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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2010375 times)
brg444
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November 17, 2014, 09:51:43 PM
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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.

I know of a lot of VCs that have solely bought BTC and not invested in companies yet. One particularity is rarely do they use money from their investors fund to do so. That money, by venture capitalist definition, is to be used to invest in businesses.

The reason for my comment was Adrian seemingly suggest VCs will stop creating and supporting companies and instead concentrate on the purchase of 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 17, 2014, 09:55:24 PM
 #17302

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 don't think SCs endanger OT.  OT can work just fine with Side Chains as well.

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November 17, 2014, 09:58:31 PM
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this is, imo, problematic for BTC holders in #2 and #3.  the realization that BTC value units now have the potential to "leak" from what's supposed to be a self contained firewalled off system will destroy Bitcoins Sound Money function.  right now, i could buy gold and throw it in a safe and never access it for the rest of my life and, in the absence of the Bitcoin alternative, be confident that it would retain its value.  in your demonstrated scenarios above, i could NEVER count on that.  therefore, the natural conclusion is that Bitcoin would NOT be Sound Money.

That is true only considering that the the "peg" is broken.

Peter himself has suggested this is not a realistic scenario.

As long as the peg is working then yes you can absolutely forget about your BTC and if, once you come back to them, the network has decided on using a different then you will be able to claim your 1:1 stake as everyone was.


"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, 10:01:00 PM
 #17304

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 don't think SCs endanger OT.  OT can work just fine with Side Chains as well.

I agree 100%.

Most applications do not necessitate SPVP sidechains level of decentralization. OT are seemingly an interesting federated model which might prove to be superior to other alternatives.

The reason SPVP is proposed is because there are absolutely some (applications/utilities) that necessitate decentralization and reduction of counterparty risk on a level equivalent to 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 17, 2014, 10:05:36 PM
 #17305

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.

I know of a lot of VCs that have solely bought BTC and not invested in companies yet. One particularity is rarely do they use money from their investors fund to do so. That money, by venture capitalist definition, is to be used to invest in businesses.

The reason for my comment was Adrian seemingly suggest VCs will stop creating and supporting companies and instead concentrate on the purchase of BTC.


VC'c could mean Venture Capatalist management Funds and it could also mean Venture Capitalists, I was referring to the later. brg444 a little humilitywould help your communication and the practice of holding 2 contradicting thoughts in your mind at the same time could help find creative solutions to the non existing problems you are so eager to defend.

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November 17, 2014, 10:09:11 PM
 #17306

the whole point that Peter R is trying to make is that with SC's, value gets "shared" btwn MC and all SC's.  with the potential of being "severed" or "fragmented". 

we don't want that with Bitcoin.  we want it ALL on the mainchain.  we want all outsiders to be forced to "buy in" to BTC for their seat at the table.

Peter R has emphasized the potential you suggest is not quite realistic.

There is again a fundamental misunderstanding in your comment. At present, a important amount of value is sitting on exchanges for example and while you would like to argue that these BTCs are on the chain, the point is the value for the user is not. It is detached and in the hands of a counterparty which could easily corrupt it, inflate it, or simply run away with it.

Sidechains does not change the dynamic to enter the economy. Your notion that someone could simply create a sidechain and "siphon" BTC is possible but does NOT grants them a position in the economy per say. Unless they decide to steal their sidechain's users units then they have no control over them. Exchange operators and other controllers of off-chain schemes can access their users funds in the very same way. Sidechains do not introduce that problem

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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November 17, 2014, 10:12:19 PM
 #17307

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.

I know of a lot of VCs that have solely bought BTC and not invested in companies yet. One particularity is rarely do they use money from their investors fund to do so. That money, by venture capitalist definition, is to be used to invest in businesses.

The reason for my comment was Adrian seemingly suggest VCs will stop creating and supporting companies and instead concentrate on the purchase of BTC.


VC'c could mean Venture Capatalist management Funds and it could also mean Venture Capitalists, I was referring to the later. brg444 a little humilitywould help your communication and the practice of holding 2 contradicting thoughts in your mind at the same time could help find creative solutions to the non existing problems you are so eager to defend.

Then what was the point of your comment about VCs?

Do you somehow suggest they are NOT purchasing BTC as part of their personal investment portfolio, right now?

I don't follow the comparison to miners if you are not referring to their management funds. By what scheme do you suggest VCs are currently trying to "earn" BTC and not outright buyingt them?

Quote
the non existing problems you are so eager to defend.

 Roll Eyes the irony

"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, 10:17:46 PM
 #17308

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.
If I was just interested in promoting OT, I'd jump on the sidechain bandwagon because Monetas could use the opcodes in the same way that Blockstream plans to use them.

If I'm in the business of self-promoting drivebys, why haven't I joined the ranks of people demanding to keep the block size limit in place to force more transactions off the main chain?

Isn't that what I should be doing if your insinuation of my motives is correct?
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November 17, 2014, 10:20:58 PM
 #17309

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?

There are plenty of examples of gold "side chains".  The GLD ETF derives its value from gold.  Egold once derived its value from gold.  In fact anyone who owns any kind of note that is redeemable for gold is participating in a gold "side chain".  Perhaps the most infamous example is the USD which has also lost its peg to gold.  These pegs were eventually lost because of central points of failure, but the physical gold remained unharmed.  Bitcoin distributes these central points of failure and if side chains fail, the bitcoin will remain.  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.

the bitcoin can be lost in a SC failure though.  i think confidence is eroded in the entire system certainly in the case of those owners who lose their scBTC.

Is confidence in the entire system not eroded from owners losing their value through off-chain, centralized schemes (gox). Sure the Bitcoin in Gox's case are still "on the blockchain" (I would argue BTC lost to a sidechain are also still on the mainchain, but burned and rendered unusuable) but the trust issue lays on the value lost by users.

"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, 10:23:23 PM
 #17310

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.
If I was just interested in promoting OT, I'd jump on the sidechain bandwagon because Monetas could use the opcodes in the same way that Blockstream plans to use them.

If I'm in the business of self-promoting drivebys, why haven't I joined the ranks of people demanding to keep the block size limit in place to force more transactions off the main chain?

Isn't that what I should be doing if your insinuation of my motives is correct?

The point is I have seen you challenge Blockstream's developers conflict of interest which I don't find very genuine considering you yourself have entrenched interest.


"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, 10:25:53 PM
 #17311

Is confidence in the entire system not eroded from owners losing their value through off-chain, centralized schemes (gox). Sure the Bitcoin in Gox's case are still "on the blockchain" (I would argue BTC lost to a sidechain are also still on the mainchain, but burned and rendered unusuable) but the trust issue lays on the value lost by users.

its funny but that and the FBI-SR coin auction is what gives me confidence. the benefit to the community is to learn the value of real money and trust, two important skills knowing how to evaluate both. the more complex the relationships the harder it is to do.  

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November 17, 2014, 10:27:17 PM
 #17312

The point is I have seen you challenge Blockstream's developers conflict of interest which I don't find very genuine considering you yourself have entrenched interest.
Do I have commit access to the Bitcoin Core repositories?

Have I ever been named as a "core developer?"
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November 17, 2014, 10:30:59 PM
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There are plenty of examples of gold "side chains".  The GLD ETF derives its value from gold.  Egold once derived its value from gold.  In fact anyone who owns any kind of note that is redeemable for gold is participating in a gold "side chain".  Perhaps the most infamous example is the USD which has also lost its peg to gold.  These pegs were eventually lost because of central points of failure, but the physical gold remained unharmed.  Bitcoin distributes these central points of failure and if side chains fail, the bitcoin will remain.  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 don't necessarily agree with this.  those ETF's and egold had to hold physical gold which "backs" those derivatives, whereas with SC's, BTC units are "transformed" into something totally different and then ride on less secure SC's.  these speculative assets i think are worth less than the original BTC.  if they get hacked or fail, those BTC are locked up forever, which i don't think necessarily translates into higher value for the rest of us still on MC.  it could erode confidence.

Maybe you don't agree because you don't understand it?

Those ETF's, egold & BANKS were indeed supposed to "back" those promissory notes with gold in vault. History has shown us that this dependence on counterparty leads to abuse of trust and ultimately inflation of the value invested.

SPVP Sidechains solve this problem by relegating the convertibility and "peg" to the protocol. Much like it was the case with BTC the counterparty risk is considerably reduced effectively guaranteeing that the "derivatives" are backed with BTC.

I have already presented that example but sidechains are to Bitcoin what paper currency was to gold. Unlike paper currency, the trust does not reside in one central entity but in a federation of servers OR in more desirable cases in the Bitcoin network.

"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, 10:33:40 PM
 #17314

Is confidence in the entire system not eroded from owners losing their value through off-chain, centralized schemes (gox). Sure the Bitcoin in Gox's case are still "on the blockchain" (I would argue BTC lost to a sidechain are also still on the mainchain, but burned and rendered unusuable) but the trust issue lays on the value lost by users.

its funny but that and the FBI-SR coin auction is what gives me confidence. the benefit to the community is to learn the value of real money and trust, two important skills knowing how to evaluate both. the more complex the relationships the harder it is to do.  

Well great, then you should be all for sidechains. May we all use the important skills of proper evaluation and due dilligence to determine the more legitimate sidechains offerings.

I do not agree that sidechains are necessarily a more complex proposition than other off-chains schemes.

The confidence erosion is not my argument btw but merely a twist on cypherdoc's comments.

"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, 10:39:17 PM
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I think this is right. The same using other words: There is a separate value for the scBTC. When the peg is broken, this value is revealed. It also means that while the peg is intact, the holding preference would be with bitcoin in cases #1 and #2, and with scBTC in case #3. This will suppress the usage of scBTC #1 and #2, and may render them less and less liquid.

The problem for scBTC in case #3, is that it first will have to survive a period with less freefloating value, so it will have a problem achiveing the status of #3.

Blockstream are attracting big clients, they want to run entire countries on SideChains, one way to grow it is to do a 1934  Gold Reserve Act  and have everyone convert, they could even do it at favorable rates above current exchange rates. you cant dismiss #3 is the point I'm making.  

We have been repeating this ad nauseam but countries willing to run their fiat economy in crypto will preferably issue their own altcoin which they can do now.

Moreover, they could alternatively achieve this through federated server sidechains. In fact, this is the most likely outcome if they choose to bootstrap their fiatcoin on a sidechain. This scheme does not require SPVP because governements will have no interest in being dependent on miners for the security of their chain. Federated models provide far more control and oversight for their fiatCOIN.


"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, 10:40:09 PM
 #17316

...
In one of the previous examples we had:

 MC
 |   \
SC1 SC3
 |   /
SC2

Where SC1 had rogue devs/miners who inflated it with new assets or subverted the proofs so no SC2 would convert back to SC1 and so convertibility was lost.
Subsequently SC3 is set up to restore convertibility because SC2 had such utility that it kept going and new owner folks wanted to (somewhat) regain the convertibility aspects (including new issuance from SPV).

So now you have SC2 with some BTC convertible back to MC and some not.


Some people who put their confidence in something (sc2) backed by a corrupt value backing (sc1) would lose.  Sidechains are not some magic bullet which nullifies end-user stupidity and provider scammery.  It just makes it possible for end-users to have an alternative to scammery if they want to put in the effort to do due dilligence.  That alternative is found missing in almost every other financial instrument these days (except arguably physical PMs.)

+1

"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, 10:42:42 PM
 #17317

[quote author=Peter R link=topic=68655.msg9573468#msg9573468 date=1416252764
But I'm not sure that these arguments are strong enough to show that SPV sidechains hurt Bitcoin's sound-money property.  In my opinion, this is only possible in Case #3, but, like Erdogan implied, it might be highly unlikely (impossible?) for a sidechain to obtain the status of #3. 

The problem for scBTC in case #3, is that it first will have to survive a period with less freefloating value, so it will have a problem achiveing the status of #3.



which brings up my problem with Blockstream.

they have a fiduciary duty aka financial incentive to make it happen regardless.  and given their power positions in core dev, they may be able to make it happen.
[/quote]

That's incorrect.

Their fiduciary duty is to create the infrastructure. They do not guarantee adoption. This adoption is dependent on the value proposition their client come up with. There will be plenty valuable enough to attract users.

My bet is inflationary schemes supported by mischievous interests will barely make a dent in 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 17, 2014, 10:44:23 PM
 #17318

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?

There are plenty of examples of gold "side chains".  The GLD ETF derives its value from gold.  Egold once derived its value from gold.  In fact anyone who owns any kind of note that is redeemable for gold is participating in a gold "side chain".  Perhaps the most infamous example is the USD which has also lost its peg to gold.  These pegs were eventually lost because of central points of failure, but the physical gold remained unharmed.  Bitcoin distributes these central points of failure and if side chains fail, the bitcoin will remain.  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.

the bitcoin can be lost in a SC failure though.  i think confidence is eroded in the entire system certainly in the case of those owners who lose their scBTC.

Bitcoin can also be locked in for a length of time by the miners, remember merge mining can mine empty blocks on the SideChain locking it without forfeiting there mining revenue earned on other SideChains or Bitcoin. 

Which implies they forfeit the mining revenue of the chain they are attacking. If users decide that this chain is valuable to them it is in the miners best interest to preserve their economic incentives

"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, 10:45:47 PM
 #17319

But I'm not sure that these arguments are strong enough to show that SPV sidechains hurt Bitcoin's sound-money property.  In my opinion, this is only possible in Case #3, but, like Erdogan implied, it might be highly unlikely (impossible?) for a sidechain to obtain the status of #3. 

The problem for scBTC in case #3, is that it first will have to survive a period with less freefloating value, so it will have a problem achiveing the status of #3.

Others would claim that a #3 is ultimately inevitable due to the ossification of Bitcoin.
At some point there would become a new SC that would be better in every way for everyone than Bitcoin and those that can exit do when then can do so.

In this case, is it not preferable that the "better" chain is an SPVP chain?

"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, 10:46:52 PM
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There are plenty of examples of gold "side chains".  The GLD ETF derives its value from gold.  Egold once derived its value from gold.  In fact anyone who owns any kind of note that is redeemable for gold is participating in a gold "side chain".  Perhaps the most infamous example is the USD which has also lost its peg to gold.  These pegs were eventually lost because of central points of failure, but the physical gold remained unharmed.  Bitcoin distributes these central points of failure and if side chains fail, the bitcoin will remain.  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 don't necessarily agree with this.  those ETF's and egold had to hold physical gold which "backs" those derivatives, whereas with SC's, BTC units are "transformed" into something totally different and then ride on less secure SC's.  these speculative assets i think are worth less than the original BTC.  if they get hacked or fail, those BTC are locked up forever, which i don't think necessarily translates into higher value for the rest of us still on MC.  it could erode confidence.



Just because GLD is supposed to be backed by gold doesn't mean that it is.  At least with bitcoin we can have cryptographic proof that side chains are backed by a certain amount of bitcoin.  I see these gold derivatives as precedent for side chains just as gold was precedent for bitcoin. 

Precisely

"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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