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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1979980 times)
brg444
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November 17, 2014, 10:44:23 PM
 #17321

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
 #17322

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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November 17, 2014, 10:50:04 PM
 #17324

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.

If you choose to use OT or Federated servers this is the decision that you are making :


"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, 10:53:52 PM
 #17325


I think, that value is always stored in MC. You can only put your bitcoins into "escrow" (lock them in main-chain) and use "value" on side-chain.


Shouldn't you then believe that the severing of 2-way peg would result in a scBTC value of zero in all cases?  I think I've convincingly shown that this would not always be the case.  Therefore, a % of the value must actually be stored on the sidechain's ledger.  

If 2wp does not work then pegged SC does not work.  If we are talking about pegged sidechains then 2wp MUST be working.

or maybe you want to talk about "pegged SC are not possible to create ?" => let's talk about why it is not possible to create functional 2wp SC

SC does not have any value -> until BTC are locked(escrowed) to fund this SC

how is it even possible to have thousands of spvp SC's when there are not enough resources to MM all of them?  and even then, they're not secure.

It is not a matter of resources but economic incentives. You are right : as I've mentioned repeatedly we can expect that only a certain numbers of sidechains be secured through MM and use the SPVP model.

For many applications, the federated model is preferable

"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, 10:56:17 PM
 #17326

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.

The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security.

"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, 10:59:01 PM
 #17327

who needs the MC to achieve all these services?  to me, Bitoin is Money and only money.  all these services can be created and just adopt BTC as their currency unit of exchange.  this would be how to drive the price of BTC much higher.

 Roll Eyes

How exactly do you propose they do this.

Consider the two very desirable applications of privacy and instant confirmations. These are sidechains that operate a money function. Would you prefer that these be as equally decentralized and secure as Bitcoin or that they be conferred to a federation of servers/oracles/OT?

"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, 11:01:06 PM
 #17328


Sidechains introduce a huge marginal value-add by providing services which people need and cannot achieve on the main chain.  My seat-of-the-pants estimate is that this will easily account for any increase in value associated with scBTC on an ecosystem level and some of the value will probably back-wash into Bitcoin itself in a big way.


I agree that sidechains could introduce a "value-add by providing services which people need and cannot achieve on the main chain" and that this could increase demand to hold BTC.  

What I'm not convinced of is whether the value-add is "huge" or not, and whether providing support for SPV sidechains at the protocol level is worth the existential risk it creates.  

Let's see what happens with federated sidechains first...  

Is there not considerable value in more decentralization of our infrastructures?


"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, 11:01:45 PM
 #17329

The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security.
Can they really accomplish an equivalent level of security compared to the main chain?

Do you know of anyone willing to go on record making that claim?
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November 17, 2014, 11:06:11 PM
 #17330

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.

 Huh

There is absolutely a most fundamental difference. Sidechains, unlike altcoins, derive their value and their scarcity from the Bitcoin mainchain. This enables users to claim a 1:1 stake in any sidechain they are interested in, unlike with altcoins

"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, 11:11:00 PM
 #17331

The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security.
Can they really accomplish an equivalent level of security compared to the main chain?

Do you know of anyone willing to go on record making that claim?

This is pretty much how I understand it :



I don't believe you can secure sidechains at the exact same level as the mainchain simply because that would require all nodes to recognize this sidechain.

My opinion is that by securing the work of all miners to validate a sidechain you make it much more decentralized and secure than any other federated options.

"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, 11:13:47 PM
 #17332

The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security.
Can they really accomplish an equivalent level of security compared to the main chain?[/quote]

I don't believe you can secure sidechains at the exact same level as the mainchain simply because that would require all nodes to recognize this sidechain.

My opinion is that by securing the work of all miners to validate a sidechain you make it much more decentralized and secure than any other federated options.

Get your story straight.
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November 17, 2014, 11:19:27 PM
 #17333

The reason SPVP is proposed is because there are applications that are not implementable on BTC mainchain but still necessitate an equivalent level of decentralization and security.
Can they really accomplish an equivalent level of security compared to the main chain?

I don't believe you can secure sidechains at the exact same level as the mainchain simply because that would require all nodes to recognize this sidechain.

My opinion is that by securing the work of all miners to validate a sidechain you make it much more decentralized and secure than any other federated options.

Get your story straight.
[/quote]

 Roll Eyes

Is this all you have to say. Does that make my argument any less true?

You are done with you driveby for now?

"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, 11:32:46 PM
 #17334

Does that make my argument any less true?
You aren't making any arguments.

You're inventing stories on the fly, without even bothering to maintain a pretense of consistency from post to post.
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November 17, 2014, 11:36:03 PM
 #17335

Does that make my argument any less true?
You aren't making any arguments.

You're inventing stories on the fly, without even bothering to maintain a pretense of consistency from post to post.

Do you not recognize there are applications that demand more decentralization than federation/oracles/OT can provide?

Would you trust any lesser decentralized schemes with money functions of Bitcoin that are not supported by the mainchain?

"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, 11:40:42 PM
 #17336

http://www.bloomberg.com/video/islamic-state-finances-how-terror-groups-move-money-E1QGs4SPTaaMkUzcjjMi~g.html


Islamic state using gold (silver, copper also) as their 'national' currency but also bitcoin allegedly.      US spec ops investigating ways to disrupt payments ?
I dont get how they even still exist, yet alone operate actual economies out there in the desert.  Not that we cant reach them surely

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November 17, 2014, 11:41:13 PM
 #17337


Do you not recognize there are applications that demand more decentralization than federation/oracles/OT can provide?

Would you trust any lesser decentralized schemes with money functions of Bitcoin that are not supported by the mainchain?

Please STFU this used to be a nice thread to follow.

I agree, that is until cypherdoc polluted it with his FUD and misinformation.

By the way there's at least 4 pages of discussion on sidechains that were created today without any of my participation so maybe you should stay away for awhile if you don't care to discuss them.

"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, 11:42:11 PM
 #17338

Do you not recognize there are applications that demand more decentralization than federation/oracles/OT can provide?

Would you trust any lesser decentralized schemes with money functions of Bitcoin that are not supported by the mainchain?
That's not the point.

You started out selling sidechains as an "equivalent level of decentralization and security" compared to the main chain.

Are they or are they not capable of providing that?
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November 17, 2014, 11:42:17 PM
 #17339

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

this is new, in Bitcoin land, to use 100% of your mining power you had to forfeit 100% of your income and pay for the energy needed to be a malicious miner, in the post SC BTC world you can use 100% of your mining power and attack the network, while still earning tx fees on other chains, these kind of speculative attacks was not possible before, its just labour and gold rigging, on the protocol level. its will always be profitable.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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November 17, 2014, 11:42:44 PM
 #17340

http://www.bloomberg.com/video/islamic-state-finances-how-terror-groups-move-money-E1QGs4SPTaaMkUzcjjMi~g.html


Islamic state using gold (silver, copper also) as their 'national' currency but also bitcoin allegedly.      US spec ops investigating ways to disrupt payments ?
I dont get how they even still exist, yet alone operate actual economies out there in the desert.  Not that we cant reach them surely

The situation is probably akin to a typical serfdom

"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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