:44:06 AM
 #15577

Now, I'm getting paranoid. :-)

SC's architecture:

<bitcoin>
   <us-govSC>
       <govscBTC />
       <govscUSD />

       <exchangeSC>
          <mergerSC />
       </exchange>

   </gowSC>
   
   <china-govSC />
   
   <!-- wild-wild-west  -->
   <exchangeSC>
         <mergerSC />
   </exchange>

</bitcoin>

govSC is asymetric 2wp => GOV can veto if you can go in/out
all govSC are secured by GOV mining HW (cetralized servers)
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November 04, 2014, 11:54:06 AM
 #15578

Now, I'm getting paranoid. :-)

SC's architecture:

<bitcoin>
   <us-govSC>
       <govscBTC />
       <govscUSD />

       <exchangeSC>
          <mergerSC />
       </exchange>

   </gowSC>
  
   <china-govSC />
  
   <!-- wild-wild-west  -->
   <exchangeSC>
         <mergerSC />
   </exchange>

</bitcoin>

govSC is asymetric 2wp => GOV can veto if you can go in/out
all govSC are secured by GOV mining HW (cetralized servers)

What a shitfest.  This is precisely the problem we have today with altcoins multiplied by a thousand.
Odalv
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November 04, 2014, 01:47:16 PM
 #15579


What a shitfest.  This is precisely the problem we have today with altcoins multiplied by a thousand.

lol, do not worry. You will able to use ALL NEW services without transferring cold-wallet back and forth.

SC is pattern how to secure keep your bitcoins in escrow on MC. While you are able to safe(b/c you own pKeys) use exchangeBTC in mergerSC for trading.

bitcoin {
  exchange {
      merger
  }
}

exchangeBTC is not new ALTcoin it is your new privateKey what can unlock BTC on MC (or parent chain).
sickpig
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November 04, 2014, 01:53:47 PM
 #15580

another Adam Back's contribute to the SC debate Smiley

https://twitter.com/adam3us/status/529599284065615872
https://bitcointalk.org/index.php?topic=831527.msg9433219#msg9433219


Bitcoin is a participatory system which ought to respect the right of self determinism of all of its users - Gregory Maxwell.
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