Gold collapsing. Bitcoin UP. - page 687.

molecular

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Quote from: cypherdoc on November 18, 2014, 02:39:06 PM

why do ppl, including myself, always say that Bitcoin is going to have a binary outcome?

it's b/c they understand that Bitcoin is about Money. Sound fixed supply Money. you know, the Money that has the chance to consume the Forex and gold markets. in that sense, it has the chance to consume the entire fiat world; yes including stocks, bonds, insurance, just by being used as money alone. it doesn't have to incorporate all those speculative assets directly within its protocol using SC's.

As much as a despise of what Gates said (in my words: "the blockchain tech is great, but as a money it's not so good"), you have to admit that the features 'decentralized', 'trustless', 'possibly anonymous' and 'uncensorable' are ones that would also be damn good features for stock exchange / dividend payments / all kinds of derivative gambling, ownership management, etc.

If you want Bitcoin (the money) to conquer these areas and serve them as a liquid interchange money, wouldn't it be brilliant to have a technical solution that would allow some asset ledger (say the land ownership ledger) to interchange value with the money ledger (Bitcoin) and make atomic swaps across the chains possible?

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Quote from: molecular on November 18, 2014, 02:23:40 PM

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imo, introducing the spvp into the source code, by itself, is a statement to the market that the BTC unit can be separated from its ultra-secure blockchain. i might be wrong, but that breaks Bitcoin's sound money principles. yes, ppl can inspect what hopefully will be open source code and don't have to move to a SC they don't like. but to me, the potential will be there and as a forward looking person, i don't like that. i might have to front run using my expectations and assumptions of what will be the consequences.

the other reason i don't like it and which i tried to avoid in my earlier post is the Blockstream for profit motive. they have every incentive to encourage usage of SC's. they say they won't construct a SC for a SC scam. well, that's for anyone's definition. and when there's money involved, i can't see how they won't take it when they have investors to please. they can always use the same excuse after a SC failure "well, we didn't force anyone to use it". yes, it bothers me that 40% of core devs + 3 of the top committers are under one paid roof. that they could get something like this through into the source code is a clear conflict of interest and sends a bad message to the marketplace.

brg444

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Bitcoin replaces central, not commercial, banks

Quote from: cypherdoc on November 18, 2014, 02:29:13 PM

Quote from: brg444 on November 18, 2014, 01:58:58 PM

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the only thing i would say to your response it that the centralized trust problems we've had in the last 5 yrs are going away. exchanges are being more regulated and investment funds are holding them more accountable. Merkle tree audits are becoming commonplace to verify reserves.

my long term vision is that more and more trade is conducted directly in Bitcoin with merchants holding BTC, like Overstock, and paying suppliers in BTC. that is happening. you can see the progress with time if you've been paying attention. the ultimate goal is to bring everything into the Bitcoin system. it will take time but it is clearly moving in the right direction.

Centralized trust problems do not go away with regulations and more oversight. They can only be reduced by removing the necessary trust. Centralized solutions are in fact becoming more common place and will only expand their place in the ecosystem precisely because of the demand for them.

Your ultimate goal is quite simply unachievable with the Bitcoin ecosystem staying as it is. Sidechains are effectively the more promising tool to enable this very thing you so desire.

molecular

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Quote from: Adrian-x on November 18, 2014, 02:27:46 PM

The more I understood the problem, the more clear it became, there is no waste, a Hard money will create efficiency in all other areas of the economy, and these efficiencies will come in waves that ripple through the economy, most product lines take years to plan and build, each stage will have 4 years to adjust and plan for, and there will be 2 cycles one of growth in Bitcoin value, flowed by a decline in bitcoin value and a growth in economy, this cycle will go on until the transformation hits equilibrium.

you just blew my mind. That is some cool view and it might be pretty realistic. Thanks, very insightful!

molecular

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Quote from: thezerg on November 18, 2014, 01:30:31 PM

I would be against SCs if they broke sound money. But they don't. Gold is still sound money even though paper gold exists.

I didn't say "that we should trust Blockstream devs to incorporate any popular function back into the MC". In fact I am scared that Blockstream will release their SC-capable test alt-coin and never "bother" to merge it back.

With altcoins we have that fear. But with Sidechains we don't even have to merge popular functions back into the MC, because they use a token scBTC that is pegged to BTC. So if the sidechain becomes popular, it creates demand for BTC to be locked and represented by scBTC which drives up the price of BTC.

The real "off-ramp" here is if that peg doesn't exist. Because then someone must SELL BTC to buy the altcoin.

USD use internationally increases the value of a dollar without us having to import every foreign product to America. Flying to the EU and exchanging your USD for Euros does not increase the dollar. The Bitcoin blockchain will remain the "gold" standard, the authoritative source. You fear that some sidechain will "take over" by getting (say) 90% of the market. How is that going to happen if that sidechain isn't distributed, open source, transparent, sound money? Nobody would move their coins. But if a sidechain is invented that is truly better than BTC in all respects then at least you can always move your BTC to it at any time. There's no rush because BTC will always == scBTC.

But if an altcoin does the same thing, you'll have missed the boat.

There's no stopping "off-ramps" and its counter to the purpose of money (to facilitate trade) to do so so we shouldn't try. If someone wants to sell BTC for GOOG they will do so. The difference is can you do it directly or do you have to go thru USD first? In other words, is BTC the most liquid most usable currency or will it still be USD? And can you transfer it in a revolutionary trustless p2p fashion or do you need the old centralized intermediary model that has spawned the current highly flawed overly powerful financial system?

This has nothing to do with Austrian vs. Keynes or sound money. Its about making BTC a better sound money...

Compared to the problems I had with cypherdocs arguments, what thezerg says above is very easy for me to understand and agree with... so I'm starting to lean that way because I'm lazy Wink

cypherdoc

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why do ppl, including myself, always say that Bitcoin is going to have a binary outcome?

it's b/c they understand that Bitcoin is about Money. Sound fixed supply Money. you know, the Money that has the chance to consume the Forex and gold markets. in that sense, it has the chance to consume the entire fiat world; yes including stocks, bonds, insurance, just by being used as money alone. it doesn't have to incorporate all those speculative assets directly within its protocol using SC's.

cypherdoc

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Quote from: brg444 on November 18, 2014, 01:58:58 PM

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the only thing i would say to your response it that the centralized trust problems we've had in the last 5 yrs are going away. exchanges are being more regulated and investment funds are holding them more accountable. Merkle tree audits are becoming commonplace to verify reserves.

my long term vision is that more and more trade is conducted directly in Bitcoin with merchants holding BTC, like Overstock, and paying suppliers in BTC. that is happening. you can see the progress with time if you've been paying attention. the ultimate goal is to bring everything into the Bitcoin system. it will take time but it is clearly moving in the right direction.

but for this to happen, the Bitcoin system has to remain impenetrable, not only from the outside, but from the inside. as in not introducing a breech in to the source code which acts like an offramp, leak, or siphon of value.

the higher level i go to when viewing this SC dynamic, the easier it is to see what the problems are. for me at least.

Adrian-x

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Bitcoin is a radical experiment,
One of the reasons I became passionate about Bitcoin was as because as a designer I had hit a limit in the existing system.

My goal was to reduce waste to a 0 sum game, in reality there is no waste just input and outputs, and a hierarchy of systems that proses each input. (I thought there must be a way as I have 100% control over 80% of a products environmental impact.)

What I learned was there is no systematic problem, just an economic assumption that we need growth, and to function profitably in a growth environment one had to be inefficient with the waste, My job and the demand for the creative skills of my staff is to find ways to incentivise consumers to to make economic chooses so our customers can increase outputs at more competitive price, and manage the expected product life cycle to maximize consumption, in effect I am a cog in a system that is a race to consume as many natural restores as possible before the competition does it more efficiently.

Bitcoin introduced the idea of Austrian economics and it turned the game of efficiency of waste on its head. The one hurdle was the environmental impact of mining, at first it seemed ludicrous to think if a Bitcoin was worth $100,000 there would be an economic incentive to consume the entire energy output of a large industrialized nation like Germany. (and efficiency in mining wouldn't change the economic incentive to do so.)

The more I understood the problem, the more clear it became, there is no waste, a Hard money will create efficiency in all other areas of the economy, and these efficiencies will come in waves that ripple through the economy, most product lines take years to plan and build, each stage will have 4 years to adjust and plan for, and there will be 2 cycles one of growth in Bitcoin value, flowed by a decline in bitcoin value and a growth in economy, this cycle will go on until the transformation hits equilibrium.

This cycle was dependent on the Block Halving, that is needed to regulate the global use of energy. What a lot of people overlook in the investing world of financial products is the point cypher made. "stocks, bonds, contracts, insurance, etc are long term investments. they are to be held" these tools are not supposed to be liquid, in the real world of building and making and growing things, one needs time, and the liquidity should reflect the life cycle of the product and size of the market not the will of HFT's.

The block halving and the discomfort it will bring to miners is fundamental to the ultimate growth of Bitcoin as Hard Money.

With out Block Halving, Miners will be empowered to consume more energy restores that is necessary to have hard money and without PoW there would be no value put on efficiency in the broader economy. in effect there is no free lunch, if you want something you make value judgements, if you can design a system where you can extract a profit for service or product, it must be held in equilibrium by the market.

The principal that SC violated for me was the incentive structure. I can see how Bitcoin may take over the world, but in the world of SC you have miners using there position of power gained early before block halving, leveraging that power (consuming more energy) to earn new revenue on other merged mined SideChains, and this if this gains traction it may be profitable for all involved, but it may also detract from end goal of environmental efficiency managed through free market ideals.

I can see a viable scenario where miners by charging higher fees on the Bitcoin Blockchain, encourage consumers to use a SideChaine for faster more cost effective money transfers. the net result is miners could in effect maintain there income and not be subject to the block halving in Bitcoin, the result is Bitcoin a financial product where the economic system can extract wealth from the productive economy and we forgo the global catalytic event that forces value judgments in fave of environmental sustainable future.

disclaimer, I am a miner and will benefit from SC's as will my itinerants, but the natural world I leave for them will be a lot more depleted and hostile.

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Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

it's becoming clearer to me everyday that what we are dealing with is Keynesian vs Austrian philosophy with this SC's debate.

that might follow from the big paragraph below about how sidechains dilute bitcoins sound money function, which I cannot for the love of my life understand the reasoning of at this point (I'm trying).

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

heretofore, what has brought Bitcoin to where it is today is its Sound Money function. and its been brilliant at that. instant liquidity and transportation worldwide and p2p. continuous growth in the economy and stellar, but volatile, increasing SOV. gvts everywhere scrambling to figure out what this is and what role it has for their futures. investment groups everywhere diving into a variety of Bitcoin investing schemes. Bitcoin is the "Technology Singularity", as Daniel put it in the video above, that is the culmination of 4 decades of work by the cypherpunks. we have achieved acceptance as a global, digital, cash money system that, imo, is in the process of replacing gold's function for the last 5000 yrs. to me, an Austrian leaning Bitcoin proponent, that's all we should strive to be. that's all we need to be. my goal is to have Bitcoin have its own ticker symbol on the Forex exchange. from there, as the only true Sound Money in the world, it can consume all fiat currency AND gold, which will take us To The Moon and way beyond as the sole globally accepted currency. there only needs to be one money and Bitcoin can be "it". the problem is, if it is even a problem, it will take time and some long hard fought battles. the Keynesians don't want to help us. they don't want to "buy in" to the system which would take the price up logarithmically. they think a price of $376 is "too expensive". well, to me the other view is that they just weren't paying attention back in 2009 and tough luck, that's how technology disrupts financial systems, as it has with many other industries. i say "buy in" now and you can still join us on the way to the Moon. we haven't even really taken off yet.

I totally agree with the goal (moon) and the view (replace gold) and also to an extent with a possible strategy (forex). I'm absolutely convinced the world needs to go back to sound money... it will solve so many hard problems many people suffer greatly from with a single stroke. We need to try this at all cost and bitcoin is our best chance.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

the Keynesian view is that Bitcoin needs to do more to gain acceptance and grow itself. the protocol needs to be changed to incorporate all other forms of asset options; stocks, bonds, assurance contracts, smart contracts, insurance, etc. by allowing BTC to be transformed into speculative assets via the spvp, that is by definition inflationary. nevermind that if Bitcoin succeeds at the Austrian Sound Money function, it will force all those assets to trade in terms of Bitcoin eventually as well. but that would be the hard battle and there are too many fiat vested interests that don't want to see that happen. and there are too many Bitcoiner's who are impatient and can't stand price volatility. and there are too many devs that gotta dev and get paid (in USD's). and there are too many of all of those who missed out. so what do they do? they try to change Bitcoin. change it by changing the source code which breaks the Sound Money function. to me, that is what the spvp does, it creates an offramp into all manner of these assets. after all, that is exactly what the Blockstream (Keynesian's) say as well; that being that the blockchain is too restrictive, it's prevents innovation, it's too risky, it's too slow, it's not big enough, yada yada yada. so what is wrong with using SC's to incorporate all those assets? it breaks the Sound Money function. Bitcoin will no longer be viewed as solely a new form of money. it will be viewed as a "trading platform" with which you can use to move back and forth btwn assets and BTC. it would be like a Fidelity brokerage house, you deposit your money in a cash acct and then trade all manner of assets in and out. it also destroys the time preference of what money should be. you see, stocks, bonds, contracts, insurance, etc are long term investments. they are to be held. and they are not used to provide seamless, instant, liquidity type functions like Bitcoin would be if it stays in its current form as sound money. thus, we may NEVER see those assets be converted back to BTC in the future. or at least if we do, it won't be for a long time, and then what does that do for Bitcoins money function? answer: it slows it down if not outright destroys it. if that's true, where do Bitcoin miners get the tx fees they desperately need in the future to secure the mainchain? what do we, as current Bitcoin holders, do if we see that many ppl are using this offramp to move into all these different SC's? how do we interpret an especially popular SC? Zerg and others say that we should trust Blockstream devs to incorporate any popular function back into the MC. but that would be to violate one of Bitcoins core principles; trust no man. and incorporating other assets back into MC doesn't even make any sense when you are talking about SC's that offer completely different assets as defined above. they would have to stay as SC's and i dare say there mere existence destroys Bitcoins liquidity and money function.

The bolded parts is the reasoning I have problems with.

Let me rip out those bolded parts and ask specific question or utter some hypothesis regarding them.

(cypherdoc, please don't take this as an attack on your opinion. I don't hold any opinion myself, I'm just asking question because I want to understand your reasoning)

allowing BTC to be transformed into speculative assets via the spvp, that is by definition inflationary.
How is that inflationary? What is being inflated? Surely there are still at most 21 million bitcoins. Ok, 1 million got locked on the bitcoin blockchain and the 'access rights' to them are now managed by a sidechain. Are you saying the sidechain devs could inflate the amound of scBTC (say they double it) and then we'd have 22 million bitcoins?
they try to change Bitcoin. change it by changing the source code which breaks the Sound Money function. [...] that is what the spvp does, it creates an offramp into all manner of these assets.
So you're saying that a part of the real BTC is being chopped off and managed by a different source code base? The rules for the 1 million scBTC are different than for the original BTC? If so, I agree so far. What I don't understand: people will know this. scInflateBTCx2 has a public ledger and is run by miners using open source code. Why would anybody 'convert' 10 BTC to 10 scInflateBTCx2 knowing full well that scInflateBTCx2 runs a fractional reserve system and the guy with the other 10 scInflateBTCx2 will have his exchanged for 10 BTC half a microsecond later. There would be a continual run on the real BTC... it just wouldn't work, hence no BTC inflation.
so what is wrong with using SC's to incorporate all those assets? it breaks the Sound Money function.
Again: how? If the sidechain fucks up, not all of the inflated coins there will magically be convertible back to BTC, only the amount that was 'moved over from the MC' in the first place, right? So again: no harm to BTC monetary base.
thus, we may NEVER see those assets be converted back to BTC in the future.
So? It's the same with hoarding or burning BTC, no? If they never come back to the MC, if anything BTC monetary supply is deflated.
they would have to stay as SC's and i dare say there mere existence destroys Bitcoins liquidity and money function.
Are you saying because all those BTC are being locked in the main chain, Bitcoins liquidity is reduced and therefore its money function hampered? Isn't that like saying Satoshi is reducing Bitcoins liquidity and money function by sitting on 1.5 million BTC?

Maybe someone can be so kind to help me understand by answering some of above questions or disputing my assertions?

Thanks!

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

Bitcoin is a simple system currently.

Yes, and it doesn't seem to me that is being changed with sc. People like you and me will still demand to be payed in BTC, not scInflateBTCx2. Just because Bitcoin now has 'plugins', doesn't complicate the core for the users that don't use those 'addons', right?

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

that's great for a simple money function. we don't want complexity or risk. but to add SC's into the equation introduces all sorts of risk and unpredictable consequences. the price of Bitcoin has to move orders of magnitude higher to achieve its money status. this is how miners will profit and how adoption will increase. the only way to achieve this is to target the Forex and gold markets as a Sound Money; the exact same plan that has gotten us to where we are. those are the Big Kahuna's we want to tap into and this is the strategy that the cypherpunks ultimately envisioned and this is what will take us to the Moon. we need to force outsiders to buy in. not allow them to insert an offramp to divert value into insignificant, undesirable or risky asset markets.

if you've read this thread for any length of time, you can see that what i'm saying above is totally consistent with my positions in the past. as well as my past memes:

"The blockchain may only ever be applicable to Bitcoin as Money".

"The BTC currency unit is forever inextricably linked to its blockchain. you break that link and you break Bitcoin".

I'm not sure sidechains break that link of Bitcoin with its blockchain. Do they?

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Quote from: lebing on November 18, 2014, 01:53:17 PM

Thought you would appreciate the 28 minute mark of this Cypher
http://www.bloomberg.com/video/barry-silbert-felix-salmon-debate-future-of-bitcoin-IJ2Wv3PdTduJ9k2iEdlxRw.html

watched those few minutes and it was interesting.

i find it jaw dropping that the only cautionary place on the internet about SC's appears to be here. yesterday's glance at Reddit shows nothing but blind faith and sheep herding regarding the SC progress. amazing.

i don't mind being a lightening rod or having my own shadow assassin Wink

as long as i speak from the heart.

we need to be discussing all existential threats to Bitcoin somewhere. it might as well be here.

Peter R

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Quote from: solex on November 18, 2014, 01:59:31 PM

So, it is early days, and more important matters need attention, such as the 1MB constraint, implementation of IBLT, blockchain pruning, headers-first. As long as progress is made on these, I think its fine to wait and see how SC develops.

+1.

solex

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100 satoshis -> ISO code

Cypher, your cri de coeur is clearly sincere, and I urge you to maintain your optimism, your Austrian perspective. Nothing is lost - yet.

I have an open mind about the potential benefits of sidechains, by the taking of territory from altcoins. Bitcoin's percentage of the cryptocurrency monetary base hovers at 90%, down from a previous level of 95%, so there is a threat from alternative currency systems, which SC could mitigate.

However (and I pointed this out early on), there is a serious flaw with how scBTC are presented: while the scBTC and BTC can be numerically pegged, they cannot be successfully value pegged: there will be a floating exchange rate. The reason is SCs have a different risk-profile from the MC, so the market will inevitably price each type of scBTC differently. This is guaranteed because even the abstract of the Sidechains paper says:

Quote

Despite bidirectional transferability between Bitcoin and pegged sidechains, they are isolated: in the case of a cryptographic break (or malicious design) in a sidechain, the damage is entirely confined to the sidechain itself.

If an SC can implode, and BTC remains locked, inaccessible, then pegging is indeed Keynesian madness, and won't be viable long-term. Of course, BTC which are permanently lost increases the scarcity of those that remain on the MC.

So, it is early days, and more important matters need attention, such as the 1MB constraint, implementation of IBLT, blockchain pruning, headers-first. As long as progress is made on these, I think its fine to wait and see how SC develops.

brg444

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Bitcoin replaces central, not commercial, banks

It becomes clearer everyday that you either insist on ignoring facts or simply do not understand the dynamics at stake.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

we have achieved acceptance as a global, digital, cash money system that, imo, is in the process of replacing gold's function for the last 5000 yrs. to me, an Austrian leaning Bitcoin proponent, that's all we should strive to be. that's all we need to be. my goal is to have Bitcoin have its own ticker symbol on the Forex exchange. from there, as the only true Sound Money in the world, it can consume all fiat currency AND gold, which will take us To The Moon and way beyond as the sole globally accepted currency.

merely replacing gold is a very shortsighted view that ignores the limitless innovations & true paradigm shift that the creation of an immutable, global, distributed ledger entail. I understand the idea to redefine the concept of money and its applications is a very powerful one by itself but the blockchain should not limit itself to money. Value, property & trade is what we are looking to decentralize. This concept has much greater implications than even money.

to limit the blockchain to money implies that the need for trust in incumbent counterparties for anything but money is not significantly limited although we have a technology that absolutely can do that.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

the Keynesian view is that Bitcoin needs to do more to gain acceptance and grow itself. the protocol needs to be changed to incorporate all other forms of asset options; stocks, bonds, assurance contracts, smart contracts, insurance, etc. nevermind that if Bitcoin succeeds at the Austrian Sound Money function, it will force all those assets to trade in terms of Bitcoin eventually as well.

This is absolutely not a debate of Keynesian vs. Austrian. How do you propose we trade assets in terms of Bitcoin if they are not represented by units in the ledger? Remember that this scheme can only be implemented off the mainchain for obvious reason.

What you seem to suggest is that those "off-chain" applications be conceded to the trust of third-parties which defeats the very purpose of the blockchain. The blockchain is where all trust reside and where all forms of value should be exchanged. Granted it may not be practical to do that or even desirable in some cases but we should absolutely expect this level of decentralization in a majority of our exchange.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

they try to change Bitcoin. change it by changing the source code which breaks the Sound Money function. to me, that is what the spvp does, it creates an offramp into all manner of these assets.

I sure hope Satoshi is not reading that. The nature of Bitcoin is open-source code, to suggest changing its source code is not desirable or should not be pursued goes against any conceivable logic.

Off-ramps a a reality of Bitcoin and exist already in numerous forms. We absolutely need off-ramps to scale the system and make it possible to reach mainstream adoption. For those of us who understand the implications, it is quite clear that sidechains are potentially the most secure and natural off-ramp possible. It offers the unique chance to preserve the integrity of the ledger and protect the Sound Money aspect of Bitcoin on the protocol level.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

so what is wrong with using SC's to incorporate all those assets? it breaks the Sound Money function.

This comment in itself is so naive and ignorant of our present reality I'm not even sure where to begin... The desire to represent these assets in BTC and the demand for such applications has been crystal clear for everyone who has been paying attention. It is the sole reason why Bitcoin 2.0 projects exist. The problem with most Bitcoin 2.0 projects is that they introduce in the majority of cases an additional third-party that demands an increased level of trust. These third-parties are by all chances, the most dangerous risk to the Sound Money function.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

Bitcoin will no longer be viewed as solely a new form of money. it will be viewed as a "trading platform" with which you can use to move back and forth btwn assets and BTC. it would be like a Fidelity brokerage house, you deposit your money in a cash acct and then trade all manner of assets in and out. it also destroys the time preference of what money should be. you see, stocks, bonds, contracts, insurance, etc are long term investments. they are to be held. and they are not used to provide seamless, instant, liquidity type functions like Bitcoin would be if it stays in its current form as sound money.

Aside from some erroneous details or assumptions this is EXACTLY what we should aspire Bitcoin to become. THE Universal Exchange by which ANY trade is facilitated.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

thus, we many NEVER see those assets be converted back to BTC in the future. or at least if we do, it won't be for a long time, and then what does that do for Bitcoins money function? answer: it slows it down if not outright destroys it. if that's true, where do Bitcoin miners get the tx fees they desperately need in the future to secure the mainchain?

They get it from MM the sidechains. The alternative you propose (off-chain/federated solutions) is provably worse in this scenario because it effectively strips from the miners the power or access to claim these tx fees.

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

they would have to stay as SC's and i dare say there mere existence destroys Bitcoins liquidity and money function.

What you constantly fail to realize is that if this demand is not fulfilled by SC's it will be through other schemes that are necessarily more dangerous to Bitcoins liquidity and money function.

lebing

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Enabling the maximal migration

Thought you would appreciate the 28 minute mark of this Cypher
http://www.bloomberg.com/video/barry-silbert-felix-salmon-debate-future-of-bitcoin-IJ2Wv3PdTduJ9k2iEdlxRw.html

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Quote from: Peter R on November 18, 2014, 01:40:17 PM

Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

it's becoming clearer to me everyday that what we are dealing with is Keynesian vs Austrian philosophy with this SC's debate.

...

"The blockchain may only ever be applicable to Bitcoin as Money".

"The BTC currency unit is forever inextricably linked to its blockchain. you break that link and you break Bitcoin".

Cypher: in the past, you've imagined a future where governments hold bitcoins as reserves to back their own currency. Could sidechains be a mechanism to implement such a scheme?

i would rather see gvts and orgs like the IMF have to buy BTC to use as reserves. that would take us to the Moon:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2248419

i still see SC's as a way to break Bitcoin's money function by allowing a gvt sponsored currency to siphon BTC to SC w/o having to pay for them. we need that the price ramps to sustain mining fees and establish Bitcoin as its own global independent currency. forget asset toys. as it is, Wall St is the only one who needs or wants those types of toys in the first place with a minority of Americans invested in these things. even less by foreigners. what ppl should want and need is Sound Money. that is what this project is all about, imo. and the nice thing is anyone who's currently in the Bitcoin system can just sit back, relax, and wait for it to happen. the price charts still tell me we are destined for greatness.

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Quote from: cypherdoc on November 18, 2014, 06:11:13 AM

Quote from: thezerg on November 17, 2014, 11:49:25 PM

In no way is the "Bitcoin's bullet proof BTC/blockchain linkage" broken. The coins aren't actually moved to the other chain, they are held on the mainchain like gold in a vault and a representation which is NOT BTC and can't be spent at coinbase for example, appears on the sidechain.

There is no way sidechains break the 21 million scarcity limit of real BTC. And anything that a sidechain could do to "dilute" the space (that is by creating a new token type) can be done with an altcoin today, and that has gotten nowhere. Any "betrayal" of the BTC "brand" that can be done with sidechains can equivalently be done much more easily (and with the same brand damage) with centralized solutions. We've seen it over and over again; Gox ponzi didn't kill BTC, and SCponzi won't either. But the risk of SCponzi will certainly make the mainchain the preferred place to hold and make large transfers. Sidechains will make Bitcoin the preferred long term store of value, because tremendous utility is just a chain transfer away.

And how is Gox going to go Ponzi when the GoxBTC and GoxUSD on its sidechain must match the BTC "locked" on the mainchain and the USD in their bank accounts (which can be audited)?

If a multi-token sidechain is created with scBTC and inflata-Coin-to-make-devs-rich, what do you think people will do? Probably not even touch the sidechain. But assuming they do, they will hold the scBTC and when they need to "use" the sidechain features the require inflata-coin, they'll buy the inflata-coin moments before spending it.

But without sidechains you really do risk a new token that comes along and takes massive market share. We as a society are not ready to put stocks, mortgages, etc on a blockchain (because why have the risk of a new tech coupled with the return of an old stock). But someday we WILL be. And when we are, what's going to be the preferred payment? Old stodgy BTC that you have to sign up for exchanges, do AML, etc to access real markets, or tradecoin which can be tranformed into GOOG 5 seconds after receipt? There's a REASON gold shot up when ETFs appeared -- its called access to markets.

What about the IOT (internet of things) token? 20 years from now, items in your house might be doing 500 txns per day for a total of < $5 automatically on your behalf... Sidechains allow BTC to scale beyond our wildest dreams to applications we can't even consider.

You are like the guy who said there's only use for 5 computers in the world.

You should instead consider that the biggest risk to BTC right now is the sidechain-altcoin that Blockstream so "kindly" offered to build instead of integrating these technologies directly into BTC. That altcoin has the potential to leave BTC in the backwaters of digital currencies (except that I believe in the core devs in Blockstream to move the tech over).

Ok, that's probably the end of my rant... but my subsequent silence does not mean that you are right :-). Honestly, I miss the great insights you guys (and mostly cypherdoc) provide about the larger world economic picture on this thread and hope that we can eventually get back to it! But I'll tell you this; I'm a technologist and I've skipped from one newly breaking technology to the next for my entire career in startups; gaming, telecom in 1995-2000, storage, wireless, OSHW, bitcoin. I'm telling you if sidechains CAN be done (honestly I haven't really verified the gory details of the automated 2-way peg myself) they WILL eventually be the dominant coin. I proposed them in early 2012 (the concept not the mechanism)... but don't worry to much, BTC will not die; it'll be the Rolls Royce with a valuation above what we have today, while the sidechain-enabled coin takes 99% of the market.

EDIT: tl;dr. Bitcoin is the zerg. It will take over everything thru sidechains.

That's a really persuasive argument from someone I respect.

The other way to question this though is that somehow btc units are fed through the peg and through some magic stocks, bonds , smart contracts, altcoins, etc come out the other side and somehow this is not inflationary? What if it just breaks the entire system?

Why would they want to hold the inflationary altcoin when they could hold the btc-pegged coin? If it was needed for functionality, they would buy it only as they needed to spend. The alt would have to be backed by some actual service to be valuable. Bitcoin would become the interchange mechanism and would primarily be used by arbitragers, speculators, and hodlers. And Cypherdoc gets to keep his pile on the right.

notme

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Quote from: thezerg on November 17, 2014, 11:49:25 PM

In no way is the "Bitcoin's bullet proof BTC/blockchain linkage" broken. The coins aren't actually moved to the other chain, they are held on the mainchain like gold in a vault and a representation which is NOT BTC and can't be spent at coinbase for example, appears on the sidechain.

There is no way sidechains break the 21 million scarcity limit of real BTC. And anything that a sidechain could do to "dilute" the space (that is by creating a new token type) can be done with an altcoin today, and that has gotten nowhere. Any "betrayal" of the BTC "brand" that can be done with sidechains can equivalently be done much more easily (and with the same brand damage) with centralized solutions. We've seen it over and over again; Gox ponzi didn't kill BTC, and SCponzi won't either. But the risk of SCponzi will certainly make the mainchain the preferred place to hold and make large transfers. Sidechains will make Bitcoin the preferred long term store of value, because tremendous utility is just a chain transfer away.

And how is Gox going to go Ponzi when the GoxBTC and GoxUSD on its sidechain must match the BTC "locked" on the mainchain and the USD in their bank accounts (which can be audited)?

If a multi-token sidechain is created with scBTC and inflata-Coin-to-make-devs-rich, what do you think people will do? Probably not even touch the sidechain. But assuming they do, they will hold the scBTC and when they need to "use" the sidechain features the require inflata-coin, they'll buy the inflata-coin moments before spending it.

But without sidechains you really do risk a new token that comes along and takes massive market share. We as a society are not ready to put stocks, mortgages, etc on a blockchain (because why have the risk of a new tech coupled with the return of an old stock). But someday we WILL be. And when we are, what's going to be the preferred payment? Old stodgy BTC that you have to sign up for exchanges, do AML, etc to access real markets, or tradecoin which can be tranformed into GOOG 5 seconds after receipt? There's a REASON gold shot up when ETFs appeared -- its called access to markets.

What about the IOT (internet of things) token? 20 years from now, items in your house might be doing 500 txns per day for a total of < $5 automatically on your behalf... Sidechains allow BTC to scale beyond our wildest dreams to applications we can't even consider.

You are like the guy who said there's only use for 5 computers in the world.

You should instead consider that the biggest risk to BTC right now is the sidechain-altcoin that Blockstream so "kindly" offered to build instead of integrating these technologies directly into BTC. That altcoin has the potential to leave BTC in the backwaters of digital currencies (except that I believe in the core devs in Blockstream to move the tech over).

Ok, that's probably the end of my rant... but my subsequent silence does not mean that you are right :-). Honestly, I miss the great insights you guys (and mostly cypherdoc) provide about the larger world economic picture on this thread and hope that we can eventually get back to it! But I'll tell you this; I'm a technologist and I've skipped from one newly breaking technology to the next for my entire career in startups; gaming, telecom in 1995-2000, storage, wireless, OSHW, bitcoin. I'm telling you if sidechains CAN be done (honestly I haven't really verified the gory details of the automated 2-way peg myself) they WILL eventually be the dominant coin. I proposed them in early 2012 (the concept not the mechanism)... but don't worry to much, BTC will not die; it'll be the Rolls Royce with a valuation above what we have today, while the sidechain-enabled coin takes 99% of the market.

EDIT: tl;dr. Bitcoin is the zerg. It will take over everything thru sidechains.

This. Decentralizing all business, including the ponzis, will let people keep an eye on things. Federated sidechains don't go far enough because only a few centralized entities control the rules, and failure rate has traditionally been high in this space.

And Cypher, if you want wild conspiracy theory, how about blockstream is meant to divide the BTC community so that they can overtake it with such a sidechain-altcoin. If it could be merged mined, miners would be stupid not to participate. They have the capital, so the only way to win this one is ideas. By making this one concession, we get to keep our hard money status, while allowing bitcoin funded innovation in a continuum of sidechains from fully decentralized through various levels of federated to fully centralized. Let the market choose which sidechains to accept.

Peter R

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Quote from: cypherdoc on November 18, 2014, 12:17:04 PM

it's becoming clearer to me everyday that what we are dealing with is Keynesian vs Austrian philosophy with this SC's debate.

...

"The blockchain may only ever be applicable to Bitcoin as Money".

"The BTC currency unit is forever inextricably linked to its blockchain. you break that link and you break Bitcoin".

Cypher: in the past, you've imagined a future where governments hold bitcoins as reserves to back their own currency. Could sidechains be a mechanism to implement such a scheme?

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I would be against SCs if they broke sound money. But they don't. Gold is still sound money even though paper gold exists.

I didn't say "that we should trust Blockstream devs to incorporate any popular function back into the MC". In fact I am scared that Blockstream will release their SC-capable test alt-coin and never "bother" to merge it back.

With altcoins we have that fear. But with Sidechains we don't even have to merge popular functions back into the MC, because they use a token scBTC that is pegged to BTC. So if the sidechain becomes popular, it creates demand for BTC to be locked and represented by scBTC which drives up the price of BTC.

The real "off-ramp" here is if that peg doesn't exist. Because then someone must SELL BTC to buy the altcoin.

USD use internationally increases the value of a dollar without us having to import every foreign product to America. Flying to the EU and exchanging your USD for Euros does not increase the dollar. The Bitcoin blockchain will remain the "gold" standard, the authoritative source. You fear that some sidechain will "take over" by getting (say) 90% of the market. How is that going to happen if that sidechain isn't distributed, open source, transparent, sound money? Nobody would move their coins. But if a sidechain is invented that is truly better than BTC in all respects then at least you can always move your BTC to it at any time. There's no rush because BTC will always == scBTC.

But if an altcoin does the same thing, you'll have missed the boat.

There's no stopping "off-ramps" and its counter to the purpose of money (to facilitate trade) to do so so we shouldn't try. If someone wants to sell BTC for GOOG they will do so. The difference is can you do it directly or do you have to go thru USD first? In other words, is BTC the most liquid most usable currency or will it still be USD? And can you transfer it in a revolutionary trustless p2p fashion or do you need the old centralized intermediary model that has spawned the current highly flawed overly powerful financial system?

This has nothing to do with Austrian vs. Keynes or sound money. Its about making BTC a better sound money...

Peter R

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Quote from: Zangelbert Bingledack on November 18, 2014, 09:49:18 AM

Quote from: Peter R on November 17, 2014, 02:32:44 PM

I'm just trying to make incremental progress in my understanding by answering the question "on which ledger is the value stored?" The probability that the 2-way peg is severed is a different discussion.

I think the probability of the 2-way peg being severed is actually central to the definition of "sidechain" vs. "altcoin," and for practical purposes determines investment behavior in the chain.

On one end of the spectrum, if a sidechain's 2-way peg can be severed at the whim of the sidechain devs, it would essentially be an altcoin and would presumably attract about as much investment as altcoins do (not a threat to Bitcoin).

At the other end of the spectrum, if it's mathematically impossible to sever the 2wp, then it is a true sidechain and the value seems to always remain with the Bitcoin ledger (not a threat to Bitcoin, at least not for this reason).

For cases in between, we cannot really call it a true sidechain, and by the same token we cannot really expect substantial portions of the bitcoin holders to just jump over to the sidechain.

In other words, there's a reasoning error to watch out for here: insofar as the value that could be funneled over to the sidechain relies on the certainty that the 2wp will remain, the concern is self-defeating. If there is any shadow of possibility that the 2wp could be broken, it won't attract that many bitcoins - not much more than any altcoin; and if any sidechain does attract a large portion of the bitcoins, it will only be because the 2wp is as certain of a thing in investors' minds as Bitcoin itself is, which is an extremely high bar.

(This does still leave the possibility that the devs could hamstring Bitcoin deliberately to reduce confidence in Bitcoin to bring it in line with confidence in a not completely solid 2wp so that many people would switch despite some uncertainty. However, this is a much smaller argument to be making.)

Great post as usual, ZB. I mostly¹ agree: the amount of bitcoins that move to a sidechain will depend, in part, on the credibility of the 2-way peg. And, realistically, it will probably take years for any sidechain to establish enough credibility to attract a significant amount of bitcoins (assuming OP_SIDECHAINPROOFVERIFY is implemented, and even this could take a few years if it happens at all). So I suspect any migration of economic activity away from the Blockchain to be slow and anti-climactic.

Hypothetical Question: If we assume (perhaps unrealistically) that the 2-way peg is unbreakable and if we also assume (again, perhaps unrealistically) that the security of Bitcoin's blockchain remains unchanged with sidechains, what additional risks do sidechains impose? The risks I can see are (a) that sidechains could be used as an "excuse" to avoid addressing Bitcoin's scalability, thereby making the likelihood of an uber sidechain absorbing all the bitcoin more likely (along with the possible shenanigans that such an event might entail), and (b) that it sets a precedent that soft-forking changes to add new "features" are OK.

¹I think even if one assumes the 2-way peg is unbreakable, that value is still stored on the sidechain ledger (at least) in the extreme case where the majority of coins and economic activity take place on that sidechain. If everyone moves out of bitcoin and onto the sidechain, then the Blockchain no longer serves its memory function--it becomes superseded by the sidechain's ledger.

Topic: Gold collapsing. Bitcoin UP. - page 687. (Read 2032265 times)