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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1805128 times)
cypherdoc
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November 04, 2014, 03:13:42 AM
 #15561

brg444,

the difference btwn an altcoin as it exists today and a sidecoin that could exist on a SC tomorrow is a direct link to the Bitcoin network via the 2wp.  b/c the 2wp guarantees that scBTC can get back to BTC (theoretically), users will be encouraged to migrate to the SC to utilize the innovation and pay scBTC tx fees.  and they will be incentivized to stay there b/c of the 2wp.  initially, i believe these scBTC will be valued lower than BTC in fiat terms b/c they are indeed less secure and arbing can be expected to drag down the BTC price.  however, as time advances and if the innovation is significantly proven to be useful and confidence in security of the SC increases, more and more ppl will convert to scBTC.  you yourself concluded this should drive up the fiat price and i agree.  this should feed on itself to the point that everyone will perform their tx's on the SC if the Bitcoin core devs do nothing to update the MC with the innovation.  this would destroy Bitcoin miners over the long run as their block rewards diminish along with defecting tx fees.  how and when will they devs decide to upgrade the protocol?  they need consensus which you've already said is impossible.  will they do it under pressure, panic?  when 40, 50, or 60% of all BTC have become scBTC?  maybe it will be too late or maybe it gets blocked by Blockstream core devs b/c their biz model depends on SC development and success?  can you imagine how many $millions it would be worth to Blockstream if all BTC hodlers ended up having to move to a SC they had helped conceive and build?  who knows, i don't see it as guaranteed and i surely see the process as potentially being conflicted.  

MM an altcoin as it's defined today is seriously risky and not worth the trouble for Bitcoin miners.  MM a sidecoin adds additional badly needed revenue to struggling smaller miners who will be more willing to defect to a sidecoin.  the revenue stream will be more easy to envision for these miners.  the other difference is that no, Bitcoin miners can't just simply start mining an altcoin today if they wanted to.  the altcoin's protocol has to be specifically modified by the altcoin devs to accept Bitcoin DMMS.  i don't see them offering this to Bitcoin miners so that's why it's not happening.  since sidecoins represent a direct link to the Bitcoin MC for BTC users to convert to scBTC, the process is simpler and worth more to miners b/c they can mine not only sidecoin reward & tx fees but scBTC tx fees as well.  

 Huh

You were wrong by your first sentence, should I continue reading?

Sidecoins do NOT guarantee that the scBTC can get back to the BTC. Sidecoins have a floating peg and not a 1:1 2wp.

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.
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November 04, 2014, 03:15:19 AM
 #15562

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November 04, 2014, 03:15:59 AM
 #15563

brg444,
MM an altcoin as it's defined today is seriously risky and not worth the trouble for Bitcoin miners.  MM a sidecoin adds additional badly needed revenue to struggling smaller miners who will be more willing to defect to a sidecoin.  the revenue stream will be more easy to envision for these miners.  the other difference is that no, Bitcoin miners can't just simply start mining an altcoin today if they wanted to.  the altcoin's protocol has to be specifically modified by the altcoin devs to accept Bitcoin DMMS.  i don't see them offering this to Bitcoin miners so that's why it's not happening.  since sidecoins represent a direct link to the Bitcoin MC for BTC users to convert to scBTC, the process is simpler and worth more to miners b/c they can mine not only sidecoin reward & tx fees but scBTC tx fees as well.  

Maybe I should repeat again? Sidecoin = altcoin. Same dynamics. Floating exchange rate with BTC and all. So MM an altcoin more risky than MM a sidecoin?

Absolutely not.

"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, 03:16:12 AM
 #15564

It is economically naive to fail to consider that a feature that adds value in one economic condition, may subtract it in another, and that movement of money may follow this with a lag, sometimes a very significant lag due to practical constraints.
Further naivete would be in imaging that this is not happening all the time, and that this effect is commonly exploited.  "Economists" here are contemplating only static ideal cases, and implementing regulatory changes in spite of these concerns.  Changing the code is changing what ultimately regulates Bitcoin.

With this particular change, it is not so easy to undo it if it turns out to be a mistake.  Many Bitcoin may be destroyed.  People will make mistakes of trust.

There are many new risks with SC.  Lets address them rather than pretend that they don't exist.

You make many sensible comments and let me insist I am not trying to downplay the potential risks of sidechains.

My problem is that most of sidechains opponents in this thread are justifying their risk-case with a proposition that involves the creation of coins booted on sidechains.

To my knowledge, coins booted on sidechains are the economic equivalent of altcoins and in no way are sidecoins advantaged over altcoins. So in essence, sidecoins are not responsible for that problem and it is misguided to suggest that they are.

brg444, what is you critique of doing all the things you like about SC with Open-Transactions http://opentransactions.org/wiki/index.php/Main_Page, and none of the inflation?

Utility sidechains (1:1) peg have no inflation and are more decentralized than OT is.


I win?

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.

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November 04, 2014, 03:21:23 AM
 #15565

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

"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, 03:28:29 AM
 #15566

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.
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November 04, 2014, 03:29:12 AM
 #15567

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?

I'm not sure I understand your last comment. Value is not inflated using utility chains working with a 1:1 peg, the ledger is preserved and no additional coins are created.

"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, 03:31:25 AM
 #15568

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

pg 11 Complexity:

On the level of assets, we no longer have a simple “one chain, one asset” maxim; individual
chains may support arbitrarily many assets, even ones that did not exist when the chain was first
created. Each of these assets is labelled with the chain it was transferred from to ensure that their
transfers can be unwound correctly.
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November 04, 2014, 03:31:29 AM
 #15569

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.

"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, 03:33:34 AM
 #15570

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.

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.
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November 04, 2014, 03:40:48 AM
 #15571

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time

"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, 03:51:57 AM
 #15572

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time
Exactly. A state would choose a sidecoin as (dare I say) cryptofiat. They would exchange for BTC at the border.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 04, 2014, 03:54:19 AM
 #15573

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time

Just to carry on this idea, I think this is something most of you fail to realize.

Any innovative feature ported to a 1:1 chain will inevitably succeed over a sidecoin.

Users will congregate to the safest, most risk-adverse chain and the one with a deterministic, floating peg is certainly not it.

Miners will MM only the most popular chain where there is sufficient value therefore there are considerable chances that miners will have no incentive to secure the sidecoins considering it is doubtful they will attract any user in the long run.

"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, 03:56:11 AM
 #15574

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time
Exactly. A state would choose a sidecoin as (dare I say) cryptofiat. They would exchange for BTC at the border.

And ban the use of any other cryptocurrency throughout the country ?

You realise this is like saying you can use the internet but please don't download songs.

"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, 04:01:42 AM
 #15575

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time

i actually see your point.

what did you mean by the bolded part?
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November 04, 2014, 04:08:38 AM
 #15576

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?

I'm not sure I understand your last comment. Value is not inflated using utility chains working with a 1:1 peg, the ledger is preserved and no additional coins are created.

re the last point there need not be value inflation on a SC, but there could be.

re. OT it's not a change on the prototypical level, so no risk to the incentives in mining Bitcoin over time. As there will always be as similar risk as there is with SC, it naturally gets priced in in the market. OT in my view enables the vision people see when thinking of Bitcoin as a trust free reserve currency. 

OT can be a  "decentralized exchanges" here is an intro as to how to do it without screwing with the bitcoin protocol.
http://youtu.be/teNzIFu5L70?t=1m

and some more info.
https://www.youtube.com/watch?v=vtJcUM5-TeA

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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November 04, 2014, 04:09:15 AM
 #15577

i actually see your point.

what did you mean by the bolded part?

Well I guess someone COULD create a sidechain that is capped at a certain amount of 1:1 units and then if you do not hold any of that stake you are stuck using the sidecoin to use the feature but to be frank I honestly don't see how someone could be fooled by such a scheme.

The bolded simply points out that in such a situation another developer could simply clone the feature of the sidechain and make it available through a 1:1 peg with no cap.

"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, 04:09:59 AM
 #15578

i know that.  i never claimed that a sidecoin needed to be exchanged for BTC.  those factors don't change my argument at all, that being Bitcoin miners will be encouraged to MM initially and defect eventually given a successful SC as i have defined it.

to be honest I don't see it.

from the quote you posted I understand that a sidechain could contain different units, some that are pegged 1:1 with BTC and others that have a deterministic, floating exchange rate.

if that is the case, then I don't see the use case for such a scheme. if one wants to use the feature on such a sidechain then he would want to use the unit which carries a 1:1 peg and not the sidecoin. if, for any reason, the amount of available 1:1 units on that sidechain are limited then someone will clone the sidechain and remove the cap.

sidecoins create no incentive for the user, only additional risk.

if they have the choice between two sidechains promoting the same feature, one using a sidecoin and the other a 1:1 2wp, then the 2wp wins every time
Exactly. A state would choose a sidecoin as (dare I say) cryptofiat. They would exchange for BTC at the border.

And ban the use of any other cryptocurrency throughout the country ?

You realise this is like saying you can use the internet but please don't download songs.
I don't see any businesses selling pirated songs or movies, because only the legal ones have value. I don't see Americans using Pesos. Nobody will sell a currency if it is not liquid enough to use in a brick and mortar store. Just like every other foreign currency, you will be asked to leave it at the border.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 04, 2014, 04:12:30 AM
 #15579

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?

I'm not sure I understand your last comment. Value is not inflated using utility chains working with a 1:1 peg, the ledger is preserved and no additional coins are created.

re the last point there need not be value inflation on a SC, but there could be.

re. OT it's not a change on the prototypical level, so no risk to the incentives in mining Bitcoin over time. As there will always be as similar risk as there is with SC, it naturally gets priced in in the market. OT in my view enables the vision people see when thinking of Bitcoin as a trust free reserve currency. 

OT can be a  "decentralized exchanges" here is an intro as to how to do it without screwing with the bitcoin protocol.
http://youtu.be/teNzIFu5L70?t=1m

and some more info.
https://www.youtube.com/watch?v=vtJcUM5-TeA


thank you, I will look into this but you did not adress my point.

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?

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.

"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, 04:17:00 AM
 #15580

brg444, did you ever address the concern that a utility chain has the chance to permanently attract all tx fees to itself in the long run at the expense of BTC miners who need those tx fees?  or is your answer simply that Bitcoin will pre empt that by adopting said innovation before that happens?
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