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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2010376 times)
Adrian-x
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November 09, 2014, 07:27:54 AM
 #16301


I think this might be an answer to my previous question, but I don't understand the part "this would be like monetary inflation, as high value SC networks grow sucking up Bitcoin". Are you saying because the SC draws mining power away from the main chain, this is also sucking value from the mainchain tokens?

Somewhat, if value is created on a SC that is greater than that of Bitcoin the Bitcoin stays there. SC would be unlucky to draw mining power away from Bitcoin while block rewards are high and it's the dominant chain. One could script mine SC-tokens I'm sure there will be PoS versions too. (Maybe a script miner who gets fees from a script SC is content building his mining farm and not supporting the Bitcoin network in that way he's investing in the SC security and not Bitcoin security in a small way he'd be drawing mining power away from the Bitcoin network)

What I'm saying is SC will be designed to be more efficient, and will need to attract users and and miners. First users want cheaper transaction, then miners want profit for security. So whoever gets the best mix grows.

In the Bitcoin incentive structure the industrial energy used to hash grows with the value of BTC, over time this is reduced to the marginal cost of protecting the network, it will fall into equilibrium with the increase and decrease in BTC value. That changes with SC.

Decentralized SC that function as a means of exchange and use merged mining will probably offer the most security miners will mine all viable ones and the difficulty will be in close equilibrium with Bitcoin. They can be thought off as secure as Bitcoin.

The SC with the lowest cost and biggest network will grow reducing the need for other Decentralized SC's, the result is Decentralized SC will either compete on fees as they are as secure as Bitcoin, or they'll compete on utility and charge a premium.  The users will go wherever it's most cost effective to exchange value, on the SC an increase in value is reflected in the price of Bitcoin, however that increase in value is attributed to being the biggest network with the lower fees, this increase in BTC value won't be reflected in mining revenue because it comes at the expense of sacrificing profits, leaving the network less secure.

The SC that offer additional utility at a premium or greatest arbitrage will alow miners to grow and secure the network, that hashing power is distributed over the whole network, those coins that earn the most for miners, when this type of growth happens will incentivized to mine those SC, they will drive new investment in mining and become more secure. In this case this network will be growing and Bitcoin and other SC will be getting the benefits of added security. This growth is inflationary taking value out of Bitcoin, the market locks it in. I'd only consider the growth inflationary because that is value on top of Bitcoin in that scenario Bitcoin is dragged up but it's not the source of the growth.

If either scenario gets a stronghold you can expect the incentive to become exaggerated, neither is good for Bitcoin.

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marcus_of_augustus
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November 09, 2014, 08:38:56 AM
 #16302

Bitcoin Collapsing, SideChains and Gold Up ... amIrite?

cypherdoc
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November 09, 2014, 09:40:29 AM
 #16303

 not only are all sorts of altcoin Sidescams going to bolt themselves onto the Bitcoin MC as shown by Truthcoin but as odalv has shown even Silk Road 4.0. How do you explain that to the Feds? 
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November 09, 2014, 10:02:03 AM
 #16304

not only are all sorts of altcoin Sidescams going to bolt themselves onto the Bitcoin MC as shown by Truthcoin but as odalv has shown even Silk Road 4.0. How do you explain that to the Feds? 

Why do you think Truthcoin is a scam? I would love to see a decentralized prediction market.

"The difference between a castle and a prison is only a question of who holds the keys."
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November 09, 2014, 10:14:08 AM
 #16305

not only are all sorts of altcoin Sidescams going to bolt themselves onto the Bitcoin MC as shown by Truthcoin but as odalv has shown even Silk Road 4.0. How do you explain that to the Feds?  

Why do you think Truthcoin is a scam? I would love to see a decentralized prediction market.

Thank you for making my point! You are  exactly what I was  looking for. A living example of someone who would be willing to trade scBTC for Truthcoin!  And they said it won't happen  Roll Eyes

Answer:  it might not be a scam!  But if successful it will be inflationary to the Bitcoin system. And if inflationary to the system it will eventually destroy Bitcoin according  to the great link I put up earlier about merge mining about currency competition .
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November 09, 2014, 10:18:58 AM
 #16306

not only are all sorts of altcoin Sidescams going to bolt themselves onto the Bitcoin MC as shown by Truthcoin but as odalv has shown even Silk Road 4.0. How do you explain that to the Feds?  

Why do you think Truthcoin is a scam? I would love to see a decentralized prediction market.

Thank you for making my point! You are  exactly what I was  looking for. A living example of someone who would be willing to trade scBTC for Truthcoin!  And they said it won't happen  Roll Eyes

Answer:  it might not be a scam!  But if successful it will be inflationary to the Bitcoin system. And if inflationary to the system it will eventually destroy Bitcoin according  to the great link I put up earlier about merge mining.

I'm glad I could help! Wink But I don't think Truthcoin has to operate as a sidechain.

I missed the link but will look through your post history to find it. We certainly don't want any inflation in BTC. But I don't think any other digital currency really has a chance (perhaps an anonymous one).

"The difference between a castle and a prison is only a question of who holds the keys."
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November 09, 2014, 10:22:33 AM
 #16307

Here is the MM  link
http://bitcoin.stackexchange.com/a/1288/3125
K
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November 09, 2014, 10:29:27 AM
 #16308

not only are all sorts of altcoin Sidescams going to bolt themselves onto the Bitcoin MC as shown by Truthcoin but as odalv has shown even Silk Road 4.0. How do you explain that to the Feds?  

Why do you think Truthcoin is a scam? I would love to see a decentralized prediction market.

Thank you for making my point! You are  exactly what I was  looking for. A living example of someone who would be willing to trade scBTC for Truthcoin!  And they said it won't happen  Roll Eyes

Answer:  it might not be a scam!  But if successful it will be inflationary to the Bitcoin system. And if inflationary to the system it will eventually destroy Bitcoin according  to the great link I put up earlier about merge mining.

I'm glad I could help! Wink But I don't think Truthcoin has to operate as a sidechain.

I missed the link but will look through your post history to find it. We certainly don't want any inflation in BTC. But I don't think any other digital currency really has a chance (perhaps an anonymous one).

It doesn't matter what you think. What matters is that guy thinks Truthcoin needs to be marketed as a SC. And why not? He can logarithmically increase the level of his advertising claims. All altcoin devs are jumping for joy right now as they can't believe their good fortune that there main competition is going to let them directly into the house next to its core engine business model.
keystroke
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November 09, 2014, 10:30:17 AM
 #16309

That's funny, I was reading that page before but only for technical details and didn't read the end of that post.

In that case, wouldn't miners just decide not to merge mine those coins?

"The difference between a castle and a prison is only a question of who holds the keys."
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November 09, 2014, 10:34:52 AM
 #16310

That's funny, I was reading that page before but only for technical details and didn't read the end of that post.

In that case, wouldn't miners just decide not to merge mine those coins?

No, they can be expected to mm Truthcoin for block rewards and tx fees related to scBTC and Truthcoin out of greed.
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November 09, 2014, 10:40:35 AM
 #16311

That's funny, I was reading that page before but only for technical details and didn't read the end of that post.

In that case, wouldn't miners just decide not to merge mine those coins?

No, they can be expected to mm Truthcoin for block rewards and tx fees related to scBTC and Truthcoin out of greed.

But not long term greed if it would destroy btc. Also mm leave a coin open to attack like when Luke Jr. killed Coiledcoin. So the coin could be killed in the early days due to a 51%.

"The difference between a castle and a prison is only a question of who holds the keys."
cypherdoc
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November 09, 2014, 10:52:24 AM
 #16312

That's funny, I was reading that page before but only for technical details and didn't read the end of that post.

In that case, wouldn't miners just decide not to merge mine those coins?

No, they can be expected to mm Truthcoin for block rewards and tx fees related to scBTC and Truthcoin out of greed.

But not long term greed if it would destroy btc. Also mm leave a coin open to attack like when Luke Jr. killed Coiledcoin. So the coin could be killed in the early days due to a 51%.

First off you can expect all the current unprofitable miners to defect to Truthcoin to speculate on success and as early adopters. Add to that those willing to MM. So there's that danger.

But I agree it is susceptible to attack. But then so are these utility SC's without an altcoin being touted for the use of faster tx or anonymity. In that case, why sidechain at all?
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November 09, 2014, 11:01:18 AM
 #16313

Oh the other thing about a  luke jr attack is that he'd be destroying fellow Bitcoiners  like yourself so politically it would be harder to do.  At the same time though much more profitable as he could steal scBTC.
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November 09, 2014, 11:37:23 AM
 #16314

That's funny, I was reading that page before but only for technical details and didn't read the end of that post.

In that case, wouldn't miners just decide not to merge mine those coins?

No, they can be expected to mm Truthcoin for block rewards and tx fees related to scBTC and Truthcoin out of greed.

But not long term greed if it would destroy btc. Also mm leave a coin open to attack like when Luke Jr. killed Coiledcoin. So the coin could be killed in the early days due to a 51%.

The other reason they might mm or direct mine Truthcoin is out of ignorance. Not everyone has got this figured out you know. Just look at the disagreements we"re having here on what's happening. 
Erdogan
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November 09, 2014, 12:55:32 PM
 #16315

Anyway, when the bitcoin address is created, the unlocking code (the secret key) has to be created by a single machine with a single owner before it is hidden or split and distributed. So the question is: Is it possible to do this and at the same time prove that the original unlocking code (the secret key) is not known by anyone? Is it possible to prove that a secret exists, and that secret can be revealed, but the secret is not known by anyone?

I'm not a crypto expert, but I think this can be done and no: the private key doesn't need to be constructed on a single machine. I think its possible to generate n public/private key pairs pub_i/priv_i (i 1..n) and then use some operation on the public keys to produce pub_aggragated the matching private key of which (priv_aggregated) can in the future be constructed exactly if all individual priv_i keys are known.


You are possibly right, but even so, the group of n will be in possession, not the current sidecoin holder.

 

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November 09, 2014, 01:01:44 PM
 #16316

Lol'ed at your tl;dr

Let's assume the 20 page maths proof proves it can be done. Now is it a good idea to change the Bitcoin protocol to make this happen, what are the risks if any.

I see a few long-term outcomes:
First is Bitcoin is largely safe so long as there is a high block reward.
Competition for transaction fees on other chains  will come at the cost of security leaving the higher cost networks vulnerable to attack.
Unless we see growth outside the Bitcoin network, this would be like monetary inflation, as high value SC networks grow sucking up Bitcoin. (Also environmental impact of mining could be an issue if a dogecoin type scenario attracts BTC.)

The above assumes that SC don't have a corruption failure where BTC becomes "decapitated", or or malfeasance where Bitcoin takes the blame for a protocol error instead of say an entity like MtGox.

Other than the above SC all good.

I had to go back to the paper to assess the volume offline math, and I find far less than 20 pages of math. To be honest, I find the paper to describe history, some vision, using bad terms, bad economics. Basically, it could be written by the tailors in the story about the low confidence emperor and his new habit. What I found somewhat useful, is the idea of the atomic swap. You might think I am arrogant by saying this, but according to my mom I am quite bright, and I could easily understand the brilliance of the bitcoin whitepaper, but not this.

FWIW Smiley my Mom also thought I was quite bright. Looking at Odalv post I assume it's possible, I was just reviewing some of the macro economic risks, and trying to understand if SC are a good idea or not, on a technical level it's a notable achievement. In reality I'd rather see some other trust free multisig solutions to the problems SC solve.

To sprinkle some salt in the wounds (since I have not yet been counter-attacked  Smiley ), it reminds me of the early days of computing, where folks thought that anything was possible (we just need to have the data in machine readable form, then we can do magic). The system lacks fundamentals, words are badly defined, imagination is unrestricted... to the moon. It is the general problem solver once again http://ai-su13.artifice.cc/gps.html.

Really, a more specific system has to be described, before it is possible to consider the viability of it. An please, inventors, cut the crap write about the essence.

 

I'm not sure I'm understanding you or we even have opposing views, as far as the essence of the code is conserved I'm not experienced enough to evaluate it, but rather I'd like to asses what are likely outcomes if it's implemented, of concern would be the unfavorable ones. Non the less yes this looks like Pandora's box, and lacking the context for your GPS reference, I'd say to a hammer every problem looks like a nail, and programmers are going to program, and investor...

Still there are many nefarious SC scams that could be used to garner trust or adoption, obviously theses are in my view infinite but if one understand the essence one may be able to avoid them, I just what to know where that leaves me.

We are not in opposition, I have focused lately on the technical viability, I am also skeptical to the economic viability. Mining rewards, or the economics of holding up the system itself, is also not clear, they basically say that they are free to do anything, therefore a solution can be found.

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November 09, 2014, 02:02:17 PM
 #16317

The economics of pegging, again. With Singapore dollars, which is a successful peg to fiat, there is a reserve bank with sufficient reserves to hold the peg. It is pegged to an unknown basket of neighboring countries' fiat, but that is no fundamental difference. The point is that it is not full reserve. If they run out of reserves, they have to tax their people and destroy some Singapore dollars, which may or may not work (it would interfere with the spoils system). The sidecoin peg is supposed to be guaranteed, which means it has to be full reserve. There has to exist a parked bitcoin for every sidecoin. For Singapore, that does not make sense. The point of having a Singapore dollar, is to exploit the seigniorage that would otherwise go to the country to which their money is pegged. With a national currency, they can take their share of the inflation tax. I suppose you could say that that is fair. If they need to desperately salvage the peg with extra taxes to reduce the money supply, it is because they printed to much, so that can also be considered fair. With bitcoin there is no seigniorage, the cost of producing the money equals the value of the money, and there is no seignor, and therefore noone to push for the sidecoins existance.

The liquidity is the ease with which you can part with your money. In the conversion from sidecoin to bitcoin, even if it is full reserve, there will be some resistance, some has talked about a delay of 2 days. It has to be at least the sum of the confirmation times of each chain. Therefore the sidecoins will have some less liquidity (it goes both ways, but since bitcoin starts out with the best liquidity, it is a problem for the sidecoin). The result is that the sidecoin usage can reach some level due to added functionality, but the lower liquidity, which should normally give it a lower value, will, with the pegging presumption, give it a lower usage. Some sidecoins will exist because they are practical, but they will not take off.


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November 09, 2014, 02:23:59 PM
 #16318

10 USD jump, just after my sidechain thrashing, now I know how it feels to be Haruhiko Kuroda.
 Smiley

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November 09, 2014, 02:25:24 PM
 #16319

Érdogan, for purposes of discussion, "sidecoin"  should mean altcoin produced de novo by SC. scBTC should mean what's created from BTC via the 2wp.
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November 09, 2014, 02:29:31 PM
 #16320

10 USD jump, just after my sidechain thrashing, now I know how it feels to be Haruhiko Kuroda.
 Smiley

That's because you haven't been assigned a shadow defender. You're wide open to shoot the 3's. Wink
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