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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2010232 times)
brg444
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November 07, 2014, 10:33:07 PM
 #16181

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.

"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 07, 2014, 10:37:19 PM
 #16182

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.

Can you help me understand how do we do this without the side chains?
For example, using an alt coin does something quite different:
If I sell bitcoin for an alt coin which turns out to be a long con scam, but before the scam was sprung, I had traded them to a different alt coin, I could still trade that second alt coin for BTC, and the BTC I initially traded away are not essentially "burned" they are still being exchanged on MC by whomever got them from me.

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November 07, 2014, 10:37:32 PM
 #16183

spv proof

I can tell you only what is in whitepaper. (crystal clear)
Quote
"We observe that Bitcoin’s blockheaders can be regarded as an example of a dynamic-membership multi-party signature (or DMMS ),
which we consider to be of independent interest as a new type of group signature"

This new signature can be verified by Bitcoin ... or for begging  oracle can verify DMMS  and if is valid  then oracle will sign Bitcoin multi-signature transaction.

yes, but that's for getting BTC--->scBTC.  how does scBTC get exchanged while on SC other than simply by localtrading p2p w/o centralizing it?

No oracle is on SC and oracle check SC.
It is same chain as Bitcoin
It know longest SC b/c it is same as every bitcoin client can verify

 and is unlocking bitcoins in MC by signing bitcoin transaction in MC.

?

maybe i can answer my own question.  once someone holds scBTC, they can transact just like they would with BTC except being able to take advantage of faster tx and anonymity be it online or p2p.  my question is that these same scBTC can be traded with other scBTC holders.  i suppose that could be p2p as well but if done on a centralized exchange that doesn't advance our anonymity desires.  which is what i was getting at to address your question about how a SC may or may not be analogous to mtgox.

Now this new SC is same as original Bitcoin + has native support for new signatures (SPV, SNARK ...) -> new version of bitcoin.
Now inside this SC, it is possible to create new SCs (eg fastWallet, exchanges, ...)

you don't mean another second SC for fastWallet and exchanges, do you?  b/c i would consider that a disadvantage as that would mean BTC would have to traverse 2 separate SPV proofs with contest/confirmation periods in order to get to 2nd SC which would increase risk of escaping SC's in general in an emergency due to time delays and technical failures.  

i would hope fastWallet exchanges  would be decentralized and anonymous and exist on the 1st SC away from Bitcoin.  

I think I'll not need create more oracles inside SC b/c bitcoinSC may support it. I'm not sure. I have to go for now.

i sure love your imagination with these things.  it's so much more imaginative and mind expanding than some others around here.

i agree with you. there are going to be billions of these things!

Thank you. (I'm not owner/creator of SC idea)
I like SC idea .. I'm glad if my explanation can help.
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November 07, 2014, 10:37:40 PM
 #16184

That is breaking the link.

They are taking the Bitcoin brand and applying it to their (and others' but I think they are more concerned with theirs) sidechain coin, which is not Bitcoin but is another coin backed by Bitcoin held in reserve.

If Bitcoin were a defended trademark this appropriation would likely not be allowed. As a practical factual matter it is also untrue. The actual Bitcoin do not and can not leave the Bitcoin blockchain.

They may get away with it though, because as others have pointed out here, the Bitcoin-the-currency/Bitcoin-the-blockchain meme is popular and spreading.

Hmm I hope you realise the contradiction in your comment here : if the "actual Bitcoin do not and can not leave the Bitcoin blockchain" then no "that is *not* breaking the link.

I do understand your argument though and I don't see any malicious intent in the marketing of their scheme as "Bitcoin moving across" chain. It is simply easier for everyone to understand and if the math are properly implemented making the algorithmic peg safe & sound then while it may be true it is not the actual Bitcoin that is moved to the sidechain, its representing unit is as close to bitcoin as anything can be.

"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 07, 2014, 10:47:36 PM
 #16185


That is breaking the link.

They are taking the Bitcoin brand and applying it to their (and others' but I think they are more concerned with theirs) sidechain coin, which is not Bitcoin but is another coin backed by Bitcoin held in reserve.

If Bitcoin were a defended trademark this appropriation would likely not be allowed. As a practical factual matter it is also untrue. The actual Bitcoin do not and can not leave the Bitcoin blockchain.

They may get away with it though, because as others have pointed out here, the Bitcoin-the-currency/Bitcoin-the-blockchain meme is popular and spreading.

Well it hasn't come to pass yet, that idea atm remains fiction.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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November 07, 2014, 10:51:31 PM
 #16186

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

this scenario is helpful in conceptualizing what is happening. 

the "BTC is locked up on the MC in UTXO and never leaves" potentially gives a false impression that there will always be 21M.  it tempts one to ignore what's happening beyond the other side of the 2wp out there in SC world.  the pass thru model forces one to consider and concentrate on what is going on out there as these scBTC are jumping from SC to SC each one of each could fail or be a scam.  assuming there will be attrition of scBTC over time, the conclusion is there will always be <21M ever decreasing.
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November 07, 2014, 10:55:46 PM
 #16187

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.

Can you help me understand how do we do this without the side chains?
For example, using an alt coin does something quite different:
If I sell bitcoin for an alt coin which turns out to be a long con scam, but before the scam was sprung, I had traded them to a different alt coin, I could still trade that second alt coin for BTC, and the BTC I initially traded away are not essentially "burned" they are still being exchanged on MC by whomever got them from me.

It doesn't matter if you transfer it to a second, third or fourth sidechain. The onus of your decision is in validating the security of your initial transfer off the Bitcoin mainchain.

Either you keep your Bitcoin on chain or you take the risk of trusting some other scheme with your coins. What is the incentive? What are the risks? Any ensuing event will be a consequence of that decision. Once you leave the mainchain you forego your position in the only established trustless crypto environment.


"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 07, 2014, 11:04:01 PM
 #16188


That is breaking the link.

They are taking the Bitcoin brand and applying it to their (and others' but I think they are more concerned with theirs) sidechain coin, which is not Bitcoin but is another coin backed by Bitcoin held in reserve.

If Bitcoin were a defended trademark this appropriation would likely not be allowed. As a practical factual matter it is also untrue. The actual Bitcoin do not and can not leave the Bitcoin blockchain.

They may get away with it though, because as others have pointed out here, the Bitcoin-the-currency/Bitcoin-the-blockchain meme is popular and spreading.

Well it hasn't come to pass yet, that idea atm remains fiction.

I'm sorry but you guys are confusing two ideologies for one.

Blockstream's idea, whether you support it or not, does not suggest that the Blockchain can be supported without Bitcoin.

The meme Peter R was referring to is the one parroted by mainstream media pretending that Blockchain tech does not need its own native currency. "Why not use it to trade USD"


"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 07, 2014, 11:04:44 PM
 #16189

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.

Can you help me understand how do we do this without the side chains?
For example, using an alt coin does something quite different:
If I sell bitcoin for an alt coin which turns out to be a long con scam, but before the scam was sprung, I had traded them to a different alt coin, I could still trade that second alt coin for BTC, and the BTC I initially traded away are not essentially "burned" they are still being exchanged on MC by whomever got them from me.

It doesn't matter if you transfer it to a second, third or fourth sidechain. The onus of your decision is in validating the security of your initial transfer off the Bitcoin mainchain.

Either you keep your Bitcoin on chain or you take the risk of trusting some other scheme with your coins. What is the incentive? What are the risks? Any ensuing event will be a consequence of that decision. Once you leave the mainchain you forego your position in the only established trustless crypto environment.



we're worried about ordinary ppl who in the future might want to get into Bitcoin.   they won't have the technical expertise or knowledge to know what's going on.  as we've seen from altcoins, they can always attract a crowd be it with deception or true value.  to think that SC's changes this is to be determined.  you did see my post from earlier today?

it's starting already.

Truthcoin, enabled by SC's!

http://www.truthcoin.info/
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November 07, 2014, 11:15:46 PM
 #16190

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.

Can you help me understand how do we do this without the side chains?
For example, using an alt coin does something quite different:
If I sell bitcoin for an alt coin which turns out to be a long con scam, but before the scam was sprung, I had traded them to a different alt coin, I could still trade that second alt coin for BTC, and the BTC I initially traded away are not essentially "burned" they are still being exchanged on MC by whomever got them from me.

It doesn't matter if you transfer it to a second, third or fourth sidechain. The onus of your decision is in validating the security of your initial transfer off the Bitcoin mainchain.

Either you keep your Bitcoin on chain or you take the risk of trusting some other scheme with your coins. What is the incentive? What are the risks? Any ensuing event will be a consequence of that decision. Once you leave the mainchain you forego your position in the only established trustless crypto environment.

brg444 once one understands the maths you may be correct.
i imagine NewLiberty scenario could be done by introducing some other cryptographic way to spoof steel the BTC from the scBTC and still trade unbaked scBTC coin on the open market.

I still feel more comfortable holding centralized entities accountable for stealing BTC and not say an autonomous SC- Satoshi inventor with nefarious intentions with hidden code that goes unnoticed for a a few years.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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November 07, 2014, 11:22:29 PM
 #16191

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

this scenario is helpful in conceptualizing what is happening.  

the "BTC is locked up on the MC in UTXO and never leaves" potentially gives a false impression that there will always be 21M.  it tempts one to ignore what's happening beyond the other side of the 2wp out there in SC world.  the pass thru model forces one to consider and concentrate on what is going on out there as these scBTC are jumping from SC to SC each one of each could fail or be a scam.  assuming there will be attrition of scBTC over time, the conclusion is there will always be <21M ever decreasing.

Whether the BTC are transferred to one sidechain or to multiple links of the sidechains, the result is the same. Either:

1) Bitcoin is the backing reserve asset to any linked scBTC. If so then convertibility is maintained and Bitcoin functions as the security mechanism, or

2) scBTC jump from SC to SC (as your example) and one sidechain in the link breaks, which breaks the link back to the underlying backing BTC. This however in effect converts that scBTC into an altcoin, those scBTC are no longer convertible with BTC and Bitcoin is no longer providing the underlying security.

Such a situation converts a SC into an altcoin.

I'm fine with that because the market is showing how network effects are slowly crushing altcoins. Once an SC converts into an altcoin, it now loses all network effects and is cast off on it's own. It now functions separately from the entire bitcoin ecosystem and can not be used with that ecosystem. Such an altcoin I believe will lose value and diminish to nothingness. You can't hide this from users, they are now locked out of the rest of the bitcoin ecosystem, that is huge.

Altcoins scare the crap out of me, the are the only threat to the Sound Money principle. But as stated before network effects seem to be properly working, I expect that to continue.

The pegging mechanism ensures convertibility, which exposes if the sidechain is #1 or #2. If a sidechain breaks convertibility, it becomes #2 it is now an altcoin.
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November 07, 2014, 11:23:31 PM
 #16192


That is breaking the link.

They are taking the Bitcoin brand and applying it to their (and others' but I think they are more concerned with theirs) sidechain coin, which is not Bitcoin but is another coin backed by Bitcoin held in reserve.

If Bitcoin were a defended trademark this appropriation would likely not be allowed. As a practical factual matter it is also untrue. The actual Bitcoin do not and can not leave the Bitcoin blockchain.

They may get away with it though, because as others have pointed out here, the Bitcoin-the-currency/Bitcoin-the-blockchain meme is popular and spreading.

Well it hasn't come to pass yet, that idea atm remains fiction.

I'm sorry but you guys are confusing two ideologies for one.

Blockstream's idea, whether you support it or not, does not suggest that the Blockchain can be supported without Bitcoin.

The meme Peter R was referring to is the one parroted by mainstream media pretending that Blockchain tech does not need its own native currency. "Why not use it to trade USD"


 Wink I don't think you understand what I've beet talking about and why SideChains are interesting to financial asset management companies.

Bitcoin the private key has no value, securing it in a SC doesn't secure value stored in the Bitcoin blockchain, (just like securing my keys on an offline computer can't secure the value in the blockchain)  only now with a SC the value could be allowed to freely move into the SideChain. (note the separation of BTC from the value in the block chain its just a presumption it will always come back, people are funny creatures) This is new this is a big change, this changes how I see Bitcoin, there are pros and cons, I'm not interested in exploring only the pros I have a lifetime to explore those I want to understand the cons!

And your not helping.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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November 07, 2014, 11:24:18 PM
 #16193

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.

Can you help me understand how do we do this without the side chains?
For example, using an alt coin does something quite different:
If I sell bitcoin for an alt coin which turns out to be a long con scam, but before the scam was sprung, I had traded them to a different alt coin, I could still trade that second alt coin for BTC, and the BTC I initially traded away are not essentially "burned" they are still being exchanged on MC by whomever got them from me.

It doesn't matter if you transfer it to a second, third or fourth sidechain. The onus of your decision is in validating the security of your initial transfer off the Bitcoin mainchain.

Either you keep your Bitcoin on chain or you take the risk of trusting some other scheme with your coins. What is the incentive? What are the risks? Any ensuing event will be a consequence of that decision. Once you leave the mainchain you forego your position in the only established trustless crypto environment.



we're worried about ordinary ppl who in the future might want to get into Bitcoin.   they won't have the technical expertise or knowledge to know what's going on.  as we've seen from altcoins, they can always attract a crowd be it with deception or true value.  to think that SC's changes this is to be determined.  you did see my post from earlier today?

it's starting already.

Truthcoin, enabled by SC's!

http://www.truthcoin.info/

So do I understand that you agree with me that a new risk is not introduced? There is always an inherent risk when trusting your Bitcoins to be somewhere else than on the blockchain.

Now to be completely fair, does Sidechain offer new schemes that could potentially abuse and profit from this risk? Probably. But from my point of view this is the nature of the beast : as the technology evolves so does the potential for more elaborate scams.

"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 07, 2014, 11:29:16 PM
 #16194

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

well essentially you're suggesting the coins were initially transferred to a non-secure scheme without proper due diligence from the owner so my answer is no, this is not a "new" risk.

Can you help me understand how do we do this without the side chains?
For example, using an alt coin does something quite different:
If I sell bitcoin for an alt coin which turns out to be a long con scam, but before the scam was sprung, I had traded them to a different alt coin, I could still trade that second alt coin for BTC, and the BTC I initially traded away are not essentially "burned" they are still being exchanged on MC by whomever got them from me.

It doesn't matter if you transfer it to a second, third or fourth sidechain. The onus of your decision is in validating the security of your initial transfer off the Bitcoin mainchain.

Either you keep your Bitcoin on chain or you take the risk of trusting some other scheme with your coins. What is the incentive? What are the risks? Any ensuing event will be a consequence of that decision. Once you leave the mainchain you forego your position in the only established trustless crypto environment.



we're worried about ordinary ppl who in the future might want to get into Bitcoin.   they won't have the technical expertise or knowledge to know what's going on.  as we've seen from altcoins, they can always attract a crowd be it with deception or true value.  to think that SC's changes this is to be determined.  you did see my post from earlier today?

it's starting already.

Truthcoin, enabled by SC's!

http://www.truthcoin.info/

So do I understand that you agree with me that a new risk is not introduced? There is always an inherent risk when trusting your Bitcoins to be somewhere else than on the blockchain.

Now to be completely fair, does Sidechain offer new schemes that could potentially abuse and profit from this risk? Probably. But from my point of view this is the nature of the beast : as the technology evolves so does the potential for more elaborate scams.

no i don't agree.  i think NL's example is a good one showing increased risk.

ordinary ppl won't necessarily understand the bolded statement as you presume.
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November 07, 2014, 11:38:50 PM
 #16195

So do I understand that you agree with me that a new risk is not introduced? There is always an inherent risk when trusting your Bitcoins to be somewhere else than on the blockchain.

Now to be completely fair, does Sidechain offer new schemes that could potentially abuse and profit from this risk? Probably. But from my point of view this is the nature of the beast : as the technology evolves so does the potential for more elaborate scams.

no i don't agree.  i think NL's example is a good one showing increased risk.

ordinary ppl won't necessarily understand the bolded statement as you presume.

Confusion between "did Bitcoin fail me and lose my coins or did a Sidecoin fail me and lose my coins" is a very legitimate issue. I'm worried about this also.

I think a lot of side chains will be seen as services beyond the main chain. For example today if one wants to anonymize coins they need to go use some sort of mixing service, if they lose their coins in the process the service takes the blame though, not bitcoin. I think sidechains will be the same, people have bitcoins and then decided to use some anonymous sidechain service, if they lose their coins I think it will be clear it was the sidechain / service at fault.

If a sidechain is integrated into Bitcoin-qt or blockchain.info to the extent that you're not even aware of the sidechain being used, then I can see the scenario you're describing as being confusing and damaging to Bitcoin. But I think SC's will be implemented in a manner that it is clear when they are being used.

At least that is my expectation / hope.
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November 07, 2014, 11:41:11 PM
 #16196

no i don't agree.  i think NL's example is a good one showing increased risk.

ordinary ppl won't necessarily understand the bolded statement as you presume.

The risk is the same : to trust your money elsewhere than on the blockchain. The schemes to deceive people into doing so might increase in numbers with sidechain but the risk is the same.

As for your second comment, I'm sorry but they absolutely should understand it. It is the very principle of Bitcoin : creating a trustless environment. It took a long time for Bitcoin to establish this status and it should be obvious that any step outside of its circle exposes you to risk that should be accounted for.

Also, I have some difficulty with your proposition that "ordinary people" will be trusting their money to all kind of obscure sidechains. Ordinary people only trust mainstream and established platforms. It is very unlikely the majority of them will fall victim to overlycomplicated schemes.


"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 07, 2014, 11:48:50 PM
 #16197

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?

If the notion is that: "Side Chains are great because people more foolish than I am will mistakenly trust some bad ones, and use them, and lose some of their coins making mine more valuable."  
Than this isn't particularly good for Bitcoin if people lose confidence in it, so whether it may or may not be good for one's own bitcoin value is questionable.

Here is one scenario where BTCs may be lost to MC in this way, essentially rendered unspendable through an economic activity.

1) Some BTC is SPV'd to scBTC1.
2) Some scBTC1 is SPV'd to scBTC2.
3) scBTC1 is discovered to be a scam (or just a bad implementation) whereas scBTC1coin massively inflates so that no one on scBTC2 has any incentive to SPV back from scBTC2 to scBTC1 and so no way to return to MC.

(Yes, you can create a side chain from a side chain.)
complexity risks...

Edit:  Is there a way to have such an event without sidechains, or is this a "new" risk?

this scenario is helpful in conceptualizing what is happening.  

the "BTC is locked up on the MC in UTXO and never leaves" potentially gives a false impression that there will always be 21M.  it tempts one to ignore what's happening beyond the other side of the 2wp out there in SC world.  the pass thru model forces one to consider and concentrate on what is going on out there as these scBTC are jumping from SC to SC each one of each could fail or be a scam.  assuming there will be attrition of scBTC over time, the conclusion is there will always be <21M ever decreasing.

Whether the BTC are transferred to one sidechain or to multiple links of the sidechains, the result is the same. Either:

1) Bitcoin is the backing reserve asset to any linked scBTC. If so then convertibility is maintained and Bitcoin functions as the security mechanism, or

2) scBTC jump from SC to SC (as your example) and one sidechain in the link breaks, which breaks the link back to the underlying backing BTC. This however in effect converts that scBTC into an altcoin, those scBTC are no longer convertible with BTC and Bitcoin is no longer providing the underlying security.

Such a situation converts a SC into an altcoin.

I'm fine with that because the market is showing how network effects are slowly crushing altcoins. Once an SC converts into an altcoin, it now loses all network effects and is cast off on it's own. It now functions separately from the entire bitcoin ecosystem and can not be used with that ecosystem. Such an altcoin I believe will lose value and diminish to nothingness. You can't hide this from users, they are now locked out of the rest of the bitcoin ecosystem, that is huge.

Altcoins scare the crap out of me, the are the only threat to the Sound Money principle. But as stated before network effects seem to be properly working, I expect that to continue.

The pegging mechanism ensures convertibility, which exposes if the sidechain is #1 or #2. If a sidechain breaks convertibility, it becomes #2 it is now an altcoin.

we've been told that one of the benefits of SC's is in crushing altcoins.  if the current network effects are already doing that, and i agree that they are, that takes away a major argument to implement them.

NL's point is that this severing of the path back to BTC will create losers and thus destroy confidence, not only for the loser's themselves, but for the rest of us potentially.
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November 07, 2014, 11:52:33 PM
 #16198

Confusion between "did Bitcoin fail me and lose my coins or did a Sidecoin fail me and lose my coins" is a very legitimate issue. I'm worried about this also.

I think a lot of side chains will be seen as services beyond the main chain. For example today if one wants to anonymize coins they need to go use some sort of mixing service, if they lose their coins in the process the service takes the blame though, not bitcoin. I think sidechains will be the same, people have bitcoins and then decided to use some anonymous sidechain service, if they lose their coins I think it will be clear it was the sidechain / service at fault.

If a sidechain is integrated into Bitcoin-qt or blockchain.info to the extent that you're not even aware of the sidechain being used, then I can see the scenario you're describing as being confusing and damaging to Bitcoin. But I think SC's will be implemented in a manner that it is clear when they are being used.

At least that is my expectation / hope.

Sidechains are like Bitcoin companies/services. If you decide to trust some shady one because it promises unconvential returns or features then you expose yourself to the underlying risk that they disappear with your money.

When we get to "ordinary people" using Bitcoin, established sidechains that have been carefully reviewed and vetted by the community will be available and should serve any conventional need that a consumer might want. My guess is that at this point they are not even referred to as "sidechains" but Bitcoin "applications" or services.

If one decides to step outside of this "safe" environment and experience more obscure services/sidechains then he should proceed with caution much like he should be doing when dealing with less renowned companies.

"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 07, 2014, 11:55:53 PM
 #16199

So do I understand that you agree with me that a new risk is not introduced? There is always an inherent risk when trusting your Bitcoins to be somewhere else than on the blockchain.

Now to be completely fair, does Sidechain offer new schemes that could potentially abuse and profit from this risk? Probably. But from my point of view this is the nature of the beast : as the technology evolves so does the potential for more elaborate scams.

no i don't agree.  i think NL's example is a good one showing increased risk.

ordinary ppl won't necessarily understand the bolded statement as you presume.

Confusion between "did Bitcoin fail me and lose my coins or did a Sidecoin fail me and lose my coins" is a very legitimate issue. I'm worried about this also.

I think a lot of side chains will be seen as services beyond the main chain. For example today if one wants to anonymize coins they need to go use some sort of mixing service, if they lose their coins in the process the service takes the blame though, not bitcoin. I think sidechains will be the same, people have bitcoins and then decided to use some anonymous sidechain service, if they lose their coins I think it will be clear it was the sidechain / service at fault.

If a sidechain is integrated into Bitcoin-qt or blockchain.info to the extent that you're not even aware of the sidechain being used, then I can see the scenario you're describing as being confusing and damaging to Bitcoin. But I think SC's will be implemented in a manner that it is clear when they are being used.

At least that is my expectation / hope.

i need to understand better where you're coming from in terms of your blockchain views.  is what you're saying today consistent with what you said here?:

https://bitcointalk.org/index.php?topic=68655.msg9459338#msg9459338
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November 07, 2014, 11:55:59 PM
 #16200

we've been told that one of the benefits of SC's is in crushing altcoins.  if the current network effects are already doing that, and i agree that they are, that takes away a major argument to implement them.

NL's point is that this severing of the path back to BTC will create losers and thus destroy confidence, not only for the loser's themselves, but for the rest of us potentially.

 Cheesy

please don't be so shallow. SC's were absolutely not created in order to "crush" altcoins. neither is it a "major" argument to implement them. the reasoning is that once implemented it should discourage the creation of alt-scams and refocus the energy of developers on innovation within Bitcoin's ecosystem.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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