Topic: Can you trust non-bitcoin crypto backed 1:1 by bitcoin? (Read 191 times)

Jeff Bezos will eat the world.

Even making an account on there to see what they are offering needs a credit card. Of course it is professionally managed and in-line with the growing demand of distributed ledger infrastructure that any actual corporation, however small or large, will need.

If one is looking to build a business based on blockchain, this would be the best bet. The experiment of making people run nodes and keep things decentralized seems to have failed for actual business applications. For business, this will most likely be the go-to solution.

This is the kind of infrastructure I'm talking about for tracking movements of tokens.
https://aws.amazon.com/qldb/

This is the kind of infrastructure I'm talking about for the token spending.
https://aws.amazon.com/managed-blockchain

The code is professionally managed.

Some interesting read and watching this topic now.

I am too much into bitcoin that I have no idea about any other project or ideas LOL. This L-BTC seems very interesting, and I guess Vod was thinking very similar to L-BTC. At the begging I did not see a reason to have such things but when realized that we are talking here about reducing tx fees then it's making sense.

LN has not made much impact yet IMHO.

I think your idea is very-close to or I would say exactly like - 'bitcoin sidechain'. Liquid from Blockstream is the best example of sidechain.

In Liquid network, user sends his bitcoin to the 11-of-15 multisig address held by the members of Liquid Federation. Once, his transaction has 102 confirmations, he got equivalent L-BTC on the network. He can do as much transactions as he wants on Liquid network at lower fees like you said. To get back BTC, user initiates peg-out process i.e. burn his L-BTC and request withdrawal to his BTC address. Functionary (a device held by Federation members) then verifies the output address of the user and issue the transaction.

To comment anything about your idea, I wanna know how your smart contract will work. On blockchains like ethereum, you get additional 'data' field so you can create smart contract like normal transaction without mentioning 'to' address and adding 'data' field. This will create contract address without the need of custody by anyone. But this is not possible on bitcoin blockchain. So, how would you create bitcoin contract address? Where will the keys of that address save? Who will keep custody of bitcoins received on contract address?

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In Liquid network, there is a backdoor through Timelock process. So if network is stalled for a time being, it is possible to move bitcoins with three emergency private keys. So, Liquid in true essence isn't 100% automated smart contract.

What is your solution for this? How will your contract handles payments and if consensus rule of your private blockchain doesn't meet for the period, will you keep a way-around like Liquid does?

Well there is a huge different actually. Bitcoin is a decentralized payment system that can not be censored or rolled back (its blockchain is immutable). None of the altcoins mentioned are even close to being decentralized and immutable. Ethereum has already rolled back a smart contract they simply didn't like (since THEY lost money in it while they didn't do the same to similar ones that OTHERS lost money in), Ripple is fully centralized and the company can censor or even reverse any transaction they like. They also have done this in the past.

To use bitcoin on another chain, it has to be guaranteed that it can be redeemed back on the main chain anytime with same value. To maintain this value, or peg, a trusted party will always be needed because the private blockchain cannot be trusted to be secure enough. Bitcoin isn't trusted because of just the code review but also because of the hashing power. This new blockchain should have an equal hashing power for users to trust it in the same way that they trust Bitcoin chain. At least that is the logic of the most stark opponents of wrapped tokens.

An equal hashpower chain not being possible, all the wrapped tokens rely on some sort of delegated decentralization. Even the federated peg from Liquid is an example of that.

TLDR, the issue would be that the smart contract holding my bitcoin isn't itself on a secure enough platform/ blockchain.

No, in LN you still pay a fee per transaction, even if it's reduced.  With this system, you could put $10 of bitcoin in, buy and sell five thousand times and then only pay the transaction fee on the coin you move back to the main network.  The five thousand transactions take place on a private blockchain so it doesn't need to be sent and processed by miners but is still immutable, distributed and public.

(In my usage, "private" blockchain means other than the main ones like Bitcoin, Ethereum, Ripple; it does not mean non-public.)



What have we done when that happens to Ethereum?  :/

Isn't LN serving that purpose already?


The price, even if backed by BTC at a 1:1 value factor, some of these tokens differ in values against BTC and can be profitable/unprofitable to the holder.

What if their (the token's) Blockchain provider gets stuck at some point due to any reason? What will happen to the transactions ahead and who will bear the losses?

What people buy/invest in nowadays are the Name (project create or endorsed by influential person), Hype (the lies cooked up by the team to coax investors and Profit (people jump into coins that are making good pump in price) but i personally don't trust any form of token claiming to be backed 1:1 by Bitcoin cause there will never be another copy of a 1 on 1 print expect a photocopy i.e the token will never be Bitcoin so why wasting my time on it.

Bitcoin is a blockchain as is Ethereum, Ripple, Hyperfabric, etc.  

Most NFT wrap around Ethereum, but I'm not talking about doing that with Bitcoin.

There would be bitcoin in a wallet that can only be accessed by a smart contract.  That smart contract will integrate the bitcoin blockchain with another trusted blockchain provider.  You need to trust the provider (the encryption, the code) the same way you trust the blockchain.  How many here had a part in programming the Bitcoin blockchain?

Rather than paying the transaction fees for a much larger network, members can transact on a private blockchain and the network fees are paid as you move the value back to the Bitcoin blockchain.

Assuming everything is secure with this process, what would your issues be?

There was a topic I created some days ago about DeFi in which wbtc was even included.

Exploits and flash loans are just the beginning, defi economy Is less private
https://bitcointalksearch.org/topic/--5292279

I think that enough will not make me make used of DeFi projects as they are less private, although the news emphasized on the ones built on ethereum blockchain.

Even though backed by BTC, why should I trust a wrapped BTC Blockchain? The same way, why should I trust other fiat tokens backed by USD and pegged to it when some tokens have relatively fluctuating values? BUSD, USDT, USDC, TUSD, and many are the examples for that.

lol @Charles-Tim, do you feel ripped off because I merited Royse777?   I'll give you one too.

She quoted your post but it was her response that made me realize I was asking the wrong question.   I've changed the thread title and moved out of beginners.

You are right about wbtc. But just a point to correct my mistake above about the second point, I later deleted it. It is BTCTRON not TRCBTC

Question answered.  Thanks all!


What if?
- You send btc to btc wallet.  Smart contract delivers token from private blockchain 1:1.
- Tokens are minted if the btc in the btc wallet exceed the number of existing tokens in the blockchain.

- You send token to private blockchain address.  Smart contract delivers btc from wallet.  
- Only smart contracts have access to the btc wallet.  Coins can never be used.

This way you only need to trust the blockchain provider (Ethereum, Ripple, AWS)  like you trust the bitcoin blockchain, right?

If you're interested only in ETH tokens, Etherscan provides a list for that here: https://etherscan.io/tokens/label/bitcoin-pegged.
You need to sign in to view the full list tho.

RBTC - RSK ? Not quite sure tbh , this always confuses me !!

The site is killing my phone but I'd suggest sorting this page by price: https://coinmarketcap.com/defi/ (they probably have a simple api).

I've found renbtc and wbtc so far near the top. I assume there's a waves version and many more too..  Binance accepts 4 different chains afaik.. .

I got this after a quick google search: https://wbtc.network/

Not an expert bud so I have no suggestion.

There are some DeFi projects that are 1:1 backed by bitcoin, but these coins are DeFi projects like Wrapped BTC and RenBTC. These projects provide means of using these tokens in form of bitcoin to make active income.

You can get some info here:
Tokenizing Bitcoin on Ethereum: WBTC vs RENBTC vs HBTC vs BTCpx
https://hackernoon.com/tokenizing-bitcoin-on-ethereum-wbtc-vs-renbtc-vs-hbtc-vs-btcpx-44l3zn8

Haven't been able to find a list.  If they are 1:1 they aren't listed on exchanges.  

Question answered - thanks Royse777!  This is now a conversation on trusting tokens instead of bitcoin and subject has been changed.