Topic: Gold collapsing. Bitcoin UP. - page 673. (Read 2032265 times)

I am wary of sidechains because of the mining incentive issue. Moving transactions off-chain leaves miners underfunded in the far future, or else results in very high tx fees, leaving Bitcoin more open to competition from a more inflationary coin that pays miners through block rewards more and tx fees less.

However, on that note I have to admit there is little substantive difference between sufficiently high tx fees and slightly breaking the 21M coin limit (no halving, or slower halving), since you can't actually benefit from your Bitcoin wealth unless you spend it eventually, at which time if you incur a big tx fee as a tax it is no different to you than an inflation tax. OK, maybe certain people will gain/lose more from high tx fees vs. inflation. Nevertheless, one way or another the miners have to get paid, and if Bitcoin is severely under-mined due to SC then one of those two things will eventually happen, or else Bitcoin (the platform) will die. But I think Bitcoin the platform will only be allowed to die if everyone is confident that Bitcoin the ledger will live on in an even more secure form as a sidechain, spin-off, or something else. So I'm not so worried about sidechains from that angle, since in such a case the investors lose nothing. And if such confidence can never be gained in the first place, sidechains will never reach such a threat level.

If you are currently a holder of 1% of "the ledger currently being updated by Bitcoin," and at the end of the day your private keys still control 1% of what is now the ledger of civilization, you haven't lost any purchasing power, provided whatever protocol is updating that ledger now is at least as secure as Bitcoin. So I see no danger from perfect sidechains (sidechains where the 2wp is permanent and the sidechain never fails and can somehow live on its own if Bitcoin-the-platform dies) although a very successful one could force Bitcoin to choose between high tx fees and some continuing inflation, but I see a possible threat from imperfect sidechains (2wp is broken and/or mining incentives get messed with) though it seems somewhat self-limiting in that most investors would be tentative about moving their wealth until the peg is proven to be as strong as Bitcoin itself.

In some sense if you're worried about the economic majority just being dumb and moving to a doomed sidechain because of naivety, why not also worry about the economic majority supporting some really bad change to Bitcoin that kills it? The nature of Bitcoin is, in part, that we trust the economic majority to have a certain level of sanity.

In summary, investors shouldn't be wedded to the protocol per se, but of course to the ledger and their percentage stake in it. If there is a better protocol for updating that ledger, and it can be proven to my satisfaction that it is superior (an extremely high bar), then I say bring it on, since it just means the ledger and all investment stakes in it become even more secure (ex hypothesi; again, if there is any doubt of this then I for one won't be excited about it, but I think - for the same reason - most others won't either).

How is it any different?

Is the "sound money function" not the aspect by which the value assigned to the unit cannot be inflated by a deterministic increase in the supply?

You propose that exchanges or any off-scheme schemes running on a fractional reserve is not a direct threat to Bitcoin's sound money function but only a "reputation" problem?

Is it not true that offchain solutions are inherently more likely to run on a fractional reserve than a sidechain where the scarcity is enforced on the protocol level (mathematically) ?

If you answer no to that question then I cannot debate with you as you are clearly not being honest.

But this is why I believe your statement, "the blockchain may only be applicable to bitcoin as money" is incorrect. We are already seeing very useful applications of the blockchain outside of money (which aren't possible with bitcoins current parameters, 10min-1hr blocktime being a big one) and I cannot see these slowing down or going away.

SC's carrying speculative asset will be different and separate ledgers to Bitcoin.  attaching these less secure ledgers to Bitcoin will devalue the entire system.  remember that the Bitcoin miners will probably only be able to MM a couple of the thousands of speculative SC's that will be bolted onto Bitcoin.

hmmm, you sure talk like you're an insider to Blockstream.  is that you Greg?

how would you know that the spvp enabled SC's will be open source?  that's up to whoever contracts with Blockstream to build them.  the rules will be whatever they want.  i've already pointed out how you love to throw the term "open source" around to drive all the juices and get support of the devs reading this thread but the fact of the matter is that Blockstream will be paid good money to construct as many SC's, be they federated or spvp related, for any willing buyer. 

i have $21M that says i'm right.

A depreciation of someone's wealth on the ledger due to speculative assets is the gain of someone else. The ledger stays intact.

lets be clear here.  my arguments in the past have been against altcoins but only in the sense that i think they will die by trying to compete with Bitcoin as a form of money.  the open market stuff, sure, they might survive as long as they provide a valuable service.  i doubt they survive if they depend on an altcoin.  in that sense, i would hope they would try to build their service on top of Bitcoin instead.

 

I should've expect that reply, you are much too shallow to understand intricacies in an argument.

These extensions to Bitcoin I'm referring to that require SPVP are of the open source domain. None will be proprietary to Blockstream or their client. Blockstream's goal is to build these decentralized platform to allow the open source community to create innovative services/chains on top of them.

If in the end SPVP is not integrated, which IMO would be a considerable loss to the ecosystem, then they will model their services around federated sidechains which is likely to be, anyway, the preffered choice of their clients.

i don't miss anything.  that doesn't mean i understand everything.

sorry, but i don't agree with his assessment.  precisely b/c it leaves out an understanding that the money function will get deprecated in deference to the speculative assets riding on the SC's which distract from the mechanism which has brought us to where we are today.  the BTC price will drop if SC's are implemented, imo.

I really don't want to bring up nxt again but you asked for an example. The Nxt FreeMarket (decentralized marketplace)for example. This cannot be built on top of bitcoin. The closest is OpenBazaar but it is not built on top of bitcoin, it simply uses it. In the coming months users of the FreeMarket will also be able to buy and sell using bitcoin directly anyway. The fact that this platform is built on top of a blockchain offers some important privacy benefits that OpenBazaar will be unable to match. For instance, OpenBazaar will be require you to have a node running at all times for your shop to remain visible to other users, which I believe is a huge privacy flaw. How would such a feature just "die" because of bitcoin? It has nothing to do with money, and everything to do with a new method of secure communication using the blockchain. (FreeMarket is not core, it was built on top by a third party).

You said yourself you have no idea what Blockstream business model is so my bet is you're just pulling things out of your ass once again.

yes it did.  but it didn't kill Bitcoin which is what is important.

And that's exactly what sidechains propose.

Note that when speaking of sidechains I am also referring to federated models.