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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1807724 times)
Peter R
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January 05, 2015, 05:47:29 AM
 #19661

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half. 

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool.  The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block. 

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January 05, 2015, 06:10:13 AM
 #19662

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.  

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool.  The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.  

Yes, but "simply" is an understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

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January 05, 2015, 06:11:30 AM
 #19663

Please let me try again to spread my ignorance about sidechains.  Grin

Perhaps the sidechains project could be renamed "ways in which the bitcoin network (BCN) can interact with other internet services, and how the bitcoin protocol (BCP) would have to be modified to allow them".  These "other services" being the "sidechains".

Different people have different ideas of what sort of services would qualify for "sidechains", but let's not focus on that, focus instead on the interactions.  In order to exclude those variable assumptions, I will use the term "bitcoin-dependent service" (BDS) instead of "sidechain".

I gather that there are at least three kinds of interactions that are being discussed:

1. Bitcoins may be somehow be "moved"  from the BTC blockchain to the BDS, who would handle them in some way, and eventually "return" them to the BTC blockchain.  
...

2. The BDS may exploit the power of the BCN to secure its data structures against tampering or rewind
...
  
3. The BDS could use the full power of the BCN to implement its own PoW mechanisms by merged mining
...

  
Does this make any sense?


As you put

1. Mnt Gox, can run off with one's Bitcoin or a Bank or service could function on fractional reserves untill there is a confidence call and a proverbial run on the bank.

2. Is not necessarily parasitic, if it claims to be a better money sure it's 100% parasitic, there are other ways to achieve the same security one eg. Open Transaction with federated oracles. But any innovative multisig decentralized authoring system could achieve this with no change to the BCP.

3. MM is a good idea, while it limits innovation to just PoW, it can tap into the sea of hashing that goes to waste.

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam. 

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.
 
Your conclusion is correct but I'm not sure how deep your understanding is, miners can manipulate (by mining empty blocks in the BDS or the BCN, controlling the flow of BTC and herding markets and controlling money flow, even restricting money supply on demand.

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cypherdoc
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January 05, 2015, 06:14:39 AM
 #19664

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.  

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool.  The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.  

Yes, but "simply" is an understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

how does the IBLT scale with the size of the block UTXO set?  linearly or by some other ratio?

edit:  actually iirc, it scales with the size of the difference btwn UTXO set estimates across the network.  iow, a UTXO set estimated to be 99% similar across the network will allow a miner to send a smaller IBLT when solving a block than a UTXO set estimated to be only 89% similar across the network.  is that right?
Peter R
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January 05, 2015, 06:17:45 AM
 #19665

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half.  

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool.  The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block.  

Yes, but "simply" is a massive understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

Agreed.  I didn't mean to understate the importance of IBLTs; I just wanted to point out for readers that IBLTs only improve block propagation (still an important problem) … and that each TX still needs to be processed by each node (linear BW scaling with TX/sec).  

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January 05, 2015, 06:23:35 AM
 #19666

The problem is not so much the storage. Bandwidth is where you'll run into a bottleneck

With that, IBLT can slash bandwidth requirements by at least 2 orders of magnitude. Only full node bootstrapping and re-sync will remain bandwidth intensive.

It will cut full-node bandwidth requirements by no more than in half. 

IBLTs make propagation of solved blocks orders of magnitude more efficient, but that's only because the nodes already have the TXs in mempool.  The TXs still need to be processed by each node as they're broadcast across the network; IBLTs simply prevent the TXs from being transmitted a second time with each solved block. 
Good point, I'd be more open to distributing the network tragic in a manner similar to the way SideChain would manage it when we have to manage that type of bandwidth.

From my perspective as things stand today the proposed SC change to the Bitcoin protocol has more risk than benefit.

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brg444
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January 05, 2015, 06:30:58 AM
 #19667

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.  

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out of it.

In a properly implemented, ideal sidechain there is no block subsidy.

"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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January 05, 2015, 06:44:43 AM
 #19668

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.  

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out.

Why would a miner MM a BDS?
Transaction fees, nothing but a good old honest 1:1 exchange is needed the token being the BTC substitute on the BDS blockchain. (Sure there will be SC with inflationary block subsidies call them what you like, I'll call them SC's)

Just a thought but alts add more value to the crypto market than SC, the reason those that fail illustrate the markets preference for a simple better money. SC will not succumb to the same market evolution. Alts that aren't scams will provide new utility.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
brg444
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January 05, 2015, 06:48:14 AM
 #19669

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.  

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out.

Why would a miner MM a BDS?
Transaction fees, nothing but a good old honest 1:1 exchange is needed the token being the BTC substitute of the BDS blockchain. (Sure there will be SC with inflationary block subsidies call them what you like, I'll call them SC's)

Just a thought but alts add more value to the crypto market than SC, the reason those that fail illustrate the markets preference for a simple better money. SC will not succumb to the same market evolution. Alts that aren't scams will provide new utility.

I fail to see the point you are trying to make.

Your argument seems to be that sidechains change miners incentive who can now earn subsidy for their work without having to secure the Bitcoin network.

Can you explain how this is any different that a miner who at this very moment can decide to MM Bitcoin and Namecoin?

"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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January 05, 2015, 06:56:06 AM
 #19670


Yes, but "simply" is an understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

Doesn't matter if the transaction fees are high or low.  Doesn't matter if the inflation-based reward 50 BTC or 0 BTC.  Doesn't matter if a block is empty or filled with 100,000*60*10 transactions.  The amount a sha256 miner nets approaches zero.  And if Bitcoin valuations fluxuate that net will drop below zero.  This due to the simple fact that there is no limit on supply of gear.  Only a lag.

None of the Libertarian brain-trust (justusravnier, cypherdoc, etc) want to touch this one.  Surprise, surprise.

The answer I was waiting for is that actually mining will be profitable for some (marginally) and not for others depending on various factors  (operational costs, economies of scale, ability to leverage otherwise idle resources, etc.)  What will almost certainly happen will be that alternate revenue streams will be tapped.  In http-land one such tap is known by the metric called 'eyeballs' and it's why you see ads all over the place.  Another tap is for intel.  Some of it you see when you notice targeted ads...some of it you don't (normally) see at all...  'Where who spends what' is an especially rich vein of actionable intelligence, BTW, and one the operators can easily get once they've got control of the system generally.

The salient point is that the only outfits who will be competitive in providing this support (and currently Bitcoin is wholly dependent on sha256 mining) are the companies who are already giants.  Perhaps also minor giants who sell intel to the major giants (both of whom are under the thumb of Big Brother.)  Well OK fine you might say.  But I've already got a Visa card and a PayPal account so yet another such thing doesn't hold much interest for me.

What does pique my interest is a solution which can be feasibly operated covertly in people's garages scattered about the world in a SHTF scenario.  That's still the case for Bitcoin at the present scale an it's something I don't want to lose.


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January 05, 2015, 07:04:46 AM
 #19671

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam. 

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out.

Why would a miner MM a BDS?
Transaction fees, nothing but a good old honest 1:1 exchange is needed the token being the BTC substitute of the BDS blockchain. (Sure there will be SC with inflationary block subsidies call them what you like, I'll call them SC's)

Just a thought but alts add more value to the crypto market than SC, the reason those that fail illustrate the markets preference for a simple better money. SC will not succumb to the same market evolution. Alts that aren't scams will provide new utility.

I fail to see the point you are trying to make.

Your argument seems to be that sidechains change miners incentive who can now earn subsidy for their without having to secure the Bitcoin network.

Can you explain how this is any different that a miner who at this very moment can decide to MM Bitcoin and Namecoin?

MM NMC is converted to BTC at a market rate.
MM a SC is similar while it's small, but I can hold the transaction fees regardless of the market and convert at a fixed rate guaranteed by the Bitcoin protocol.

In 10 years when transaction fees supersede Bitcoin block rewards the blockchain with the greater revenue will attract the most mining, as time goes on it becomes more unlikely it will be Bitcoin, the skeptic in me believes the economic majority who believe a modest 2% inflation is healthy for an economy will prefer a blockchain with that feature.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
brg444
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January 05, 2015, 07:14:06 AM
 #19672

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam.  

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out.

Why would a miner MM a BDS?
Transaction fees, nothing but a good old honest 1:1 exchange is needed the token being the BTC substitute of the BDS blockchain. (Sure there will be SC with inflationary block subsidies call them what you like, I'll call them SC's)

Just a thought but alts add more value to the crypto market than SC, the reason those that fail illustrate the markets preference for a simple better money. SC will not succumb to the same market evolution. Alts that aren't scams will provide new utility.

I fail to see the point you are trying to make.

Your argument seems to be that sidechains change miners incentive who can now earn subsidy for their without having to secure the Bitcoin network.

Can you explain how this is any different that a miner who at this very moment can decide to MM Bitcoin and Namecoin?

MM NMC is converted to BTC at a market rate.
MM a SC is similar while it's small, but I can hold the transaction fees regardless of the market and convert at a fixed rate guaranteed by the Bitcoin protocol.

In 10 years when transaction fees supersede Bitcoin block rewards the blockchain with the greater revenue will attract the most mining, as time goes on it becomes more unlikely it will be Bitcoin, the skeptic in me believes the economic majority who believe a modest 2% inflation is healthy for an economy will prefer a blockchain with that feature.

I see, I guess we're back to square one whereas I believe at this point it will be trivial for miners to equally mine ANY chain with supporting considerable value so as to substain an ecosystem of co-existing blockchains without any incentive to favor a particular one.

Miners have X amount of hashing power. There is no valuable argument IMO for them to cut short their profits by allocating this hashing only to one particular sidechain.

I think I have mentioned to you previously that I consider cryptocurrency to be in some sense the democratization of money. Of course, this means we should expect 2% inflationary sidechains to eventually show up. They might indeed gather considerable traction from those who favor inflationary economies. On the other hand, there's a reason why you, Adrian-x, and a bunch of us here consider fixed supply money to be favorable : we believe it will can eventually lead to a healthier economic system. If we are right then the economic majority will, at last, have a free-market alternative to consider other than their inflationary currency.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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January 05, 2015, 07:17:28 AM
 #19673



...This due to the simple fact that there is no limit on supply of gear...


Roll Eyes Huh I felt those econ 101 insults were a little harsh untill I read this line.

Real world economic constraints are a limit on the supply of mining gear, just the risk that it could be a bad investment validates the reward.

Have you seen the difficulty lately, it moved against me despite the price drop and R&D lag before gen4 ASIC's are implemented.

Crazy but some schmuck somewhere thinks it's a good idea to burn real world electricity and double digit MW of it. All to earn a fiew Bitcoin.

I bet it's him dumping on the market right now to cover overhead, cheep coins for sure if it is him.

Thank me in Bits 12MwnzxtprG2mHm3rKdgi7NmJKCypsMMQw
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January 05, 2015, 07:26:07 AM
 #19674

The way BlockStream has proposed to manage what you call BDS is to have in principal the multisig authorizing of Bitcoin transactions in and out of different secured ledgers, this will alow miners to MM BDS's in exchange for a token that is guaranteed to be redeemable in BTC by the BCP.

The perversion is miners could MM a BDS earn additional Bitcoin, without being forced to mine on the BCP or use there hashing power to protect the BCN.

MM = GOOD, but MM for BTC* is an attack at the very incentives that protect the BCN.

*MM alts are subject to market force, so while you can exchange them for BTC, the BCN is unaffected by them, if they gain value it will be a utilitarian value unsupported by the BCN, and thus just grow the ecosystem, otherwise it will shrivel and die as a scam. 

MM a BDS that gives a token that is redeemable for BTC regardless of market rates allows miners to earn BTC equivalent tokens without contributing there hashing power (securing the Bitcoin blockchain) on the BCN, or any work to the greater economy. I.e. it has similar characteristics to our financial system today. What changes is just trust the central bank now becomes just trust the protocol. Making a change to the BCP to alow this is evil at the core.

Again, this doesn't seem quite right to me.

"BDS" that give a token (block subsidy) are alts. They are in nature inflationary and by no means can you redeem these units for equivalent amounts of BTC.

Remember, you can only return to the mainchain what has been locked out.

Why would a miner MM a BDS?
Transaction fees, nothing but a good old honest 1:1 exchange is needed the token being the BTC substitute of the BDS blockchain. (Sure there will be SC with inflationary block subsidies call them what you like, I'll call them SC's)

Just a thought but alts add more value to the crypto market than SC, the reason those that fail illustrate the markets preference for a simple better money. SC will not succumb to the same market evolution. Alts that aren't scams will provide new utility.

I fail to see the point you are trying to make.

Your argument seems to be that sidechains change miners incentive who can now earn subsidy for their without having to secure the Bitcoin network.

Can you explain how this is any different that a miner who at this very moment can decide to MM Bitcoin and Namecoin?

MM NMC is converted to BTC at a market rate.
MM a SC is similar while it's small, but I can hold the transaction fees regardless of the market and convert at a fixed rate guaranteed by the Bitcoin protocol.

In 10 years when transaction fees supersede Bitcoin block rewards the blockchain with the greater revenue will attract the most mining, as time goes on it becomes more unlikely it will be Bitcoin, the skeptic in me believes the economic majority who believe a modest 2% inflation is healthy for an economy will prefer a blockchain with that feature.

I see, I guess we're back to square one whereas I believe at this point it will be trivial for miners to mine ANY chain with supporting considerable value so as to substain an ecosystem of blockchains without any incentive to favor a particular one.

Miners have X amount of hashing power. There is no valuable argument IMO for them to cut short their profits by allocating this hashing only to one particular sidechain.

I'm a miner, not a particularly bright one,  but for sure once SC are implemented I'll be mining as many as I can practically manage, and if I controlled enough hashing power I'd be manipulating the flow of BTC in and out trying to disturb a fixed market equilibrium buying low and converting back, it's less dishonest than pool hopping it's just using the protocol as designed.

But why introduce that problem in the first place.

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January 05, 2015, 07:32:49 AM
 #19675

if I controlled enough hashing power I'd be manipulating the flow of BTC in and out trying to disturb a fixed market equilibrium buying low and converting back,

Please explain how you would do that.

"I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash." Hal Finney, Dec. 2010
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January 05, 2015, 07:55:18 AM
 #19676

how does the IBLT scale with the size of the block UTXO set?  linearly or by some other ratio?

edit:  actually iirc, it scales with the size of the difference btwn UTXO set estimates across the network.  iow, a UTXO set estimated to be 99% similar across the network will allow a miner to send a smaller IBLT when solving a block than a UTXO set estimated to be only 89% similar across the network.  is that right?

Yes. The size of an IBLT does depend upon the average expected number of differences between the unconfirmed tx mempools of the majority of the nodes. Because each node has independent choice on which tx to accept or reject then it is impossible to be precise, in advance, about how efficient IBLT will be. Miners will always want to propagate small blocks, so there will be an incentive for mining nodes to find consensus on their tx mempools. Gavin describes it:

RE: O(1) versus O(some-function-of-total-number-of-transactions):

Yes, it will depend on whether or not the number of differences goes up as the number of transactions goes up.

The incentives align so it is in everybody's best interest to make the differences as small as possible. I wouldn't be surprised if that causes innovations to drive the actual size to O(1) minus an increasing constant, as code gets better at predicting which transactions our peers do or don't have.

It is also worth noting that IBLT can be implemented on top of other block propagation models, such as Matt Corallo's block relay system, which already saves on bandwidth.

Agreed.  I didn't mean to understate the importance of IBLTs; I just wanted to point out for readers that IBLTs only improve block propagation (still an important problem) … and that each TX still needs to be processed by each node (linear BW scaling with TX/sec).  

Thanks for making the clarification.


Yes, but "simply" is an understatement. Real-time tx cross the network uniformly, with enormous capacity already available, perhaps 1000 TPS. It is block propagation which is time critical where milliseconds count. When a block is solved the rest of the mining network is then hashing uselessly until the block is fully propagated. Incentives are perverse, against large blocks which are ultimately needed to fund the network via fees rather than rewards. Removing the bottleneck for block propagation is a huge win for scaling Bitcoin.

Doesn't matter if the transaction fees are high or low.  Doesn't matter if the inflation-based reward 50 BTC or 0 BTC.  Doesn't matter if a block is empty or filled with 100,000*60*10 transactions.  The amount a sha256 miner nets approaches zero.  And if Bitcoin valuations fluxuate that net will drop below zero.  This due to the simple fact that there is no limit on supply of gear.  Only a lag.

None of the Libertarian brain-trust (justusravnier, cypherdoc, etc) want to touch this one.  Surprise, surprise.

The answer I was waiting for is that actually mining will be profitable for some (marginally) and not for others depending on various factors  (operational costs, economies of scale, ability to leverage otherwise idle resources, etc.)  What will almost certainly happen will be that alternate revenue streams will be tapped.  In http-land one such tap is known by the metric called 'eyeballs' and it's why you see ads all over the place.  Another tap is for intel.  Some of it you see when you notice targeted ads...some of it you don't (normally) see at all...  'Where who spends what' is an especially rich vein of actionable intelligence, BTW, and one the operators can easily get once they've got control of the system generally.

The salient point is that the only outfits who will be competitive in providing this support (and currently Bitcoin is wholly dependent on sha256 mining) are the companies who are already giants.  Perhaps also minor giants who sell intel to the major giants (both of whom are under the thumb of Big Brother.)  Well OK fine you might say.  But I've already got a Visa card and a PayPal account so yet another such thing doesn't hold much interest for me.

What does pique my interest is a solution which can be feasibly operated covertly in people's garages scattered about the world in a SHTF scenario.  That's still the case for Bitcoin at the present scale an it's something I don't want to lose.

To be honest, I have not previously considered the points you make above. I have always taken Satoshi's block rewards->fees evolution at face value, and am not convinced that the majority of miners will work for zero income. Obviously this does happen to some of them, occasionally.

A real-world analogy must be the oil market. With the oil price down 45% a lot of producers are unprofitable, pumping for zero, and considering closing down. But there are profitable producers and the oil industry will continue, even if the price stays low and half of the producers go out of business.

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January 05, 2015, 08:27:12 AM
 #19677

Please let me try again to spread my ignorance about sidechains.  Grin

Your conclusion is correct but I'm not sure how deep your understanding is,

Thanks for the reply.  My understanding is obviously quite limited.    My first difficulty is this:

Perhaps the sidechains project could be renamed "ways in which the bitcoin network (BCN) can interact with other internet services, and how the bitcoin protocol (BCP) would have to be modified to allow them".  These "other services" being the "sidechains".

Different people have different ideas of what sort of services would qualify for "sidechains", but let's not focus on that, focus instead on the interactions.  In order to exclude those variable assumptions, I will use the term "bitcoin-dependent service" (BDS) instead of "sidechain".

I would appreciate comments on the point above.  Namely, that trying to focus on what the "sidechains" are and what they can do or cannot do internally is neither desirable (because it would restrict innovation) nor possible (because a service that depends on bitcoin but does not qualify as a "sidechain", if it is useful, would be implemented anyway, and would use the BCN anyway). 

Instead, I think that what the "sidechains project" can and should do is to design a small set of basic BCN-BDS interaction mechanisms, that can be used by any BDS as it sees fit; that is, a very general and simple "API" for the bitcoin network. 

I would compare designing these mechanisms to designing a programming language, and trying to specify or constrain the "sidechains" to trying to specify or constrain what programs could be write in that language.

What would you say to this view? Is the "sidechain project" gong in this direction -- a "bitcoin network API"? 

Academic interest in bitcoin only. Not owner, not trader, very skeptical of its longterm success.
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January 05, 2015, 11:11:10 AM
 #19678

Instead, I think that what the "sidechains project" can and should do is to design a small set of basic BCN-BDS interaction mechanisms, that can be used by any BDS as it sees fit; that is, a very general and simple "API" for the bitcoin network. 

There are existing "APIs" that exchanges, OpenTransactions, payment channels use, op-codes!: op-sig and opmultisig and op-timelock  sidechains proposes a fourth one op-spvmultisig.  Thats it people can code whatever they want with those opcodes as now but just with one more...

Quote from: JorgeStolfi
I would compare designing these mechanisms to designing a programming language, and trying to specify or constrain the "sidechains" to trying to specify or constrain what programs could be write in that language.

constraining what you can use in languages is generally hard.  bitcoin script does have some constraints, and some of those constraints are a good thing(tm) for security and grey goo avoidance.

Quote from: JorgeStolfi
What would you say to this view? Is the "sidechain project" gong in this direction -- a "bitcoin network API"? 

as its a p2p network with a security model, the API is going to be smart-contracts.  (A local API without smart-contract enforcement is meaningless to the network)

Adam

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January 05, 2015, 11:28:24 AM
 #19679

if I controlled enough hashing power I'd be manipulating the flow of BTC in and out trying to disturb a fixed market equilibrium buying low and converting back,

Please explain how you would do that.
Presumably he refers to sidechains.pdf section 6.1 which describes the forgeability during the contest period by sufficient proof of work via mining.

Quote from: sidechains.pdf
6.1 Hashpower attack resistance
The main thrust of this paper surrounds two-way peg using SPV proofs, which are forgeable by a 51%-majority and blockable by however much hashpower is needed to build a sufficiently-long proof during the transfer’s contest period. (There is a tradeoff on this latter point — if 33% hashpower can block a proof, then 67% is needed to successfully use a false one, and so on.)

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January 05, 2015, 11:45:19 AM
 #19680

I'm still numb from reading the Side Chain white paper and trying to figure how they plan to wrangle their mining pools into a reliable source of metadata. I'll await details on that.
If you think Side Chains are sketchy, check out the Internet of Coins white paper.
I only glanced at it so far. First of all, why does everyone seem to think PoS is so great an incentive? Answer: Because human labor can be farmed cheaper and easier than technology. Then there's Proof of Allocation. The thing is, you have to trade something for something else.  I came up with a rudimentary (and completely ignored) idea for a multicoin system in 2012 based on Rock Paper Scissors as the analog called Proof of Merit.

I don't understand these kitchen sink mentalities. I'm starting to like Bitcoin as money more and more, because humans will always find greater levels of abstraction.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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