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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1808732 times)
brg444
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November 18, 2014, 06:58:58 PM
 #17441

It becomes clearer everyday that you either insist on ignoring facts or simply do not understand the dynamics at stake.

we have achieved acceptance as a global, digital, cash money system that, imo, is in the process of replacing gold's function for the last 5000 yrs.  to me, an Austrian leaning Bitcoin proponent, that's all we should strive to be.  that's all we need to be.  my goal is to have Bitcoin have its own ticker symbol on the Forex exchange.  from there, as the only true Sound Money in the world, it can consume all fiat currency AND gold, which will take us To The Moon and way beyond as the sole globally accepted currency.

merely replacing gold is a very shortsighted view that ignores the limitless innovations & true paradigm shift that the creation of an immutable, global, distributed ledger entail. I understand the idea to redefine the concept of money and its applications is a very powerful one by itself but the blockchain should not limit itself to money. Value, property & trade is what we are looking to decentralize. This concept has much greater implications than even money.

to limit the blockchain to money implies that the need for trust in incumbent counterparties for anything but money is not significantly limited although we have a technology that absolutely can do that.

Quote
So, for the first time in history, we (or those of us with signing authority, at least) can now directly control what gets entered on an exchange's (and, in this case, a Universal Exchange's) books and records on our behalf.  We don't need anyone's permission to make an entry, nobody can bar us from entering a transaction on the exchange (though the system itself will prevent it if we don't have signing authority), and nobody can reverse or corrupt an entry once made.

...

In short, in a world with a Universal Exchange, the need for trust in humans (be they counter-parties, third parties, auditors, or regulators) is significantly diminished.  Not eliminated, but greatly lessened.

Quote
In short, bitcoins are valuable not because you can trade things for them (as money), but rather because you can trade things with (via) them by simply entering a transaction into the Universal Exchange. Thus, bitcoins are not (yet) the medium of exchange, they are the method by which things are exchanged in exchange for the medium of exchange.  Or, at least they will be once the Bitcoin infrastructure is more built out and widely known.

Bitcoins thus have value as a method for avoiding or diminishing the need for trust, and the expensive infrastructure built up to instill it, and not merely a collectible or as money.  Trust is valuable, and few things are more demonstrably trustworthy than a public blockchain

Sidecoins are, in a way, our best chance of fulfilling these promises of the blockchain.

the Keynesian view is that Bitcoin needs to do more to gain acceptance and grow itself.  the protocol needs to be changed to incorporate all other forms of asset options; stocks, bonds, assurance contracts, smart contracts, insurance, etc.  nevermind that if Bitcoin succeeds at the Austrian Sound Money function, it will force all those assets to trade in terms of Bitcoin eventually as well.

This is absolutely not a debate of Keynesian vs. Austrian. How do you propose we trade assets in terms of Bitcoin if they are not represented by units in the ledger? Remember that this scheme can only be implemented off the mainchain for obvious reason.

What you seem to suggest is that those "off-chain" applications be conceded to the trust of third-parties which defeats the very purpose of the blockchain. The blockchain is where all trust reside and where all forms of value should be exchanged. Granted it may not be practical to do that or even desirable in some cases but we should absolutely expect this level of decentralization in a majority of our exchange.

they try to change Bitcoin.  change it by changing the source code which breaks the Sound Money function.  to me, that is what the spvp does, it creates an offramp into all manner of these assets.

I sure hope Satoshi is not reading that. The nature of Bitcoin is open-source code, to suggest changing its source code is not desirable or should not be pursued goes against any conceivable logic.

Off-ramps a a reality of Bitcoin and exist already in numerous forms. We absolutely need off-ramps to scale the system and make it possible to reach mainstream adoption. For those of us who understand the implications, it is quite clear that sidechains are potentially the most secure and natural off-ramp possible. It offers the unique chance to preserve the integrity of the ledger and protect the Sound Money aspect of Bitcoin on the protocol level.

so what is wrong with using SC's to incorporate all those assets?  it breaks the Sound Money function.

This comment in itself is so naive and ignorant of our present reality I'm not even sure where to begin... The desire to represent these assets in BTC and the demand for such applications has been crystal clear for everyone who has been paying attention. It is the sole reason why Bitcoin 2.0 projects exist. The problem with most Bitcoin 2.0 projects is that they introduce in the majority of cases an additional third-party that demands an increased level of trust. These third-parties are by all chances, the most dangerous risk to the Sound Money function.

Bitcoin will no longer be viewed as solely a new form of money.  it will be viewed as a "trading platform" with which you can use to move back and forth btwn assets and BTC.  it would be like a Fidelity brokerage house, you deposit your money in a cash acct and then trade all manner of assets in and out.  it also destroys the time preference of what money should be.  you see, stocks, bonds, contracts, insurance, etc are long term investments.  they are to be held.  and they are not used to provide seamless, instant, liquidity type functions like Bitcoin would be if it stays in its current form as sound money.

Aside from some erroneous details or assumptions this is EXACTLY what we should aspire Bitcoin to become. THE Universal Exchange by which ANY trade is facilitated.

Quote
And this is especially true with the tool that makes all that possible, bitcoins themselves.  Since bitcoins represent the universal, inalienable (though transferable) right to enter a transaction, any transaction, into the Universal Exchange, and since bitcoins themselves are readily tradable on the exchange itself, an exponentially increasing number of things will come to be bought and sold for bitcoins, and not just with (that is, via) them.

You can call such trading of good and services for bitcoins "barter" if you want (so that you don't have to acknowledge bitcoins as "real" money or currency), but the result is the same either way.  They will be used to purchase goods and services regularly on the Universal Exchange.

In short, a Universal Exchange will facilitate a barter economy like the world has never seen.  For the first time, barter transactions will be nearly as easy as cash transactions (and in many cases even easier).  This will have a great many revolutionary impacts.  It will impact "trusted" third parties the most and soonest, but it will also impact governments, human relationships, law, accounting, economics, and a great many other fields.  And, perhaps most of all, it may just eventually make the whole concept of "money" unnecessary and obsolete.  With a Universal Exchange, a common currency, in the traditional sense of the word, isn't hardly necessary.

thus, we many NEVER see those assets be converted back to BTC in the future.  or at least if we do, it won't be for a long time, and then what does that do for Bitcoins money function?  answer:  it slows it down if not outright destroys it.  if that's true, where do Bitcoin miners get the tx fees they desperately need in the future to secure the mainchain?

They get it from MM the sidechains. The alternative you propose (off-chain/federated solutions) is provably worse in this scenario because it effectively strips from the miners the power or access to claim these tx fees.

they would have to stay as SC's and i dare say there mere existence destroys Bitcoins liquidity and money function.

What you constantly fail to realize is that if this demand is not fulfilled by SC's it will be through other schemes that are necessarily more dangerous to Bitcoins liquidity and money function.



  


"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 18, 2014, 06:59:31 PM
 #17442

Cypher, your cri de coeur is clearly sincere, and I urge you to maintain your optimism, your Austrian perspective. Nothing is lost - yet.

I have an open mind about the potential benefits of sidechains, by the taking of territory from altcoins. Bitcoin's percentage of the cryptocurrency monetary base hovers at 90%, down from a previous level of 95%, so there is a threat from alternative currency systems, which SC could mitigate.

However (and I pointed this out early on), there is a serious flaw with how scBTC are presented: while the scBTC and BTC can be numerically pegged, they cannot be successfully value pegged: there will be a floating exchange rate. The reason is SCs have a different risk-profile from the MC, so the market will inevitably price each type of scBTC differently. This is guaranteed because even the abstract of the Sidechains paper says:

Quote
Despite bidirectional transferability between Bitcoin and pegged sidechains, they are isolated: in the case of a cryptographic break (or malicious design) in a sidechain, the damage is entirely confined to the sidechain itself.

If an SC can implode, and BTC remains locked,  inaccessible, then pegging is indeed Keynesian madness, and won't be viable long-term. Of course, BTC which are permanently lost increases the scarcity of those that remain on the MC.

So, it is early days, and more important matters need attention, such as the 1MB constraint, implementation of IBLT, blockchain pruning, headers-first. As long as progress is made on these, I think its fine to wait and see how SC develops.

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November 18, 2014, 07:01:14 PM
 #17443

So, it is early days, and more important matters need attention, such as the 1MB constraint, implementation of IBLT, blockchain pruning, headers-first. As long as progress is made on these, I think its fine to wait and see how SC develops.

+1.

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November 18, 2014, 07:19:26 PM
 #17444


watched those few minutes and it was interesting.

i find it jaw dropping that the only cautionary place on the internet about SC's appears to be here.  yesterday's glance at Reddit shows nothing but blind faith and sheep herding regarding the SC progress.  amazing.

i don't mind being a lightening rod or having my own shadow assassin Wink  as long as i speak from the heart. 

we need to be discussing all existential threats to Bitcoin somewhere.  it might as well be here.
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November 18, 2014, 07:23:40 PM
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it's becoming clearer to me everyday that what we are dealing with is Keynesian vs Austrian philosophy with this SC's debate.

that might follow from the big paragraph below about how sidechains dilute bitcoins sound money function, which I cannot for the love of my life understand the reasoning of at this point (I'm trying).

heretofore, what has brought Bitcoin to where it is today is its Sound Money function.  and its been brilliant at that.  instant liquidity and transportation worldwide and p2p.  continuous growth in the economy and stellar, but volatile, increasing SOV.  gvts everywhere scrambling to figure out what this is and what role it has for their futures.  investment groups everywhere diving into a variety of Bitcoin investing schemes.  Bitcoin is the "Technology Singularity", as Daniel put it in the video above, that is the culmination of 4 decades of work by the cypherpunks.  we have achieved acceptance as a global, digital, cash money system that, imo, is in the process of replacing gold's function for the last 5000 yrs.  to me, an Austrian leaning Bitcoin proponent, that's all we should strive to be.  that's all we need to be.  my goal is to have Bitcoin have its own ticker symbol on the Forex exchange.  from there, as the only true Sound Money in the world, it can consume all fiat currency AND gold, which will take us To The Moon and way beyond as the sole globally accepted currency.  there only needs to be one money and Bitcoin can be "it".  the problem is, if it is even a problem, it will take time and some long hard fought battles.  the Keynesians don't want to help us.  they don't want to "buy in" to the system which would take the price up logarithmically.  they think a price of $376 is "too expensive".  well, to me the other view is that they just weren't paying attention back in 2009 and tough luck, that's how technology disrupts financial systems, as it has with many other industries.  i say "buy in" now and you can still join us on the way to the Moon.  we haven't even really taken off yet.

I totally agree with the goal (moon) and the view (replace gold) and also to an extent with a possible strategy (forex). I'm absolutely convinced the world needs to go back to sound money... it will solve so many hard problems many people suffer greatly from with a single stroke. We need to try this at all cost and bitcoin is our best chance.

the Keynesian view is that Bitcoin needs to do more to gain acceptance and grow itself.  the protocol needs to be changed to incorporate all other forms of asset options; stocks, bonds, assurance contracts, smart contracts, insurance, etc.  by allowing BTC to be transformed into speculative assets via the spvp, that is by definition inflationary.  nevermind that if Bitcoin succeeds at the Austrian Sound Money function, it will force all those assets to trade in terms of Bitcoin eventually as well.  but that would be the hard battle and there are too many fiat vested interests that don't want to see that happen.  and there are too many Bitcoiner's who are impatient and can't stand price volatility.  and there are too many devs that gotta dev and get paid (in USD's).  and there are too many of all of those who missed out.  so what do they do?  they try to change Bitcoin.  change it by changing the source code which breaks the Sound Money function.  to me, that is what the spvp does, it creates an offramp into all manner of these assets.  after all, that is exactly what the Blockstream (Keynesian's) say as well; that being that the blockchain is too restrictive, it's prevents innovation, it's too risky, it's too slow, it's not big enough, yada yada yada.  so what is wrong with using SC's to incorporate all those assets?  it breaks the Sound Money function.  Bitcoin will no longer be viewed as solely a new form of money.  it will be viewed as a "trading platform" with which you can use to move back and forth btwn assets and BTC.  it would be like a Fidelity brokerage house, you deposit your money in a cash acct and then trade all manner of assets in and out. it also destroys the time preference of what money should be.  you see, stocks, bonds, contracts, insurance, etc are long term investments.  they are to be held.  and they are not used to provide seamless, instant, liquidity type functions like Bitcoin would be if it stays in its current form as sound money.  thus, we may NEVER see those assets be converted back to BTC in the future.  or at least if we do, it won't be for a long time, and then what does that do for Bitcoins money function?  answer:  it slows it down if not outright destroys it.  if that's true, where do Bitcoin miners get the tx fees they desperately need in the future to secure the mainchain?  what do we, as current Bitcoin holders, do if we see that many ppl are using this offramp to move into all these different SC's?  how do we interpret an especially popular SC?  Zerg and others say that we should trust Blockstream devs to incorporate any popular function back into the MC. but that would be to violate one of Bitcoins core principles; trust no man.  and incorporating other assets back into MC doesn't even make any sense when you are talking about SC's that offer completely different assets as defined above.  they would have to stay as SC's and i dare say there mere existence destroys Bitcoins liquidity and money function.  

The bolded parts is the reasoning I have problems with.

Let me rip out those bolded parts and ask specific question or utter some hypothesis regarding them.

(cypherdoc, please don't take this as an attack on your opinion. I don't hold any opinion myself, I'm just asking question because I want to understand your reasoning)

  • allowing BTC to be transformed into speculative assets via the spvp, that is by definition inflationary.
    How is that inflationary? What is being inflated? Surely there are still at most 21 million bitcoins. Ok, 1 million got locked on the bitcoin blockchain and the 'access rights' to them are now managed by a sidechain. Are you saying the sidechain devs could inflate the amound of scBTC (say they double it) and then we'd have 22 million bitcoins?
  • they try to change Bitcoin.  change it by changing the source code which breaks the Sound Money function. [...] that is what the spvp does, it creates an offramp into all manner of these assets.
    So you're saying that a part of the real BTC is being chopped off and managed by a different source code base? The rules for the 1 million scBTC are different than for the original BTC? If so, I agree so far. What I don't understand: people will know this. scInflateBTCx2 has a public ledger and is run by miners using open source code. Why would anybody 'convert' 10 BTC to 10 scInflateBTCx2 knowing full well that scInflateBTCx2 runs a fractional reserve system and the guy with the other 10 scInflateBTCx2 will have his exchanged for 10 BTC half a microsecond later. There would be a continual run on the real BTC... it just wouldn't work, hence no BTC inflation.
  • so what is wrong with using SC's to incorporate all those assets?  it breaks the Sound Money function.
    Again: how? If the sidechain fucks up, not all of the inflated coins there will magically be convertible back to BTC, only the amount that was 'moved over from the MC' in the first place, right? So again: no harm to BTC monetary base.
  • thus, we may NEVER see those assets be converted back to BTC in the future.
    So? It's the same with hoarding or burning BTC, no? If they never come back to the MC, if anything BTC monetary supply is deflated.
  • they would have to stay as SC's and i dare say there mere existence destroys Bitcoins liquidity and money function.
    Are you saying because all those BTC are being locked in the main chain, Bitcoins liquidity is reduced and therefore its money function hampered? Isn't that like saying Satoshi is reducing Bitcoins liquidity and money function by sitting on 1.5 million BTC?

Maybe someone can be so kind to help me understand by answering some of above questions or disputing my assertions?

Thanks!

Bitcoin is a simple system currently.

Yes, and it doesn't seem to me that is being changed with sc. People like you and me will still demand to be payed in BTC, not scInflateBTCx2. Just because Bitcoin now has 'plugins', doesn't complicate the core for the users that don't use those 'addons', right?

 that's great for a simple money function.  we don't want complexity or risk.  but to add SC's into the equation introduces all sorts of risk and unpredictable consequences.  the price of Bitcoin has to move orders of magnitude higher to achieve its money status.  this is how miners will profit and how adoption will increase.  the only way to achieve this is to target the Forex and gold markets as a Sound Money; the exact same plan that has gotten us to where we are.  those are the Big Kahuna's we want to tap into and this is the strategy that the cypherpunks ultimately envisioned and this is what will take us to the Moon.  we need to force outsiders to buy in.  not allow them to insert an offramp to divert value into insignificant, undesirable or risky asset markets.  

if you've read this thread for any length of time, you can see that what i'm saying above is totally consistent with my positions in the past.  as well as my past memes:

"The blockchain may only ever be applicable to Bitcoin as Money".

"The BTC currency unit is forever inextricably linked to its blockchain.  you break that link and you break Bitcoin".

I'm not sure sidechains break that link of Bitcoin with its blockchain. Do they?

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November 18, 2014, 07:27:46 PM
 #17446

Bitcoin is a radical experiment,
One of the reasons I became passionate about Bitcoin was as because as a designer I had hit a limit in the existing system.

My goal was to reduce waste to a 0 sum game, in reality there is no waste just input and outputs, and a hierarchy of systems that proses each input. (I thought there must be a way as I have 100% control over 80% of a products environmental impact.)

What I learned was there is no systematic problem, just an economic assumption that we need growth, and to function profitably in a growth environment one had to be inefficient with the waste, My job and the demand for the creative skills of my staff is to find ways to incentivise consumers to to make economic chooses so our customers can increase outputs at more competitive price, and manage the expected product life cycle to maximize consumption, in effect I am a cog in a system that is a race to consume as many natural restores as possible before the competition does it more efficiently.  

Bitcoin introduced the idea of Austrian economics and it turned the game of efficiency of waste on its head. The one hurdle was the environmental impact of mining, at first it seemed ludicrous to think if a Bitcoin was worth $100,000 there would be an economic incentive to consume the entire energy output of a large industrialized nation like Germany. (and efficiency in mining wouldn't change the economic incentive to do so.)

The more I understood the problem, the more clear it became, there is no waste, a Hard money will create efficiency in all other areas of the economy, and these efficiencies will come in waves that ripple through the economy, most product lines take years to plan and build, each stage will have 4 years to adjust and plan for, and there will be 2 cycles one of growth in Bitcoin value, flowed by a decline in bitcoin value and a growth in economy, this cycle will go on until the transformation hits equilibrium.

This cycle was dependent on the Block Halving, that is needed to regulate the global use of energy. What a lot of people overlook in the investing world of financial products is the point cypher made. "stocks, bonds, contracts, insurance, etc are long term investments.  they are to be held" these tools are not supposed to be liquid, in the real world of building and making and growing things, one needs time, and the liquidity should reflect the life cycle of the product and size of the market not the will of HFT's.

The block halving and the discomfort it will bring to miners is fundamental to the ultimate growth of Bitcoin as Hard Money.

With out Block Halving, Miners will be empowered to consume more energy restores that is necessary to have hard money and without PoW there would be no value put on efficiency in the broader economy. in effect there is no free lunch, if you want something you make value judgements, if you can design a system where you can extract a profit for service or product, it must be held in equilibrium by the market.

The principal that SC violated for me was the incentive structure.  I can see how Bitcoin may take over the world, but in the world of SC you have miners using there position of power gained early before block halving, leveraging that power (consuming more energy) to earn new revenue on other merged mined SideChains, and this if this gains traction it may be profitable for all involved, but it may also detract from end goal of environmental efficiency managed through free market ideals.

I can see a viable scenario where miners by charging higher fees on the Bitcoin Blockchain, encourage consumers to use a SideChaine for faster more cost effective money transfers. the net result is miners could in effect maintain there income and not be subject to the block halving in Bitcoin, the result is Bitcoin a financial product where the economic system can extract wealth from the productive economy and we forgo the global catalytic event that forces value judgments in fave of environmental sustainable future.

disclaimer, I am a miner and will benefit from SC's as will my itinerants, but the natural world I leave for them will be a lot more depleted and hostile.

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November 18, 2014, 07:29:13 PM
 #17447

-

the only thing i would say to your response it that the centralized trust problems we've had in the last 5 yrs are going away.  exchanges are being more regulated and investment funds are holding them more accountable.  Merkle tree audits are becoming commonplace to verify reserves.

my long term vision is that more and more trade is conducted directly in Bitcoin with merchants holding BTC, like Overstock, and paying suppliers in BTC.  that is happening.  you can see the progress with time if you've been paying attention.  the ultimate goal is to bring everything into the Bitcoin system. it will take time but it is clearly moving in the right direction.

but for this to happen, the Bitcoin system has to remain impenetrable, not only from the outside, but from the inside.  as in not introducing a breech in to the source code which acts like an offramp, leak, or siphon of value. 

the higher level i go to when viewing this SC dynamic, the easier it is to see what the problems are.  for me at least.
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November 18, 2014, 07:39:06 PM
 #17448

why do ppl, including myself, always say that Bitcoin is going to have a binary outcome?

it's b/c they understand that Bitcoin is about Money.  Sound fixed supply Money.  you know, the Money that has the chance to consume the Forex and gold markets.  in that sense, it has the chance to consume the entire fiat world; yes including stocks, bonds, insurance, just by being used as money alone.  it doesn't have to incorporate all those speculative assets directly within its protocol using SC's.  
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November 18, 2014, 07:40:28 PM
 #17449

I would be against SCs if they broke sound money.  But they don't.  Gold is still sound money even though paper gold exists.

I didn't say "that we should trust Blockstream devs to incorporate any popular function back into the MC".  In fact I am scared that Blockstream will release their SC-capable test alt-coin and never "bother" to merge it back.  

With altcoins we have that fear.  But with Sidechains we don't even have to merge popular functions back into the MC, because they use a token scBTC that is pegged to BTC.  So if the sidechain becomes popular, it creates demand for BTC to be locked and represented by scBTC which drives up the price of BTC.

The real "off-ramp" here is if that peg doesn't exist.  Because then someone must SELL BTC to buy the altcoin.

  USD use internationally increases the value of a dollar without us having to import every foreign product to America.  Flying to the EU and exchanging your USD for Euros does not increase the dollar.  The Bitcoin blockchain will remain the "gold" standard, the authoritative source.  You fear that some sidechain will "take over" by getting (say) 90% of the market.  How is that going to happen if that sidechain isn't distributed, open source, transparent, sound money?  Nobody would move their coins.  But if a sidechain is invented that is truly better than BTC in all respects then at least you can always move your BTC to it at any time.  There's no rush because BTC will always == scBTC.

  But if an altcoin does the same thing, you'll have missed the boat.


There's no stopping "off-ramps" and its counter to the purpose of money (to facilitate trade) to do so so we shouldn't try.  If someone wants to sell BTC for GOOG they will do so.  The difference is can you do it directly or do you have to go thru USD first?  In other words, is BTC the most liquid most usable currency or will it still be USD?  And can you transfer it in a revolutionary trustless p2p fashion or do you need the old centralized intermediary model that has spawned the current highly flawed overly powerful financial system?

This has nothing to do with Austrian vs. Keynes or sound money.  Its about making BTC a better sound money...

Compared to the problems I had with cypherdocs arguments, what thezerg says above is very easy for me to understand and agree with... so I'm starting to lean that way because I'm lazy Wink

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November 18, 2014, 07:48:10 PM
 #17450

The more I understood the problem, the more clear it became, there is no waste, a Hard money will create efficiency in all other areas of the economy, and these efficiencies will come in waves that ripple through the economy, most product lines take years to plan and build, each stage will have 4 years to adjust and plan for, and there will be 2 cycles one of growth in Bitcoin value, flowed by a decline in bitcoin value and a growth in economy, this cycle will go on until the transformation hits equilibrium.

you just blew my mind. That is some cool view and it might be pretty realistic. Thanks, very insightful!

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November 18, 2014, 07:53:54 PM
 #17451

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the only thing i would say to your response it that the centralized trust problems we've had in the last 5 yrs are going away.  exchanges are being more regulated and investment funds are holding them more accountable.  Merkle tree audits are becoming commonplace to verify reserves.

my long term vision is that more and more trade is conducted directly in Bitcoin with merchants holding BTC, like Overstock, and paying suppliers in BTC.  that is happening.  you can see the progress with time if you've been paying attention. the ultimate goal is to bring everything into the Bitcoin system. it will take time but it is clearly moving in the right direction.

Centralized trust problems do not go away with regulations and more oversight. They can only be reduced by removing the necessary trust. Centralized solutions are in fact becoming more common place and will only expand their place in the ecosystem precisely because of the demand for them.

Your ultimate goal is quite simply unachievable with the Bitcoin ecosystem staying as it is. Sidechains are effectively the more promising tool to enable this very thing you so desire.


"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 18, 2014, 07:55:48 PM
 #17452

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imo, introducing the spvp into the source code, by itself, is a statement to the market that the BTC unit can be separated from its ultra-secure blockchain.  i might be wrong, but that breaks Bitcoin's sound money principles.  yes, ppl can inspect what hopefully will be open source code and don't have to move to a SC they don't like.  but to me, the potential will be there and as a forward looking person, i don't like that.  i might have to front run using my expectations and assumptions of what will be the consequences.

the other reason i don't like it and which i tried to avoid in my earlier post is the Blockstream for profit motive.  they have every incentive to encourage usage of SC's.  they say they won't construct a SC for a SC scam.  well, that's for anyone's definition.  and when there's money involved, i can't see how they won't take it when they have investors to please.  they can always use the same excuse after a SC failure "well, we didn't force anyone to use it".  yes, it bothers me that 40% of core devs + 3 of the top committers are under one paid roof.  that they could get something like this through into the source code is a clear conflict of interest and sends a bad message to the marketplace.
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November 18, 2014, 07:57:20 PM
 #17453

why do ppl, including myself, always say that Bitcoin is going to have a binary outcome?

it's b/c they understand that Bitcoin is about Money.  Sound fixed supply Money.  you know, the Money that has the chance to consume the Forex and gold markets.  in that sense, it has the chance to consume the entire fiat world; yes including stocks, bonds, insurance, just by being used as money alone.  it doesn't have to incorporate all those speculative assets directly within its protocol using SC's.  

As much as a despise of what Gates said (in my words: "the blockchain tech is great, but as a money it's not so good"), you have to admit that the features 'decentralized', 'trustless', 'possibly anonymous' and 'uncensorable' are ones that would also be damn good features for stock exchange / dividend payments / all kinds of derivative gambling, ownership management, etc.

If you want Bitcoin (the money) to conquer these areas and serve them as a liquid interchange money, wouldn't it be brilliant to have a technical solution that would allow some asset ledger (say the land ownership ledger) to interchange value with the money ledger (Bitcoin) and make atomic swaps across the chains possible?

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November 18, 2014, 07:58:42 PM
 #17454

    • they try to change Bitcoin.  change it by changing the source code which breaks the Sound Money function. [...] that is what the spvp does, it creates an offramp into all manner of these assets.
      So you're saying that a part of the real BTC is being chopped off and managed by a different source code base? The rules for the 1 million scBTC are different than for the original BTC? If so, I agree so far. What I don't understand: people will know this. scInflateBTCx2 has a public ledger and is run by miners using open source code. Why would anybody 'convert' 10 BTC to 10 scInflateBTCx2 knowing full well that scInflateBTCx2 runs a fractional reserve system and the guy with the other 10 scInflateBTCx2 will have his exchanged for 10 BTC half a microsecond later. There would be a continual run on the real BTC... it just wouldn't work, hence no BTC inflation.

    Maybe someone can be so kind to help me understand by answering some of above questions or disputing my assertions?

    Thanks!

    I can't speak for Cypherdoc, (and also don't agree with all of his criticisms) but I'll take a crack at expounding a bit on this one.

    The different rules for the 1 million scBTC may be pretty much anything. They need not be in a public ledger or have open source code, but even if they do, you ask "Why would anybody 'convert' 10 BTC to 10 scInflateBTCx2 knowing full well that scInflateBTCx2 runs a fractional reserve system and the guy with the other 10 scInflateBTCx2 will have his exchanged for 10 BTC half a microsecond later?"

    Historically the reason has been war.  This has been done many times over and over throughout history.  If you look at the creation of almost any central bank scheme, it has almost always been done to finance a war, and to pay soldiers an inflating currency because sound money is scarce at such times.

    When there is conflict, folks are very willing to "go for broke".  They have become convinced by TPTB that their life, and their way of life, and everything they care about will be lost of they don't accept the new scheme... and it is "illegal" not to do so, so they get put to death, imprisoned, called a traitor or whatever if they don't comply.

    If there is a geographical region that has a sound money system and a rule of law system, then the other geographical regimes that have only a rule of law system and have already pulled the con of paying their soldiers with inflation money have the military advantage.  Their soldiers are willing to die for funny money and medals, and your soldiers aren't, so they can afford more of them.


    So... what has all this got to do with Side Chains?  Not a lot, other than it is one mechanism that could be used to turn Bitcoin into "Military Government Inflation Coin" and require the use of that coin within a region by force of law, which of course the monetary authority could then inflate as needed and generate more as needed, diluting the bitcoin in the chain.


    The mechanism itself isn't the evil, it is just the tool.  It can be used for good or "necessary" evils.

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    November 18, 2014, 08:01:00 PM
     #17455

    why do ppl, including myself, always say that Bitcoin is going to have a binary outcome?

    it's b/c they understand that Bitcoin is about Money.  Sound fixed supply Money.  you know, the Money that has the chance to consume the Forex and gold markets.  in that sense, it has the chance to consume the entire fiat world; yes including stocks, bonds, insurance, just by being used as money alone.  it doesn't have to incorporate all those speculative assets directly within its protocol using SC's.  

    As much as a despise of what Gates said (in my words: "the blockchain tech is great, but as a money it's not so good"), you have to admit that the features 'decentralized', 'trustless', 'possibly anonymous' and 'uncensorable' are ones that would also be damn good features for stock exchange / dividend payments / all kinds of derivative gambling, ownership management, etc.

    If you want Bitcoin (the money) to conquer these areas and serve them as a liquid interchange money, wouldn't it be brilliant to have a technical solution that would allow some asset ledger (say the land ownership ledger) to interchange value with the money ledger (Bitcoin) and make atomic swaps across the chains possible?


    i guess, if it's possible.

    but are we asking too much?  can it really be achieved by the spvp?  that's the $5B question, b/c that's what we'll be putting at risk if SC's are wrong.
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    November 18, 2014, 08:01:41 PM
     #17456

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    imo, introducing the spvp into the source code, by itself, is a statement to the market that the BTC unit can be separated from its ultra-secure blockchain.  i might be wrong, but that breaks Bitcoin's sound money principles.  yes, ppl can inspect what hopefully will be open source code and don't have to move to a SC they don't like.  but to me, the potential will be there and as a forward looking person, i don't like that.  i might have to front run using my expectations and assumptions of what will be the consequences.

    Thank you for answering. I think I understand your concern, I just don't share it to a large degree (I think that risk is low). And I'm easily worried about these things: I even worry about changetip inflating the bitcoin money supply. I may just not be as forward-looking. But I definitely agree it's something we need to watch carefully.

    the other reason i don't like it and which i tried to avoid in my earlier post is the Blockstream for profit motive.  they have every incentive to encourage usage of SC's.  they say they won't construct a SC for a SC scam.  well, that's for anyone's definition.  and when there's money involved, i can't see how they won't take it when they have investors to please.  they can always use the same excuse after a SC failure "well, we didn't force anyone to use it".  yes, it bothers me that 40% of core devs + 3 of the top committers are under one paid roof.  that they could get something like this through into the source code is a clear conflict of interest and sends a bad message to the marketplace.

    You should provide an 'alternative payed roof' for bitcoin developers. I might join Wink

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    November 18, 2014, 08:10:12 PM
     #17457

    i would rather see gvts and orgs like the IMF have to buy BTC to use as reserves.  that would take us to the Moon:

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2248419

    i still see SC's as a way to break Bitcoin's money function by allowing a gvt sponsored currency to siphon BTC to SC w/o having to pay for them.  we need that the price ramps to sustain mining fees and establish Bitcoin as its own global independent currency.  forget asset toys.  as it is, Wall St is the only one who needs or wants those types of toys in the first place with a minority of Americans invested in these things.  even less by foreigners.  what ppl should want and need is Sound Money.  that is what this project is all about, imo.  and the nice thing is anyone who's currently in the Bitcoin system can just sit back, relax, and wait for it to happen.  the price charts still tell me we are destined for greatness.

    sorry cypher I'm slow, could you please explain to me how the bolded part is possible?  (serious question)

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    November 18, 2014, 08:11:19 PM
     #17458

    • they try to change Bitcoin.  change it by changing the source code which breaks the Sound Money function. [...] that is what the spvp does, it creates an offramp into all manner of these assets.
      So you're saying that a part of the real BTC is being chopped off and managed by a different source code base? The rules for the 1 million scBTC are different than for the original BTC? If so, I agree so far. What I don't understand: people will know this. scInflateBTCx2 has a public ledger and is run by miners using open source code. Why would anybody 'convert' 10 BTC to 10 scInflateBTCx2 knowing full well that scInflateBTCx2 runs a fractional reserve system and the guy with the other 10 scInflateBTCx2 will have his exchanged for 10 BTC half a microsecond later. There would be a continual run on the real BTC... it just wouldn't work, hence no BTC inflation.
    Maybe someone can be so kind to help me understand by answering some of above questions or disputing my assertions?

    Thanks!

    I can't speak for Cypherdoc, (and also don't agree with all of his criticisms) but I'll take a crack at expounding a bit on this one.

    The different rules for the 1 million scBTC may be pretty much anything. They need not be in a public ledger or have open source code, but even if they do, you ask "Why would anybody 'convert' 10 BTC to 10 scInflateBTCx2 knowing full well that scInflateBTCx2 runs a fractional reserve system and the guy with the other 10 scInflateBTCx2 will have his exchanged for 10 BTC half a microsecond later?"

    Historically the reason has been war.  This has been done many times over and over throughout history.  If you look at the creation of almost any central bank scheme, it has almost always been done to finance a war, and to pay soldiers an inflating currency because sound money is scarce at such times.

    When there is conflict, folks are very willing to "go for broke".  They have become convinced by TPTB that their life, and their way of life, and everything they care about will be lost of they don't accept the new scheme... and it is "illegal" not to do so, so they get put to death, imprisoned, called a traitor or whatever if they don't comply.

    If there is a geographical region that has a sound money system and a rule of law system, then the other geographical regimes that have only a rule of law system and have already pulled the con of paying their soldiers with inflation money have the military advantage.  Their soldiers are willing to die for funny money and medals, and your soldiers aren't, so they can afford more of them.


    So... what has all this got to do with Side Chains?  Not a lot, other than it is one mechanism that could be used to turn Bitcoin into "Military Government Inflation Coin" and require the use of that coin within a region by force of law, which of course the monetary authority could then inflate as needed and generate more as needed, diluting the bitcoin in the chain.


    The mechanism itself isn't the evil, it is just the tool.  It can be used for good or "necessary" evils.

    Thanks or your answer.

    Especially the part about "the party that convinced their soldiers to fight for funny money have better military" got me thinking.

    Oh, btw: a sidechain that might flourish in war times: the scInCaseOfWarAnonymizeBTC. Beware, though. Might be a trap!

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    Bitcoin replaces central, not commercial, banks


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    November 18, 2014, 08:14:52 PM
     #17459

    why do ppl, including myself, always say that Bitcoin is going to have a binary outcome?

    it's b/c they understand that Bitcoin is about Money.  Sound fixed supply Money.  you know, the Money that has the chance to consume the Forex and gold markets.  in that sense, it has the chance to consume the entire fiat world; yes including stocks, bonds, insurance, just by being used as money alone.  it doesn't have to incorporate all those speculative assets directly within its protocol using SC's.  

    It is not a question of whether or not these assets are denominated in BTC. The issue is how do you TRADE these assets.

    What ledger do you trust to register these assets in BTC?

    At the moment there are only one option : use an off-chain solutions that either operate through a completely centralized ledger or a network of trusted federation/oracles.

    The value proposition of sidechains is to reappropriate this trust as close as possible to the blockchain environment where ultimate trust reside. It is not a perfect solution but the closest one we have right 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 18, 2014, 08:18:16 PM
     #17460

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    imo, introducing the spvp into the source code, by itself, is a statement to the market that the BTC unit can be separated from its ultra-secure blockchain.  i might be wrong, but that breaks Bitcoin's sound money principles.  yes, ppl can inspect what hopefully will be open source code and don't have to move to a SC they don't like.  but to me, the potential will be there and as a forward looking person, i don't like that.  i might have to front run using my expectations and assumptions of what will be the consequences.

    You are, persistingly wrong.

    There exist dozens of ways already for the value of a BTC unit to be separated from the blockchain. Sidechains introduce an ideal way to leverage this ultra-secure blockchain so as to preserve the money principles by reducing as much as technically possible the need for trust.

    "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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