Gold collapsing. Bitcoin UP.

[N12]

No emerging SC market will have higher liquidity than the BTC markets. If there is little friction to converting BTC <> SC, then the preferable way will be to convert and sell on the BTCUSD markets, and this can only be done so many times. And of course, converting BTC > SC would serve to make Bitcoin more scarce.

if you read my simplified version earlier, i think the market will price Bitcoin + SC's in aggregate, not each independently.  what you're doing in essence is moving a bunch of high valued BTC's over to a less secure SC resulting in a lower initial value for scBTC which will then be arbitraged away by pulling down the BTC price to a lower equilibrium.  the "innovation" cannot be depended on initially to offset this dynamic b/c it is unproven.

Yet if you are right, then few will wish to convert their SC to BTC if they see that they're purely burning their money.

I just don't think this is anything to be worried about at all.

[cypherdoc]

i think the conceptual problem many are having here is that they're tying the fiat value of scBTC to BTC b/c all they can think of is this risk free put or 2wp.  that is incorrect.

the value of the scBTC, in fiat terms, is dependent on the security of the sidechain upon which they are riding at the time, which by definition we know is less secure and has different economic properties.  it may only have 50% of the Bitcoin network hashing power from MM.

trying to say a new, untested "innovation" will exactly offset the discount the market will apply b/c of less security is naive.  that might only be true over a given time period during which that innovation is tested.

on top of all this, this discussion is naive in that it ignores economic manipulation or speculation.  even speculative attacks as i have already outline.  

the peg itself takes at least 2d to contest/confirm.  as we all know, the price of BTC can fluctuate 10% in a day and i'm sure the fiat value of the scBTC will do so as well.  it won't be 1:1 at all times as one would have to assume perfect efficiencies/arbing in market trading which almost certainly never happens.

But all this can only increase BTC value.

naive    look at the stagnating price now.  it should be going up with all the good news over last 7 mo.

We can create bitcoin features SC

sure.  something i haven't heard addressed is how will the success or failure of the innovation be determined?  brg444 said an increase in scBTC or an increase in price would be indication for him.  c'mon.  price is the only one factor to measure.  how do the devs plan to measure success in a price volatile situation which we can certainly expect just like we see in Bitcoin?

[cypherdoc]

if they see that they're purely burning their money.

explain

[N12]

Well, the SCs would have reduced purchasing power. If they want their purchasing power back, they have to convert back. And like I said before, if it is easy enough to convert back, it sure beats dealing with some new and illiquid scamcoin exchanges.

I was worried initially reading your posts, but I actually like the idea of this two way peg. My opinion remains that the market will inevitably price them very closely to the Bitcoin price because the force of arbitrage is a stronger and more continuous pressure than the realization that Bitcoin is safer. And regardless, the volume will probably be negligible anyway.

[Odalv]

naive    look at the stagnating price now.  it should be going up with all the good news over last 7 mo.

Seems, you are out of reality ($320).  We had $6 USD/BTC  2 years ago and $190 1 year ago.

[cypherdoc]

Well, the SCs would have reduced purchasing power. If they want their purchasing power back, they have to convert back. And like I said before, if it is easy enough to convert back, it sure beats dealing with some new and illiquid scamcoin exchanges.

no, you're missing the time element.

initially, when a SC is first established, trading prices in fiat for scBTC will be lower b/c they are riding on a less secure sidechain..  we can expect this b/c of newness, less security from MM, possible failure, unproven innovation.  as time goes on, and as arb bots can be confident that the SC is relatively stable and they won't lose any scBTC that they buy in arbing from a SC failure, they will enter the market to buy up scBTC (price rises) while at the same time selling BTC (price drops) until they create a new equilibrium price for both which will closely match each other but result in a lower price for BTC.  multiply this by a 1000x SC's.

it's kinda like the one's closest to the Fed when it first release QE into the fiat system and it's value is highest until its inflationary effects spread throughout the system. only this is in reverse.

[Odalv]

Well, the SCs would have reduced purchasing power. If they want their purchasing power back, they have to convert back. And like I said before, if it is easy enough to convert back, it sure beats dealing with some new and illiquid scamcoin exchanges.

no, you're missing the time element.

initially, when a SC is first established, trading prices in fiat for scBTC will be lower b/c they are riding on a less secure sidechain..  we can expect this b/c of newness, less security from MM, possible failure, unproven innovation.  as time goes on, and as arb bots can be confident that the SC is relatively stable and they won't lose any scBTC that they buy in arbing from a SC failure, they will enter the market to buy up scBTC (price rises) while at the same time selling BTC (price drops) until they create a new equilibrium price for both which will closely match but result in a lower price for BTC.  multiply this by a 1000x SC's.

it's kinda like the one's closest to the Fed when it first release QE into the fiat system and it's value is highest until its inflationary effects spread throughout the system. only this is in reverse.

That is simply not true. No one will sell you scBTC for less than BTC. He will offer feature/utility on higher price than actually BTC has.  If you buy then I'll make money. If you do not buy then I'll withdraw to BTC.

[N12]

Initially we can't expect shit IMO, because the volume will be low, and that's assuming some credible exchange lists SCs. The amount that is arbed until the price gets close shouldn't be too high. I'm certain that if a credible exchange took it up and it actually had significant volume while being substantially below peg rate, despite any doubts of people with newly converted to SCs, the pressure up would be far higher than the pressure down.

Why a thousand SCs? Are people really going to flow to so many, or do you expect them to do it in series as one gets deserted after the other?

[cypherdoc]

No one will sell you scBTC for less than BTC.

and this is not necessarily true.  remember, this is NOT an efficient peg with seamless transition back and forth btwn BTC <--> scBTC.  there is at least a 2d delay.

someone caught in scBTC made need to rush liquidate scBTC for less fiat on an exchange  for any one of a number of reasons.  and then there is shorting as Adrian alluded to earlier.

[N12]

I do want to ask though, does this mean you're bearish on Bitcoin now?

[Odalv]

No one will sell you scBTC for less than BTC.

and this is not necessarily true.  remember, this is NOT an efficient peg with seamless transition back and forth btwn BTC <--> scBTC.  there is at least a 2d delay.

someone caught in scBTC made need to rush liquidate scBTC for less fiat on an exchange  for any one of a number of reasons.  and then there is shorting as Adrian alluded to earlier.

I agree with you. It will create new market. But this market will start at 1:1 and participants who start new market are not willing to take loss. They offers new feature. If there is not market for new feature, they will terminate sidechain withdrawing bitcoins.

[cypherdoc]

Initially we can't expect shit IMO, because the volume will be low, and that's assuming some credible exchange lists SCs. The amount that is arbed until the price gets close shouldn't be too high. I'm certain that if a credible exchange took it up and it actually had significant volume while being substantially below peg rate, despite any doubts of people with newly converted to SCs, the pressure up would be far higher than the pressure down.

Why a thousand SCs? Are people really going to flow to so many, or do you expect them to do it in series as one gets deserted after the other?

there will be thousands b/c it's just software.  no real work involved.

[Odalv]

Initially we can't expect shit IMO, because the volume will be low, and that's assuming some credible exchange lists SCs. The amount that is arbed until the price gets close shouldn't be too high. I'm certain that if a credible exchange took it up and it actually had significant volume while being substantially below peg rate, despite any doubts of people with newly converted to SCs, the pressure up would be far higher than the pressure down.

Why a thousand SCs? Are people really going to flow to so many, or do you expect them to do it in series as one gets deserted after the other?

there will be thousands b/c it's just software.  no real work involved.

Yes, BUT some are world wide and some are local.

[N12]

I do want to ask though, does this mean you're bearish on Bitcoin now?

Why avoid this question? I really am curious. What's there to stop the Sidecoins induced fall to nothingness?

[cypherdoc]

I do want to ask though, does this mean you're bearish on Bitcoin now?

Why avoid this question? I really am curious. What's there to stop the Sidecoins induced fall to nothingness?

well, there's always hope it doesn't go thru.

[cypherdoc]

I do want to ask though, does this mean you're bearish on Bitcoin now?

Why avoid this question? I really am curious. What's there to stop the Sidecoins induced fall to nothingness?

or maybe that it will provide endless opportunities to manipulate.

[marcus_of_augustus]

I do want to ask though, does this mean you're bearish on Bitcoin now?

Why avoid this question? I really am curious. What's there to stop the Sidecoins induced fall to nothingness?

... maybe cypherdoc is spreading FUD so he can buy more BTC lower ... who knows?

[Adrian-x]

I hugely disagree with the belief that sidechains will decrease the value of Bitcoin. Having more uses for the Bitcoin blockchain will almost certainly increase its value, rather than decreasing it.

Do you believe that Bitcoin the currency is separate from Bitcoin the distributed ledger?
If you do then yes Bitcoin the ledger can be used without Bitcoin the currency. (Make the protocol change)

Finding uses for Bitcoin the blockchain that are separate from the currency are a threat to Bitcoin the currency.

If you believe Bitcoin the currency is Bitcoin the ledger then separating them threaten Bitcoin.

I see all the value that SC enable, I also see some situations where the SC is more valuable than Bitcoin and in those situations bitcoins value leaks into the SC it's not that Bitcoin is beet by competition it's the SC that has enabled a mechanism that exploited Bitcoin.

Cypher has given examples and there are others too.

1:1 pegs are a dream. They will only exist within a trusted and controlled system.

[cypherdoc]

I do want to ask though, does this mean you're bearish on Bitcoin now?

Why avoid this question? I really am curious. What's there to stop the Sidecoins induced fall to nothingness?

... maybe cypherdoc is spreading FUD so he can buy more BTC lower ... who knows?

or maybe my explanations simply explain why the market is dropping?

[brg444]

 

I haven't visited this thread in 2 days look what I see when I pop up in here, cypherdoc still doesn't sidechains and clings on to failed arguments