Gold collapsing. Bitcoin UP.

[cypherdoc]

It seems we are again challenging our ideas of sidechains.

what's happening is again you're not understanding my questions.

presumably these scBTC will have a market price on an exchange, just like BTC.  so i ask again, would the price of scBTC on an independent exchange affect your assessment of how well the SC with its innovation is working?

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[smooth]

If 1:1 pegs can achieve stable transfer of BTCs between chains then this is where, to me, the innovation is.

BTC can't literally be "transferred," only locked.

What you are talking about is an altcoin that is backed by BTC and is likely to have lower volatility relative to BTC than an altcoin that doesn't have this backing. (Interestingly though, this could in theory mean higher volatility relative to fiat, though in practice that would not be the case with most current alts.)

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

but these rules are hard coded into the sidechain so one knows what to expect before moving his BTC there

Hard coded does not mean the code can't be changed. It is the same as with any altcoin. If the developers decide to change the code, and the community accepts it (without forking) then it is changed.

[cypherdoc]

You are being really disingenous again.

Did Satoshi warn about the dangers of altscams in the Bitcoin white paper?

and you're just being a shill again trying to discredit anyone who is asking good questions.

what does Satoshi have to do with what i would believe to be an expected disclaimer warning to moving one's BTC to a SC?

[Zangelbert Bingledack]

brg444, do you agree with JR that a SC failure can occur taking scbtc with it and thus btc too?

taking scBTC sure. if by "thus btc too" you mean the bitcoins attached to it then yes I agree also that it is possible.

but taking Bitcoin down with it? I wouldn't go there

and why don't I see Maxwell warning us of that?

It seems like if this were a concern it would become general practice to have the locked bitcoins be set to automatically unlock after a certain period of time, barring input from the sidechain.

In any case, I don't think this warrants special concern considering the scBTC can potentially be hacked away from the holder, meaning that the BTC can be hacked away as well. The difference between some BTC going to a hacker/scammer and being lost forever is not great. I'd probably prefer lost forever. That way at least everyone else's coins would be worth more. It'd just be a gift from suckers investing in unstable sidechain schemes to the rest of the bitcoin holders. Same as Counterparty's burning of bitcoins for XCP, except with Counterparty it was known that there was no way to get the coins back in the first place.

[brg444]

It seems we are again challenging our ideas of sidechains.

what's happening is again you're not understanding my questions.

presumably these scBTC will have a market price on an exchange, just like BTC.  so i ask again, would the price of scBTC on an independent exchange affect your assessment of how well the SC with its innovation is working?

no, what's happening is you don't understand the tech.

presumably, these scBTC if pegged 1:1 and properly implemented would have a market price closely correlated to BTC's from the jump. the price of BTC units on a sidechain is not dependent on whether the innovation is working or not

[brg444]

If 1:1 pegs can achieve stable transfer of BTCs between chains then this is where, to me, the innovation is.

BTC can't literally be "transferred," only locked.

What you are talking about is an altcoin that is backed by BTC and is likely to have lower volatility relative to BTC than an altcoin that doesn't have this backing. (Interestingly though, this could in theory mean higher volatility relative to fiat, though in practice that would not be the case with most current alts.)

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

but these rules are hard coded into the sidechain so one knows what to expect before moving his BTC there

Hard coded does not mean the code can't be changed. It is the same as with any altcoin. If the developers decide to change the code, and the community accepts it (without forking) then it is changed.

I have read Konrad's paper. My understanding is that he suggests the price of the BTC locked on the chain would essentially gravitate towards BTC's and most probably at a certain market discount considering cost, risk and uncertainty.

[cypherdoc]

It seems we are again challenging our ideas of sidechains.

what's happening is again you're not understanding my questions.

presumably these scBTC will have a market price on an exchange, just like BTC.  so i ask again, would the price of scBTC on an independent exchange affect your assessment of how well the SC with its innovation is working?

no, what's happening is you don't understand the tech.

presumably, these scBTC if pegged 1:1 and properly implemented would have a market price closely correlated to BTC's from the jump. the price of BTC units on a sidechain is not dependent on whether the innovation is working or not

i do understand the tech.  it's you who do not understand the economics. 

it's perfectly reasonable to expect the price to differ in certain circumstances even in the presence of arbitrage.

[brg444]

It seems we are again challenging our ideas of sidechains.

what's happening is again you're not understanding my questions.

presumably these scBTC will have a market price on an exchange, just like BTC.  so i ask again, would the price of scBTC on an independent exchange affect your assessment of how well the SC with its innovation is working?

no, what's happening is you don't understand the tech.

presumably, these scBTC if pegged 1:1 and properly implemented would have a market price closely correlated to BTC's from the jump. the price of BTC units on a sidechain is not dependent on whether the innovation is working or not

i do understand the tech.  it's you who do not understand the economics. 

it's perfectly reasonable to expect the price to differ in certain circumstances even in the presence of arbitrage.

well then if you do understand this I will say yes, of course, the correlation between market exchange rate and technical conversion rate will be considered in my review of sidechains. I fail to see the point of that question though considering the obvious answer.

[smooth]

If 1:1 pegs can achieve stable transfer of BTCs between chains then this is where, to me, the innovation is.

BTC can't literally be "transferred," only locked.

What you are talking about is an altcoin that is backed by BTC and is likely to have lower volatility relative to BTC than an altcoin that doesn't have this backing. (Interestingly though, this could in theory mean higher volatility relative to fiat, though in practice that would not be the case with most current alts.)

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

but these rules are hard coded into the sidechain so one knows what to expect before moving his BTC there

Hard coded does not mean the code can't be changed. It is the same as with any altcoin. If the developers decide to change the code, and the community accepts it (without forking) then it is changed.

I have read Konrad's paper. My understanding is that he suggests the price of the BTC locked on the chain would essentially gravitate towards BTC's and most probably at a certain market discount considering cost, risk and uncertainty.

Could be a discount or a premium depending on market supply and demand factors. Long term, yes you would expect a discount given the weaker security.

[brg444]

You are being really disingenous again.

Did Satoshi warn about the dangers of altscams in the Bitcoin white paper?

and you're just being a shill again trying to discredit anyone who is asking good questions.

what does Satoshi have to do with what i would believe to be an expected disclaimer warning to moving one's BTC to a SC?

If you return to the AMA I believe there is one instance of one of the devs essentially recognizing the possibility of malicious implementations of sidechains.

My point is this should be obvious to most that are even considering the technology of sidechain at this stage.

A fool and his money are soon parted, whether it's in BTC, sBTC or altscam. There is no reason for Gmaxwell to specifically go out of his way to *disclaim* the possibility of malicious uses of sidechains.

It'd just be a gift from suckers investing in unstable sidechain schemes to the rest of the bitcoin holders. Same as Counterparty's burning of bitcoins for XCP, except with Counterparty it was known that there was no way to get the coins back in the first place.

exactly

[smooth]

A fool and his money are soon parted, whether it's in BTC, sBTC or altscam. There is no reason for Gmaxwell to specifically go out of his way to *disclaim* the possibility of malicious uses of sidechains.

I think there is. Altcoins get criticized constantly for not warning people enough about the risks involved, and therefore contributing to people losing money. Bitcoin developers should not get a pass on doing the exact same thing.

In my opinion sidechains (by which I mean locks that are contingent on actions of another chain) are a valuable extension of the Bitcoin functionality but they are also being hyped.

[cypherdoc]

It seems we are again challenging our ideas of sidechains.

what's happening is again you're not understanding my questions.

presumably these scBTC will have a market price on an exchange, just like BTC.  so i ask again, would the price of scBTC on an independent exchange affect your assessment of how well the SC with its innovation is working?

no, what's happening is you don't understand the tech.

presumably, these scBTC if pegged 1:1 and properly implemented would have a market price closely correlated to BTC's from the jump. the price of BTC units on a sidechain is not dependent on whether the innovation is working or not

i do understand the tech.  it's you who do not understand the economics. 

it's perfectly reasonable to expect the price to differ in certain circumstances even in the presence of arbitrage.

well then if you do understand this I will say yes, of course, the correlation between market exchange rate and technical conversion rate will be considered in my review of sidechains. I fail to see the point of that question though considering the obvious answer.

ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not?  for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?

second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?

[Adrian-x]

Who here has interpreted the SC paper to mean that you can get your BTC back from scBTC in the case of a SC failure?

I don't interpret it that way.

Before you can get your BTC back, you've got to perform burn transaction on the sidechain.

So if the sidechain ceases to function entirely, you have no way to generate the SPV proof that lets you claim your BTC.

But does the paper state that you have to perform this burn to get back or is that your interpretation of what has to happen?

Reason I ask is that many people seem to believe they can get back no matter what.

Many believe the exchange will be 1:1 over time and the SC won't can't  be inflated.

Are the sidechains "rules" not set in stone at its creation?

I am of the belief they will be but that fact doesn't stop consumers falling victim to deceit, given 99% of the people (pole stats reviewed @ 55 second into the clip)  who will adopt Bitcoin are unaware of the mechanism of inflation and how increasing the supply robs them of value, I don't see this ending well for Bitcoin.

[cypherdoc]

You are being really disingenous again.

Did Satoshi warn about the dangers of altscams in the Bitcoin white paper?

and you're just being a shill again trying to discredit anyone who is asking good questions.

what does Satoshi have to do with what i would believe to be an expected disclaimer warning to moving one's BTC to a SC?

If you return to the AMA I believe there is one instance of one of the devs essentially recognizing the possibility of malicious implementations of sidechains.

My point is this should be obvious to most that are even considering the technology of sidechain at this stage.

A fool and his money are soon parted, whether it's in BTC, sBTC or altscam. There is no reason for Gmaxwell to specifically go out of his way to *disclaim* the possibility of malicious uses of sidechains.

It'd just be a gift from suckers investing in unstable sidechain schemes to the rest of the bitcoin holders. Same as Counterparty's burning of bitcoins for XCP, except with Counterparty it was known that there was no way to get the coins back in the first place.

exactly

i disagree.  

when Satoshi created Bitcoin, a BTC was worth $0. there was literally nothing to warn us about.

when Maxwell proposes a technical change to the source code of a market worth $5 Billion, i think he should be expected has a duty to warn us of all possibilities, negative or not.

you and i may be able to distinguish what's going on here in terms of a potential SC failure, but certainly the avg investor might not be.  and simply b/c there will be a market price for scBTC, one can assume uneducated investors will be tempted to buy them on an exchange.

[tvbcof]

Speaking of economics (or, more fundamentally, system analysis), one of the biggest issues of sidechains that I see has to do with the latency in exercising the two-way peg.

Sidechains can be assumed to be fairly small in total value relative to the total in BTC.  The distribution of wealth in Bitcoin means that there are plenty of whales.  If (or when) these folks decide to game things, they might be able to get some interesting oscillations riding on on the various sidechain pegs going.

In order to defend itself a sidechain is going to need to be able to anticipate these potentially significant threats and figure out buffering mechanism to isolate themselves.  Those who fail to do so in a proactive manner, or who implement ineffective protections, may be under very unwelcome influences.

The relatively high latency(theorized) of the two-way pegs may act as a natural buffer or be able to be leveraged as such.  One way or another I'll be paying some attention to how well the designers of a given sidechain have thought about this nature of attack mode.

[brg444]

ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not?  for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?

second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?

Correct, stability in their correlation could be one indication of a well designed and useful application.

As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.

Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.

If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.

Like all things BTC, it is a matter of trust.

[cypherdoc]

ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not?  for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?

second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?

Correct, stability in their correlation could be one indication of a well designed and useful application.

As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.

Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.

If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.

Like all things BTC, it is a matter of trust.

and you may not have the luxury of a practical example.

for instance, one of the first SC's i'd expect to pop up is a SC with perfect anonymity added as an innovation to a simple fork of Bitcoin with no initial coins and a 1:1 peg in place to accept incoming transfers of BTC to scBTC.

the question for you is, what if you saw significant #'s of BTC start moving into scBTC, what would you conclude?

[brg444]

i disagree.  

when Satoshi created Bitcoin, a BTC was worth $0. there was literally nothing to warn us about.

when Maxwell proposes a technical change to the source code of a market worth $5 Billion, i think he should be expected has a duty to warn us of all possibilities, negative or not.

you and i may be able to distinguish what's going on here in terms of a potential SC failure, but certainly the avg investor might not be.  and simply b/c there will be a market price for scBTC, one can assume uneducated investors will be tempted to buy them on an exchange.

Fair enough.

Although I don't see exactly how the danger differs much from altcoins. I also fail to see how GMaxwell warning the community of the dangers of sidechain scam will stop scammers from creating them and suckers from investing.. but yes maybe they should have been more straightforward regarding this possibility.

[Erdogan]

Lets say we have a 1:1 sidecoin with properties that is good for microtransactions. To simplify, first consider the sidechain to be a company, where customers are the news suppliers, who should receive the money, and the readers, who should pay the money. In this first model, the company must be trusted. A reader sends amount-a to an address addr-a controlled by the company. We call it tx-a. Microtransactions ensue with multiple customers, and at some later time, the company sends addr-a containing amount-a to a new address controlled by the receiving news source.

The bitcoin protocol is ok with this, as long as all transactions are valid.

Now we enhance the example, where the company is replaced by the sidechain. The sidechain logic must create a receiving bitcoin address where the unlocking key is known by noone, and at the same time create a sidecoin address where the unlocking key is given to the news reader in the example. Microtransactions ensue, and after a while a news producer has the amount-a in the form of sxBTC. He then wants to destroy the scBTC and  receive his BTC. Let's just say it is a corresponding amount, it makes the example easier.

The problem of the sidechain logic is now to construct the hidden unlocking key of the output address addr-a of tx-a or another tx with the same amount. A new bitcoin transaction is created with address-a as input, and with a news-producer address as output. So seen from the bitcoin blockchain point of view, this is only two normal transactions. It has to be so, because bitcoin can not contain rules to validate transactions in the sidechain, that would be the same as extending the bitcoin protocol with the sidechain funtionality.

Is it possible to hide the bitcoin unlocking key in the sidechain like this? That is the question.

[brg444]

ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not?  for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?

second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?

Correct, stability in their correlation could be one indication of a well designed and useful application.

As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.

Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.

If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.

Like all things BTC, it is a matter of trust.

and you may not have the luxury of a practical example.

for instance, one of the first SC's i'd expect to pop up is a SC with perfect anonymity added as an innovation to a simple fork of Bitcoin with no initial coins and a 1:1 peg in place to accept incoming transfers of BTC to scBTC.

the question for you is, what if you saw significant #'s of BTC start moving into scBTC, what would you conclude?

I would conclude the market has voted in favor of such a sidechain and with time, would feel comfortable using it?

Where are you trying to lead me? Stop beating around the bush