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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1804280 times)
brg444
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November 06, 2014, 06:17:31 PM
 #16061

This is because successful sidechains would allow Bitcoin transactions to be disconnected from Bitcoin miners.

Interesting read but considering this is the premise of your scenario I have no choice but to disagree with your conclusions.

Txs fees are not escaping Bitcoin miners. As I've explained in another post, instead of miners sharing a % of the same pie, the txs fees are now split into different slices which are all available for miners to MM.

"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 06, 2014, 06:18:16 PM
 #16062

....
Then we agree.
Side chains accommodate arbitrary crypto (good bad or ugly) and which crypto is used for a particular chain matters.

It is my understanding that while the transactions can use arbitrary crypto, block hashing would be limited to sha256 (or possibly a small list of others).  In order to ensure a malicious attacker can not simply lie, the bitcoin miners supporting SPV proofs will need to verify the block hash is valid for the headers provided.  The transaction's details that destroy the pegged coin and unlock the bitcoin will be used, but the signature can be trusted since it is in the block with the highest amount of work.  If nobody presents a higher difficulty block header that contains a contradicting transaction within the contest period, the bitcoins unlock.  But, to verify all this, the miners must be able to hash the headers.

Is  it possible for attackers to do this in reverse?

Take someone's cold wallet and lock them into an SPVPROOF on a SC while the true owner is indisposed for some reason? Or is this impossible because they would need the private keys to begin with? 

Presumably the sidechain would still require a valid signature to allow a transaction in a block.

you mean the SC block?  yes, don't these SPV proofs require 2 tx's each, one in MC and one in SC?
Quote
Essentially, what you are dealing with is a set of headers and a transaction.  The headers prove the transaction was added to a block.  (See section 8 of bitcoin.pdf).

there is no section 8
Quote
What the sidechains idea adds is that instead light node verifying a bitcoin transaction, the bitcoin miners verify that the sidechain has a transaction that destroys sidecoins.  If this transaction goes uncontested, the SPV proof is accepted and the previously locked bitcoins are sent to the address specified in the destroy transaction.

i asked you before about this contest period.  what is the probability of an attacker constructing a fake proof in either direction.
Quote

what is this all about?  isn't this a fundamental change to how Bitcoin blocks are linked together?

We require a change to Bitcoin so that rather than each blockheader committing only to the
header before it, it commits to every one of its ancestors.
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November 06, 2014, 06:20:25 PM
 #16063

While I don't necessarily agree with all of your constructs over the years here, I appreciate that you the potential for and disposition toward thinking.

It does seem to me that Bitcoin infrastructure provisioning is designed such that it will always approach unprofitably no matter what the growth rate, inflation rate, fee structure, etc.

It is worthwhile to note that different classes of entities can accept different levels of profit.  So, an independent enthusiast class individual might be happy to break even and occasionally make a few bucks while this is not an option for a large commercial.  Whatever the case, Bitcoin as implemented simply does not promote the individual class actor very well.

The take-away is that Bitcoin's only realistic hope is for infrastructure providers to monetize some other aspect of Bitcoin's existence.  For large corporate actors this is a no-brainier.  Monetize the intelligence stream as has been a well proven model over the last 15 years.  The big down-side of this is that actors who are able to monetize in this way are distinctly under the thumb of governments, and governments have a very strong propensity to exercise fine-grained control over their citizens.  Governments are inextricably linked to corporations and will be for the foreseeable future.

As I've mentioned before, sidechains would seem to provide a golden opportunity to monetize Bitcoin as a credible source of backing which they require in order to function.  They thus have a significant interest in keeping it that way.

Right now Bitcoin is fairly credible to at least a cross-section of us in the community because it is free of interference (no 'red-listing', transaction discrimination at the mining level, etc.)  Sidechains seem to me like the last best hope of keeping it that way.



My hope is that commoditization of ASICS and integration into heat recycling appliances distributed globally can solve that problem

"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 06, 2014, 06:21:05 PM
 #16064


why should i tell you?  with your propensity to accuse me of conspiracy theories improprieties, maybe i was a supporter all along and i just wanted to manipulate Bitcoin lower so i could just buy more!  like marcus said!

If you are not trading BTC then there is not much reason buying now b/c You already bought at better price years ago.

but i like buying Bitcoin.
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November 06, 2014, 06:30:39 PM
 #16065

i told you this was gonna happen:

Garrett Keirns isn’t the only bitcoin entrepreneur to come within the sights of the SEC, and some worry that his case may mark the beginning of a larger crackdown into the technically interesting and freewheeling world of crypto currency pre-sales—a crackdown that could affect promising Bitcoin 2.0 projects such as Ethereum, MaidSafe, and Counterparty.[/i]

http://www.wired.com/2014/11/crypto-ipos/
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November 06, 2014, 06:32:26 PM
 #16066

...
As I've mentioned before, sidechains would seem to provide a golden opportunity to monetize Bitcoin as a credible source of backing which they require in order to function.  They thus have a significant interest in keeping it that way.

Right now Bitcoin is fairly credible to at least a cross-section of us in the community because it is free of interference (no 'red-listing', transaction discrimination at the mining level, etc.)  Sidechains seem to me like the last best hope of keeping it that way.

My hope is that commoditization of ASICS and integration into heat recycling appliances distributed globally can solve that problem

I hoped for that as well at one point but I always considered it something of a pipe-dream.  Under an 'only Bitcoin for everything' paradigm it's probably completely out the window for technical reasons associated with data distribution.  With sidechains where people have a vested interest in reasonably finite chains of their favor, and where Bitcoin remains reasonably tight and compact, I could see more potential for such a thing developing.


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November 06, 2014, 06:44:08 PM
 #16067

....
Then we agree.
Side chains accommodate arbitrary crypto (good bad or ugly) and which crypto is used for a particular chain matters.

It is my understanding that while the transactions can use arbitrary crypto, block hashing would be limited to sha256 (or possibly a small list of others).  In order to ensure a malicious attacker can not simply lie, the bitcoin miners supporting SPV proofs will need to verify the block hash is valid for the headers provided.  The transaction's details that destroy the pegged coin and unlock the bitcoin will be used, but the signature can be trusted since it is in the block with the highest amount of work.  If nobody presents a higher difficulty block header that contains a contradicting transaction within the contest period, the bitcoins unlock.  But, to verify all this, the miners must be able to hash the headers.

Is  it possible for attackers to do this in reverse?

Take someone's cold wallet and lock them into an SPVPROOF on a SC while the true owner is indisposed for some reason? Or is this impossible because they would need the private keys to begin with? 

Presumably the sidechain would still require a valid signature to allow a transaction in a block.

you mean the SC block?  yes, don't these SPV proofs require 2 tx's each, one in MC and one in SC?
Quote
Essentially, what you are dealing with is a set of headers and a transaction.  The headers prove the transaction was added to a block.  (See section 8 of bitcoin.pdf).

there is no section 8
Quote
What the sidechains idea adds is that instead light node verifying a bitcoin transaction, the bitcoin miners verify that the sidechain has a transaction that destroys sidecoins.  If this transaction goes uncontested, the SPV proof is accepted and the previously locked bitcoins are sent to the address specified in the destroy transaction.

i asked you before about this contest period.  what is the probability of an attacker constructing a fake proof in either direction.
Quote

what is this all about?  isn't this a fundamental change to how Bitcoin blocks are linked together?

We require a change to Bitcoin so that rather than each blockheader committing only to the
header before it, it commits to every one of its ancestors.


Yes a SC block.  Yes, there needs to be a destroy transaction on SC and a SPV proof on MC.

Did you try looking between sections 7 and 9?  That's where I found section 8.  (Hint, page 5).

An attacker can only fake a proof if they can fake a block, so it is up to the security model of the sidechain.

Can you put that quote in context (where is it in which whitepaper?).... I'm not sure quite what they are referring to.

https://www.bitcoin.org/bitcoin.pdf
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November 06, 2014, 06:48:56 PM
 #16068

i told you this was gonna happen:

Garrett Keirns isn’t the only bitcoin entrepreneur to come within the sights of the SEC, and some worry that his case may mark the beginning of a larger crackdown into the technically interesting and freewheeling world of crypto currency pre-sales—a crackdown that could affect promising Bitcoin 2.0 projects such as Ethereum, MaidSafe, and Counterparty.[/i]

http://www.wired.com/2014/11/crypto-ipos/

Just growing pains. Issuing shares and not expecting regulatory interest is foolish. Presale of new crypto currency or stakes in a network on the other hand is much more interesting. Is.it.similar to seeking equity or is it a simple exchange of goods?

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November 06, 2014, 06:50:38 PM
 #16069

Is the price of BTC going down because of altscams? In fact, a successful sidescam might push BTC's value up since it would essentially increase the scarcity of the remaining coins.
Scams depress price.  Alt scams, exchange scams, pirate@40 scams, these all depress price, reduce confidence, encourage regulation, and suck wealth and productive resources out of the crypto economy.  SC scams should be expected to do likewise.

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November 06, 2014, 06:58:49 PM
 #16070

Congratulations, in 3 years on this board I've never once put someone on ignore because I usually like to hear what others have to say even if I disagree. But you are the first. It was a feat, you should be proud.

Thanks for that, your pedantry was becoming tiresome.
I think we both understand the mechanism of side chains.  For anyone else reading this I hope they aren't further confused by your explanation.
The block chains are the ledgers, there are as many ledgers as there are block chains.  Side chains create new block chains, each with their own ledger which are reconciled through what is being called a 2 way peg (though that is also an inaccurate term for the mechanism).  
Merging ledgers would be a destructive process where one block chain would then be abandoned afterwards.  I don't think you are meaning that is what is happening, because that would be incorrect.
I know gmaxwell likes the term 2-way peg from his explanation of this last December, I didn't much care for the term then either.  It is a useful shorthand, but it is going to confuse folks once this stuff catches on.

It is probably important to recognize that these are different units of account as well.  Otherwise there would be no need for the SPVs (and the term peg would be completely meaningless if there were only one unit of account).

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November 06, 2014, 07:05:47 PM
 #16071

who here has gone thru the math in Appendix B on SPV proofs?  is it sound and how does a compact SPV proof work in practical terms?

also, what is the structure of a SC?  does it start at the same block height (328739) as Bitcoin on day 1 with a complete history going back to the genesis block or does it start at it's own Block 1 w/o a coinbase?

i assume the crypto would be the same?  ECDSA and sha256, ripemd160?

New SC starts when peg is created (bitcoins are locked). All credibility for SC is in MC.
It does not matters what crypto will SC use. (it can use any cypto)

example:
SC can create paper coupons, this coupons is backed by bitcoin. (no new coupons can be created, only by depositing more bitcoins)
 - there is not digital ledger in couponSC
 - transaction are doing exchanging coupon by hand
 - somebody is doing 2wp exchanging coupons for BTC
 - no changes to existing bitcoin protocol is needed.

Some people in africa may find this useful. There is no way paper coupons can affect your bitcoins.
Only users of paper coupons take risk if they exchange this coupons for BTC they already owned and locked in MC.

Again "It does not matters what crypto will SC use. "

Yes... it does matter.
If a SC uses a compromised crypto, say one that incorporates key escrow, then the one with the escrowed keys can redeem the bitcoin that have been sent to the side chain.
Advocating for blind trust of all SC just on the merits that they are SC, is not a service to your readers.

There are 2 different things. 2wp(escrow), and side-blockchain crypto

Odalv I think we have consensus, I'm sorry any personal attacks.

if I have been understood, its only the later side-blockchain crypto that have the potential to change the incentives that give Bitcoin its value.  

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November 06, 2014, 07:08:13 PM
 #16072

....
Then we agree.
Side chains accommodate arbitrary crypto (good bad or ugly) and which crypto is used for a particular chain matters.

It is my understanding that while the transactions can use arbitrary crypto, block hashing would be limited to sha256 (or possibly a small list of others).  In order to ensure a malicious attacker can not simply lie, the bitcoin miners supporting SPV proofs will need to verify the block hash is valid for the headers provided.  The transaction's details that destroy the pegged coin and unlock the bitcoin will be used, but the signature can be trusted since it is in the block with the highest amount of work.  If nobody presents a higher difficulty block header that contains a contradicting transaction within the contest period, the bitcoins unlock.  But, to verify all this, the miners must be able to hash the headers.

Is  it possible for attackers to do this in reverse?

Take someone's cold wallet and lock them into an SPVPROOF on a SC while the true owner is indisposed for some reason? Or is this impossible because they would need the private keys to begin with? 

Presumably the sidechain would still require a valid signature to allow a transaction in a block.

you mean the SC block?  yes, don't these SPV proofs require 2 tx's each, one in MC and one in SC?
Quote
Essentially, what you are dealing with is a set of headers and a transaction.  The headers prove the transaction was added to a block.  (See section 8 of bitcoin.pdf).

there is no section 8
Quote
What the sidechains idea adds is that instead light node verifying a bitcoin transaction, the bitcoin miners verify that the sidechain has a transaction that destroys sidecoins.  If this transaction goes uncontested, the SPV proof is accepted and the previously locked bitcoins are sent to the address specified in the destroy transaction.

i asked you before about this contest period.  what is the probability of an attacker constructing a fake proof in either direction.
Quote

what is this all about?  isn't this a fundamental change to how Bitcoin blocks are linked together?

We require a change to Bitcoin so that rather than each blockheader committing only to the
header before it, it commits to every one of its ancestors.


Yes a SC block.  Yes, there needs to be a destroy transaction on SC and a SPV proof on MC.

Did you try looking between sections 7 and 9?  That's where I found section 8.  (Hint, page 5).

An attacker can only fake a proof if they can fake a block, so it is up to the security model of the sidechain.

Can you put that quote in context (where is it in which whitepaper?).... I'm not sure quite what they are referring to.

pg 20 Implementation

why would an attacker have to fake a block when faking a SPV proof (tx)?  blocks are created by miners...

still don't see a section 8 on pg 5
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November 06, 2014, 07:12:34 PM
 #16073

Is the price of BTC going down because of altscams? In fact, a successful sidescam might push BTC's value up since it would essentially increase the scarcity of the remaining coins.
Scams depress price.  Alt scams, exchange scams, pirate@40 scams, these all depress price, reduce confidence, encourage regulation, and suck wealth and productive resources out of the crypto economy.  SC scams should be expected to do likewise.

absolutely.  the "oh, my coins will only be worth more" crowd is missing this point.  especially considering that Bitcoin proponents/owners would be the ones who could get wiped out.
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November 06, 2014, 07:17:07 PM
 #16074

Its pretty exhausting because it is difficult to determine what you are trying to communicate.
This post in particular is merely self contradictory rhetoric.  It doesn't contain any reasoned arguments.
Parse it yourself and you will see...

Either (a) side chains have no capability to "mess with" Bitcoin, or (b) they are empowered to improve, ensure preservation, and adaptability...  

Then, you claim to know the purpose of side chains.  As if there is only one purpose that *the people* that create side chains can have.  This is an outlandishly impossible claim to make.

Followed by another self contradiction.  Either (a) side chains do not change the incentive structure, or (b) they improve it.  Both of these can not be true.


I think you should just stop advocating for side chains.  You are a bad spokesperson for the cause.  People will read these posts of yours and get the idea that someone is hyping SC for some nefarious purpose, because these posts of yours just don't make sense, and not even internally consistent with itself.  

I knew this would be your argument, and yes, I can see how it might sound contradictory.

Adrian's use of those terms, "mess with" and "change", were made in a notably pejorative way. My point is that these changes are, IMO, for the better. Someone could have a different opinion but while you accuse me of not making sense, the same could be said of much of the arguments made against SC so far in this thread.
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November 06, 2014, 07:22:47 PM
 #16075

i actually think the underlying problem here is that some of us see Bitcoin as Sound Money who's sanctity is to be protected at all costs, like me, and others see it as an avenue to develop stocks, bonds, community currencies, assurance contracts, smart contracts, etc, etc.

as Bitcoin stands, it makes anything other than money very difficult to implement.  i've talked about this for years here.  how many times have i said "The Blockchain may only ever be applicable to Bitcoin as Money"?

if you don't buy into this view, then SC's seem like a natural thing.  who cares if somehow a little inflation, centralization, or trust requiring needs slip in the backdoor?

I have a count of 3 Bitcoin proponents who see what you see, - sad reflection on comprehension skill. If Blockstreem gets to implement the protocol change to allow the extraction of value from the blockchain, we may get another chance at sound money in another 100 years, who knows, it could be longer as the sad truth is the majority cant see how this proposal destroys the one hope we have at sound money.   

The sad thing is those crazy evaluations people where projecting wont materialist, they'll be eaten by inflation in the SC that your tormenters are so eager to see happen.

There is still a chance they wake up. 


I'm sorry, there's just no way I can follow this discussion. I roughly know what sidechains are and how they work, but I'm low on time so please can you (or someone else) explain why/how SCs can inflate Bitcoin (or somehow make Bitcoin "unsound")?

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November 06, 2014, 07:25:42 PM
 #16076

Its pretty exhausting because it is difficult to determine what you are trying to communicate.
This post in particular is merely self contradictory rhetoric.  It doesn't contain any reasoned arguments.
Parse it yourself and you will see...

Either (a) side chains have no capability to "mess with" Bitcoin, or (b) they are empowered to improve, ensure preservation, and adaptability...  

Then, you claim to know the purpose of side chains.  As if there is only one purpose that *the people* that create side chains can have.  This is an outlandishly impossible claim to make.

Followed by another self contradiction.  Either (a) side chains do not change the incentive structure, or (b) they improve it.  Both of these can not be true.


I think you should just stop advocating for side chains.  You are a bad spokesperson for the cause.  People will read these posts of yours and get the idea that someone is hyping SC for some nefarious purpose, because these posts of yours just don't make sense, and not even internally consistent with itself.  

I knew this would be your argument, and yes, I can see how it might sound contradictory.

Adrian's use of those terms, "mess with" and "change", were made in a notably pejorative way. My point is that these changes are, IMO, for the better. Someone could have a different opinion but while you accuse me of not making sense, the same could be said of much of the arguments made against SC so far in this thread.

I also think they are for the better, when done successfully and by people of good will.

In much the same way that a software "upgrade" is not always better than its predecessor.  It may require more resource or implement a nasty form or DRM or who knows what.  

Usually they are better, but not always.

What SC does is a great thing.  I have strongly advocated them myself to both developers and investors.  I don't like is seeing them misrepresented as something they aren't.  It is mostly a method of "upgrading" a crypto currency.  Some but not all upgrades are beneficial, only most of them are.

The really insanely great thing about them is that they deal with the ossification issue in a market sensitive way.  If you like the old version and don't want the "upgrade" you don't have to take it.  Or you can try it out for a while and move back without much cost.

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November 06, 2014, 07:30:03 PM
 #16077


The problem that me, and seemingly a couple others, have with Cypherdoc's concerns is that most of them boil down to the creation of altcoins, something that sidechains did not introduce and do little to enable. I hope you have come to understand this part because the accusation that you make of SC proponents being "unreasonable" can equally be applied to most, if not all, of the SC opponents in this thread.

You seem to be a reasonable person who has a great ability to distill his ideas in thoughtful and concise manners. Maybe you want to share with us notable weaknesses of the 2wp and what considerable risks you can foresee?

not having examined the mechanism and trusting it does what it says on the box I see the positives as you do, but with 1 exception, a side-blockchain crypto this presents some concerns that haven't been effectively analised, thinking side-blockchain crypto will be as effective as Altcoins today is an unbaked projection.  

I't would be great the have some economic studies done on these effects, Bitcoin is as much an economic prototypical as it is a computer algorithm.  

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November 06, 2014, 07:43:03 PM
 #16078

TL;DR: Sidechains (if they succeed) force Bitcoin's hand, although decades in the future, in setting an inflation rate determined by the market, in order to tie miner's subsidies more exactly to the primary service they perform: that of securing Bitcoin's store of value. This is because successful sidechains would allow Bitcoin transactions to be disconnected from Bitcoin miners. Bitcoin therefore could not rely on transaction fees for its network security incentives. Sidechains would have made it clear that transaction functionality is not intrinsic to or inseparable from the Bitcoin network; only the store of value function is, and therefore miners must be continually rewarded for maintaining this function alone, for the lifetime the network.

Thanks for distilling the concern.

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November 06, 2014, 07:47:10 PM
 #16079

The problem that me, and seemingly a couple others, have with Cypherdoc's concerns is that most of them boil down to the creation of altcoins, something that sidechains did not introduce and do little to enable. I hope you have come to understand this part because the accusation that you make of SC proponents being "unreasonable" can equally be applied to most, if not all, of the SC opponents in this thread.

You seem to be a reasonable person who has a great ability to distill his ideas in thoughtful and concise manners. Maybe you want to share with us notable weaknesses of the 2wp and what considerable risks you can foresee?

I don't know that there are any SC opponents in this thread.
I also don't claim there are any weaknesses in the SPV mechanism, and find it weird that you would see that anywhere in anything I wrote.  
I like SC's, I think it works and does pretty much what it says it does is the blockstream white paper.

There are however risks, some of which have been discussed here already.  Most of the more interesting risks fall into two main categories.
1) Economic risks (changes to miner incentives, centralization issues, and practical concerns, ZB's is one of these)
2) Confidence risks (both "cons" in the scam sense, and misplaced confidence in the mechanism as a panacea, or else misplaced confidence in any particular SC - what you call the altcoin risk, and loss of confidence in Bitcoin generally due to its new ease of change).

As mentioned upthread, the SC mods present a new upgrade path.  Introducing upgrade paths is something to do carefully, and I like that there is this discussion to work through some of the more obvious issues.


There are all sorts of dystopian varieties of these two categories.
Some may imagine a distant future where with a click of a button (or it is done automatically) where one upgrades their bitcoins from Bitcoin 17.4 to 17.5 moving to yet another new chain, and something goes horribly wrong and they find themselves on Central Banker Inflation Coin of something.
Or what is more likely historically, they do this willfully because the news is telling them that it is necessary to do it for their survival in the new important war of the day.

Edit: there is a 3rd category of risk, technical risks (of which SPV brokenness would be an example, but these haven't been much discussed here).

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November 06, 2014, 07:49:26 PM
 #16080

actually, that may not be true.  hardware is entering commoditization and the cost of hashing has dropped 10 fold in the last year.  so there may be some hope for solo mining still.  or at least for individuals holding hardware that want to pool mine.

did you see this: over $3.6M in hardware, one of the risks of centralized mining, the guy was consuming 5.5MW of power and only had 2 security grads. 

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