Gold collapsing. Bitcoin UP.

[tvbcof]

Nice to see someone standing up for the cause on that SC AMA there Cyph.  Go get 'em

[solex]

SC won't solve Bitcoin's scalability because they will optimize spamming Bitcoin for metadata. We'll be right back to the block size argument again. In fact, they will make it happen much faster.

Oh. I completely agree! My sentence earlier was poorly worded, I meant that scaling is important (whether or not SC happens).

EDIT: I see from the graph in a subsequent post that my intuition was correct. It isn't entirely up to date but shows alts at 4%. It's really quite silly for that to motivate anything at all about Bitcoin development. For sidechains to be a good idea they had better be a good idea independent of alts

Yes, the graph is interesting, but for a month, at least, it has been hovering near 90%, where it still stands (4832M / 5342M).
http://coinmarketcap.com/#USD
Assuming the same underlying data is used by both sources.
Note: if Bitshares, Counterparty and Mastercoin are included in Bitcoin, then it is 91%

[Erdogan]

My understanding, and I might be wrong :

- I'm not sure about the concept of scBTC trading on exchanges for reasons that buying a 4$ share of BTC and transferring to SC will give you 4$ share of scBTC. Value of BTC and sBTC are correlated, no matter the 1:x peg.

- My assumption is the share of scBTC pie you can claim is representative to the share of BTC you own. In that sense, if a SC is so superior that there are clear incentives for people to transfer their BTC to this chain, it does not matter when they do it for their stake in BTC, even while on BTC's blockchain, is simply a stake of scBTC they have not claimed YET.

- If this assumption is true then automatically the value of a Bitcoin will rise will the value of its "to-be-claimed" stake in sBTC and be redeemable for the same USD exchange rate

edit : Maybe this makes no sense but this is how I understand it.

ah, that does make sense actually.  but what happens if, as it becomes clear that a SC is going to win over Bitcoin, miners begin to jack their mining tx fees just b/c they can to create the SPV proof tx required to make the switch to scBTC?

also, there still is the question of Blockstream creating an additional asset on the winning SC ahead of time that stands to profit from a rush of BTC to scBTC.

Here is your arb channel:

BTC -> SCbtc ->USD -> BTC

rinse and repeat


So if BTC=$500 and SCbtc=$1000:

I buy BTC for $500, convert to SCbtc, sell SCbtc for $1000, pocket $500, take the other $500 and buy BTC that can then be converted to SCbtc and be sold for $1000, ect, ect, ect


As you said, the waiting periods and tx fees come into play.

This is not even a possibility.

500$ in BTC = 500$ in SCbtc.

Yes it is.  BTC and SCbtc are not necessarily fungible because they are on separate chains with separate tech and the market may value them differently.  The spread I gave was wide to illustrate the point.  Spreads will likely be much smaller.

Still, as you can see of the above, eventually every BTC is converted to scBTC.

[Dusty]

Ultimately, SC are what will completely destroy all altcoins and will give more and more value to Bitcoin, exactly because to the hard-pegging of the currency: what happens now is that for each new scamcoin that is launched every bitcoin holder must choose if part some of his bitcoin stash to buy some of the new coins because they may become more useful and hence more valuable of bitcoin in the future.

Oh come on. Alts in the aggregate are only 10% of Bitcoin's value, and the biggest alt has no innovative features at all. It clearly exists for some completely different reason other than that addressed by side chains and therefore is unlikely to be affected.

You don't know the future, and the trend could certainly change, so better proactive.

This obsession with alts is very unhealthy and unhelpful. Focus on the value that sidechains (or anything else) could potentially add to Bitcoin by allowing faster and safer development. There is a lot more than 10% to be gained there.

That's exactly the point: this is the right way to experiment new coins, and to progressively add new features to Bitcoin without the need to risk to buy some stupid scamcoin.

I think that we will see a lot of hate toward sidechains from all the altcoiners, and you will know why: sidechains take from them the opportunity to make some profit pumping new coins.

[Odalv]

...
Inca, the number of BTC that are put on the sidechain is irrelevant.  As long as there is a single Satoshi left "unlocked" on the bitcoin chain, that satoshi can be transferred into the sidechain for SCBTC.  So that Satoshi is worth its value in SCBTC.  As long as SCBTC has value, BTC would be a store of that value.
...

...
Value of BTC and sBTC are correlated, no matter the 1:x peg.
...

Are these statements actually true? You are both assuming that bitcoin is perpetually transferrable to the sidechain at some perpetually fixed exchange rate.

But, IIRC, the Blockstream crew said in the AMA that the exchange rate can be "any deterministic function", with the constraint that no more BTC can get transferred back to the bitcoin blockchain than got transferred out to begin with. That basically means anything. The rate can change with time, or any other input...as long as it's deterministic. For example:

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.

I'm frankly struggling to see how sidechains are anything more than an optional decentralized exchange mechanism between BTC and alts.

Then I'll create clone of microtransactions sidechain ... will have same properties as original, only no fixed supply.

[smooth]

That's exactly the point: this is the right way to experiment new coins, and to progressively add new features to Bitcoin without the need to risk to buy some stupid scamcoin.

Sort of. I certainly view it as one potentially right way to experiment with expanding the functionality of Bitcoin.

I think that we will see a lot of hate toward sidechains from all the altcoiners, and you will know why: sidechains take from them the opportunity to make some profit pumping new coins.

I agree with you there will be hate. I disagree with that reaction even though also I don't agree with the hate directed at alts.

I'm not sure about your second sentence though. What is your explanation for why the largest alt has (and a few of the top alts have) nothing to do with features?

[smooth]

SC won't solve Bitcoin's scalability because they will optimize spamming Bitcoin for metadata. We'll be right back to the block size argument again. In fact, they will make it happen much faster.

Oh. I completely agree! My sentence earlier was poorly worded, I meant that scaling is important (whether or not SC happens).

EDIT: I see from the graph in a subsequent post that my intuition was correct. It isn't entirely up to date but shows alts at 4%. It's really quite silly for that to motivate anything at all about Bitcoin development. For sidechains to be a good idea they had better be a good idea independent of alts

Yes, the graph is interesting, but for a month, at least, it has been hovering near 90%, where it still stands (4832M / 5342M).
http://coinmarketcap.com/#USD
Assuming the same underlying data is used by both sources.
Note: if Bitshares, Counterparty and Mastercoin are included in Bitcoin, then it is 91%

Okay, so you have one data point from that source, which more or less agrees with my original rough estimate of 10%. I still doubt the number measured that way or any other reasonable way is increasing. Alts have not exactly been doing well the past several months, in case you haven't noticed. Further in support is that every study I've seen says that alts are highly correlated with Bitcoin but positively leveraged, and since Bitcoin is down so much the alts are likely down more. But I don't have hard data other than the one chart that was posted. Do you?

BTW, the observation that alts are positively correlated with Bitcoin raises serious questions about the argument that alts "take value" from Bitcoin. Substitute goods would have negative correlation.

[sickpig]

One last quest on this sidechains thing, is it possible to remove the bridge between bitcoin and a sidechain at any given point in time?

p.s. sorry for the OT

Edit: fix grammar

[cypherdoc]

If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?

I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over? 

[smooth]

If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?

Some altcoins are more equal than others.

[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.

I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.

You said if all the bitcoin are converted.  If all the bitcoin are converted that means there are no more sellers left and the price is zero because no more trade is possible in bitcoin.  

If the price is non-zero that means there are sellers of bitcoin, which also means arb channels are open.  The only way the channels can close is if it either the price of BTC or SCBTC goes to zero.

[justusranvier]

If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?

Some altcoins are more equal than others.

It's kind of embarrassing that certain people keep clinging to the idea of demurrage, in spite of the fact that Freicoin conclusively proved that nobody wants self-destructing money.

[cypherdoc]

If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?

Some altcoins are more equal than others.

It's kind of embarrassing that certain people keep clinging to the idea of demurrage, in spite of the fact that Freicoin conclusively proved that nobody wants self-destructing money.

What's embarrassing is brg444 continuing to promise that no altcoins will be considered in SC's when there is an entire section dedicated to them in the paper.

[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).

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.

I never said the price goes to zoro. The price would be approximately the same as scBTC, obviously, since you can convert. There would just be no reason to hold BTC. If scBTC offers some advantage to enough people, you might as well convert it.

You said if all the bitcoin are converted.  If all the bitcoin are converted that means there are no more sellers left and the price is zero because no more trade is possible in bitcoin.  

No trade does not mean the price is zero, it simply means there is trade. For example, in a speculative market you would get no trading if everyone agrees on the same price.

Anyway, as I said mining would still happen, and you could potentially buy from miners, but only at better price than what they could get by converting to higher-valued scBTC. There is no arbitrage though, the mining rewards would simply be sought out for their conversion value and miners would compete harder for them, driving up difficulty.

[smooth]

It's kind of embarrassing that certain people keep clinging to the idea of demurrage, in spite of the fact that Freicoin conclusively proved that nobody wants self-destructing money.

One example does not prove this at all. It simply proved that no one wanted Freicoin. They might want something else with that property, but with some other differences.

[cbeast]

If altcoins are not being considered for SC's, why do they dedicate a paragraph to Freicoin in the Economic part of the paper?

I still haven't heard a good excuse for core dev concentration in one for profit company other than "trust us".

Again,  why wouldn't we expect a SC fork of bitcoin with perfect anonymity to take over? 

I love the idea, but I don't get how a dark 1:1 pegged SC can have a security incentive if you are only mining for fees.

[justusranvier]

One example does not prove this at all. It simply proved that no one wanted Freicoin. They might want something else with that property, but with some other differences.

I have to agree with Daniel on this one. He proved fairly rigorously why demurrage-based currencies must fail, and nobody has produced a refutation stronger than, "Maybe if I hope hard enough it will work!!!"

http://themisescircle.org/blog/2013/08/22/the-problem-with-altcoins/

Freicoin is an idea whose time will never come. Since it rebukes buyers, it resists ever having value. Freicoin is thus not so much a scam but more an abortion. Its ideals are so refined that they eschew the merest chance of affecting the real world. Perhaps it could be taken as some sort of absurdist parody, which would be brilliant. I hope that is true because otherwise it is just too sad.

[smooth]

One example does not prove this at all. It simply proved that no one wanted Freicoin. They might want something else with that property, but with some other differences.

I have to agree with Daniel on this one. He proved fairly rigorously why demurrage-based currencies must fail, and nobody has produced a refutation stronger than, "Maybe if I hope hard enough it will work!!!"

http://themisescircle.org/blog/2013/08/22/the-problem-with-altcoins/

Freicoin is an idea whose time will never come. Since it rebukes buyers, it resists ever having value. Freicoin is thus not so much a scam but more an abortion. Its ideals are so refined that they eschew the merest chance of affecting the real world. Perhaps it could be taken as some sort of absurdist parody, which would be brilliant. I hope that is true because otherwise it is just too sad.

That's essentially identical to the frequent argument that deflationary currencies can't work because no one will spend them (or, in his words, it rebukes sellers). Both are wrong.

[cbeast]

One example does not prove this at all. It simply proved that no one wanted Freicoin. They might want something else with that property, but with some other differences.

I have to agree with Daniel on this one. He proved fairly rigorously why demurrage-based currencies must fail, and nobody has produced a refutation stronger than, "Maybe if I hope hard enough it will work!!!"

http://themisescircle.org/blog/2013/08/22/the-problem-with-altcoins/

Freicoin is an idea whose time will never come. Since it rebukes buyers, it resists ever having value. Freicoin is thus not so much a scam but more an abortion. Its ideals are so refined that they eschew the merest chance of affecting the real world. Perhaps it could be taken as some sort of absurdist parody, which would be brilliant. I hope that is true because otherwise it is just too sad.

That's essentially identical to the frequent argument that deflationary currencies can't work because no one will spend them (or, in his words, it rebukes sellers). Both are wrong.

Gold is deflationary, manure rots like demurrage. Try spending manure.

[justusranvier]

That's essentially identical to the frequent argument that deflationary currencies can't work because no one will spend them (or, in his words, it rebukes sellers). Both are wrong.

Your statement is only true if we don't care about reality. Or truth.

Both of these theories have been empirically tested, and only one of them demonstrated to be true.