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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2014250 times)
Odalv
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November 17, 2014, 08:47:38 PM
 #17281

This is a very interesting theoretical question: "where is the value stored for a sidechain?"  

blah blah blah

Wow, you can describe all that in one line:  The price change will be proportional to the flow derivative.  

In other words, if BTC was moving (and would have continued to move) into the sidechain, the SC price when "broken" will rise.  If BTC is moving out of the sidechain the price will fall.


What you said above doesn't give any value to convertibility.  Like NewLiberty said, the value for scBTC is:

   value = convertibility + utility/network effect.

If you permanently break the peg (convertibility), the value of scBTC will immediately drop (at least in Cases 1 and 2), regardless of the direction of the flow.  


I feel convertibility (2wp works) same as if you did not break ECDSA then convertibility works. (sorry, I'm not natural speaker)
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Erdogan
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November 17, 2014, 08:54:43 PM
 #17282

Of course none of the elemental properties of gold were changed to create gold "side chains" and that is why we should go the federated route with bitcoin.

i think this is where we agree; if we are going to use SC's at all.  of course, there's always OT as well.

Yes.  If it ain't broke, don't fix it.

Bingo!  we have a Winner!

If you look at Peter R's three scenarios and my comments (I hoped someone else would point this out...) there is not really that much difference between sidechains and altcoins. The sidechains' promoters just want to get a flying start. In my opinion, they won't. The economics does not support it.



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November 17, 2014, 08:57:16 PM
 #17283

Of course none of the elemental properties of gold were changed to create gold "side chains" and that is why we should go the federated route with bitcoin.

i think this is where we agree; if we are going to use SC's at all.  of course, there's always OT as well.

Yes.  If it ain't broke, don't fix it.

Bingo!  we have a Winner!

If you look at Peter R's three scenarios and my comments (I hoped someone else would point this out...) there is not really that much difference between sidechains and altcoins. The sidechains' promoters just want to get a flying start. In my opinion, they won't. The economics does not support it.




i think you may be right.  see this convo i had with MrMadden on Reddit:

http://www.reddit.com/r/Bitcoin/comments/2m6r10/forget_currency_bitcoin_tech_could_disrupt/cm44rfd?context=10000
brg444
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November 17, 2014, 09:10:13 PM
 #17284

but sidechains are not competitors  Huh
The same value can not be held simultaneously in the main chain and in a side chain.

But the value of the sidechain is derived from the mainchain and so the scarcity and ledger is respected.
This is a dud answer that illustrates a lack of understanding. Value is subjective one only makes value judgments, one choose to where value is greatest. It's not just scarcity that makes Bitcoin valuable, we know this because equal Altcoins with the same features can have no value.

It's the network that is created by incentive structure that creates bitcoins value. SideChain change the incentive structure.

In your ignorance you agree but you don't prove that one can create economic energy from nothing you assume that to be true. The value that is Bitcoin isn't about to die (it's FUD to say SC "are the last hope"), it's dependent on it's existing incentive structure to grow, investment in infrastructure or wealth.

 Roll Eyes

The point, if you were really too dense to get it, is that sidechains do not create or support value until value is transferred to them from the mainchain.

It seems you also did not process my "scarcity" comment.. Oh well...

I have argued that sidechain potentially improve the miners incentive and secure it in the future. You have conveniently chose not to adress any of these argument and so until then it seems a bit disingenous for you to continue parading the same concern.

it's dependent on it's existing incentive structure to grow

And that is exactly the proposition made by sidechains


"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 17, 2014, 09:11:54 PM
 #17285

RUT turning down again.  Dow and Transports peaking out in a Megaphone?

Erdogan
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November 17, 2014, 09:18:46 PM
 #17286

The significance of the peg on the volume of scBTC: I really think it is important to rub it in.

Two real life examples:

If you peg something higher than its natural market value, you get a situation like the one with the cars on Cuba (you don't get them).

If you peg something lower than its natural market value, you get a situation like the one with gasoline in Venezuela, where everybody use gas guzzling cars (tendency to transform money to gasoline) and smuggling to the neighbour country.

Again, with money: When you peg the peso to a higher value (compared to its natural value which is the dolar blue rate), everybody wants to transform their pesos (the scBTC) to dollars (the BTC) (they can't transform all, because of currency controls, but they would if they could).

With a peg that is higher than the natural price, which necessarily is the situation with scBTC at kickoff, they will have a hard time intializing the sidechain. I don't think sidechain promoters understand this.




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November 17, 2014, 09:22:55 PM
 #17287

whenever we get proposals to "fix Bitcoin" as we are currently getting with SC's, it's often helpful to step back to before the proposal to help reassess where we actually.  below is a talk by Daniel Krawiscz, whose views very much correspond to mine.  listen carefully and realize everything is just fine and there is nothing to panic about by making rash changes to the protocol.  other points that struck me in this talk are:

https://www.youtube.com/watch?v=iKRH_zxpdjM

1.  OT appears to be a better federated system in that it doesn't require another currency and doesn't require an spvp change to the protocol which would "siphon off" BTC value from its blockchain.

 Huh

That's your usual federated server model right there. A "better" one? Conventional federated sidechains do not require another currency or spvp change to the protocol.

I'm not sure what your point is

2.  he, and Balaji Srinivasan here, https://www.youtube.com/watch?v=cOubCHLXT6A, both advocate "exiting the system" principles if you are dissatisfied with your current existing fiat system.  exiting the current system implies that there is another new and secure system to which you can flee which will protect you.  since this is high risk, this system would have to be a Self Contained Financial System that is secure, reliable, and firewalled off from outside intervention.  ideally, it would be a public good, not subject to improprieties or vested interests that might be motivated to "profit" off said system.  this system, as it currently and already stands, is Bitcoin.  its transactional units are inextricably linked to its blockchain for maximum impenetrable security.

Sidechains are within Bitcoin's "self contained financial system".

3.  i think the reason you're hearing such common calls for the "blockchain" as distinct and removed from its "currency unit" is b/c the outside public intuitively realizes that if left as is, Bitcoin fundamentally disrupts the current fiat system.  they can conceptually "understand" a blockchain as new "tech" while rejecting the currency unit.  it also allows them to continue to "resist" buying a seat at the table by using cold hard cash or trading something of great value for BTC.  if you can subvert the system by changing the rules, ie the protocol, to break the inextricable link, then you can "attract" value out of the Bitcoin system and convert or transform that value into all manner of inflationary, speculative assets.  this is what the spvp or 2wp does.  we don't want that.

You don't need sidechains to do so. Value in Bitcoin can be attracted to all kind of inflationary schemes as is.

i view the spvp as a breach in that system, like a leaky valve or offramp thru which real value can be siphoned off and transformed into all manner of speculative assets.  this is a problem.  guys like brg444 have already shown their cards that Bitcoin "is broken" and if you just insert this "funnel" or 2wp (spvp) into the walls of what now is an impenetrable system, it will make it "better".  i think this is fundamentally wrong and is a major flaw in the Blockstream WP.  the mere insertion of this funnel will break Bitcoin's Sound Money principles as it allows an offramp into all manner of insecure, alternative ledger systems (fake blockchains).  if we can know ahead of time that it "might" be a problem, why insert it?  it's not enough to say, "let's just let them put it in and see what happens".  if they're wrong, and i am right, it will destroy the system as it erodes confidence that we indeed have a secure firewalled off Bitcoin not subject to for-profit opportunities and structural weakness.

You still don't get it.... SPVP does NOT introduce the off ramp. SPVP is a proof verification mechanism. Federated model sidechains can be created without SPVP and act as the SAME "leaky valve of offramp thru which real value can be siphoned off". So consider that your "problem" exists already.


"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 17, 2014, 09:26:57 PM
 #17288

you want these guys to "buy in" to the Bitcoin system buy purchasing BTC units which they can then use for their own purposes.  you don't want them to "siphon" value out of Bitcoin by breaking its Sound Money principles by breaking the link btwn the currency unit and its blockchain.

i know you know this but i'm just clarifying how i see these developments.

 Roll Eyes

You never fail to surprise me with your stupidity.

Venture Capitalists do not exist to make speculative bets on assets/commodity/money.

They exist for the sole reason of developing businesses and infrastructure. You can be quite certain they ARE investing in Bitcoin through their personal portfolio. Their job is not to do it through their clients' investment.

The Sound Money principles of Bitcoin are broken as is by the existence of federated sidechains. Value can be siphonned through these off ramps any moment one is created.

Sold your Bitcoins yet?

"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 17, 2014, 09:30:03 PM
 #17289

an analogy to the self contained financial system that i envision with Bitcoin is gold.

there is a finite amount of gold circulating throughout the world.  it's stored, it's used, it's supply is theoretically immutable.  none of it gets "transformed" to other speculative assets at any time.  and for 5000 yrs it served as the basis for a sound money system.  

by promoting the transformation of BTC units over to "different less secure ledgers" which now seems to be accepted here by even brg444, how is Bitcoins Sound Money function sustained?

You are promoting the transfer of BTC units to even less secured, more centralized ledger that are infinitely more suspect to inflating the users' value.

How does THIS support Bitcoins' Sound Money function?

You analogy to gold is quite ridiculous I should say. "None of it gets transformed to other speculative assets at any time" Are you kidding me? Did you forget maybe about the existence of gold-backed paper currency !?

"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 17, 2014, 09:30:11 PM
 #17290

TC is a pathetic example and an obvious scam that will attract so much suckers before it gets exposed.

TC in this statement is TruthCoin.

brg444 This guy has a much better take on what SC are than you.
He understand the mining incentives that make Bitcoin, the only scam he's pulling is capitalizing on the inflation effect offered by the idea of SC's, someone who gets mining like this and looks for a win win without addressing the effect the proposed protocol change will have on mining incentives is a businessman, he isn't the scanner you think he is. We'll see thousand of these   Wink

brg444 read the article you may learn something please address all criticism on the appropriate blog, feel free to invite my input over there if you like.

http://www.truthcoin.info/blog/pow-and-mining/


burterins arguments against the paper:

https://www.reddit.com/user/vbuterin



your link is now confusing because of new comments in other threads he wrote.

here's his main rebuttal: https://www.reddit.com/r/Bitcoin/comments/2miytv/long_live_proofofwork_long_live_mining/cm4tr3f

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brg444
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November 17, 2014, 09:31:41 PM
 #17291

bang on. also explains the long bull market, metaphorically, VC,s will get to a stage like early mining, at some point its better to invest in BTC than it is to try and make earn it.
the idea isn't to disrupt the economy, its to disrupt the financial system used to run the economy.

Bitcoin is a risk distribution virus, more powerful than any biological weapon, it assimilates and leave a working economy in its wake, all we have to do is protect the DNA that makes it work, punting economic energy into Bitcoin is how it grows.  

VCs will never resort to solely buying BTC. This is an asinine proposition which defeats the whole purpose of their existence.


"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 17, 2014, 09:33:03 PM
 #17292

bang on. also explains the long bull market, metaphorically, VC,s will get to a stage like early mining, at some point its better to invest in BTC than it is to try and make earn it.
the idea isn't to disrupt the economy, its to disrupt the financial system used to run the economy.

Bitcoin is a risk distribution virus, more powerful than any biological weapon, it assimilates and leave a working economy in its wake, all we have to do is protect the DNA that makes it work, punting economic energy into Bitcoin is how it grows.  

VCs will never resort to solely buying BTC. This is an asinine proposition which defeats the whole purpose of their existence.

Tim Draper would be surprised to learn this.
http://www.coindesk.com/tim-draper-revealed-silk-road-bitcoin-auction-winner/

FREE MONEY1 Bitcoin for Silver and Gold NewLibertyDollar.com and now BITCOIN SPECIE (silver 1 ozt) shows value by QR
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brg444
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November 17, 2014, 09:41:53 PM
 #17293

The same value can not be held simultaneously in the main chain and in a side chain.

But the value of the sidechain is derived from the mainchain and so the scarcity and ledger is respected.

Once again, the purpose of this thought experiment was not to propose "realistic scenarios"; the purpose was to help answer the question "on which ledger is the value stored?"  I think the answer is that for low-levels of adoption, the value remains stored on Bitcoin's Blockchain.  But as the network effect of the sidechain grows, a larger component of the value is actually stored on the sidechain's ledger.  


That is correct, but this value only exist because it was derived off the Bitcoin mainchain.

I think the concern is : does this value sitting on other chains respect Bitcoin's ledger and the answer is in the most probable cases it does.

Convertibility then is the feature by which all of this value sitting on different chains is compounded. Of course if the peg is removed than the value on any of the detached sidechain is cutoff from the ecosystem.

Is that a problem? It is, but not one that sidechain introduce. There exist plenty of off-chain schemes already that are in fact more probable to corrupt the value assigned to them, IMO. Sidechains that are properly implemented will protect the value assigned outside the mainchain on the procol level.


"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 17, 2014, 09:41:59 PM
 #17294

Of course none of the elemental properties of gold were changed to create gold "side chains" and that is why we should go the federated route with bitcoin.

i think this is where we agree; if we are going to use SC's at all.  of course, there's always OT as well.

Yes.  If it ain't broke, don't fix it.

Bingo!  we have a Winner!

If you look at Peter R's three scenarios and my comments (I hoped someone else would point this out...) there is not really that much difference between sidechains and altcoins. The sidechains' promoters just want to get a flying start. In my opinion, they won't. The economics does not support it.

But Keynesian Economists might.

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brg444
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November 17, 2014, 09:43:54 PM
 #17295

bang on. also explains the long bull market, metaphorically, VC,s will get to a stage like early mining, at some point its better to invest in BTC than it is to try and make earn it.
the idea isn't to disrupt the economy, its to disrupt the financial system used to run the economy.

Bitcoin is a risk distribution virus, more powerful than any biological weapon, it assimilates and leave a working economy in its wake, all we have to do is protect the DNA that makes it work, punting economic energy into Bitcoin is how it grows.  

VCs will never resort to solely buying BTC. This is an asinine proposition which defeats the whole purpose of their existence.

Tim Draper would be surprised to learn this.
http://www.coindesk.com/tim-draper-revealed-silk-road-bitcoin-auction-winner/

Would you like me to list the Bitcoin companies in which Draper is invested? The keyword here is solely.

The Draper example is even more stupid in itself considering he has said these Bitcoins will be used to bootstrap liquidity into Vaurum/Mirror.

You are better than 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 17, 2014, 09:45:16 PM
 #17296

If Side Chains were wholly good, they would need no promotion.
The fact that there are more nuanced advantages and disadvantages for Bitcoin by their existence justifies promotion expense, despite the promoters efforts to deny the disadvantages, that is why the promoters exist.

FREE MONEY1 Bitcoin for Silver and Gold NewLibertyDollar.com and now BITCOIN SPECIE (silver 1 ozt) shows value by QR
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November 17, 2014, 09:46:20 PM
 #17297

Of course none of the elemental properties of gold were changed to create gold "side chains" and that is why we should go the federated route with bitcoin.

i think this is where we agree; if we are going to use SC's at all.  of course, there's always OT as well.

Yes.  If it ain't broke, don't fix it.

Bingo!  we have a Winner!

If you look at Peter R's three scenarios and my comments (I hoped someone else would point this out...) there is not really that much difference between sidechains and altcoins. The sidechains' promoters just want to get a flying start. In my opinion, they won't. The economics does not support it.

But Keynesian Economists might.

Hehe, we don't count on those guys, they are "out".


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November 17, 2014, 09:48:02 PM
 #17298

bang on. also explains the long bull market, metaphorically, VC,s will get to a stage like early mining, at some point its better to invest in BTC than it is to try and make earn it.
the idea isn't to disrupt the economy, its to disrupt the financial system used to run the economy.

Bitcoin is a risk distribution virus, more powerful than any biological weapon, it assimilates and leave a working economy in its wake, all we have to do is protect the DNA that makes it work, punting economic energy into Bitcoin is how it grows.  

VCs will never resort to solely buying BTC. This is an asinine proposition which defeats the whole purpose of their existence.

Tim Draper would be surprised to learn this.
http://www.coindesk.com/tim-draper-revealed-silk-road-bitcoin-auction-winner/

Would you like me to list the Bitcoin companies in which Draper is invested? The keyword here is solely.

The Draper example is even more stupid in itself considering he has said these Bitcoins will be used to bootstrap liquidity into Vaurum/Mirror.

You are better than that....

Why not simply "define away" the existence of VCs that solely buy BTC by just not including them in your definition of VC...  or that they aren't VC until they also create a Bitcoin company even though they bought BTC before creating such a company?

Its tautological that way, and you can avoid not knowing about the VCs that have just bought BTC and don't have any Bitcoin company planned.
Otherwise a single example invalidates your claim that it "never" happens.

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November 17, 2014, 09:48:12 PM
 #17299

Its sad but true that I think OT never really took off because it couldn't be used as a get rich scheme or P&D Sad The OT client for grandma offered what a 500btc bounty or something crazy? But noone ever did it and I don't think those bounty awarders are still around to offer that kinda money for the nice client... otherwise I'd prob take a stab at it.
i think its going strong, its the best solution not a failed one.
The reason you're not hearing much about OT is that Monetas is spending a lot of time working on voting pools, which are a hard problem to solve and also a backend technology.

When exchanges start using voting pools to handle customer deposits, there will be a great many OT users who won't even realize they're using it.

That's right... I had almost forgot you are quite invested in a technology that is directly endangered by sidechains.

Your quick drivebys are more easily explained now.

I'd say you should not worry so much and embrace sidechains. It looks to me like OT is one kind of federated model which will find its place for certain use cases.

"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 17, 2014, 09:48:28 PM
 #17300

You never fail to surprise me with your stupidity.

the conversation was quite pleasant for a while, but the tone just dropped again.  oh well,

its a race to 10,000 pages this thread has been growing faster then the wall observer lets see if we can pack out another 200 pages.

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