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Author Topic: Gold collapsing. Bitcoin UP.  (Read 2011232 times)
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December 30, 2014, 12:33:12 PM
 #19101

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9

I don't see it that way.

I see you were happy about coinlock saying this...

Quote
Now super-risky-coin collapses, I lose my Bitcoin because the information about the relative risks was hidden in the deterministic rate.

To this I would say: you already lost your Bitcoins when you swapped them for super-risky-coins. That information isn't hidden at all. When you 'move' (it's debatable wether that's a good expression to use) BTC -> scBTC you're well aware you're swapping your bitcoins for sidechain coins, aren't you?

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December 30, 2014, 12:33:14 PM
 #19102

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9
nullc :
About the only thing negative you can say about a system which is truly backed by Bitcoin is that it doesn't create huge incomes for traders. Many people wouldn't consider that much of a negative.

Does he heard about Soros?
When two things are pegged while they don't have the same economic features, then the pegged is temporary, and that creates profit opportunities and people prompted to accelerate the failure of the peg system.

It looks like sidechains people think because two things are pegged they magically become the same thing. From 1984 to 1997 the thai bath was pegged with the US dollar, that doesn't mean that the bath was the same thing than the dollar. Sooner or later the market forces end up destroying the top down price fixation.

Yep, that contorted remark by nullc is painfully naive.  He totally neglects the fact that these SC assets will have a  separate exchange price in fiat that certainly can and will be pumped and manipulated to all sorts of illogical levels. SC's don't solve any of those issues
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December 30, 2014, 12:34:41 PM
 #19103

Sidechain coins are Bitcoins.

No. There's time (cost) and risk between the two.

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December 30, 2014, 12:36:48 PM
 #19104

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9
nullc :
About the only thing negative you can say about a system which is truly backed by Bitcoin is that it doesn't create huge incomes for traders. Many people wouldn't consider that much of a negative.

Does he heard about Soros?
When two things are pegged while they don't have the same economic features, then the pegged is temporary, and that creates profit opportunities and people prompted to accelerate the failure of the peg system.

It looks like sidechains people think because two things are pegged they magically become the same thing. From 1984 to 1997 the thai bath was pegged with the US dollar, that doesn't mean that the bath was the same thing than the dollar. Sooner or later the market forces end up destroying the top down price fixation.

Yep, that contorted remark by nullc is painfully naive.  He totally neglects the fact that these SC assets will have a  separate exchange price in fiat that certainly can and will be pumped and manipulated to all sorts of illogical levels. SC's don't solve any of those issues

Please, we have been going over this times and times again. The exchange rate of a properly implemented 1:1 SC asset will, in time, closely track BTC prices for many logical reasons.

"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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December 30, 2014, 12:43:32 PM
 #19105

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9
nullc :
About the only thing negative you can say about a system which is truly backed by Bitcoin is that it doesn't create huge incomes for traders. Many people wouldn't consider that much of a negative.

Does he heard about Soros?
When two things are pegged while they don't have the same economic features, then the pegged is temporary, and that creates profit opportunities and people prompted to accelerate the failure of the peg system.

It looks like sidechains people think because two things are pegged they magically become the same thing. From 1984 to 1997 the thai bath was pegged with the US dollar, that doesn't mean that the bath was the same thing than the dollar. Sooner or later the market forces end up destroying the top down price fixation.

Yep, that contorted remark by nullc is painfully naive.  He totally neglects the fact that these SC assets will have a  separate exchange price in fiat that certainly can and will be pumped and manipulated to all sorts of illogical levels. SC's don't solve any of those issues

Please, we have been going over this times and times again. The exchange rate of a properly implemented 1:1 SC asset will, in time, closely track BTC prices for many logical reasons.

'pumped and manipulated to all sorts of illogical levels'? Yeah, that's ridiculous. If the peg works, arbitrage would stop that kind of thing in its roots. Also: do you really thing there would be sidechainCoin <-> fiat exchange? I doubt that makes much sense since the peg plus existing bitcoin <-> fiat exchanges can easily be used, no?

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December 30, 2014, 12:43:34 PM
 #19106

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9

I don't see it that way.

I see you were happy about coinlock saying this...

Quote
Now super-risky-coin collapses, I lose my Bitcoin because the information about the relative risks was hidden in the deterministic rate.

To this I would say: you already lost your Bitcoins when you swapped them for super-risky-coins. That information isn't hidden at all. When you 'move' (it's debatable wether that's a good expression to use) BTC -> scBTC you're well aware you're swapping your bitcoins for sidechain coins, aren't you?


If that's a real question, then, but of course.  SC's mechanics are easy to understand. But economically do they work and will they be good for Bitcoin? The answer, I think, is more philosophical.

I think Bitcoin is, and has always been, simply  money. It has gotten to where it has based on economic assumptions of how the blockchain works currently. SC's change all those assumptions. That is a mistake, imo.
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December 30, 2014, 12:45:03 PM
 #19107

I don't think traditional currency peg apply. The mechanics behind these pegs are not solid and open to the failures you've illustrated.

The situation here is one where a sidechain unit has its equivalent in BTC collateral. A mathematically enforced 1:1 convertibility between both units. Each units' exchange rate value might differ but the protocol dictates that they are exchangeable 1:1 no matter their economic value. That is because for every unit on a sidechain there exist an equivalent amount of BTC locked in an "escrow" type transaction.

Theoratically, and I might be wrong, but even if the perceived market value of the unit on a sidechain would come to 0 one could still return is sidecoin for its equivalent in BTC.
If markets are efficient then market value of pure 1:1 sidechains should only ever be *higher* than BTC.  They should never have the same market value.  The time delay via SPV to use the sidechain makes it such that there should be a premium on no-delay (bought from market).

We never did find out why the SC marketing folks are using the economically discredited term "peg", for something that is so very different from a peg in any traditional sense of the word.  It is bound to confuse people.

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December 30, 2014, 12:45:39 PM
 #19108

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9

I don't see it that way.

I see you were happy about coinlock saying this...

Quote
Now super-risky-coin collapses, I lose my Bitcoin because the information about the relative risks was hidden in the deterministic rate.

To this I would say: you already lost your Bitcoins when you swapped them for super-risky-coins. That information isn't hidden at all. When you 'move' (it's debatable wether that's a good expression to use) BTC -> scBTC you're well aware you're swapping your bitcoins for sidechain coins, aren't you?


If that's a real question, then, but of course.  SC's mechanics are easy to understand. But economically do they work and will they be good for Bitcoin? The answer, I think, is more philosophical.

I think Bitcoin is, and has always been, simply  money. It has gotten to where it has based on economic assumptions of how the blockchain works currently. SC's change all those assumptions. That is a mistake, imo.

SC's would change some assumptions but most certainly not all.

It is also debatable whether those changes will hinder the Bitcoin blockchain or help it thrive.

"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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December 30, 2014, 12:48:07 PM
 #19109

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9
nullc :
About the only thing negative you can say about a system which is truly backed by Bitcoin is that it doesn't create huge incomes for traders. Many people wouldn't consider that much of a negative.

Does he heard about Soros?
When two things are pegged while they don't have the same economic features, then the pegged is temporary, and that creates profit opportunities and people prompted to accelerate the failure of the peg system.

It looks like sidechains people think because two things are pegged they magically become the same thing. From 1984 to 1997 the thai bath was pegged with the US dollar, that doesn't mean that the bath was the same thing than the dollar. Sooner or later the market forces end up destroying the top down price fixation.

Yep, that contorted remark by nullc is painfully naive.  He totally neglects the fact that these SC assets will have a  separate exchange price in fiat that certainly can and will be pumped and manipulated to all sorts of illogical levels. SC's don't solve any of those issues

Please, we have been going over this times and times again. The exchange rate of a properly implemented 1:1 SC asset will, in time, closely track BTC prices for many logical reasons.

'pumped and manipulated to all sorts of illogical levels'? Yeah, that's ridiculous. If the peg works, arbitrage would stop that kind of thing in its roots. Also: do you really thing there would be sidechainCoin <-> fiat exchange? I doubt that makes much sense since the peg plus existing bitcoin <-> fiat exchanges can easily be used, no?

Yes, there should be markets that arise. Have you read Konrad Grafs paper? 
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December 30, 2014, 12:48:28 PM
 #19110

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9

I don't see it that way.

I see you were happy about coinlock saying this...

Quote
Now super-risky-coin collapses, I lose my Bitcoin because the information about the relative risks was hidden in the deterministic rate.

To this I would say: you already lost your Bitcoins when you swapped them for super-risky-coins. That information isn't hidden at all. When you 'move' (it's debatable wether that's a good expression to use) BTC -> scBTC you're well aware you're swapping your bitcoins for sidechain coins, aren't you?


If that's a real question, then, but of course.  SC's mechanics are easy to understand. But economically do they work and will they be good for Bitcoin? The answer, I think, is more philosophical.

I think Bitcoin is, and has always been, simply  money. It has gotten to where it has based on economic assumptions of how the blockchain works currently. SC's change all those assumptions. That is a mistake, imo.

If people can be lured into thinking their scBTC are BTC (even just 'monetarily'), then yes, that's a danger. The same kind of danger as thinking mtgoxBTC are BTC.

going back to ccc now. side-note: the 'hacker crowd' seems much more open to Bitcoin than a year ago.

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December 30, 2014, 12:51:24 PM
 #19111

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9

I don't see it that way.

I see you were happy about coinlock saying this...

Quote
Now super-risky-coin collapses, I lose my Bitcoin because the information about the relative risks was hidden in the deterministic rate.

To this I would say: you already lost your Bitcoins when you swapped them for super-risky-coins. That information isn't hidden at all. When you 'move' (it's debatable wether that's a good expression to use) BTC -> scBTC you're well aware you're swapping your bitcoins for sidechain coins, aren't you?


If that's a real question, then, but of course.  SC's mechanics are easy to understand. But economically do they work and will they be good for Bitcoin? The answer, I think, is more philosophical.

I think Bitcoin is, and has always been, simply  money. It has gotten to where it has based on economic assumptions of how the blockchain works currently. SC's change all those assumptions. That is a mistake, imo.

SC's would change some assumptions and most certainly not all.

It is also debatable whether those changes will hinder the Bitcoin blockchain or help it thrive.

Those are very logical statements with which I agree. Clearly I have my opinions though. 
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December 30, 2014, 12:52:09 PM
 #19112

I don't think traditional currency peg apply. The mechanics behind these pegs are not solid and open to the failures you've illustrated.

The situation here is one where a sidechain unit has its equivalent in BTC collateral. A mathematically enforced 1:1 convertibility between both units. Each units' exchange rate value might differ but the protocol dictates that they are exchangeable 1:1 no matter their economic value. That is because for every unit on a sidechain there exist an equivalent amount of BTC locked in an "escrow" type transaction.

Theoratically, and I might be wrong, but even if the perceived market value of the unit on a sidechain would come to 0 one could still return is sidecoin for its equivalent in BTC.
If markets are efficient then market value of pure 1:1 sidechains should only ever be *higher* than BTC.  They should never have the same market value.  The time delay via SPV to use the sidechain makes it such that there should be a premium on no-delay (bought from market).

I agree, in a sense the price of BTC should be the floor for the price of a 1:1 sidechain unit. The logic of this is if bitcoins can be algorithmically "redeemed" for an equivalent amount of sidechain units then the perceived market value of these units can not be lower than their collateral BTC units' value.

"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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December 30, 2014, 12:54:30 PM
 #19113

for those who miss their daily SC's hit, go here for an excellent discussion btwn this guy Coinlock and nullc over on Reddit.  Coinlock gives some very clear and cogent arguments against the peg and shuts nullc down real quick:

http://www.reddit.com/r/Bitcoin/comments/2qpdnc/gregory_maxwell_how_i_went_from_bitcoin_skeptic/cn8dne9

I don't see it that way.

I see you were happy about coinlock saying this...

Quote
Now super-risky-coin collapses, I lose my Bitcoin because the information about the relative risks was hidden in the deterministic rate.

To this I would say: you already lost your Bitcoins when you swapped them for super-risky-coins. That information isn't hidden at all. When you 'move' (it's debatable wether that's a good expression to use) BTC -> scBTC you're well aware you're swapping your bitcoins for sidechain coins, aren't you?


If that's a real question, then, but of course.  SC's mechanics are easy to understand. But economically do they work and will they be good for Bitcoin? The answer, I think, is more philosophical.

I think Bitcoin is, and has always been, simply  money. It has gotten to where it has based on economic assumptions of how the blockchain works currently. SC's change all those assumptions. That is a mistake, imo.

If people can be lured into thinking their scBTC are BTC (even just 'monetarily'), then yes, that's a danger. The same kind of danger as thinking mtgoxBTC are BTC.

going back to ccc now. side-note: the 'hacker crowd' seems much more open to Bitcoin than a year ago.


Clearly people can be duped into thinking  they  are bitcoins. The Blockstream people have told us they are multiple times.

And altcoins are  evidence people will believe anything.
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December 30, 2014, 01:21:21 PM
 #19114

Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.

Time will tell I suppose.

Fwiw 2wpeg sidechains could be implemented now, without any changes to the btc protocol...

I understand that the two-way peg ensures that no extra bitcoins can be created on the main chain by going through a side chain.  But will the Bitcoin Network ensure that no extra SideCoins are generated on the side chain, before they are brought back?  That is, can one implement MtGOX on a sidechain?

EDIT: I see that someone partially answered this question above.

Academic interest in bitcoin only. Not owner, not trader, very skeptical of its longterm success.
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December 30, 2014, 01:24:20 PM
 #19115

Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.

Time will tell I suppose.

Fwiw 2wpeg sidechains could be implemented now, without any changes to the btc protocol...

I understand that the two-way peg ensures that no extra bitcoins can be created on the main chain by going through a side chain.  But will the Bitcoin Network ensure that no extra SideCoins are generated on the side chain, before they are brought back?  That is, can one implement MtGOX on a sidechain?

EDIT: I see that someone partially answered this question above.

The peg, that is, the exchange rate between the mainchain and the sidechain can be deterministic and one could create a inflationary sidechain but the network will not allow more coins to return to the mainchain than what got out.

"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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December 30, 2014, 01:34:31 PM
 #19116

Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.

Time will tell I suppose.

Fwiw 2wpeg sidechains could be implemented now, without any changes to the btc protocol...

I understand that the two-way peg ensures that no extra bitcoins can be created on the main chain by going through a side chain.  But will the Bitcoin Network ensure that no extra SideCoins are generated on the side chain, before they are brought back?  That is, can one implement MtGOX on a sidechain?

EDIT: I see that someone partially answered this question above.

The peg, that is, the exchange rate between the mainchain and the sidechain can be deterministic and one could create a inflationary sidechain but the network will not allow more coins to return to the mainchain than what got out.

In other words, the Bitcoin protocol will not ensure that the SideCoins are pegged to the bitcoins that were transferred.  The SideCoin protocol can do with SideCoins anything its designers choose to do.  Correct?

Will it be possible to create SideCoins after transferring 0 BTC to the sidechain? Or just 1 satoshi?

Academic interest in bitcoin only. Not owner, not trader, very skeptical of its longterm success.
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December 30, 2014, 01:40:55 PM
 #19117

Who actually pegs the transaction? With many different versions of the blockchain, how do you reach  consensus without an actual bitcoin transaction?

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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December 30, 2014, 01:51:12 PM
 #19118

Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.

Time will tell I suppose.

Fwiw 2wpeg sidechains could be implemented now, without any changes to the btc protocol...
Let's see a two way peg with test bitcoins and test litecoins at an arbitrary peg. Has anyone created an atomic swap between chains without human intervention?

No such a thing is in place, that I'm aware of.

Having said that, what I meant with "implemented" was the federeted servers with mutlisig scheme. Afaik atomic swaps concept is orthogonal to the way the sidechain is built, it even applies to alt chains. Dunno what you meant with "w/o human intervention" though. Scripted?

In any case I'm very eager to see a first "actual" sidechains (if any).

Bitcoin is a participatory system which ought to respect the right of self determinism of all of its users - Gregory Maxwell.
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December 30, 2014, 02:12:06 PM
 #19119

Side chains are probably unicorns . I say probably because I haven't seen the proof of concept demonstrated nor have a real world analogy. It seems like vaporware.

Time will tell I suppose.

Fwiw 2wpeg sidechains could be implemented now, without any changes to the btc protocol...

I understand that the two-way peg ensures that no extra bitcoins can be created on the main chain by going through a side chain.  But will the Bitcoin Network ensure that no extra SideCoins are generated on the side chain, before they are brought back?  That is, can one implement MtGOX on a sidechain?

EDIT: I see that someone partially answered this question above.

The peg, that is, the exchange rate between the mainchain and the sidechain can be deterministic and one could create a inflationary sidechain but the network will not allow more coins to return to the mainchain than what got out.

In other words, the Bitcoin protocol will not ensure that the SideCoins are pegged to the bitcoins that were transferred.  The SideCoin protocol can do with SideCoins anything its designers choose to do.  Correct?

Will it be possible to create SideCoins after transferring 0 BTC to the sidechain? Or just 1 satoshi?

The peg rate is a function of the sidechain's and is hard coded into the protocol. The sidecoin protocol can decide on whatever rate of exchange (peg) he desires.

Yes, inflationary sidechains can be created

"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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December 30, 2014, 02:19:23 PM
 #19120

Who actually pegs the transaction? With many different versions of the blockchain, how do you reach  consensus without an actual bitcoin transaction?

It seems you haven't gotten much far in your own research of the technology.

I will quote Konrad Graf here :

Quote
A sidechain peg to bitcoin is a technical peg, not a price peg

About consensus of chains and how the "peg" work, see here :

http://blockstream.com/sidechains.pdf
http://gendal.me/2014/10/26/a-simple-explanation-of-bitcoin-sidechains/

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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