Gold collapsing. Bitcoin UP.

[cypherdoc]

Therefore, it seems to me that the argument against sidechains should focus on why these assumptions are not likely to be met (mining issues), which is a situation that will mess with the ledger (though only if people get duped into putting too much money into SCs).

that's what i am trying to do.

i would also submit that a ledger that carries speculative assets (anything other than BTC) will be different ledgers as they will be less secure as they aren't likely to be MM and will be priced in the market differently. 

[Adrian-x]

When they say "you can't separate" the two, that's absolutely not in reference to sidechains or other similar schemes.

In this paper, we argue that it is possible to simultaneously achieve these seemingly contradictory goals. The core observation is that
“Bitcoin” the blockchain is conceptually independent from “bitcoin” the asset

I totally believe that BlockStream's business as it standards will depend on that fact.

There is a risk of destroying Bitcoin as we know it if BlockStream's goal is achieved.

So I understand you are also against federated sidechains? Because they also create this exact seperation you are against.

it sounds like you are desperate, in all the noise you may have missed it.

Peter-R put it most succinctly - my emphasis in bold:

(continued) Furthermore, except for in this thread, there seems to be very little concern for the new dynamics that this change could entail.  I highly respect Greg Maxwell (gmaxwell) and Andrew Poelstra (andytoshi), and I want to mention that they're pretty quick to point out the need for rigour in any proposed crypto-system.  Andytoshi wrote what's become a highly-cited paper on the dangers of altcoins designed by "amateurs."  New designs should be peer-reviewed by experts in the field, tested, etc., etc., etc.

But SPVP sidechains are not just a new cryptosystem.  They represent a change to the economics, game theory, politics, and probably even legal aspects of bitcoin.  For the same reason that amateur cryptographers may be blind to the weaknesses of their proposed cryptosystems, professional cryptographers may be blind to the change in incentives that their new cryptosystem entails.  SPVP sidechains should not be viewed as simply a technical problem; it's a multidisciplinary problem and we need to explore the concerns raised through many different lenses.  

In the meantime, there's already the potential for enormous growth ahead of us with bitcoin as it is.

One argument I would like to make is I don't consider SPV to be a "feature" like blacklisting but moreso an "upgrade" on a scheme that is already possible within the existing Bitcoin protocol (federated peg can be implemented right now as you have pointed out).

I think it is clearly a new feature (not that that's necessarily a bad thing--one could argue that Pay2ScriptHash was a new feature too).  The fact that federated sidechains are already possible in no way means that adding OP_SIDECHAINPROOFVERIFY is an "upgrade." The federated servers sit on top of the bitcoin protocol, whereas the SPV-proof-based sidechains would be integrated within the protocol.  If you argue that SPV-sidechains would be an "upgrade," would you not also argue that native support for colored coins or Counterparty features would also be an "upgrade"?  Like federated sidechains, these features are already possible on platforms that sit on top of bitcoin too.  

brg444: Do you support a hard-fork to increase the max block size limit?

[Peter R]

One supposed "weakness" of colored coins (I use the quotes because I personally see it as a strength), is that the bitcoin protocol doesn't verify the "amount" of colored coins transferred.  I can inspect any bitcoin output, look at its "value" field," and, provided that that TX has been mined into a block, I know that the output really contains the stated number of bitcoins.  With colored coins, this property does not exist; instead I must follow the chain of colored transactions back to the original issuance of the colored asset to determine if the (e.g.) 1,000,000 stock certificates I'm about to buy is actually valid.  This means that SPV nodes cannot verify transactions and that the whole transaction chain cannot be pruned.  

And so transactions are verified through a process external to the Bitcoin system, right? Hence my statement that there is an additional layer of trust.

I don't understand what you mean by "additional layer of trust" in the context that you're using it.  What I addressed above was just a technical issue of whether an SPV node can verify the colored coin transfer, or whether a node that stores the full chain of colored transactions is required. 

The additional layer of trust is the fact that there's a counter party to these colored assets (the issuer of stocks, bonds, gold receipts, etc.) and there's no protocol that can remedy that. 

[cypherdoc]

Are you mainly saying that the incentive structures for mining change in unpredictable ways if speculative assets are built straight into the money itself, rather than those assets simply being denominated in the money, like how the DOW is denominated in dollars? If that's what you're saying, I might agree. I'm not sure I see any problem with the incentives, but I also can't rule out a problem. The precautionary principle. This would extend to things like Counterparty, yes?

Wait, I'm pretty sure you said before that it's fine for things to be built on top of Bitcoin. So I'm confused about whether your argument here is just an extension of your "Bitcoin will only ever be used as money" thesis or whether it's specific to sidechains due to merge mining or for some other reason.

yes, that's what i'm saying. the danger being that of building speculative asset trading directly into the protocol facilitated by a conflicted spvp.  i think it deprecates the money function we currently enjoy and introduces unacceptable risk.  and it certainly hasn't been proven to work.

and i am fine with things being built on top of Bitcoin as long as they bring value and compete fairly.

[cypherdoc]

here's another hint at Satoshi's original intentions in targeting the money function only.  he titled the original Bitcoin thread thusly:

"Bitcoin p2p e-cash paper."

[Zangelbert Bingledack]

a single Blockchain is a single point of failure.

The problem from an investment perspective is that this requires active asset management, and if I choose the wrong chain to allocate some of my wealth to I lose when it fails (assuming the 2wp is also lost). I like spin-offs because if you have a 1% stake in the ledger now, you have a 1% stake in all the spin-offs as well (assuming spin-offs have the same inflation schedule as Bitcoin) by default, without having to do anything. No matter what chains win, your stake in the ledger is always and automatically preserved. With sidechains, you have to be a masterful investor to ensure net zero change to your stake in the total operational ledger.

[Adrian-x]

(continued) Furthermore, except for in this thread, there seems to be very little concern for the new dynamics that this change could entail.  I highly respect Greg Maxwell (gmaxwell) and Andrew Poelstra (andytoshi), and I want to mention that they're pretty quick to point out the need for rigour in any proposed crypto-system.  Andytoshi wrote what's become a highly-cited paper on the dangers of altcoins designed by "amateurs."  New designs should be peer-reviewed by experts in the field, tested, etc., etc., etc.

But SPVP sidechains are not just a new cryptosystem.  They represent a change to the economics, game theory, politics, and probably even legal aspects of bitcoin.  For the same reason that amateur cryptographers may be blind to the weaknesses of their proposed cryptosystems, professional cryptographers may be blind to the change in incentives that their new cryptosystem entails.  SPVP sidechains should not be viewed as simply a technical problem; it's a multidisciplinary problem and we need to explore the concerns raised through many different lenses. 

In the meantime, there's already the potential for enormous growth ahead of us with bitcoin as it is.

what do you drink in the morning? i want some of that 

[brg444]

When they say "you can't separate" the two, that's absolutely not in reference to sidechains or other similar schemes.

In this paper, we argue that it is possible to simultaneously achieve these seemingly contradictory goals. The core observation is that
“Bitcoin” the blockchain is conceptually independent from “bitcoin” the asset

I totally believe that BlockStream's business as it standards will depend on that fact.

There is a risk of destroying Bitcoin as we know it if BlockStream's goal is achieved.

So I understand you are also against federated sidechains? Because they also create this exact seperation you are against.

it sounds like you are desperate, in all the noise you may have missed it.

Peter-R put it most succinctly - my emphasis in bold:

(continued) Furthermore, except for in this thread, there seems to be very little concern for the new dynamics that this change could entail.  I highly respect Greg Maxwell (gmaxwell) and Andrew Poelstra (andytoshi), and I want to mention that they're pretty quick to point out the need for rigour in any proposed crypto-system.  Andytoshi wrote what's become a highly-cited paper on the dangers of altcoins designed by "amateurs."  New designs should be peer-reviewed by experts in the field, tested, etc., etc., etc.

But SPVP sidechains are not just a new cryptosystem.  They represent a change to the economics, game theory, politics, and probably even legal aspects of bitcoin.  For the same reason that amateur cryptographers may be blind to the weaknesses of their proposed cryptosystems, professional cryptographers may be blind to the change in incentives that their new cryptosystem entails.  SPVP sidechains should not be viewed as simply a technical problem; it's a multidisciplinary problem and we need to explore the concerns raised through many different lenses.  

In the meantime, there's already the potential for enormous growth ahead of us with bitcoin as it is.

One argument I would like to make is I don't consider SPV to be a "feature" like blacklisting but moreso an "upgrade" on a scheme that is already possible within the existing Bitcoin protocol (federated peg can be implemented right now as you have pointed out).

I think it is clearly a new feature (not that that's necessarily a bad thing--one could argue that Pay2ScriptHash was a new feature too).  The fact that federated sidechains are already possible in no way means that adding OP_SIDECHAINPROOFVERIFY is an "upgrade." The federated servers sit on top of the bitcoin protocol, whereas the SPV-proof-based sidechains would be integrated within the protocol.  If you argue that SPV-sidechains would be an "upgrade," would you not also argue that native support for colored coins or Counterparty features would also be an "upgrade"?  Like federated sidechains, these features are already possible on platforms that sit on top of bitcoin too.  

brg444: Do you support a hard-fork to increase the max block size limit?

The first notion I agree with.

The second is irrelevant to the notion you are defending : that sidechains seperate the BTC unit from its blockchain. SPVproof is a different trust model for this mechanism and the fact that is it embedded in the protocol makes it potentially more secure and trustable. Yes federated models sit on top of the protocol by the separation is the same, only the way by which these units interoperate with the mainchain is different.

[cypherdoc]

a single Blockchain is a single point of failure.

The problem from an investment perspective is that this requires active asset management, and if I choose the wrong chain to allocate some of my wealth to I lose when it fails (assuming the 2wp is also lost). I like spin-offs because if you have a 1% stake in the ledger now, you have a 1% stake in all the spin-offs as well (assuming spin-offs have the same inflation schedule as Bitcoin) by default, without having to do anything. No matter what chains win, your stake in the ledger is always and automatically preserved. With sidechains, you have to be a masterful investor to ensure net zero change to your stake in the total operational ledger.

now you're rolling.

this is why i call it dilutional to Bitcoins current core function and value; that of money.

not only that, a SC for stock would introduce a time preference demand into the equation.  whereas BTC currency is supposed to be highly liquid and hold value, a stock is a long term investment and introduces risk which negates Bitcoins money function in aggregate.  i would argue that the non US world could care less about Bitcoin as a vehicle to invest in stocks, bonds, etc.  they only care about the SOV money function.  Americans only care about this too for the most part if you look at the stats (relatively low participation).

if we start diverting our attention away from the core problem for which Satoshi built Bitcoin, that as money, it just becomes another WoW trading platform game.

[Melbustus]

...
Maybe you are right and the whole thing was a pump-n-dump.  If so, I'm glad I dumped some already because there is every possibility that many people will be enthusiastic enough about a 'real' Bitcoin to get one going once the original has proven to be a hoax from the get-go.

Nice try, but that's not what I said. Bitcoin can survive, be useful, remain significantly better than the legacy financial system, and be valuable without your idealistic and unrealistic notion of "decentralization"; ie, the blocksize can be raised (at least up to some conservative interpretation of Nielsen's law) without killing bitcoin.

[Zangelbert Bingledack]

Are you mainly saying that the incentive structures for mining change in unpredictable ways if speculative assets are built straight into the money itself, rather than those assets simply being denominated in the money, like how the DOW is denominated in dollars? If that's what you're saying, I might agree. I'm not sure I see any problem with the incentives, but I also can't rule out a problem. The precautionary principle. This would extend to things like Counterparty, yes?

Wait, I'm pretty sure you said before that it's fine for things to be built on top of Bitcoin. So I'm confused about whether your argument here is just an extension of your "Bitcoin will only ever be used as money" thesis or whether it's specific to sidechains due to merge mining or for some other reason.

yes, that's what i'm saying. the danger being that of building speculative asset trading directly into the protocol facilitated by a conflicted spvp.  i think it deprecates the money function we currently enjoy and introduces unacceptable risk.  and it certainly hasn't been proven to work.

and i am fine with things being built on top of Bitcoin as long as they bring value and compete fairly.

I suppose whether or not it deprecates the money function comes down to the exact nature of the change to the protocol.

"Devs gotta dev" means we should see more and more big projects doing amazing futuristic things that really end up going nowhere since they are way too advanced. It also presumably means VCs and other investors will "follow the shiny thing" until it burns them enough (too many investments in Bitcoin 2.0 that vaporize), and that could be what Austin Hill is doing now. However, it seems you're worried about the collateral damage in the meantime. Is that right?

[brg444]

a single Blockchain is a single point of failure.

The problem from an investment perspective is that this requires active asset management, and if I choose the wrong chain to allocate some of my wealth to I lose when it fails (assuming the 2wp is also lost). I like spin-offs because if you have a 1% stake in the ledger now, you have a 1% stake in all the spin-offs as well (assuming spin-offs have the same inflation schedule as Bitcoin) by default, without having to do anything. No matter what chains win, your stake in the ledger is always and automatically preserved. With sidechains, you have to be a masterful investor to ensure net zero change to your stake in the total operational ledger.

But spin-off create a different ledger no?

Once transactions occur on the spun-off chain they don't consolidate on the other chain

[cypherdoc]

Are you mainly saying that the incentive structures for mining change in unpredictable ways if speculative assets are built straight into the money itself, rather than those assets simply being denominated in the money, like how the DOW is denominated in dollars? If that's what you're saying, I might agree. I'm not sure I see any problem with the incentives, but I also can't rule out a problem. The precautionary principle. This would extend to things like Counterparty, yes?

Wait, I'm pretty sure you said before that it's fine for things to be built on top of Bitcoin. So I'm confused about whether your argument here is just an extension of your "Bitcoin will only ever be used as money" thesis or whether it's specific to sidechains due to merge mining or for some other reason.

yes, that's what i'm saying. the danger being that of building speculative asset trading directly into the protocol facilitated by a conflicted spvp.  i think it deprecates the money function we currently enjoy and introduces unacceptable risk.  and it certainly hasn't been proven to work.

and i am fine with things being built on top of Bitcoin as long as they bring value and compete fairly.

I suppose whether or not it deprecates the money function comes down to the exact nature of the change to the protocol.

"Devs gotta dev" means we should see more and more big projects doing amazing futuristic things that really end up going nowhere since they are way too advanced. It also presumably means VCs and other investors will "follow the shiny thing" until it burns them enough (too many investments in Bitcoin 2.0 that vaporize), and that could be what Austin Hill is doing now. However, it seems you're worried about the collateral damage in the meantime. Is that right?

yes.

and i think SC's deviate from Satoshi's original vision for Bitcoin as Money.  a digital gold standard so to speak.

[brg444]

a single Blockchain is a single point of failure.

The problem from an investment perspective is that this requires active asset management, and if I choose the wrong chain to allocate some of my wealth to I lose when it fails (assuming the 2wp is also lost). I like spin-offs because if you have a 1% stake in the ledger now, you have a 1% stake in all the spin-offs as well (assuming spin-offs have the same inflation schedule as Bitcoin) by default, without having to do anything. No matter what chains win, your stake in the ledger is always and automatically preserved. With sidechains, you have to be a masterful investor to ensure net zero change to your stake in the total operational ledger.

now you're rolling.

this is why i call it dilutional to Bitcoins current core function and value; that of money.

not only that, a SC for stock would introduce a time preference demand into the equation.  whereas BTC currency is supposed to be highly liquid and hold value, a stock is a long term investment and introduces risk which negates Bitcoins money function in aggregate.  i would argue that the non US world could care less about Bitcoin as a vehicle to invest in stocks, bonds, etc.  they only care about the SOV money function.  Americans only care about this too for the most part if you look at the stats (relatively low participation).

if we start diverting our attention away from the core problem for which Satoshi built Bitcoin, that as money, it just becomes another WoW trading platform game.

these things are gonna happen whether or not SPVP is introduced

SPVproof is a different trust model for this mechanism and the fact that is it embedded in the protocol makes it potentially more secure and trustable. Yes federated models sit on top of the protocol but the separation is the same, only the way by which these units interoperate with the mainchain is different.

[Zangelbert Bingledack]

a single Blockchain is a single point of failure.

The problem from an investment perspective is that this requires active asset management, and if I choose the wrong chain to allocate some of my wealth to I lose when it fails (assuming the 2wp is also lost). I like spin-offs because if you have a 1% stake in the ledger now, you have a 1% stake in all the spin-offs as well (assuming spin-offs have the same inflation schedule as Bitcoin) by default, without having to do anything. No matter what chains win, your stake in the ledger is always and automatically preserved. With sidechains, you have to be a masterful investor to ensure net zero change to your stake in the total operational ledger.

But spin-off create a different ledger no?

Once transactions occur on the spun-off chain they don't consolidate on the other chain

Yeah, that's true, but as a hodler you can just hodl even if others choose to transact. To participate in transactions (i.e., to alter your percentage of the ledger) on any spin-off is opt-in, rather than opt-out.

Suppose I hold X% of all the BTC now. If I never spend on, say, a Monero spin-off of Bitcoin using a snapshot of the Bitcoin ledger today, my stake remains X% in perpetuity. If the Monero spin-off one day takes over, I still control X% of it no matter what other holders have done, so my position in "the ledger" (what is currently known as "the Bitcoin ledger") is preserved by default even if I was frozen in ice the whole time.

[brg444]

a single Blockchain is a single point of failure.

The problem from an investment perspective is that this requires active asset management, and if I choose the wrong chain to allocate some of my wealth to I lose when it fails (assuming the 2wp is also lost). I like spin-offs because if you have a 1% stake in the ledger now, you have a 1% stake in all the spin-offs as well (assuming spin-offs have the same inflation schedule as Bitcoin) by default, without having to do anything. No matter what chains win, your stake in the ledger is always and automatically preserved. With sidechains, you have to be a masterful investor to ensure net zero change to your stake in the total operational ledger.

But spin-off create a different ledger no?

Once transactions occur on the spun-off chain they don't consolidate on the other chain

Yeah, that's true, but as a hodler you can just hodl even if others choose to transact. To participate in transactions (i.e., to alter your percentage of the ledger) on any spin-off is opt-in, rather than opt-out.

Suppose I hold X% of all the BTC now. If I never spend on, say, a Monero spin-off of Bitcoin using a snapshot of Bitcoin ledger today, my stake remains X% in perpetuity. If the Monero spin-off one day takes over, I still control X% of it no matter what other holders have done, so my position in "the ledger" (what is currently known as "the Bitcoin ledger") is preserved by default even if was frozen in ice the whole time.

Yes but then you create two competing chains that work against each others network effect.

It is also different from sidechains because then you have to decide whether or not to use the feature of, say, your Monero spin-off.

As you have mentioned above, you can't benefit from your wealth unless you spend it. The point of sidechains is not only to ensure your stake in the ledger but to be able to use it in different ways that are not possible on the mainchain.

[Adrian-x]

The first notion I agree with.

The second is irrelevant to the notion you are defending : that sidechains seperate the BTC unit from its blockchain. SPVproof is a different trust model for this mechanism and the fact that is it embedded in the protocol makes it potentially more secure and trustable. Yes federated models sit on top of the protocol by the separation is the same, only the way by which these units interoperate with the mainchain is different.

It's simple, you trust the distributed ledger more than the entities that hold your money, you see it as an additional layer of security for the money. I see the incentives that secure the distributed ledger as a security risk and a change to those incentives is changes the security.

I believe on every level that the existing incentive will preserve the existing distributed ledger, I see SPVP injected into the Bitcoin Protocol as a means to secure other ledgers, or have the Bitcoin ledger secured by other means, this adjustment in incentives if manipulated, and over time would have devastating disruption to the incentive that secure the main Bitcoin blockchain.

It's all about the trust you want to marginalize it I want people to take risks, the one risk I we need to mitigate is trusting money. I believe cypher is correct that in order to succeed the only thing you need in society is trust less money, all other relationships depend on that one thing.  

[Zangelbert Bingledack]

I suppose whether or not it deprecates the money function comes down to the exact nature of the change to the protocol.

"Devs gotta dev" means we should see more and more big projects doing amazing futuristic things that really end up going nowhere since they are way too advanced. It also presumably means VCs and other investors will "follow the shiny thing" until it burns them enough (too many investments in Bitcoin 2.0 that vaporize), and that could be what Austin Hill is doing now. However, it seems you're worried about the collateral damage in the meantime. Is that right?

yes.

and i think SC's deviate from Satoshi's original vision for Bitcoin as Money.  a digital gold standard so to speak.

I'm still wondering why things like Counterparty don't mess up the mining incentives. If a huge amount of stock value is riding on Bitcoin doesn't that potentially make an attack more attractive than the miners can get paid to defend against (since they're only getting paid based on the bitcoin price, rather than all the stock value)?

Also, I can see that SCs could mean miners don't get paid enough in tx fees in the future, but couldn't the same problem arise from off-chain transaction mechanisms in general?

[Adrian-x]

The first notion I agree with.

The second is irrelevant to the notion you are defending : that sidechains seperate the BTC unit from its blockchain. SPVproof is a different trust model for this mechanism and the fact that is it embedded in the protocol makes it potentially more secure and trustable. Yes federated models sit on top of the protocol by the separation is the same, only the way by which these units interoperate with the mainchain is different.

its not irrelevant, if it was, there would be no need to inject SPVproof into the Bitcoin protocol.

[Adrian-x]

I suppose whether or not it deprecates the money function comes down to the exact nature of the change to the protocol.

"Devs gotta dev" means we should see more and more big projects doing amazing futuristic things that really end up going nowhere since they are way too advanced. It also presumably means VCs and other investors will "follow the shiny thing" until it burns them enough (too many investments in Bitcoin 2.0 that vaporize), and that could be what Austin Hill is doing now. However, it seems you're worried about the collateral damage in the meantime. Is that right?

yes.

and i think SC's deviate from Satoshi's original vision for Bitcoin as Money.  a digital gold standard so to speak.

I'm still wondering why things like Counterparty don't mess up the mining incentives. If a huge amount of stock value is riding on Bitcoin doesn't that potentially make an attack more attractive than the miners can get paid to defend against (since they're only getting paid based on the bitcoin price, rather than all the stock value)?

Also, I can see that SCs could mean miners don't get paid enough in tx fees in the future, but couldn't the same problem arise from off-chain transaction mechanisms in general?

i dont know how Counterparty works, but I'd be interested to know?