Gold collapsing. Bitcoin UP.

[BlindMayorBitcorn]

Two thoughts:

What would Satoshi think of sidechains?

(Hint: I suspect he likes them ... )

What if someone(s) involved with Blockstream is Satoshi?

Now it is all out in the open, like the source code, which for sidechains, does not even exist yet.

That sound pretty legendary dude

[1714042070]

1714042070

[1714042070]

1714042070

[1714042070]

1714042070

[1714042070]

1714042070

[juju]

Two thoughts:

What would Satoshi think of sidechains?

(Hint: I suspect he likes them ... )

What if someone(s) involved with Blockstream is Satoshi?

Now it is all out in the open, like the source code, which for sidechains, does not even exist yet.

Cool a speculation thread with people talking about SC, I read the paper the other day and almost cried. This is truly a thing of beauty, I remember writing on my notes: 21Million BTC | ∞  SC Assets

Alot of smart people working on that team/with, likely he has been involved at some stage unbeknownst to all or most.

[HeliKopterBen]

That would only work if ALL users decided to move to SCbtc and no user wanted to buy BTC under any circumstances, even with spreads in the thousands of dollars or more.  If the tech were that far superior then SCbtc deserves to win out.  In reality, there will most likely be debate over which system is better and not all users will convert, resulting in normal arbitration.

People would certainly buy BTC if scBTC were worth more, but only at something less than the scBTC value in order to convert it and make a profit. There would be no reason to convert back

Yes there is reason to convert back.  You sell the scBTC at a profit and take the profit and buy more BTC to convert.  Rinse and repeat.

[tvbcof]

Two thoughts:

What would Satoshi think of sidechains?

(Hint: I suspect he likes them ... )

What if someone(s) involved with Blockstream is Satoshi?

Now it is all out in the open, like the source code, which for sidechains, does not even exist yet.

Cool a speculation thread with people talking about SC, I read the paper the other day and almost cried. This is truly a thing of beauty, I remember writing on my notes: 21Million BTC | ∞  SC Assets

Alot of smart people working on that team/with, likely he has been involved at some stage unbeknownst to all or most.

Sidechains seem to have no downsides for Bitcoin that I can see, and solve a bunch of really thorny problems.  As long as they are defensible it should have huge value for a greatly expanded Bitcoin userbase.  Probably for us BTC hodlers as well in monetary terms as well as for more philosophical aspects.  Some sidechains could be totally 'licensed' to the government's satisfaction so all of the big names could jump on board.

My guess is that there will be some who try desperately to yank out Satoshi's 1MB cap ASAP before it's to late.  As long as the cap is in place the system will be much more difficult to subvert or monopolize and that has been driving some clued in people crazy for as long as I've been watching things.

[cypherdoc]

That would only work if ALL users decided to move to SCbtc and no user wanted to buy BTC under any circumstances, even with spreads in the thousands of dollars or more.  If the tech were that far superior then SCbtc deserves to win out.  In reality, there will most likely be debate over which system is better and not all users will convert, resulting in normal arbitration.

People would certainly buy BTC if scBTC were worth more, but only at something less than the scBTC value in order to convert it and make a profit. There would be no reason to convert back

Yes there is reason to convert back.  You sell the scBTC at a profit and take the profit and buy more BTC to convert.  Rinse and repeat.

if i were setting up a SC, i'd just fork Bitcoin, add an anonymity function, then let it run.  there'd be a good chance i could get a full on rush into my SC.

[HeliKopterBen]

Say a microtransactions sidechain is developed with a fixed supply of one-billion Micros, and an exchange rate of 1 BTC = 1 million Micros. That means that 1000BTC *total* will ever be able to move to the sidechain. Say the sidechain is very successful; ie, Micros work really well and start to gain a lot of real-world economic traction and value. So the 1000BTC gets transferred over.

Now say that Micros continue to see more use. Their purchasing power goes up, but this has no effect whatsoever on the purchasing power of bitcoin because the max has already moved in. Now all we have is another alt that *used to* have an easy decentralized way of buying it with bitcoin.

Arbitrage.  For example:  All 1000 bitcoin are transferred and micros increase in value to the point that:

1 million micros = $800
1 bitcoin = $400

Anyone wanting to arb this spread can sell 1 million micros for $800, buy 1 bitcoin for $400, pocket $400, convert that 1 bitcoin to 1 million micros, rinse and repeat.  Most likely, one billion micros will never be in circulation at any point in time because of arbitrage.

[smooth]

That would only work if ALL users decided to move to SCbtc and no user wanted to buy BTC under any circumstances, even with spreads in the thousands of dollars or more.  If the tech were that far superior then SCbtc deserves to win out.  In reality, there will most likely be debate over which system is better and not all users will convert, resulting in normal arbitration.

People would certainly buy BTC if scBTC were worth more, but only at something less than the scBTC value in order to convert it and make a profit. There would be no reason to convert back

Yes there is reason to convert back.  You sell the scBTC at a profit and take the profit and buy more BTC to convert.  Rinse and repeat.

No that doesn't work once all the BTC are converted. The only ones you could possibly find to buy for conversion would be newly mined coins, and miners would have no reason to sell them to you. They can just convert themselves (which is what they would do).

The arbitrage you is exactly what would happen, but it would quickly convert all the BTC until there were none left, then the main chain would simply die (other than for mining purposes).

[HeliKopterBen]

That would only work if ALL users decided to move to SCbtc and no user wanted to buy BTC under any circumstances, even with spreads in the thousands of dollars or more.  If the tech were that far superior then SCbtc deserves to win out.  In reality, there will most likely be debate over which system is better and not all users will convert, resulting in normal arbitration.

People would certainly buy BTC if scBTC were worth more, but only at something less than the scBTC value in order to convert it and make a profit. There would be no reason to convert back

Yes there is reason to convert back.  You sell the scBTC at a profit and take the profit and buy more BTC to convert.  Rinse and repeat.

No that doesn't work once all the BTC are converted. The only ones you could possibly find to buy for conversion would be newly mined coins, and miners would have no reason to sell them to you. They can just convert themselves (which is what they would do).

The arbitrage you is exactly what would happen, but it would quickly convert all the BTC until there were none left, then the main chain would simply die (other than for mining purposes).

That is a bold assumption, pun intended.  If I had a satoshi for every time someone said the price of bitcoin could go to 0, then I would be rich... as I said before, if the technology of SCbtc is that great, then it deserves to win.

[Melbustus]

Say a microtransactions sidechain is developed with a fixed supply of one-billion Micros, and an exchange rate of 1 BTC = 1 million Micros. That means that 1000BTC *total* will ever be able to move to the sidechain. Say the sidechain is very successful; ie, Micros work really well and start to gain a lot of real-world economic traction and value. So the 1000BTC gets transferred over.

Now say that Micros continue to see more use. Their purchasing power goes up, but this has no effect whatsoever on the purchasing power of bitcoin because the max has already moved in. Now all we have is another alt that *used to* have an easy decentralized way of buying it with bitcoin.

Arbitrage.  For example:  All 1000 bitcoin are transferred and micros increase in value to the point that:

1 million micros = $800
1 bitcoin = $400

Anyone wanting to arb this spread can sell 1 million micros for $800, buy 1 bitcoin for $400, pocket $400, convert that 1 bitcoin to 1 million micros, rinse and repeat.  Most likely, one billion micros will never be in circulation at any point in time because of arbitrage.

What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

[solex]

Sidechains seem to have no downsides for Bitcoin that I can see, and solve a bunch of really thorny problems.  As long as they are defensible it should have huge value for a greatly expanded Bitcoin userbase.  Probably for us BTC hodlers as well in monetary terms as well as for more philosophical aspects.  Some sidechains could be totally 'licensed' to the government's satisfaction so all of the big names could jump on board.

My guess is that there will be some who try desperately to yank out Satoshi's 1MB cap ASAP before it's to late.  As long as the cap is in place the system will be much more difficult to subvert or monopolize and that has been driving some clued in people crazy for as long as I've been watching things.

tvbcof, can you take the tinfoil hat off now?

Sidechains may work brilliantly, and deliver lots of 2.0 applications, but this tech will not appear overnight. What is the point of star-ship Enterprise quality sidechains working off the MySpace of cryptocurrency?

Not raising blocksize, *at least* roughly allowing for Moore's Law, seems insane, and would just drive some alt to gain significant marketshare.

Absolutely.

No matter how good SC are, they are not a substitute for allowing the existing system to scale at the rate of the slowest improving computing technology: bandwidth.

[HeliKopterBen]

Say a microtransactions sidechain is developed with a fixed supply of one-billion Micros, and an exchange rate of 1 BTC = 1 million Micros. That means that 1000BTC *total* will ever be able to move to the sidechain. Say the sidechain is very successful; ie, Micros work really well and start to gain a lot of real-world economic traction and value. So the 1000BTC gets transferred over.

Now say that Micros continue to see more use. Their purchasing power goes up, but this has no effect whatsoever on the purchasing power of bitcoin because the max has already moved in. Now all we have is another alt that *used to* have an easy decentralized way of buying it with bitcoin.

Arbitrage.  For example:  All 1000 bitcoin are transferred and micros increase in value to the point that:

1 million micros = $800
1 bitcoin = $400

Anyone wanting to arb this spread can sell 1 million micros for $800, buy 1 bitcoin for $400, pocket $400, convert that 1 bitcoin to 1 million micros, rinse and repeat.  Most likely, one billion micros will never be in circulation at any point in time because of arbitrage.

What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

Then I suppose bitcoin would be lost, only affecting users of the side chain.  Arb could still be done with micros that hadn't matured.  As long as the exchange rate is deterministic and not stochastic.

[Melbustus]

...
What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

Then I suppose bitcoin would be lost, only affecting users of the side chain.  Arb could still be done with micros that hadn't matured.  As long as the exchange rate is deterministic and not stochastic.

Not sure I follow. If there's no way to move bitcoin to the sidechain, the arb channel is closed, and bitcoin cannot benefit from increased purchasing power of the sidecoin. This is only relevant after all the sidecoins have been created/unlocked/whatever. Is that what you mean by "matured"?

[HeliKopterBen]

...
What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

Then I suppose bitcoin would be lost, only affecting users of the side chain.  Arb could still be done with micros that hadn't matured.  As long as the exchange rate is deterministic and not stochastic.

Not sure I follow. If there's no way to move bitcoin to the sidechain, the arb channel is closed, and bitcoin cannot benefit from increased purchasing power of the sidecoin. This is only relevant after all the sidecoins have been created/unlocked/whatever. Is that what you mean by "matured"?

Maybe I should have said expire.  So you are saying the exchange rate can cease to exist after a certain time/block N for the entire side chain?  Or, once you convert a coin, that coin cannot be exchanged back after a certain time/block N?

[tvbcof]

Not raising blocksize, *at least* roughly allowing for Moore's Law, seems insane, and would just drive some alt to gain significant marketshare.

Absolutely.

No matter how good SC are, they are not a substitute for allowing the existing system to scale at the rate of the slowest improving computing technology: bandwidth.

Bandwidth may or may not be the slowest improving computing technology, but it's certainly the weak link in any networked system.

It's hard enough to understand how people could fantasize about Bitcoin becoming the new gold and vanquishing the USD and all that crap.  It's much much much more difficult to understand how one could envision this with everything going on in today's hunky-dory fasion with 'Moores law' yielding joy and solutions to all the unwashed masses problems.

So-called 'bandwidth'* will never be brought to zero, but it could quite trivially be brought to a very low value under the right set of circumstances.  And there are a number of sets which would qualify.  I don't (currently) fear that my BTC would vanish in such instances, but they could become vastly less useful and convenient for a fair bit of time.  As long as Bitcoin does not actually need protective hardening against robust attacks (as is the case today) then it is mostly a toy (as is the case today.)

(*) latency is at least as big of a potential threat.

Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway.

—Tanenbaum, Andrew S. (1989). Computer Networks. New Jersey: Prentice-Hall. p. 57. ISBN 0-13-166836-6.

[Melbustus]

...
(*) latency is at least as big of a potential threat.

Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway.

—Tanenbaum, Andrew S. (1989). Computer Networks. New Jersey: Prentice-Hall. p. 57. ISBN 0-13-166836-6.

Love that quote. That textbook was required reading in college.

[Melbustus]

...
What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

Then I suppose bitcoin would be lost, only affecting users of the side chain.  Arb could still be done with micros that hadn't matured.  As long as the exchange rate is deterministic and not stochastic.

Not sure I follow. If there's no way to move bitcoin to the sidechain, the arb channel is closed, and bitcoin cannot benefit from increased purchasing power of the sidecoin. This is only relevant after all the sidecoins have been created/unlocked/whatever. Is that what you mean by "matured"?

Maybe I should have said expire.  So you are saying the exchange rate can cease to exist after a certain time/block N for the entire side chain?  Or, once you convert a coin, that coin cannot be exchanged back after a certain time/block N?

The former: After time N for the whole chain, global exchange rate goes to 1 BTC = 0 Sidecoin. I see nothing preventing the exchange rate function from being able to be specified this way.

[HeliKopterBen]

...
What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

Then I suppose bitcoin would be lost, only affecting users of the side chain.  Arb could still be done with micros that hadn't matured.  As long as the exchange rate is deterministic and not stochastic.

Not sure I follow. If there's no way to move bitcoin to the sidechain, the arb channel is closed, and bitcoin cannot benefit from increased purchasing power of the sidecoin. This is only relevant after all the sidecoins have been created/unlocked/whatever. Is that what you mean by "matured"?

Maybe I should have said expire.  So you are saying the exchange rate can cease to exist after a certain time/block N for the entire side chain?  Or, once you convert a coin, that coin cannot be exchanged back after a certain time/block N?

The former: After time N for the whole chain, global exchange rate goes to 1 BTC = 0 Sidecoin. I see nothing preventing the exchange rate function from being able to be specified this way.

Then the sidechain would effectively become a separate chain... an altcoin.  I guess this is a question for the devs.

[NewLiberty]

I'm in justusranvier's camp on this one. Not raising blocksize, *at least* roughly allowing for Moore's Law, seems insane, and would just drive some alt to gain significant marketshare.

Bandwidth doesn't increase according to Moore's.
At best, Neilson's
http://www.nngroup.com/articles/law-of-bandwidth/

This would be in time of peace, in rich nations, with good infrastructure, and other assumptions.

There is some discussion of methods to achieve this in a way that is flexible to accommodate changing conditions.
https://bitcointalk.org/index.php?topic=815712.0

[cbeast]

...
What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

Then I suppose bitcoin would be lost, only affecting users of the side chain.  Arb could still be done with micros that hadn't matured.  As long as the exchange rate is deterministic and not stochastic.

Not sure I follow. If there's no way to move bitcoin to the sidechain, the arb channel is closed, and bitcoin cannot benefit from increased purchasing power of the sidecoin. This is only relevant after all the sidecoins have been created/unlocked/whatever. Is that what you mean by "matured"?

Maybe I should have said expire.  So you are saying the exchange rate can cease to exist after a certain time/block N for the entire side chain?  Or, once you convert a coin, that coin cannot be exchanged back after a certain time/block N?

The former: After time N for the whole chain, global exchange rate goes to 1 BTC = 0 Sidecoin. I see nothing preventing the exchange rate function from being able to be specified this way.

Then the sidechain would effectively become a separate chain... an altcoin.  I guess this is a question for the devs.

Of course not. They can force a two-way peg through regulation. /s

[zeetubes]

...
(*) latency is at least as big of a potential threat.

Never underestimate the bandwidth of a station wagon full of tapes hurtling down the highway.

—Tanenbaum, Andrew S. (1989). Computer Networks. New Jersey: Prentice-Hall. p. 57. ISBN 0-13-166836-6.

Love that quote. That textbook was required reading in college.

Ethernet just celebrated its 40th birthday and its history is arguably a better analog for bitcoin and the alts than say myspace versus facebook. It was up against Big Blue's token ring and IBM was the Fed of the computer industry at the time. IBM even commissioned professors to write papers suggesting that ethernet wasn't feasible for commercial use, but happily ethernet eventually won over and it marked the first major kick in the nuts for IBM's influence and hegemony (Microsoft and Compaq later took out further chunks). Ethernet was also a decentralized architecture and beyond interacting with the layers below and above it, it didn't care much about anything. It just provided a solid and pervasive framework. Open source didn't really exist back then and ethernet was licensed but it was much cheaper than token ring. The major reason ethernet prevailed was because it was up against only IBM and there wasn't much else in the way of noise. In a way, I think Bitcoin could have benefitted from a more restrictive licensing agreement, whilst still remaining open source. Sidechain developments may indeed be complementary but the alts are mostly an expensive and divisive distraction imo, even though there are some very promising ideas.