Gold collapsing. Bitcoin UP.

[brg444]

That's a good point.

 You seem to understand Economics. What's your opinion of we lose 50% of all BTC to a SC failure?  

A sidechain that supports 50% of the Bitcoin economy would probably be as extensively reviewed, secured and protected than Bitcoin's own blockchain so it seems to me these type of scenarios are far out there.

I would much rather see such important amount of BTC on a community supported sidechain than on a centralized off-chain scheme ala Mt. Gox.

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[rocks]

rocks, I also disagree with your characterization of Mc plus SC's as one seamless ledger in which 21M coins float with sov. If that were the case,  why all the fuss and need to firewall them off?

In theory they are buy no one knows for sure in reality.

And again you are simply stating an opinion as if it is fact but not responding to points made before.

The 2-way pegging process merge sidechains into the main chain as a single data structure. At any given time you could look at the bitcoin blockchain and billions of sidechains and see exactly where all 21M coins are in a completely open and transparent manner. That is the definition of a single seamless ledger that preserves the 21M cap and maintains the Sound Money aspect just as today.

It's fine to disagree, but so far you have not presented anything that counters that.

I think your actually wrong here from a technical standpoint.

From what I understand from odalv and gmax is that these SC's can be private communities which would be using scBTC and we would never know it.  Certainly it seems like that way through the federated peg model. Remember these SC's are designed to fiction without having to have the Bitcoin network monitor them. The only thing that needs to be presented at the time of reentry into the Bitcoin network is a valid proof. In the meantime, maybe years, certainly the Bitcoin network has no idea what's going on with SC's and the scBTC involved so how would you?

Yes you may not be able to see what is happening off the main chain. (In the case of a zerocoin sidechain that would be the whole point BTW)

But my understanding is you would be able to see that the coins were moved to a sidechain and that is all you need for a global view. i.e. Bitcoin's main chain has 18M coins located at these UXTO, 1M coins on sidechain A, 1M coins on sidechain B, 1M coins on sidechain C. All 21M are accounted for.

The reason I'm saying that is a complete view is all 21M coins are accounted for visibly. The fact that you may not know what some of them are doing on sidechain B or who has them is not an issue, their existence and location on which chain is still known.

This might just be semantics....

That's a good point.

 You seem to understand Economics. What's your opinion of we lose 50% of all BTC to a SC failure?  

Not entirely sure, interesting question. It might have the same effect as if a shipment of gold from the US to Germany was sunk and permanently lost at the bottom of an ocean trench.  It is a complete loss for those involved, but increases the value for the other 50% by removing supply from a fixed stock. Such an event wouldn't have stopped gold being used in 1880, it would have made people more careful with their gold.

So I think this event would make people be much more careful in using sidechains because sidechains introduce another layer of risk. Such an event might actually drive demand away from sidechains and onto the mainchain.


To me the main risk of sidechain ledgers is if a bad sidechain creator tried to artificially inflate the supply. Let's say someone created a centrally managed sidechain, received 1M BTC as 1M scBTC on that sidechain, but then artificially increased the supply of used scBTC on that sidechain to 10M scBTC over time. They could do this because this sidechain is not transparent in structure and no one would notice for a time.

This greatly damages the store of value property.

But only until the attempt was exposed. I think every attempt like this would fail, in the same manner as banks used to fail in runs. Some people would get concerned and transfer back to BTC. But the sidechain only has 1M BTC in reserve for 10M scBTC liabilities. Very quickly the 1M BTC would be exhausted or the convertibility window would close. Both actions would expose the fraud and the remaining 9M scBTC would quickly be priced to their true value (zero).

This is how fixed reserve assets function, they don't prevent fraud, they just force it to eventually come to public light. (The problem for fiat today is there is no forcing function).

[brg444]

Let's say someone created a centrally managed sidechain, received 1M BTC as 1M scBTC on that sidechain, but then artificially increased the supply of used scBTC on that sidechain to 10M scBTC over time.

Someone would need to come up with one hell of an explanation to incite people to transfer 1M BTC to a centralized sidechain.

This doesn't seem to me like a scenario that sidechains introduce. On the contrary, now that they introduce the opportunity for any one to set up decentralized platforms, proponents of a centralized scheme would be hard pressed to explain their reasoning behind the creation of a centralized structure on top of a natively decentralized sidechain.

[Melbustus]

I've been busy for the past week or so. Did I miss anything?

[rocks]

And I completely understand your point that it could stimulate free and open development. I've come off my harder line of objection and can see the light but it HAS to evolve as hypothesized by brg444  here or else were doomed.  There's alot of economic assumptions involved.

What if the market punishes  bitcoin though for allowing the conflict of interest?

Hmmm, I'll have to chew on that a bit.

[rocks]

Let's say someone created a centrally managed sidechain, received 1M BTC as 1M scBTC on that sidechain, but then artificially increased the supply of used scBTC on that sidechain to 10M scBTC over time.

Someone would need to come up with one hell of an explanation to incite people to transfer 1M BTC to a centralized sidechain.

This doesn't seem to me like a scenario that sidechains introduce. On the contrary, now that they introduce the opportunity for any one to set up decentralized platforms, proponents of a centralized scheme would be hard pressed to explain their reasoning behind the creation of a centralized structure on top of a natively decentralized sidechain.

Completely agree it is not a realistic example.

It was just a statement that even in the worse case scenario the economic cap would still function, to say that sidechains ledgers don't change the reserve asset quality of bitcoin cap.

[Adrian-x]

I've been busy for the past week or so. Did I miss anything?

Lol over a 100 200 pages,  and a few  unsubstantiated and substantiated accusations.
And a conclusion that it would be wise to considered SideChains could come with some risks.  

[Melbustus]

I've been busy for the past week or so. Did I miss anything?

Lol over a 100 200 pages,  and a few  unsubstantiated and substantiated accusations.

Well, I've read every post of this thread (and the one before it) except for the last few days, so I suppose I have some reading to do tonight.

And a conclusion that it would be wise to considered SideChains could come with some risks.  

Isn't that obvious?

[cypherdoc]

rocks, I also disagree with your characterization of Mc plus SC's as one seamless ledger in which 21M coins float with sov. If that were the case,  why all the fuss and need to firewall them off?

In theory they are buy no one knows for sure in reality.

And again you are simply stating an opinion as if it is fact but not responding to points made before.

The 2-way pegging process merge sidechains into the main chain as a single data structure. At any given time you could look at the bitcoin blockchain and billions of sidechains and see exactly where all 21M coins are in a completely open and transparent manner. That is the definition of a single seamless ledger that preserves the 21M cap and maintains the Sound Money aspect just as today.

It's fine to disagree, but so far you have not presented anything that counters that.

I think your actually wrong here from a technical standpoint.

From what I understand from odalv and gmax is that these SC's can be private communities which would be using scBTC and we would never know it.  Certainly it seems like that way through the federated peg model. Remember these SC's are designed to fiction without having to have the Bitcoin network monitor them. The only thing that needs to be presented at the time of reentry into the Bitcoin network is a valid proof. In the meantime, maybe years, certainly the Bitcoin network has no idea what's going on with SC's and the scBTC involved so how would you?

Yes you may not be able to see what is happening off the main chain. (In the case of a zerocoin sidechain that would be the whole point BTW)

But my understanding is you would be able to see that the coins were moved to a sidechain and that is all you need for a global view. i.e. Bitcoin's main chain has 18M coins located at these UXTO, 1M coins on sidechain A, 1M coins on sidechain B, 1M coins on sidechain C. All 21M are accounted for.

The reason I'm saying that is a complete view is all 21M coins are accounted for visibly. The fact that you may not know what some of them are doing on sidechain B or who has them is not an issue, their existence and location on which chain is still known.

This might just be semantics....

actually, i need to re-address your answer here.

the fact that you view SC's in this manner, ie, it doesn't matter what's happening on the SC's as all that's important is the Bitcoin blockchain and its UTXO set, then doesn't that support NL's and my argument that these SC's ledgers are, in fact, different than Bitcoins blockchain?  so different that they could range from complete scams with centralization and no MM  all the way to complete legit SC's that are 100% MM and no sidecoins?  if you buy that then SC's are in fact NOT extensions of the Bitcoin blockchain and are NOT the same ledger.  they are just some amorphous bunch of ledgers/blockchains for anything from complete speculation to complete legitimacy.  and then in that same sense, do you not understand my concern of breaking the link btwn BTC the currency, from BTC the blockchain?

[Adrian-x]

Let's say someone created a centrally managed sidechain, received 1M BTC as 1M scBTC on that sidechain, but then artificially increased the supply of used scBTC on that sidechain to 10M scBTC over time.

Someone would need to come up with one hell of an explanation to incite people to transfer 1M BTC to a centralized sidechain.

This doesn't seem to me like a scenario that sidechains introduce. On the contrary, now that they introduce the opportunity for any one to set up decentralized platforms, proponents of a centralized scheme would be hard pressed to explain their reasoning behind the creation of a centralized structure on top of a natively decentralized sidechain.

Completely agree it is not a realistic example.

It was just a statement that even in the worse case scenario the economic cap would still function, to say that sidechains ledgers don't change the reserve asset quality of bitcoin cap.

If it were a smaller value do you think history could teach us anything?
Sinking rai stones for eg. if the SC-crypto was preserved but the locked scBTC lost.  I wonder if the holders of the SC-crypto would instantly except the loss, if they  could still exchange among themselves.

[smooth]

breaking the link btwn BTC the currency, from BTC the blockchain?

The "breaking the link" is pure marketing. You may be right that it is harmful marketing try to promote the idea of breaking that link. I consider it deceptive at best.

BTC-the-currency still has all 21 million on the main chain with or without sidechains. Some may be locked, some lost, some not yet mined, but they never go anywhere. They are on the main chain ever and always.

[cypherdoc]

rocks, I also disagree with your characterization of Mc plus SC's as one seamless ledger in which 21M coins float with sov. If that were the case,  why all the fuss and need to firewall them off?

In theory they are buy no one knows for sure in reality.

And again you are simply stating an opinion as if it is fact but not responding to points made before.

The 2-way pegging process merge sidechains into the main chain as a single data structure. At any given time you could look at the bitcoin blockchain and billions of sidechains and see exactly where all 21M coins are in a completely open and transparent manner. That is the definition of a single seamless ledger that preserves the 21M cap and maintains the Sound Money aspect just as today.

It's fine to disagree, but so far you have not presented anything that counters that.

I think your actually wrong here from a technical standpoint.

From what I understand from odalv and gmax is that these SC's can be private communities which would be using scBTC and we would never know it.  Certainly it seems like that way through the federated peg model. Remember these SC's are designed to fiction without having to have the Bitcoin network monitor them. The only thing that needs to be presented at the time of reentry into the Bitcoin network is a valid proof. In the meantime, maybe years, certainly the Bitcoin network has no idea what's going on with SC's and the scBTC involved so how would you?

Yes you may not be able to see what is happening off the main chain. (In the case of a zerocoin sidechain that would be the whole point BTW)

But my understanding is you would be able to see that the coins were moved to a sidechain and that is all you need for a global view. i.e. Bitcoin's main chain has 18M coins located at these UXTO, 1M coins on sidechain A, 1M coins on sidechain B, 1M coins on sidechain C. All 21M are accounted for.

The reason I'm saying that is a complete view is all 21M coins are accounted for visibly. The fact that you may not know what some of them are doing on sidechain B or who has them is not an issue, their existence and location on which chain is still known.

This might just be semantics....

That's a good point.

 You seem to understand Economics. What's your opinion of we lose 50% of all BTC to a SC failure?  

Not entirely sure, interesting question. It might have the same effect as if a shipment of gold from the US to Germany was sunk and permanently lost at the bottom of an ocean trench.  It is a complete loss for those involved, but increases the value for the other 50% by removing supply from a fixed stock. Such an event wouldn't have stopped gold being used in 1880, it would have made people more careful with their gold.

So I think this event would make people be much more careful in using sidechains because sidechains introduce another layer of risk. Such an event might actually drive demand away from sidechains and onto the mainchain.


To me the main risk of sidechain ledgers is if a bad sidechain creator tried to artificially inflate the supply. Let's say someone created a centrally managed sidechain, received 1M BTC as 1M scBTC on that sidechain, but then artificially increased the supply of used scBTC on that sidechain to 10M scBTC over time. They could do this because this sidechain is not transparent in structure and no one would notice for a time.

This greatly damages the store of value property.

But only until the attempt was exposed. I think every attempt like this would fail, in the same manner as banks used to fail in runs. Some people would get concerned and transfer back to BTC. But the sidechain only has 1M BTC in reserve for 10M scBTC liabilities. Very quickly the 1M BTC would be exhausted or the convertibility window would close. Both actions would expose the fraud and the remaining 9M scBTC would quickly be priced to their true value (zero).

This is how fixed reserve assets function, they don't prevent fraud, they just force it to eventually come to public light. (The problem for fiat today is there is no forcing function).

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

[cypherdoc]

I've been busy for the past week or so. Did I miss anything?

Lol over a 100 200 pages,  and a few  unsubstantiated and substantiated accusations.

Well, I've read every post of this thread (and the one before it) except for the last few days, so I suppose I have some reading to do tonight.

And a conclusion that it would be wise to considered SideChains could come with some risks.  

Isn't that obvious?

not to some around here.  didn't you get the memo?  SC's can only make the BTC price go up, be they scam or legit.

[rocks]

doesn't that support NL's and my argument that these SC's ledgers are, in fact, different than Bitcoins blockchain?  so different that they could range from complete scams with centralization and no MM  all the way to complete legit SC's that are 100% MM and no sidecoins?  if you buy that then SC's are in fact NOT extensions of the Bitcoin blockchain and are NOT the same ledger.  they are just some amorphous bunch of ledgers/blockchains for anything from complete speculation to complete legitimacy.  and then in that same sense, do you not understand my concern of breaking the link btwn BTC the currency, from BTC the blockchain?

Yes sidechains could be anything from legit coins to complete scams, but why does that matter?

I think the question is whether or not sidechains need to be honest and help secure the economic cap. If sidechains are needed to secure the ledger and secure the cap, then yes we have a disaster in the making because by definition sidechains can be anything (as you pointed out) and can't be relied on.

But I don't believe that is the case. I believe the core protection mechanism is still the bitcoin mainchain which tracks where all 21M coins are. Sidechains that are scams will experience bank runs because the Bitcoin mainchain is where honesty and security is enforced. That was the point of my example in the previous page where some sidechain created millions of dishonest scBTC, the bitcoin mainchain would expose the scam/fraud.

Bitcoin is the reserve asset. Reserve assets don't prevent fraud, but force fraud it to eventually come to public light. I trust bitcoin to enforce correctness in sidechains by functioning as a reserve asset to sidechains, I don't trust any sidechains to do so.

[brg444]

not to some around here.  didn't you get the memo?  SC's can only make the BTC price go up, be they scam or legit.

 

do you want us to revisit some of your doomsday scenario made in the first couple of pages of this discussion.

your amount of backpedalling has been quite impressive and obvious to anyone following since the beginning.

the argument was not that there weren't any risks. it was that those you were coming up with were completely farfetched and improbable

[cypherdoc]

doesn't that support NL's and my argument that these SC's ledgers are, in fact, different than Bitcoins blockchain?  so different that they could range from complete scams with centralization and no MM  all the way to complete legit SC's that are 100% MM and no sidecoins?  if you buy that then SC's are in fact NOT extensions of the Bitcoin blockchain and are NOT the same ledger.  they are just some amorphous bunch of ledgers/blockchains for anything from complete speculation to complete legitimacy.  and then in that same sense, do you not understand my concern of breaking the link btwn BTC the currency, from BTC the blockchain?

Yes sidechains could be anything from legit coins to complete scams, but why does that matter?

I think the question is whether or not sidechains need to be honest and help secure the economic cap. If sidechains are needed to secure the ledger and secure the cap, then yes we have a disaster in the making because by definition sidechains can be anything (as you pointed out) and can't be relied on.

But I don't believe that is the case. I believe the core protection mechanism is still the bitcoin mainchain which tracks where all 21M coins are. Sidechains that are scams will experience bank runs because the Bitcoin mainchain is where honesty and security is enforced. That was the point of my example in the previous page where some sidechain created millions of dishonest scBTC, the bitcoin mainchain would expose the scam/fraud.

Bitcoin is the reserve asset. Reserve assets don't prevent fraud, but force fraud it to eventually come to public light. I trust bitcoin to enforce correctness in sidechains by functioning as a reserve asset to sidechains, I don't trust any sidechains to do so.

that's a pretty good answer rocks.

[brg444]

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?

[rocks]

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

OK, so you're saying that the media and public view would be that "Bitcoin failed!!!" if a sidechain went down, and that would damage the ecosystem.

Yes, I agree a lot of people would do so and interpret it this way. I think these would be the same people who say Bitcoin is a scam today. I think smart people would separate that Sidecoin A went down but Bitcoin is fine.

But I think the best answer is brg444's earlier comment that no sidechain will get large enough to cause a big public blowup unless it itself is as strong at Bitcoin. If sidechain A has 50% of BTC as your example, I'd be just as confident in it as the current Bitcoin mainchain.

[cypherdoc]

i think the true answer is, "it's impossible to know".  a loss of that magnitude would wipe out alot of Bitcoin's most ardent supporters, eliminate the perception of SOV, and could set the community back 100 yrs.  in that sense, the BTC price could tank.  i know i wouldn't trust crypto devs anymore in my lifetime if i lost scBTC from that scenario.  or, yes, it could "make all our BTC more valuable!"  that's certainly the conventional thinking around here.

the difference with your gold example is that i doubt the Chinese had any idea a Spanish armada ship laden with gold went to the bottom of the Atlantic.  today, we have the internet and the media would be all over it.

that's a fair statement but again, how does sidechain increase the risks of BTCs being lost to centralized, malicious or corrupted scheme?

if you believe Odalv, there are going to be billions of these federated server models of private community SC's doing their thing w/o MM.  that's where problems could arise.

[Adrian-x]

I've been busy for the past week or so. Did I miss anything?

Lol over a 100 200 pages,  and a few  unsubstantiated and substantiated accusations.

Well, I've read every post of this thread (and the one before it) except for the last few days, so I suppose I have some reading to do tonight.

And a conclusion that it would be wise to considered SideChains could come with some risks.  

Isn't that obvious?

One would think but it seems they've all been mitigated and it's possible one is ignorant if one doesn't see it.