Gold collapsing. Bitcoin UP.

[brg444]

I think Bitcoin proponents who are Side Chane enthusiasts will finally understand when a Side Chane takes over with less desirable qualities than Bitcoin provides its proponents today - or not, the argument that Bitcoin was an experiment due to fail anyway will still be valid.

today: It is SC allow inflation in SC tokens (currency) while backing it with and fixing the value of Bitcoin and by this means Blockstream and their future partners may secretly and unobserved, confiscate the wealth of the Bitcoiners, and not one man in a million will detect the theft. (problem is there arrant that many Bitcoiners)

you just need Fiat money to make this happen, and not a lot either, fractions of that is pumped out in the past QE (more than I have but I am not at risk of a failing Fiat system.)

This makes so little sense I don't know where to begin.

A sidechain taking over Bitcoin that has less desirable qualities than Bitcoin provides? I... I just can't

SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.

Why is it so hard for you people to understand this

[1714048955]

1714048955

[1714048955]

1714048955

[brg444]

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).

 


Open source

 

[Adrian-x]

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).

Call me paranoid but that's how I feel about wallet that generate my private keys.
Why would it be bad for Bitcoin? How would it be destroyed?

I can see how the BTC price would drop but wouldn't this be like other scams in the past? When people clue in it would be like a run on the bank SideChain?

[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 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).

i've brought up a number of times that this SPV proof is unproven and untested no matter what you call it.  they can vet it all they want but no one knows it will work until it's been tested live under market conditions.

[Adrian-x]

SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.

Altcoins are not inflationary, the innovators grow the total market cap. The failure are bad investments, BTC just changes hands no inflation.

A SideChain token is a Bitcoin substitute it can be used as an alternative.

Growth in a SC that creates an arbitrage opportunity that exceeds the Bitcoin market cap would be inflationary.

[brg444]

and that would be to ignore what Odalv has said all along.  he envisions billions.  there certainly will be a lot as they are costless to implement.  and why not if you can attract valuable BTC to scBTC while possibly securing MM?

Did you read through my comment or just skim through it? I'm interested in the money function of Bitcoin and its subset in sidechains.

"Why not create a billion altcoins if you can attract valuable BTC to altchain while possibly securing MM". Well what do you know? We've seen that already and not much damage was caused to Bitcoin afaik.

we would hope not.  except with lots of miners losing money at this point, if SC's were implemented tomorrow even with a questionable innovation, speculative miners could be expected to support a speculative SC.

  you really can't get it through your head heh. I will repeat it again in hope that you eventually get it. Miners can decide to merge mine any altcoin already RIGHT NOW if they find it profitable. There exists plenty of speculative ALTcoins. Evidently miners do not find any value in these speculative altcoins because they are NOT merge mining them.

Now, by what kind of strech of the imagination do you propose that if SC's were implemented tomorrow, a gang of sidecoins would be created that would create any incentive for the miners to merge mine them.

What is the sidecoins' value proposition for the miners that doesn't exist in current altcoins? Answer me that.

a sidecoin exacerbates the problem as i see it by introducing a block reward on the SC in addition to the tx fees paid.  as Bitcoin's mining reward dwindles, the inequity in payout becomes even more stark in favor of the SC.  we've been through this already, why ignore us?

Again, let's compare with altcoins shall we? Altcoins introduce blockrewards in addition to tx fees paid. Why are miners not merge mining altcoins right now then?

i disagree that these can ever be the only benefits that Bitcoin might ever derive from technological advancements.  better security might be one.   niche uses not dependent on MM are another huge source.  all these have the potential to suck the life out of Bitcoin (decreased tx fees) especially when there exists this theoretical risk free put.

There is NO risk free put in the creation of issued assets on a sidechain (sidecoins). The only "risk free put" is in utility sidechains.

you're still ignoring that they could take over the MC especially if the scBTC start to climb in price and we see migration to the SC over time if the innovation appears valid and useful. you've never answered my Q about how and when will the core devs be willing to integrate a new innovation into the MC?  maybe the Blockstream core devs don't want that to happen out of conflict of interest?
 

BTC climbs in price with the realization of added value in a utility sidechain (1:1 peg). That said, if innovation in a utility sidechain appears to gain significant market traction then it will be considered whether or not it should be implemented in the mainchain. It might necessitate a hardfork and the devs might simply decide it should be left as is : a sidechain working in synergy with the mainchain. Remember that we are only considering 1:1 pegged SC. Others are simply altcoins in disguise.

it is a risk in the sense that if successive innovative SC's are introduced, which is to be expected, then forcing all BTC hodlers to crack open cold wallets to migrate each time this happens would introduce all sorts of risk which i've already identified.

And that is precisely why it will not happen and sidechain will be used as UTILITY chains where coins will be sent only when their particular feature is necessary. It has been 6 years now since Bitcoin was published. Assuming it was created with sidechains, how many sidechains do your foresee would attract considerable market capital? What are their features? Is there any that would entice you to crack open your cold wallets to migrate all of you coins to it?

[cypherdoc]

SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.

Why is it so hard for you people to understand this

why is it so hard for you to read?:

5.2 Issued assets
To this point, we have mostly been thinking about sidechains which do not need their own native
currency: all coins on the sidechain are initially locked, until they are activated by a transfer from
some other sidechain. However, it is possible for sidechains to produce their own tokens, or
issued
assets
, which carry their own semantics. These can be transferred to other sidechains and traded for
other assets and currencies, all without trusting a central party, even if a trusted party is needed for
future redemption.
440
Issued asset chains have many applications, including traditional financial instruments such
as shares, bonds, vouchers, and IOUs. This allows external protocols to delegate ownership and
transfer tracking to the sidechain on which the ownership shares were issued. Issued asset chains
may also support more innovative instruments such as smart property.
These technologies can also be used in
complementary currencies
[Lie01]. Examples of
complementary currencies include community currencies, which are designed to preferentially
boost local businesses; business barter associations, which support social programs like education
or elderly care; and limited-purpose tokens which are used within organisations such as massive
15
multiplayer games, loyalty programs, and online communities
12
.
A suitably extended scripting system and an asset-aware transaction format would allow the
450
creation of useful transactions from well-audited components, such as the merger of a bid and
an ask to form an exchange transaction, enabling the creation of completely trustless peer-to-peer
marketplaces for asset exchange and more complex contracts such as trustless options[FT13]. These
contracts could, for example, help reduce the volatility of bitcoin itself.

[brg444]

that's not but what is: is failing to understanding that a feature that is more valuable will have an impact.

what if that value is laundering stolen coins? the arb opportunity will be 0ver 10% and there are about 1,000,000 stolen BTC out there.

what if some nation state: whats to use blockchain technology, and invests a failing fiat system or there gold reserves in a SC that is inflationary but comes with demurrage if saving in a private wallet and interest when held with a CB or some other feature that appeals to the 99% that is not Bitcoin. it is a great opportunity for Bitcoiners to arb initially until the arb gap is closed.  the goale here is to make Bitcoin attractive to Nation-State's note there isn't a Nation-State that should feel safe with bitcoin growing as it is.  

What if ? Well 1,000,000 in, laundry time, 1,000,000 laundered coin out to the main chain.

Are you serious when asking these questions? Do you seriously believe that there are an incentive for someone to leave their coins on a potentially less secure Sidechain when it's only feature is to launder coin and that somehow this feature is more valuable than the whole Bitcoin mainchain?

Here you go again with your GOVcoin argument   You know what's the problem with this paranoiac idea, other than paranoia itself, is that GOVcoin is... guess what? An altcoin! And altcoin, well... they already exist.

Sidechains did not create altcoins
Sidechains do not enable altcoins

[tvbcof]

OK, how about a real problem with sidechains for a change?

Sidechains rely on Bitcoin since it is their reserve currency.  They will need to support it as a subsidized entity if it is not profitable to support by itself (and the design of Bitcoin ensures that we will always approach this condition.)

A sidechain, however, relies on Bitcoin being healthy for them.  That is to say, Bitcoin operates on the transactions which impact the sidechain and the rest of the transactions can go pound sand.  If a sidechain is subsidizing Bitcoin by mining it (or even if it's not) what would be the mechanism to deter them from prioritizing transactions which benefit themselves?  Or, for that matter, neglecting all other transactions?  Perhaps 'user pressure' or 'the goodness of their hearts', but this always makes me uncomfortable.

Now it is the case (I believe) that miners are autonomous and not necessarily tied to one sidechain or another.  But in design one must consider miners (and everyone else) to be completely predatory.  In many scenarios, however, a sidechain could induce them enough to consider the miner (pool) to be of a particular sidechain I would expect.

I was surprised and disappointed by Back's anticipation that there would be a small number of sidechains.  I'd like to see 1000's of them.  Now I am starting to visualize some of the dynamics which might be playing into his calculations.

In the end it all comes back to transaction fees I guess.  One of the huge appeals of sidechains, to me, is that they produce the possibility of sizable transaction fees on the Bitcoin blockchain and thus support the network without small-fry spam.

It would appear to be the case that sidechains in the presence of anything like pressure on the block capacity will indeed chase out the smaller individual players on Bitcoin proper since they'll be priced out by entities who are able to aggregate value flows.  I personally think this is a good thing but I can simpithize with those who see it as the opposite.  Three years ago I myself did as well.  My philosophy shifted suddenly (three years ago) when some of the economic and infrastructure ideas clicked.  By that time, however, I had envisioned the future as being something like sidechains so those who are chased out of Bitcoin proper would have a place to go.

(Also three years ago I was pretty fully vested in BTC...how much that had to do with my philosophy is unknown...)

[brg444]

SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.

Why is it so hard for you people to understand this

irrelevant quote

 

I know that you can create altcoins on top of sidechains.

My argument is they don't enable them to succeed any more than traditional altcoin.

And please don't bring up the "yes they will be merged mined" argument.... I would be very disappointed.

[brg444]

It is economically naive to fail to consider that a feature that adds value in one economic condition, may subtract it in another, and that movement of money may follow this with a lag, sometimes a very significant lag due to practical constraints.
Further naivete would be in imaging that this is not happening all the time, and that this effect is commonly exploited.  "Economists" here are contemplating only static ideal cases, and implementing regulatory changes in spite of these concerns.  Changing the code is changing what ultimately regulates Bitcoin.

With this particular change, it is not so easy to undo it if it turns out to be a mistake.  Many Bitcoin may be destroyed.  People will make mistakes of trust.

There are many new risks with SC.  Lets address them rather than pretend that they don't exist.

You make many sensible comments and let me insist I am not trying to downplay the potential risks of sidechains.

My problem is that most of sidechains opponents in this thread are justifying their risk-case with a proposition that involves the creation of coins booted on sidechains.

To my knowledge, coins booted on sidechains are the economic equivalent of altcoins and in no way are sidecoins advantaged over altcoins. So in essence, sidecoins are not responsible for that problem and it is misguided to suggest that they are.

[brg444]

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?

a chunk of the assets != ALL of the assets

tx fees will come from miners mining all chains producing holding significant value

[Adrian-x]

SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.

Why is it so hard for you people to understand this

irrelevant quote

 

I know that you can create altcoins on top of sidechains.

My argument is they don't enable them to succeed any more than traditional altcoin.

And please don't bring up the "yes they will be merged mined" argument.... I would be very disappointed.

"irrelevant quote" FYI those were examples of inflation.

[brg444]

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?

duh!

they will mine both chains!

one more comment like this and you've officially turned into a troll

[cypherdoc]

brg444,

the difference btwn an altcoin as it exists today and a sidecoin that could exist on a SC tomorrow is a direct link to the Bitcoin network via the 2wp.  b/c the 2wp guarantees that scBTC can get back to BTC (theoretically), users will be encouraged to migrate to the SC to utilize the innovation and pay scBTC tx fees.  and they will be incentivized to stay there b/c of the 2wp.  initially, i believe these scBTC will be valued lower than BTC in fiat terms b/c they are indeed less secure and arbing can be expected to drag down the BTC price.  however, as time advances and if the innovation is significantly proven to be useful and confidence in security of the SC increases, more and more ppl will convert to scBTC.  you yourself concluded this should drive up the fiat price and i agree.  this should feed on itself to the point that everyone will perform their tx's on the SC if the Bitcoin core devs do nothing to update the MC with the innovation.  this would destroy Bitcoin miners over the long run as their block rewards diminish along with defecting tx fees.  how and when will they devs decide to upgrade the protocol?  they need consensus which you've already said is impossible.  will they do it under pressure, panic?  when 40, 50, or 60% of all BTC have become scBTC?  maybe it will be too late or maybe it gets blocked by Blockstream core devs b/c their biz model depends on SC development and success?  can you imagine how many $millions it would be worth to Blockstream if all BTC hodlers ended up having to move to a SC they had helped conceive and build?  who knows, i don't see it as guaranteed and i surely see the process as potentially being conflicted.  

MM an altcoin as it's defined today is seriously risky and not worth the trouble for Bitcoin miners.  MM a sidecoin adds additional badly needed revenue to struggling smaller miners who will be more willing to defect to a sidecoin.  the revenue stream will be more easy to envision for these miners.  the other difference is that no, Bitcoin miners can't just simply start mining an altcoin today if they wanted to.  the altcoin's protocol has to be specifically modified by the altcoin devs to accept Bitcoin DMMS.  i don't see them offering this to Bitcoin miners so that's why it's not happening.  since sidecoins represent a direct link to the Bitcoin MC for BTC users to convert to scBTC, the process is simpler and worth more to miners b/c they can mine not only sidecoin reward & tx fees but scBTC tx fees as well.  

[Adrian-x]

It is economically naive to fail to consider that a feature that adds value in one economic condition, may subtract it in another, and that movement of money may follow this with a lag, sometimes a very significant lag due to practical constraints.
Further naivete would be in imaging that this is not happening all the time, and that this effect is commonly exploited.  "Economists" here are contemplating only static ideal cases, and implementing regulatory changes in spite of these concerns.  Changing the code is changing what ultimately regulates Bitcoin.

With this particular change, it is not so easy to undo it if it turns out to be a mistake.  Many Bitcoin may be destroyed.  People will make mistakes of trust.

There are many new risks with SC.  Lets address them rather than pretend that they don't exist.

You make many sensible comments and let me insist I am not trying to downplay the potential risks of sidechains.

My problem is that most of sidechains opponents in this thread are justifying their risk-case with a proposition that involves the creation of coins booted on sidechains.

To my knowledge, coins booted on sidechains are the economic equivalent of altcoins and in no way are sidecoins advantaged over altcoins. So in essence, sidecoins are not responsible for that problem and it is misguided to suggest that they are.

brg444, what is you critique of doing all the things you like about SC with Open-Transactions http://opentransactions.org/wiki/index.php/Main_Page, and none of the inflation?

[brg444]

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.

no, your logic fails you again.

if faster tx times is implemented WITHOUT security tradoff to the SC then it makes perfect sense that the mainchain would incorporate the feature natively.

since you refuse this scenario, then indeed, as mentionned in the whitepaper, the scBTC might attract considerable, even the majority of the coin.

BUT

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.

[/i]

The price of scBTC will NOT riser faster than BTC's since a BTC can claim a 1:1 stake in the SC so they are effectively worth the same.

[brg444]

SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.

Why is it so hard for you people to understand this

irrelevant quote

 

I know that you can create altcoins on top of sidechains.

My argument is they don't enable them to succeed any more than traditional altcoin.

And please don't bring up the "yes they will be merged mined" argument.... I would be very disappointed.

"irrelevant quote" FYI those were examples of inflation.

Inflation on the sidechain is not affecting the mainchain 

[brg444]

It is economically naive to fail to consider that a feature that adds value in one economic condition, may subtract it in another, and that movement of money may follow this with a lag, sometimes a very significant lag due to practical constraints.
Further naivete would be in imaging that this is not happening all the time, and that this effect is commonly exploited.  "Economists" here are contemplating only static ideal cases, and implementing regulatory changes in spite of these concerns.  Changing the code is changing what ultimately regulates Bitcoin.

With this particular change, it is not so easy to undo it if it turns out to be a mistake.  Many Bitcoin may be destroyed.  People will make mistakes of trust.

There are many new risks with SC.  Lets address them rather than pretend that they don't exist.

You make many sensible comments and let me insist I am not trying to downplay the potential risks of sidechains.

My problem is that most of sidechains opponents in this thread are justifying their risk-case with a proposition that involves the creation of coins booted on sidechains.

To my knowledge, coins booted on sidechains are the economic equivalent of altcoins and in no way are sidecoins advantaged over altcoins. So in essence, sidecoins are not responsible for that problem and it is misguided to suggest that they are.

brg444, what is you critique of doing all the things you like about SC with Open-Transactions http://opentransactions.org/wiki/index.php/Main_Page, and none of the inflation?

Utility sidechains (1:1) peg have no inflation and are more decentralized than OT is.


I win?

[brg444]

brg444,

the difference btwn an altcoin as it exists today and a sidecoin that could exist on a SC tomorrow is a direct link to the Bitcoin network via the 2wp.  b/c the 2wp guarantees that scBTC can get back to BTC (theoretically), users will be encouraged to migrate to the SC to utilize the innovation and pay scBTC tx fees.  and they will be incentivized to stay there b/c of the 2wp.  initially, i believe these scBTC will be valued lower than BTC in fiat terms b/c they are indeed less secure and arbing can be expected to drag down the BTC price.  however, as time advances and if the innovation is significantly proven to be useful and confidence in security of the SC increases, more and more ppl will convert to scBTC.  you yourself concluded this should drive up the fiat price and i agree.  this should feed on itself to the point that everyone will perform their tx's on the SC if the Bitcoin core devs do nothing to update the MC with the innovation.  this would destroy Bitcoin miners over the long run as their block rewards diminish along with defecting tx fees.  how and when will they devs decide to upgrade the protocol?  they need consensus which you've already said is impossible.  will they do it under pressure, panic?  when 40, 50, or 60% of all BTC have become scBTC?  maybe it will be too late or maybe it gets blocked by Blockstream core devs b/c their biz model depends on SC development and success?  can you imagine how many $millions it would be worth to Blockstream if all BTC hodlers ended up having to move to a SC they had helped conceive and build?  who knows, i don't see it as guaranteed and i surely see the process as potentially being conflicted.  

MM an altcoin as it's defined today is seriously risky and not worth the trouble for Bitcoin miners.  MM a sidecoin adds additional badly needed revenue to struggling smaller miners who will be more willing to defect to a sidecoin.  the revenue stream will be more easy to envision for these miners.  the other difference is that no, Bitcoin miners can't just simply start mining an altcoin today if they wanted to.  the altcoin's protocol has to be specifically modified by the altcoin devs to accept Bitcoin DMMS.  i don't see them offering this to Bitcoin miners so that's why it's not happening.  since sidecoins represent a direct link to the Bitcoin MC for BTC users to convert to scBTC, the process is simpler and worth more to miners b/c they can mine not only sidecoin reward & tx fees but scBTC tx fees as well.  

 

You were wrong by your first sentence, should I continue reading?

Sidecoins do NOT guarantee that the scBTC can get back to the BTC. Sidecoins have a floating peg and not a 1:1 2wp.