Gold collapsing. Bitcoin UP.

[tvbcof]

 - 12 years is about 2x the current age of Bitcoin.

 - 56,000,000,000 transactions is about 90,000x the current 600,000 TPD.

You can judge for yourself how much technology has advances between 2009 and 2015 and extrapolate that out then decide how, given the struggles Bitcoin has had meeting it's current 7TPS, it's going to swallow 650,000TPS.  But don't worry...it's just 'initial calculations.'

Please spell it out for us laymen  

It's simple math.(*)  7 Tr/sec * 60 sec/min * 60 min/hr * 25 hr/day = 604,800 Tr/day  Not sure where Gavin pulled the 400x10^6 Tr/day 'if implemented now' figure from.  I guess maybe he's planning to (try to) get infrastructure monopolization started with a bang.


(*)  "Ain't no such thing as simple math!" he exclaimed as reeled off a few extra yard of bungee cord for his jump just to be on the safe side.

[tvbcof]

...
I think you are running cypherSC. You are selling cypherCertificates for BTC and back. You did create cypherSC and this is reason why BTC drop in price  b/c cypherCertificates have no value.

The guy's endless army of newsletter subscribers will indeed be the death knell for Bitcoin.  Just the anticipation of it is tanking Bitcoin as we can see.  Oh well.  Bitcoin RIP.

[tvbcof]

http://ledracapital.com/blog/2014/11/1/bitcoin-series-28-sidechains

Thoughts?

Pretty much spot on.

It's easy to get demoralized at the ignorance (or pseudo-ignorance) and lack of analytical abilities of Bitcoin enthusiasts if all one looks at is this forum and more specifically, one mostly looks at the threads which one has commented on.  Ask my how I know.

[NewLiberty]

 - 12 years is about 2x the current age of Bitcoin.

 - 56,000,000,000 transactions is about 90,000x the current 600,000 TPD.

You can judge for yourself how much technology has advances between 2009 and 2015 and extrapolate that out then decide how, given the struggles Bitcoin has had meeting it's current 7TPS, it's going to swallow 650,000TPS.  But don't worry...it's just 'initial calculations.'

Please spell it out for us laymen  

I'm not a fan of building in extrapolating to protocol definitions.


Even if they aren't exponential.

I'm debating this with Gavin privately, but there is an ELI5 of it here:
http://www.bizforum.org/Journal/www_journalJVP018.htm

Gavin agrees with me that there is no way to know today what the future of technology will be.
He offers what is essentially his best guess.

Where we disagree is whether the block sizes of the future will be useful in determining what the Max Block Size should be. (I say yes, he remains sceptical)

Using a flexible limit that is to some extent dependent on actual future block sizes has benefits such as:
1) It reduces (but does not eliminate) the role of a future arbitrator (a point of centralization) needing to decide when the variable is wrong and what it should be instead..
2) Brings us closer to the Milton Freidman ideal of a mechanistic system.
3) Discourages bandwidth attacks.
4) Having a flexible lower bound to which the protocol adheres, may allow for a more accommodating higher bound to manage for growth.  Since there is a mitigation for bursting issues, the upper bound may be higher as it isn't a default value but an additional safeguard.
5) Potential for encouraging active full nodes (another aspect of scalability).

[Odalv]

@cypherdoc - SC is not simple to understand

transacting in SC can be separated in 3 steps
1. entering SC
2. using SC
3. exiting SC

steps #1 and #3 => entering and exiting is 2-way-peg
a) 2-way-peg can be done by
 - trusted entity (human or server will convert between MC and SC) => it can be you (cypherSC)
 - Federated peg (N humans or oracles will create transactions on MC and SC -> locking and unlocking BTC and scBTC)
 - Co-signed (N humans or oracles ) and SPV proof from SC will be required to convert between MC and SC
 - bitcoin (bitcoin protocol wlll exchange  BTC <-> scBTC)
 - ... and many more
 
b) Then there is step #2 "using SC". This is separated from creating 2wp.
Using SC will require mining. This can be done by
 - MM merge mining
 - trusted entity (server will confirm blocks)
 - using Federated miners (those can by differnet from those who created Federated peg)
 - Oracle/s
 - bitcoin timestamping
 - SNARK
 - ... and many more

c) Block in SC can be new blockchain concept (aka, 'faster transactions', 'different monetary policy', 'better privacy', 'more extensive scripting', 'contracts', 'different cryptography', 'different mining models' and so on).


edit:
2wp, mining, blockchain concept are orthogonal. They create new 3-dimensional world.

[tvbcof]

...
Allowing that artificial quota to limit the transaction rate is the radical experiment, taking us into uncharted economic territory.

There are no good economic arguments for magic constants that ration the transaction rate, just handwaving about "centralization".

Bolded to nail the exact situation.
...

Echo chamber in action.

In fact the 'radical experiment into uncharted economic territory' happens to be what Satoshi coded in.  Probably for better reasons than just a quick-n-dirty hack against abuse, but we may never know.  One would think that if that is what he was thinking he would have seen fit to put his thoughts in the commit comments.  Surely he was a smart enough guy to realize that this was going to become a bone of contention at some point...if Bitcoin took off at all anyway.

As for 'handwaving about centralization', I think I've amply demonstrated that even the likes of Google would have some troubles at Gavin's predicted transaction rates of half-a-million per second.  Long before that they would be shit-canning the blockchain nonsense and making Bitcoin a real-time system which would be moderately easy to do since they'de have to coordinate with at most a small handful of counterparts by that time.

It is true that private keys would remain private and the several infrastructure operates would never void them outright since it would destroy the last remnants of the system, but they certainly could and would require hodlers to verify to the levels required of a Bitcoin Licensee.

[tvbcof]

...
i think Gavin can get this done right if he can get the cooperation of the "Blockstream" devs.

I'd go for anything up to a 10x static and one-time increase (which requires about 5 seconds with the commiter's favorite text editor) as long as I heard a well put together argument from the credible devs (who almost all just happen to be associated with Blockstream.)

Anything which fails the above criteria will cause me to consider blocksize shenanigans to be an attack and the fork upon which they occur to be hostile to Bitcoin.

[cypherdoc]

pg 4 whitepaper:

For this reason, Bitcoin’s objective is relatively simple: it is a blockchain supporting the
transfer of a single native digital asset, which is not redeemable for anything else.

so if a chunk of the native digital assets are allowed to migrate to SC's, where will the tx fees come from to pay miners long term after block rewards diminish to zero?

[cypherdoc]

pg 5: 

The fact that functionality must be broadly acceptable to gain adoption limits participants’
personal freedom and autonomy over their own coins.

this is inflammatory as far as i'm concerned.  if it bothers you, sell them and don't participate.

[cypherdoc]

so they moved this to pg 5:

The core observation is that
“Bitcoin” the blockchain is conceptually independent from “bitcoin” the asset: if we had technology
to support the movement of assets between blockchains, new systems could be developed which
users could adopt by simply reusing the existing bitcoin currency

wrong

[tvbcof]

pg 4 whitepaper:

For this reason, Bitcoin’s objective is relatively simple: it is a blockchain supporting the
transfer of a single native digital asset, which is not redeemable for anything else.

so if a chunk of the native digital assets are allowed to migrate to SC's, where will the tx fees come from to pay miners long term after block rewards diminish?

Sounds like he is saying, in effect, 'a reserve currency'.  That is exactly what BTC would be in a solution involving more than one sidechain.

Maybe that's why the author(s) deemed batch mode (periodic blocks forming a chain) to be a satisfactory design vs. a streaming or token design more appropriate for exchange duty.

I do wonder if Satoshi anticipated sidechains from the get-go.  Very possibly since they are quite logical and they occurred to dumb-ass me fairly quickly after putting my mind to the problem of how to make the thing scale.  Indeed, bitcoin seems almost custom made to serve as a reserve currency foundation.  If he did I would not be surprised at all if he declined to mention them given how they blow the mind of some of you mouth-breathing simpletons out there.

Oh! --->>>

pg 5:  

The fact that functionality must be broadly acceptable to gain adoption limits participants’
personal freedom and autonomy over their own coins.

That almost seals it for me.  Yup.

[cypherdoc]

pg 7

If, in the medium term, there
were wide agreement that the new system was an improvement, it may end up seeing significantly
more use than Bitcoin. As there are no changes to parent chain consensus rules, everyone can switch
in their own time without any of the risks associated with consensus failure.

they never address the problem of mining tx fee fragmentation as a result of increasing usage of the SC.  how will Bitcoin miners ever make make money when SC's are attracting all the tx's?

[cypherdoc]

Sounds like he is saying, in effect, 'a reserve currency'.  That is exactly what BTC would be in a solution involving more than one sidechain.

tv, how can Bitcoin act as a reserve currency in the presence of multiple SC's that are sucking BTC and miners away from the MC thus decreasing it's security model and therefore it's value?  think about 2140 when the block reward has gone to 0 and Bitcoin miners are supposed to rely on tx fees exclusively but they are being outcompeted by a SC that is processing all their tx's b/c everyone has migrated over to it b/c of an innovation?

edit:  i know some will say that the MC will just incorporate the innovation.  maybe, maybe not.  the whitepaper says everyone can/should move over.  also, if consensus is so hard to get now, what changes then?  and what about the conflict of interest that the Blockstream devs might use to block the innovation being added to MC b/c they have an interest in SC's being successful?

[NewLiberty]

Personally I am considerably less worried about the effect of sidechains on Bitcoin, than I am about their effect on Bitcoiners.

However, I do not appreciate wanton ignoring of risks and claiming "don't worry it will be fine"
Whenever I hear that it is a good reason to hold my wallet tight and walk the other direction.

[Adrian-x]

I think Satosi envisioned blockchain to blockchain transactions for sure, not sure he flushed out pegging them.

I believe he saw the decentralized exchanges using OpenTransaction trust free servers and backing new featured tokens with smart contracts.

Who knows I'm sure he's hands off.

[tvbcof]

how will Bitcoin miners ever make make money when SC's are attracting all the tx's?

Nobody ever imagined that SC's would "attract all the tx's".  Just the opposite else the two-way peg is meaningless.

In my mind there is significant concern that 500k transactions per day would satisfy even the peg transactions (given that I would like to see it be realistic for a reasonable swath of individual-class users store value on the primary chain.)  That is why I'm not opposed to some expansion of the transaction rate, but I am fiercely protective of keeping Bitcoin at a size that it can be both maintained by smaller players AND defended in the case of a broad attack by core global internet infrastructure providers.

[cypherdoc]

how will Bitcoin miners ever make make money when SC's are attracting all the tx's?

Nobody ever imagined that SC's would "attract all the tx's".  Just the opposite else the two-way peg is meaningless.

why wouldn't a SC with an innovation like faster tx times attract all the tx's?  and why wouldn't the scBTC stay scBTC with the perceived risk free put (2wp)?  and if i'm right, they will be rewarded by staying on the SC b/c the price of scBTC on that SC will start to rise faster in fiat terms than BTC itself as the SC becomes more and more successful.

[NewLiberty]

Sounds like he is saying, in effect, 'a reserve currency'.  That is exactly what BTC would be in a solution involving more than one sidechain.

tv, how can Bitcoin act as a reserve currency in the presence of multiple SC's that are sucking BTC and miners away from the MC thus decreasing it's security model and therefore it's value?  think about 2140 when the block reward has gone to 0 and Bitcoin miners are supposed to rely on tx fees exclusively but they are being outcompeted by a SC that is processing all their tx's b/c everyone has migrated over to it b/c of an innovation?

This will happen a lot sooner if we get the level of transactions that Gavin is anticipating.
Currently TX fees are 1/300th of the total reward.
If we get 40x the transactions in a decade, the fees with be anywhere from equivalent to as low as 1/3 the reward (the coinbase block reward will go down twice - maybe thrice by then so 1/4 or 1/8).
This would be about 80 TX per second.
Visa does about 2000/second on average today.

However if we get accompanying price appreciation for BTC along with such adoption, we may likely have fee reduction by an order of magnitude or two, which could put us back to only fees = 1/100th the block reward.

[cypherdoc]

@cypherdoc - SC is not simple to understand

transacting in SC can be separated in 3 steps
1. entering SC
2. using SC
3. exiting SC

steps #1 and #3 => entering and exiting is 2-way-peg
a) 2-way-peg can be done by
 - trusted entity (human or server will convert between MC and SC) => it can be you (cypherSC)
 - Federated peg (N humans or oracles will create transactions on MC and SC -> locking and unlocking BTC and scBTC)
 - Co-signed (N humans or oracles ) and SPV proof from SC will be required to convert between MC and SC
 - bitcoin (bitcoin protocol wlll exchange  BTC <-> scBTC)
 - ... and many more
 
b) Then there is step #2 "using SC". This is separated from creating 2wp.
Using SC will require mining. This can be done by
 - MM merge mining
 - trusted entity (server will confirm blocks)
 - using Federated miners (those can by differnet from those who created Federated peg)
 - Oracle/s
 - bitcoin timestamping
 - SNARK
 - ... and many more

c) Block in SC can be new blockchain concept (aka, 'faster transactions', 'different monetary policy', 'better privacy', 'more extensive scripting', 'contracts', 'different cryptography', 'different mining models' and so on).


edit:
2wp, mining, blockchain concept are orthogonal. They create new 3-dimensional world.

that is how i understand it.  but as far as you pumping the Federated server model, this is from the paper itself pg 7:

Although it is possible to use a simple trust-based solution involving fixed signers
(see Appendix A) to verify locking of coins, there are important reasons to avoid the introduction
of single points of failure:

Trusting individual signers does not only mean expecting them to behave honestly; they must
also never be compromised, never leak secret key material, never be coerced, and never stop
participating in the network.

Because digital assets are long-lived, any trust requirements must be as well. Experience has
shown that trust requirements are dangerous expectations even for timespans on the order of
months, let alone the generational timespans we expect financial systems to last.
180

Digital currencies were unable to gain traction until Bitcoin was able to eliminate single
points of failure, and the community is strongly averse to the introduction of such weaknesses.
Community mistrust is reinforced by financial events since 2007; public trust in the financial
system and other public institutions is likewise at historical lows.

[NewLiberty]

how will Bitcoin miners ever make make money when SC's are attracting all the tx's?

Nobody ever imagined that SC's would "attract all the tx's".  Just the opposite else the two-way peg is meaningless.

why wouldn't a SC with an innovation like faster tx times attract all the tx's?  and why wouldn't the scBTC stay scBTC with the perceived risk free put (2wp)?  and if i'm right, they will be rewarded by staying on the SC b/c the price of scBTC on that SC will start to rise faster in fiat terms as the SC becomes more and more successful.

People keep talking about a peg.
As if there were such a thing.


One of these days there will be an SC with some very useful feature, but the devs used compromised cryptographic primitives, and can factor out SC private keys and run off with all the BTC that moved into that chain.
If this is done as a long enough con, it could become an existential risk to bitcoin, yes?  (both the SC and Bitcoin could be essentially destroyed).