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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1955677 times)
brg444
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November 09, 2014, 07:20:11 PM
 #16361

this was one of your most sensible post and it seems you have come around to some my line of thinking. there are some things I take exception with though...

Somewhat, if value is created on a SC that is greater than that of Bitcoin the Bitcoin stays there.

It is not that the value is greater but merely different. Sidechains serve a different utility than BTC. Some might value convenience more (SC), others prefer security & liquidity (BTC).

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.

I'm glad you are able to come to that conclusion as well. Some it appears are to shortsighted to believe this could happen.

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.

I'm having some problem with that train of thought. First, it seems to me that the increase in value is not originated on the SC. Some will suggest that scBTC are traded on exchange but I don't find that to be convenient for users. Who would buy a premium scBTC on exchange when you can buy a regular BTC and convert it 1:1? Therefore, it is BTC's value that increases because of users finding value in the attached SCs.

Having said that, I'm not sure about the jump you're making about Bitcoin "sacrificing profits" and miners subsequently leaving the network less secure. Maybe you can expand on that?

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.

Agree with most of that

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.

As stated above, I disagree with that logic. Bitcoin is the source of the growth because Bitcoin is the underlying monetary unit. Users will buy BTC to participate in this economy and access the different SCs. Bitcoin is never "dragged up".

"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 09, 2014, 07:23:08 PM
 #16362

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? 

I sincerely hope this was a joke. A very bad one at that.

"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 09, 2014, 07:30:17 PM
 #16363

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?  

I sincerely hope this was a joke. A very bad one at that.

again, no substance or imagination from you!:

You can also create SilkRoad 3.0 SC.

Edit:
Web site will be only used to keep offers. (it will not hold pKyes).
This SC can use Cryptonote 2.0 protocol(as Monero uses) and decentralized miners will provide 2wp.

Edit2:
Architecture

<bitcoin>
  <crypto-noteSC> - decentralized network  btc <-1:1 2wp-> scBTC
         <scBTC - asset>
         <scDrug - asset>
        <silkRoadSC-1 /> - hidden centralized server -1 same as Merger
        <silkRoadSC-2 /> - new hidden centralized server if #1 fails
   </crypto-noteSC>
</bitcoin>
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November 09, 2014, 08:15:22 PM
 #16364

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?  

I sincerely hope this was a joke. A very bad one at that.

again, no substance or imagination from you!:

You can also create SilkRoad 3.0 SC.

Edit:
Web site will be only used to keep offers. (it will not hold pKyes).
This SC can use Cryptonote 2.0 protocol(as Monero uses) and decentralized miners will provide 2wp.

Edit2:
Architecture

<bitcoin>
  <crypto-noteSC> - decentralized network  btc <-1:1 2wp-> scBTC
         <scBTC - asset>
         <scDrug - asset>
        <silkRoadSC-1 /> - hidden centralized server -1 same as Merger
        <silkRoadSC-2 /> - new hidden centralized server if #1 fails
   </crypto-noteSC>
</bitcoin>

From sidechain.pdf

Quote
A suitably extended scripting system and an asset-aware transaction format would allow the
creation of useful transactions from well-audited components, such as the merger of a bid and
an ask to form an exchange transaction, enabling the creation of completely trustless peer-to-peer
marketplaces for asset exchange and more complex contracts such as trustless options[FT13]. These
contracts could, for example, help reduce the volatility of bitcoin itself.
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November 09, 2014, 08:18:56 PM
 #16365

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?  

I sincerely hope this was a joke. A very bad one at that.

again, no substance or imagination from you!:

You can also create SilkRoad 3.0 SC.

Edit:
Web site will be only used to keep offers. (it will not hold pKyes).
This SC can use Cryptonote 2.0 protocol(as Monero uses) and decentralized miners will provide 2wp.

Edit2:
Architecture

<bitcoin>
  <crypto-noteSC> - decentralized network  btc <-1:1 2wp-> scBTC
         <scBTC - asset>
         <scDrug - asset>
        <silkRoadSC-1 /> - hidden centralized server -1 same as Merger
        <silkRoadSC-2 /> - new hidden centralized server if #1 fails
   </crypto-noteSC>
</bitcoin>

From sidechain.pdf

Quote
A suitably extended scripting system and an asset-aware transaction format would allow the
creation of useful transactions from well-audited components, such as the merger of a bid and
an ask to form an exchange transaction, enabling the creation of completely trustless peer-to-peer
marketplaces for asset exchange and more complex contracts such as trustless options[FT13]. These
contracts could, for example, help reduce the volatility of bitcoin itself.

no one's doubting you except for unimaginative, narrow minded, pidgeon-holed shills around here who think only non-speculative up & up businesses will be exploiting SC's.
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November 09, 2014, 08:19:34 PM
 #16366

It may be time to throw a new another risk into the mix for consideration.
An economic attack.  Lets call this one the side coin peg in a fiat hole.

If there is a peg and scBTC and BTC have the same price in fiat in the minds of people.  What happens when we use altcoin economics for the classic pump scenario.
This is where you use a third asset to do a circular round trip. 

For example:
Say I have 10 BTC and they are worth 100 each, I convert to scBTC, then sell the scBTC for $100USD each, then buy more BTC with the $1000, but there were no sellers so maybe I pay 101 each.  No problem, I will be able to sell the scBTC at 101 now too, so I do it and do this repeatedly.

In this scheme, there will be only BTC buying with the fiat at exchanges.  No BTC is sold to the market.  Only scBTC is sold to the market but people believe the notion of the peg so they pay the same for them as they would for BTC (because after all they can be redeemed for BTC with only a 100 block delay in spend-ability).

Endgame is there are a lot of the scBTC created, reducing BTC liquidity and pumping the BTC fiat price... until it unwinds.

There is no peg.
There is no spoon.

FREE MONEY1 Bitcoin for Silver and Gold NewLibertyDollar.com and now BITCOIN SPECIE (silver 1 ozt) shows value by QR
Bulk premiums as low as .0012 BTC "BETTER, MORE COLLECTIBLE, AND CHEAPER THAN SILVER EAGLES" 1Free of Government
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November 09, 2014, 08:25:24 PM
 #16367

It may be time to throw a new another risk into the mix for consideration.
An economic attack.  Lets call this one the side coin peg in a fiat hole.

If there is a peg and scBTC and BTC have the same price in fiat in the minds of people.  What happens when we use altcoin economics for the classic pump scenario.
This is where you use a third asset to do a circular round trip.  

For example:
Say I have 10 BTC and they are worth 100 each, I convert to scBTC, then sell the scBTC for $100USD each, then buy more BTC with the $1000, but there were no sellers so maybe I pay 101 each.  No problem, I will be able to sell the scBTC at 101 now too, so I do it and do this repeatedly.

In this scheme, there will be only BTC buying with the fiat at exchanges.  No BTC is sold to the market.  Only scBTC is sold to the market but people believe the notion of the peg so they pay the same for them as they would for BTC (because after all they can be redeemed for BTC with only a 100 block delay in spend-ability).

Endgame is there are a lot of the scBTC created, reducing BTC liquidity and pumping the BTC fiat price... until it unwinds.

There is no peg.
There is no spoon.

i've already went thru that one early on in the 200 pgs +.  but i lol'd at the name  Cheesy  reminded me of a billiard shot.

but i here ya and i expect you to be trolled hard as i was for that one.
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November 09, 2014, 08:48:00 PM
 #16368

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 .

I'm sorry but you have sorely misunderstood the gist of the comment in the link you posted. Worse, you mistakingly figured it would support your arguments.

Merged-mining, the way it was described in this comment, is essentally supporting multiple competing currencies : altcoins

Now sidechains, as I hope you have come to understand from our discussions, do not enable altcoins in any significant way.

The primary use case of sidechains is not to bootstrap altcoins on top of them.

In fact, to most of the Blockstream developers (from comments read), this mere notion is absurd. Sidechains were not created to "go to war & destroy" altcoins as you might like to think. In reality, altcoins are simply made irrelevant.

While you seem to have problem with "devs dev-ing" this is what they do : use technology to improve processes. Did the Blockstream guys dislike scammy alts? Of course, everyone does. Did they find important to leverage altcoins' innovation to improve the Bitcoin ecosystem? My opinion is this is the idea here.

Quote
At any given time there is a certain amount of demand for a Bitcoin like currency to make transactions. That need doesn’t increase with more competition. That means that the transactional demand for Bitcoin is really the same as the transactional demand for all substantially similar forms of payment. As more currencies are competing to fill the same demand they actually reduce the demand for the other currencies as they become more widely used.

This theory is blatantly ignorant of network effect. This is another reason why I found it strange for you to pull this one up from the 2012 cementary where it belong.. You do realize this guy is the 2012 version of you Cheesy Essentially, his proposition is that because of merged-mining, Bitcoins' competing currencies will leverage the security of the network and create a race to the bottom for the most "cost-effective" currency.

Well it's been almost 3 years now and there has been no sign of his theory being proven right. Additionally, Bitcoin's network effect has been growing along, making it even less probable.


"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 09, 2014, 08:50:08 PM
 #16369

It may be time to throw a new another risk into the mix for consideration.
An economic attack.  Lets call this one the side coin peg in a fiat hole.

If there is a peg and scBTC and BTC have the same price in fiat in the minds of people.  What happens when we use altcoin economics for the classic pump scenario.
This is where you use a third asset to do a circular round trip.  

For example:
Say I have 10 BTC and they are worth 100 each, I convert to scBTC, then sell the scBTC for $100USD each, then buy more BTC with the $1000, but there were no sellers so maybe I pay 101 each.  No problem, I will be able to sell the scBTC at 101 now too, so I do it and do this repeatedly.

In this scheme, there will be only BTC buying with the fiat at exchanges.  No BTC is sold to the market.  Only scBTC is sold to the market but people believe the notion of the peg so they pay the same for them as they would for BTC (because after all they can be redeemed for BTC with only a 100 block delay in spend-ability).

Endgame is there are a lot of the scBTC created, reducing BTC liquidity and pumping the BTC fiat price... until it unwinds.

There is no peg.
There is no spoon.

i've already went thru that one early on in the 200 pgs +.  but i lol'd at the name  Cheesy  reminded me of a billiard shot.

but i here ya and i expect you to be trolled hard as i was for that one.

I really do not know what is rationale of this debate.
1) SCs exist
2) SC will exist
SC is not somehing new or something what can be destroyed.

Only new thing is a change in Bitcoin protocol.  Support to verify new dynamic-membership multi-party signature (or DMMS) at protocol level.
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November 09, 2014, 08:53:53 PM
 #16370

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?  

I sincerely hope this was a joke. A very bad one at that.

again, no substance or imagination from you:

Again you show your lack of depth  Cheesy

My comment was not about the feasibility of this scheme.

It was simply an observation of the stupidity of such a remark. Classic desperate and disingenous proclamation on your part.

When has Bitcoin ever had to explain itself "to the Fed"? How do you suggest that happen?

"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 09, 2014, 09:28:27 PM
 #16371

In this scheme, there will be only BTC buying with the fiat at exchanges.  No BTC is sold to the market.  Only scBTC is sold to the market but people believe the notion of the peg so they pay the same for them as they would for BTC (because after all they can be redeemed for BTC with only a 100 block delay in spend-ability).

Endgame is there are a lot of the scBTC created, reducing BTC liquidity and pumping the BTC fiat price... until it unwinds.

There is no peg.
There is no spoon.

Here is what I believe to be the flaw in your scenario :

If, as you say, people believe in the peg (which they absolutely should) then they will not buy your scBTC. In reality, the market has no incentive to purchase your scBTC over BTC if they are the same price.  

The reason for this? Well you have suggested it yourself : the "block delay in spend-ability". What makes the best money? The most cost effective and versatile exchangeable asset. BTC is more easily exchangeable with fiat (because of liquidity) and other scBTCs than scBTC is and is also more cost-effective at doing so. No matter the 1:1 fiat peg, BTC is a more desirable unit than scBTC. BTC has better fungibility and liquidity in the economy than scBTC.


"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 09, 2014, 09:46:50 PM
 #16372

Endgame is there are a lot of the scBTC created, reducing BTC liquidity and pumping the BTC fiat price... until it unwinds.

You're getting warm.

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November 09, 2014, 09:47:36 PM
 #16373

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

That scheme has been available to altcoins every since the introduction of merged-mining.


"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 09, 2014, 09:49:10 PM
 #16374

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?


I suggest you read Adrian's very good post that indicate valuable utility SC will be MM at possibly the same hashing power than BTC.

"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 09, 2014, 09:50:00 PM
 #16375

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. 

 Roll Eyes

How many altcoins are MM "out of ignorance"?

"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 09, 2014, 09:54:30 PM
 #16376

In this scheme, there will be only BTC buying with the fiat at exchanges.  No BTC is sold to the market.  Only scBTC is sold to the market but people believe the notion of the peg so they pay the same for them as they would for BTC (because after all they can be redeemed for BTC with only a 100 block delay in spend-ability).

Endgame is there are a lot of the scBTC created, reducing BTC liquidity and pumping the BTC fiat price... until it unwinds.

There is no peg.
There is no spoon.

Here is what I believe to be the flaw in your scenario :

If, as you say, people believe in the peg (which they absolutely should) then they will not buy your scBTC. In reality, the market has no incentive to purchase your scBTC over BTC if they are the same price.  

The reason for this? Well you have suggested it yourself : the "block delay in spend-ability". What makes the best money? The most cost effective and versatile exchangeable asset. BTC is more easily exchangeable with fiat (because of liquidity) and other scBTCs than scBTC is and is also more cost-effective at doing so. No matter the 1:1 fiat peg, BTC is a more desirable unit than scBTC. BTC has better fungibility and liquidity in the economy than scBTC.

Here is where you are flatly wrong.  There clearly is an incentive, the time incentive.
To change BTC to scBTC, you will have to wait for 100 blocks or so, whatever the confirmation time may be.
If you buy them at exchange, there is no wait.

This confirmation exchange value is created in both ways in the transaction.  People will pay a premium for time, localbitcoin pricing is evidence enough of this.

FREE MONEY1 Bitcoin for Silver and Gold NewLibertyDollar.com and now BITCOIN SPECIE (silver 1 ozt) shows value by QR
Bulk premiums as low as .0012 BTC "BETTER, MORE COLLECTIBLE, AND CHEAPER THAN SILVER EAGLES" 1Free of Government
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November 09, 2014, 09:59:17 PM
 #16377

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.

This is a very good explanation of why NL's speculative attack is not plausible although I disagree with you end argument that "utility" sidechains cannot take off.

Lower usage (than BTC) does not necessarily translate in no usage at all. That said, this effectively support Adrian's comments that SC with biggest network will discourage use of similarly featured/competing clones.

"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 09, 2014, 09:59:50 PM
 #16378

It may be time to throw a new another risk into the mix for consideration.
An economic attack.  Lets call this one the side coin peg in a fiat hole.

If there is a peg and scBTC and BTC have the same price in fiat in the minds of people.  What happens when we use altcoin economics for the classic pump scenario.
This is where you use a third asset to do a circular round trip.  

For example:
Say I have 10 BTC and they are worth 100 each, I convert to scBTC, then sell the scBTC for $100USD each, then buy more BTC with the $1000, but there were no sellers so maybe I pay 101 each.  No problem, I will be able to sell the scBTC at 101 now too, so I do it and do this repeatedly.

In this scheme, there will be only BTC buying with the fiat at exchanges.  No BTC is sold to the market.  Only scBTC is sold to the market but people believe the notion of the peg so they pay the same for them as they would for BTC (because after all they can be redeemed for BTC with only a 100 block delay in spend-ability).

Endgame is there are a lot of the scBTC created, reducing BTC liquidity and pumping the BTC fiat price... until it unwinds.

There is no peg.
There is no spoon.

i've already went thru that one early on in the 200 pgs +.  but i lol'd at the name  Cheesy  reminded me of a billiard shot.

but i here ya and i expect you to be trolled hard as i was for that one.

True, apologies for taking some of your well deserved heat from this.  Cheesy
I went for the meme-combo of billiards, and square peg round hole to resurrect this one because I didn't think it was adequately resolved.
And the recently revisited topic of the misuse of economic terms in the new whitepaper was brought up.  That is bound to create more confusion than it resolves.

FREE MONEY1 Bitcoin for Silver and Gold NewLibertyDollar.com and now BITCOIN SPECIE (silver 1 ozt) shows value by QR
Bulk premiums as low as .0012 BTC "BETTER, MORE COLLECTIBLE, AND CHEAPER THAN SILVER EAGLES" 1Free of Government
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November 09, 2014, 10:04:42 PM
 #16379

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.

This is a very good explanation of why NL's speculative attack is not plausible although I disagree with you end argument that "utility" sidechains cannot take off.

Lower usage (than BTC) does not necessarily translate in no usage at all. That said, this effectively support Adrian's comments that SC with biggest network will discourage use of similarly featured/competing clones.

This is rather a good explanation of what makes it plausible instead of not plausible.
The time has market value, confirmed scBTC are worth more than the newly created ones awaiting confirmation.
If I want to get scBTC right away without having to wait for confirmations, I could get them through exchange rather than SPV conversion, and could expect to pay some small premium for that.

FREE MONEY1 Bitcoin for Silver and Gold NewLibertyDollar.com and now BITCOIN SPECIE (silver 1 ozt) shows value by QR
Bulk premiums as low as .0012 BTC "BETTER, MORE COLLECTIBLE, AND CHEAPER THAN SILVER EAGLES" 1Free of Government
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November 09, 2014, 10:07:24 PM
 #16380

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 .

I'm sorry but you have sorely misunderstood the gist of the comment in the link you posted. Worse, you mistakingly figured it would support your arguments.

lol, you love to try and say i'm wrong even when i'm right; as you admit below, i correctly understood what the guy is saying but since you think he is wrong, somehow i am wrong also simply b/c it disagrees with your view  Roll Eyes  dude, you're fouling me even when i'm nowhere close to receiving a pass! 
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Merged-mining, the way it was described in this comment, is essentally supporting multiple competing currencies : altcoins

Now sidechains, as I hope you have come to understand from our discussions, do not enable altcoins in any significant way.

wrong--->Truthcoin! and its first customer:

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.

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The primary use case of sidechains is not to bootstrap altcoins on top of them.

you won't be able to control this anymore than you already have

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In fact, to most of the Blockstream developers (from comments read), this mere notion is absurd. Sidechains were not created to "go to war & destroy" altcoins as you might like to think. In reality, altcoins are simply made irrelevant.

While you seem to have problem with "devs dev-ing" this is what they do : use technology to improve processes. Did the Blockstream guys dislike scammy alts? Of course, everyone does. Did they find important to leverage altcoins' innovation to improve the Bitcoin ecosystem? My opinion is this is the idea here.

why do we get this from Poelstra?

Seen this yet?

https://download.wpsoftware.net/bitcoin/alts.pdf

Quote from: 'Andrew Poelstra'
Of course, “developing your own cryptosystem” is the purview of only cranks and researchers, so it was reasonably assumed that none of these “altcoins”, as they were called, could ever be plausibly presented for public use.
Boy, were we ever wrong on that one.
...
If you are, or are planning to, develop and release an “altcoin” to the public, this document reminds you that you are playing with fire. This sort of behavior was cute on sci.crypt, a community populated mainly by cryptographic experts where there was no risk that your charlatanism would be mistaken for anything legitimate, and where there was no ability to store value in your scheme anyway.
...
The Bitcoin community differs in both those respects. Your crankery is not cute. You are not a cryptographer, and yet are releasing a homebrew cryptosystem, misrepresenting your own qualifications, and encouraging others to store value in your creation. These actions are incompetent, dishonest and reprehensibly dangerous.

lol.

That's Andrew Poelstra's "A Treatise on Altcoins". He's even harsher than many of us in this thread! He's also listed as an author on the sidechains whitepaper.
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At any given time there is a certain amount of demand for a Bitcoin like currency to make transactions. That need doesn’t increase with more competition. That means that the transactional demand for Bitcoin is really the same as the transactional demand for all substantially similar forms of payment. As more currencies are competing to fill the same demand they actually reduce the demand for the other currencies as they become more widely used.

This theory is blatantly ignorant of network effect. This is another reason why I found it strange for you to pull this one up from the 2012 cementary where it belong.. You do realize this guy is the 2012 version of you Cheesy Essentially, his proposition is that because of merged-mining, Bitcoins' competing currencies will leverage the security of the network and create a race to the bottom for the most "cost-effective" currency.

Well it's been almost 3 years now and there has been no sign of his theory being proven right. Additionally, Bitcoin's network effect has been growing along, making it even less probable.



you just fouled out.

the reason it hasn't happened is b/c the only coin that has been MM'd on top of Bitcoin has been Namecoin out of public service.  so no, the guys conclusions are not wrong or invalidated.  btw, that's dooglus aka Chris Moore, a very talented Bitcoin early adopter who if you take the time to look is a MAJOR contributor #8 in reputation, right up there behind Pieter Wiullie, in total rankings to Bitcoin Stack Exchange and our understanding of what Bitcoin is, so fuck off:

Quote from: dooglus

Basically the idea is that you assemble a Namecoin block and hash it, and then insert that hash into a Bitcoin block. Now when you solve the Bitcoin block at a difficulty level greater to or equal to the Namecoin difficulty level, it will be proof that that amount of work has been done for the Namecoin block. The Namecoin protocol has been altered to accept a Bitcoin block (solved at or above the Namecoin difficulty level) containing a hash of a Namecoin block as proof of work for the Namecoin block. The Bitcoin block will only be acceptable to the Bitcoin network if it is at the difficulty of the Bitcoin network.

The Bitcoin block chain gets a single extra hash when a merged mining block is accepted, and the Namecoin block chain gets a little bit more (because it includes the Bitcoin block) when a merged mining block is accepted. However, because of the Merkle Tree, the entire Bitcoin block doesn’t need to be included in the Namecoin tree, just the top level hashes (so the extra bloat to the Namecoin chain is not a big problem).

Since you make more money mining both Namecoins and Bitcoins miners will eventually all do merged mining, and the difficulty level for all block chains will eventually be the same.

Furthermore, the economic incentive to mine will be the combined economic incentive of all networks, making all networks more secure. Of course this allows competing networks (with different inflation rates) to quickly become secure. This subjects Bitcoin to more competition.

Ultimately the value of Bitcoin is a reflection of the need for Bitcoins to make exchanges. The more people using Bitcoin to make purchases, the more demand there is for Bitcoins, and the higher the price of Bitcoins goes. (Speculation also raises the price, but long term speculation is essentially a bet that the transactional demand for Bitcoin will increase in the future.) The higher the price, the higher the incentive to mine.

At any given time there is a certain amount of demand for a Bitcoin like currency to make transactions. That need doesn’t increase with more competition. That means that the transactional demand for Bitcoin is really the same as the transactional demand for all substantially similar forms of payment. As more currencies are competing to fill the same demand they actually reduce the demand for the other currencies as they become more widely used.

This means that ultimately, to the extent that currencies are interchangeable to end users, merged mining does not increase the overall security of the networks. The demand for currencies drives the price (and thus the value of the reward). Increased demand for any given currency results in decreased demand for others, lowering the incentive to mine for the other currencies. The total incentive is a function of total demand for all Bitcoin like currencies.

Except now competing currencies can market themselves as “as secure as Bitcoin but with lower transaction fees.” In other words there is a race to the bottom among competing currencies to offer the lowest transaction fees, because lowering the transaction fee doesn’t hurt the security of the network in comparison to the other merged mining networks. Users, following their own self interest, will adopt the currency with the lowest transaction fees as long as it has the same security of the competitors.

This will increase the price of the currency with the lowest transaction fee (because demand for the currency is higher), and decrease the price of the currencies with higher transactions fees (because demand for those currencies is dropping as it is being filled by demand for the competing currency). Because the currencies with the higher transaction fees were the ones generating the incentive to mine, overall incentive to mine will diminish. As long as a currency’s mining is merged with the freeloading currency, it will be powerless to increase incentives by imposing mandatory transaction fees.

The result will be a decrease in mining incentive, a decrease in mining, and ultimately all networks that allow merged mining will become insecure.
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