Gold collapsing. Bitcoin UP.

[faince222]

Good to hear this. Bitcoin is future of currency, and I give to it some trust, but I not appreciate so much volatility of this ultimate. It's because I have some gold in my investment portfolio..

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[Erdogan]

About pegging.

To have pegging, there must be an authority that guarantees the peg to the main coin.

The tool is to have a reserve, so you can buy from one with the other and vice versa.

The reserve is always less than the full value of the pegged currency. Else there would be no point, from the authority's point of view. The point is to extract the inflation tax on the users of the sidecoin.

The peg is instituted for a coin that is of risk to lose all value. To inject trust in the sidechain, the authority starts the peg.

The peg is in practise not exact, it is a band with a lower and upper limit. Else there is opportunity for others to front run the pegging transactions and extract value from the authority. For the same reason, the exact limits are often not public.

Since the authority controls the volume of the sidecoins, their volume can also be increased or decreased. Decrease means taxing and destroying sidecoins, this is not helpful for the authority. Increasing the numbers can also be used. Increase is possible when the sidecoin demand increases (economy increases), and when the main coin volume increases (thus inflation tax goes to the sidecoin authorities in stead of to the main coin authorities).

Bad management, decrease of sidecoin demand due to shrinking economy, or random external shocks can destroy the peg. In that case, the sidecoin quickly looses value and stays there.

A new peg can then be instituated at a lower level.

[sickpig]

About pegging.

To have pegging, there must be an authority that guarantees the peg to the main coin.

An authority? Made of people?

[Odalv]

This is a soft fork change, which means any single miner can choose to adopt it and remain compatible with the existing infrastructure.  Other miners won't add the new transactions since they are "nonstandard", but they will validate blocks containing them.

Can someone explain how this works. I didn't follow it in the paper and I don't have time to read it more carefully right now.

If a new opcode is added for coin return how will existing nodes validate that transactions unlocking coins using an opcode they don't understand are valid?

I think yes, this opcode is NO_OPERATION. But if this transaction is invalid then majority (who perform a real check) will refuse his block.

[sickpig]

Can someone ask kindly Jeff to stop stalking NXT and Mr Maxwell his sidechains coding and both have a look at this:

http://t.co/eWNQq2h1Cx

??


WTF ? ? ? ?

Is Jeff still listing on twitter and elsewhere all what he thinks are nxt weaknesses? I thought he was done with it.

Having said that all the links contained in the above post show how a bad implementation can ruin also the best crypto idea. More to the point I don't think gmaxwell has to check all wallet implementations around the globe.

If you're interested in this kind of narrative look at this s djb presentation:

http://cr.yp.to/talks/2014.10.18/slides-djb-20141018-a4.pdf

[cbeast]

Can someone ask kindly Jeff to stop stalking NXT and Mr Maxwell his sidechains coding and both have a look at this:

http://t.co/eWNQq2h1Cx

??


WTF ? ? ? ?

Is Jeff still listing on twitter and elsewhere all what he thinks are nxt weaknesses? I thought he was done with it.

Having said that all the links contained in the above post show how a bad implementation can ruin also the best crypto idea. More to the point I don't think gmaxwell has to check all wallet implementations around the globe.

If you're interested in this kind of narrative look at this s djb presentation:

http://cr.yp.to/talks/2014.10.18/slides-djb-20141018-a4.pdf

Devs don't need to watch a sales pitch. Just show the code. Ok, next.

[Zangelbert Bingledack]

I'm beginning to doubt Maxwell (nullc) has a grasp on the economics of money as a ledger, and he seemed like the best of the sidechain team on the economic aspects. This seems like a basic error:

http://www.reddit.com/r/Bitcoin/comments/2k7xwj/aantonop_sidechains_could_unleash_even_more/cliw3mi

What if sidechains, or a large part of their motivation, comes from not understanding the idea of spin-offs? Peter R has in places proposed spin-offs as a way to bootstrap an altcoin launch, but the relevance here is they serve many or perhaps even all the functions of sidechains, but without need to mess with Bitcoin.

I get a general sense from the sidechain crew that they don't understand Bitcoin as ledger, that the ledger is what matters, and that the protocol is secondary. To them, as coders, it must seem like the ledger and protocol are inextricably linked, but if you take Money as Memory seriously, the ledger is something outside the protocol and is merely updated by it. Understanding spin-offs requires fully internalizing this insight, and that is what I see no evidence of from the sidechain team.

[brg444]

http://konradsgraf.squarespace.com/storage/Monetary%20analsyis%20of%20sidecoins%20KG%2024Oct2014.pdf

thank you.

very very helpful.

not at all. The discussion in this thread have moved way beyond the limited concepts in that paper.

 

surely I didn't hurt your feelings so much that you would argue with me for the sake of arguing

please let's keep it civilized. the paper was a worthy contribution and certainly helped clear out some misconceptions. that's it.

[brg444]

My understanding is that the exchange rate BTC <> sidecoin will not float, only the exchange rate sidecoin <> fiat will float. Is that true?

If 10 000 BTC back 10 million units of sidecoin (so the fixe exchange rate is 1 BTC = 10 000 sidecoins) and that side-currency is deemed as crap by the free market (ie. the fiat exchange rate implies a valuation 1 BTC >10 000), then people will just doesn't sell their sidecoins on the free market and moved back to the BTC blockchain and take back their BTC.

Now if the free market loves a new feature of that sidecoin and the fiat exchange rate imply a 1BTC = 1 000 sidecoins rate, then people will have made a 10x profit.

So barring an improbable technical failure of the sidechain that would prevent to get back the BTC, people will have only benefits by exchanging bitcoins to sidecoins.

It's a lethal mechanism for Bitcoin. Imagine the size of the altcoin market if people were able to sell their bitcoins to buy altcoins while being able to reclaim the exact same initial amount of bitcoin if the said altcoin end up underperforming BTC.

It seems you are again confusing two ideas of the sidechains.

IF a sidecoin is created through a sidechain, then yes the sidecoin will have a free floating market exchange rate. If people pledge their BTC to that sidecoin then they are effectively buying an altcoin. If this sidecoin tanks then they CANNOT reclaim the exact same initial amount of BTC they "invested".

Remember, implementation of new features in sidechains do not require creation of an alternative currency.

[World]

I think development on sidechains is a good thing and will open a new ideas and jobs.
http://techcrunch.com/2014/10/25/bitcoin-2-0-sidechains-and-zerocash-and-ethereum-oh-my/

[brg444]

I'm beginning to doubt Maxwell (nullc) has a grasp on the economics of money as a ledger, and he seemed like the best of the sidechain team on the economic aspects. This seems like a basic error:

http://www.reddit.com/r/Bitcoin/comments/2k7xwj/aantonop_sidechains_could_unleash_even_more/cliw3mi

What if sidechains, or a large part of their motivation, comes from not understanding the idea of spin-offs? Peter R has in places proposed spin-offs as a way to bootstrap an altcoin launch, but the relevance here is they serve many or perhaps even all the functions of sidechains, but without need to mess with Bitcoin.

I get a general sense from the sidechain crew that they don't understand Bitcoin as ledger, that the ledger is what matters, and that the protocol is secondary. To them, as coders, it must seem like the ledger and protocol are inextricably linked, but if you take Money as Memory seriously, the ledger is something outside the protocol and is merely updated by it. Understanding spin-offs requires fully internalizing this insight, and that is what I see no evidence of from the sidechain team.

Interesting idea.

Question : who mines the spin-offs? Can the same concept of merge-mining be applied ?

[smooth]

Question : who mines the spin-offs? Can the same concept of merge-mining be applied ?

Spon-offs can be mined in any manner including merge-mining.

[sickpig]

I'm beginning to doubt Maxwell (nullc) has a grasp on the economics of money as a ledger, and he seemed like the best of the sidechain team on the economic aspects. This seems like a basic error:

http://www.reddit.com/r/Bitcoin/comments/2k7xwj/aantonop_sidechains_could_unleash_even_more/cliw3mi

What if sidechains, or a large part of their motivation, comes from not understanding the idea of spin-offs? Peter R has in places proposed spin-offs as a way to bootstrap an altcoin launch, but the relevance here is they serve many or perhaps even all the functions of sidechains, but without need to mess with Bitcoin.

I get a general sense from the sidechain crew that they don't understand Bitcoin as ledger, that the ledger is what matters, and that the protocol is secondary. To them, as coders, it must seem like the ledger and protocol are inextricably linked, but if you take Money as Memory seriously, the ledger is something outside the protocol and is merely updated by it. Understanding spin-offs requires fully internalizing this insight, and that is what I see no evidence of from the sidechain team.

Interesting idea.

Question : who mines the spin-offs? Can the same concept of merge-mining be applied ?

Who think it's worthy to mine it. As far as I know peter r idea it's a way to bootstrap an alt-coin with a bitcoin-blockchain-based initial coin distribution, nothing more than this. As far as I remember peter even proposed to clone ethereum with this method. In the case of ethereum clone it's impossible to merge mine i think.

[Odalv]

http://letstalkbitcoin.com/blockchain-2-0-let-a-thousand-chains-blossom/

Hill’s view is:

    We are a “blockchain 2.0” company.  Although I personally care for the success of Bitcoin, it is important to distinguish between bitcoin the asset and the blockchain as a programmable distributed trust infrastructure.  And we are interested in blockchain 2.0 and blockchain 2.0 using Bitcoin as a neutral transactional currency we believe is a great, offers great promise but I want to build a blockchain that could support a nation-state putting its national currency and phasing out paper dollars.

[brg444]

I'm beginning to doubt Maxwell (nullc) has a grasp on the economics of money as a ledger, and he seemed like the best of the sidechain team on the economic aspects. This seems like a basic error:

http://www.reddit.com/r/Bitcoin/comments/2k7xwj/aantonop_sidechains_could_unleash_even_more/cliw3mi

What if sidechains, or a large part of their motivation, comes from not understanding the idea of spin-offs? Peter R has in places proposed spin-offs as a way to bootstrap an altcoin launch, but the relevance here is they serve many or perhaps even all the functions of sidechains, but without need to mess with Bitcoin.

I get a general sense from the sidechain crew that they don't understand Bitcoin as ledger, that the ledger is what matters, and that the protocol is secondary. To them, as coders, it must seem like the ledger and protocol are inextricably linked, but if you take Money as Memory seriously, the ledger is something outside the protocol and is merely updated by it. Understanding spin-offs requires fully internalizing this insight, and that is what I see no evidence of from the sidechain team.

Thinking about it, it seems to me Maxwell is suggesting this creates two competing markets while sidechains are complementary markets at worst, if not integrated.

It's simply incorrect to state that it's not an altcoin; it's a seperate orthorgonal ledger that immediately doubles the supply of cryptocurrency and creates a base of people with commercial interests directly opposed to Bitcoin; who stand to profit by driving the adoption of their alternative in parallel to Bitcoin.

It does seem to me like his comment about supply is wrong but the rest remains true. People that start trading on the spin-off and accumulate more spinoffcoins then they had Bitcoins have competing interests with Bitcoin holders.

The difference with sidechains, from what I understand, is that accrued adoption through usage of 1:1 pegged sidechains features creates additional value for Bitcoin

[smooth]

I think it is best to understand side chains as a Bitcoin feature that facilitates Bitcoin being used as backing for altcoins. This creates demand for Bitcoins to be held in the form of backing.

So, put simply: Bitcoin adds feature -> Bitcoin demand increases. That is the hope of side chain advocates at least, but the reality will be decided by the market, not by advocates. A new feature may increase demand, but only if people choose to use it.

From that perspective it is understandable that spin-offs would not be supported by side chain supporters, since spin-offs don't need the feature they are promoting.

I do agree that spin-offs are non-dilutive. So side chain supporters should really stop using that argument. It is incorrect.

[brg444]

Who think it's worthy to mine it. As far as I know peter r idea it's a way to bootstrap an alt-coin with a bitcoin-blockchain-based initial coin distribution, nothing more than this. As far as I remember peter even proposed to clone ethereum with this method. In the case of ethereum clone it's impossible to merge mine i think.

True, it seems merge mining, in that case, would require significant change to BTC.

While the idea of bootstrapping an altcoin with bitcoin's distribution is interesting, I don't see how this solves the security issue.

[brg444]

I think it is best to understand side chains as a Bitcoin feature that facilitates Bitcoin being used as backing for altcoins. This creates demand for Bitcoins to be held in the form of backing.

So, put simply: Bitcoin adds feature -> Bitcoin demand increases. That is the hope of side chain advocates at least, but the reality will be decided by the market, not by advocates. A new feature may increase demand, but only if people choose to use it.

From that perspective it is understandable that spin-offs would not be supported by side chain supporters, since spin-offs don't need the feature they are promoting.

I do agree that spin-offs are non-dilutive. So side chain supporters should really stop using that argument. It is incorrect.

Of course.

I'm not sure exactly how spin-offs compete with sidechains.

Would it not be possible to create spin-off coins through a sidechain?

This coin could benefit from spin-offs' idea of Bitcoin-blockchain distribution and also from sidechains' convenient, integrated, merge-mining.

The mining and security part is where I could be wrong though since these are technical issues I am not always comfortable with.

Another thing is a normal sidechain concept requires the user to effectively "lock" their BTC to the sidechain. For the idea I have in mind, the user should only need to claim their stake based on a particular snapshot of BTC blockchain i.e. his BTCs are not locked to the sidechain but are only used to claim his stake.

[Odalv]

I think it is best to understand side chains as a Bitcoin feature that facilitates Bitcoin being used as backing for altcoins. This creates demand for Bitcoins to be held in the form of backing.

So, put simply: Bitcoin adds feature -> Bitcoin demand increases. That is the hope of side chain advocates at least, but the reality will be decided by the market, not by advocates. A new feature may increase demand, but only if people choose to use it.

From that perspective it is understandable that spin-offs would not be supported by side chain supporters, since spin-offs don't need the feature they are promoting.

I do agree that spin-offs are non-dilutive. So side chain supporters should really stop using that argument. It is incorrect.

Of course.

I'm not sure exactly how spin-offs compete with sidechains.

Would it not be possible to create spin-off coins through a sidechain?

This coin could benefit from spin-offs' idea of Bitcoin-blockchain distribution and also from sidechains' convenient, integrated, merge-mining.

The mining and security part is where I could be wrong though since these are technical issues I am not always comfortable with.

Another thing is a normal sidechain concept requires the user to effectively "lock" their BTC to the sidechain. For the idea I have in mind, the user should only need to claim their stake based on a particular snapshot of BTC blockchain i.e. his BTCs are not locked to the sidechain but are only used to claim his stake.

+1

spin-of doubles units (bitcoins  + altCoins)
SC do not create new units.

[smooth]

Would it not be possible to create spin-off coins through a sidechain?

Technically I suppose, but such a coin couldn't be backed by bitcoin or offer the 1:1 conversion feature.

This coin could benefit from spin-offs' idea of Bitcoin-blockchain distribution and also from sidechains' convenient, integrated, merge-mining.

I guess we should define some terms here. By "side chain" I mean the on-chain convertibility feature. This is usually described as 1:1 but doesn't need to be that, it could use some other fixed ratio or a non-fixed formula.

Merged mining can be done with or without this sort of side chain. They are independent.