Topic: [ANN][XCP] Counterparty - Pioneering Peer-to-Peer Finance - Official Thread - page 314. (Read 1276817 times)

maaku thanks for being here I have a few questions
1.) can you explain 2-way-pegging in non-technical manner? coming from an economics background I know pegging, but two-way-pegging is a somewhat artificial expression. is it simply fixing exchange rates?
2.) again from an economics, non-technical perspective, it seems to have a lot of disadvantages, for the case it is the same as fixing exchange rates. if I understood Adam Beck on LTB properly the reason for using this model is keeping the promise of 21 million bitcoins as a somewhat law of scarcity in Cryptocurrencies. Due to altcoins, he sees the danger of losing digital scarcity - that is absurd for an open-source technology isn't it? what incentive do altcoin-developers have to create a great coin within this system? Who sets the exchange rate for the tokens on the sidechains?
3.) Aren't you afraid that some developers who have great ideas simply create altcoins, using closed source code, because they know otherwise they would be cloned by bitcoin (idea is funny)? I think the cryptocurrecy development works so great because it is open sourced, free floating and not limited. I am afraid that you could move great minds, who also want to be monetarily rewarded for an innovation (which is by no doubt fine) out of the Bitcoin-Protocol?

Just to clarify I do not know if there are technical reasons for two-way-pegging, but regarding incentives for core innovation within the cryptocurrency system, especially for people entering the market now and in the future, this is a suicide. After listening to Adam on LTB I think that the motivation for two way pegging is completely wrong and almost funny.

When you look for a platform that can weathered the storm best, would you put your most valuable assets on an inflatable raft tied to the Bitcoin boat?

I think most businesses would rather stay on BitcoinXCounterparty.

Parasitic is a technical word that describes precisely what it is; those other terms do not. It is not meant to be derogatory.

To the second matter, depending on how the pegging is constructed there might be some automated mechanism by which it shuts off (e.g. if the hash rate falls below some proportional threshold of bitcoin's). In that case of course the market value would diverge. But so long as the pegging mechanism is in place, any significant deviation of market price would be equalized by market makers moving coin in our out of the side chain.

Would you pls stop calling it "parasitic"? Its kind of offensive around here and most people in this thread would disagree with you. If you aim for a fruitful interaction with us pls use a less derogative term, like "complementary", "add-on", or "top level layer", etc.

For a different matter, could you think of any situation where 1 BTC in side chain A has a different exchange value then 1 BTC in side chain B? For example during a time period when chain A is under attack and thus less functional or save?

I won't deny that there are significant advantages to doing asset issuance, etc. on a validated side chain. But there are also significant disadvantages. Both technologies are valid, in my opinion, and they don't solve the same problems (though something like Freimarkets, if it were created, would certainly be able to duplicate some of the functionality of Counterparty). I do disagree that side chains are better for the ecosystem, and also that the benefits of building on a side chain outweigh their significant costs.

The side-chain currency is bitcoins. It's not meant to be detached from the original BTC reserve amount at all! Asking "how is the value of any unit of that currency going to increase?" is kinda silly. It's value goes up or down exactly as bitcoin does, as the two are instances of the same thing: a single, unified cross-chain currency. Indeed one of the primary points is to prevent this scammy every-alt-has-its-own-floating-currency nonsense.


We'll have to differ on this opinion. As I've stated multiple times in this thread, and to various counterparty and mastercoin people in person, there are significant advantages to doing asset issuance and distributed markets on a validated, merged-mined side chain. This is solving the same problem in a way that is better for the ecosystem. Although we're getting some press now, two-way pegging as a implementable idea has existed since at least December of last year, and distributed p2p markets over side chains was fleshed out in the Freimarkets paper six months prior to that. These ideas pre-date Counterparty and yes, they are frankly better than the unvalidated parasitic model. I will stop evangelizing, but I will be happy to answer specific questions.

thanks PP and sparta
jsut the answer i was looking for

Side chains are nothing new, and they have many limitations which make them unsuitable for our use in the short term. What's new here is the proposal for two-way pegs to BTC, which is a very interesting idea, but one that has no direct relevance to Counterparty, or the limitations of Bitcoin that Counterparty resolves.

Theoretically, a side-chain can be created to do the same things as Counterparty, Mastercoin, or any true altcoin. However, I wonder at the financial incentive to create an altcoin or XCP as a side-chain. Since the side-chain "currency" (not a true coin) will have to be created by burning/suspending/reserving BTC, and the second peg will unburn/unsuspend/redeem at most the same total amount of BTC, isn't the total value of the side-chain "currency" forever limited by the amount of BTC that was reserved for creation?

Let's say someone develops a really cool side-chain currency that does wonderful things, and everyone is using it and wants it. How is the value of any unit of that currency going to increase if it can only ever be redeemed for the same amount of BTC that was reserved to create it? I don't see how it's possible for the side-chain currency to have its own ecosystem and be, in a sense, detached from the original BTC reserve amount. (But I didn't major in math or economics, so maybe I'm missing something.)

Please see some of the questions posed by taariqlewis in this reddit thread for more: http://www.reddit.com/r/Bitcoin/comments/22p0ch/eli5_side_chains/

any comments on how side chains make counter party redundant?

great project!
need you guys!

Thank you for your attention
I hope you would like it to promote it
A great community

Understanding of a very comprehensive is a good start
 

In my earlier post I indicated that it is a one way flow from Bitcoin to the 'Type-B' blockchain.
I listen to the podcast again. It appears that I made a mistake and
there will be a two way exchange between Bitcoin and 'Type-B' Bitcoin. What that will do is essentially peg the Type-B Bitcoin price to the Bitcoin price.
For example, you can move your Bitcoin to a side chain to do microtransactions etc..., then move it back to the main chain once you are done.

Page not found.

Apparently I have misunderstood some of this discussion - the last time I read (the discussion suggesting type-B bitcoins - which Kdrop was quoting from) the implementation suggested an unlimited one-way burn.

My calculation was assuming you were making a PoW side-chain (i.e. shorter block times) and storing block hashes in the Bitcoin chain - it was not directed at merged mining. In the later case it's true that you will have significantly more security for "free" but at the potential reward of .0582 BTC it isn't a great security incentive either (and you can be attacked nearly for "free" as well).

Sorry, but no it's not immediately clear this 2-way pegging mechanism has any application to parasitic, unverified systems like Counterparty and Mastercoin. Certainly not without some changes to these systems. The pegging system itself depends on SPV mode of operation for public chains (which parasitic chains do not support), or the existence of auditor commitments for private accounting servers. Counterparty natively supports neither.

As I've advocated earlier, asset issuance and exchange transactions would be done on a merged mined side chain, with all the benefits that come from having the protocol rules validated by miners. One of those benefits is the ability to do pegging transactions with other chains.

@porqupine, first of all we're talking about 2-way pegs. Bitcoin and type-B bitcoins are for practical purposes the same asset because you can freely exchange between them. I was not and never was talking about one-way issued assets.

Regarding hash rate, your calculation doesn't make any sense. The side chain would be merged mined so there would be approximately zero cost. Those 0.05852852 BTC would be money left on the table by any miner who choses not to merge mine the side chain. So long as the fees are sufficient to cover the bandwidth costs of miner's full node, or demurrage or some other construction is used to enact a perpetual reward, one should expect very hash rate adoption.

Seems a bug in Counterwallet. I can import the private key start from letter 'K' which is dumped from Bitcoin-QT, but can't import the private key start from '5' which is dumped from blockchain.info

The same question "Not a valid private key."
Could anybody help?
thnk

Error making request to https://counterwallet.co/_api: JSON-RPC Error:
Type: Server error

Code: -32000

Message: 'NoneType' object has no attribute 'timetuple'