Topic: Gold collapsing. Bitcoin UP. - page 743. (Read 2032266 times)

Why do you think Truthcoin is a scam? I would love to see a decentralized prediction market.

 not only are all sorts of altcoin Sidescams going to bolt themselves onto the Bitcoin MC as shown by Truthcoin but as odalv has shown even Silk Road 4.0. How do you explain that to the Feds? 

Bitcoin Collapsing, SideChains and Gold Up ... amIrite?

Somewhat, if value is created on a SC that is greater than that of Bitcoin the Bitcoin stays there. SC would be unlucky to draw mining power away from Bitcoin while block rewards are high and it's the dominant chain. One could script mine SC-tokens I'm sure there will be PoS versions too. (Maybe a script miner who gets fees from a script SC is content building his mining farm and not supporting the Bitcoin network in that way he's investing in the SC security and not Bitcoin security in a small way he'd be drawing mining power away from the Bitcoin network)

What I'm saying is SC will be designed to be more efficient, and will need to attract users and and miners. First users want cheaper transaction, then miners want profit for security. So whoever gets the best mix grows.

In the Bitcoin incentive structure the industrial energy used to hash grows with the value of BTC, over time this is reduced to the marginal cost of protecting the network, it will fall into equilibrium with the increase and decrease in BTC value. That changes with SC.

Decentralized SC that function as a means of exchange and use merged mining will probably offer the most security miners will mine all viable ones and the difficulty will be in close equilibrium with Bitcoin. They can be thought off as secure as Bitcoin.

The SC with the lowest cost and biggest network will grow reducing the need for other Decentralized SC's, the result is Decentralized SC will either compete on fees as they are as secure as Bitcoin, or they'll compete on utility and charge a premium.  The users will go wherever it's most cost effective to exchange value, on the SC an increase in value is reflected in the price of Bitcoin, however that increase in value is attributed to being the biggest network with the lower fees, this increase in BTC value won't be reflected in mining revenue because it comes at the expense of sacrificing profits, leaving the network less secure.

The SC that offer additional utility at a premium or greatest arbitrage will alow miners to grow and secure the network, that hashing power is distributed over the whole network, those coins that earn the most for miners, when this type of growth happens will incentivized to mine those SC, they will drive new investment in mining and become more secure. In this case this network will be growing and Bitcoin and other SC will be getting the benefits of added security. This growth is inflationary taking value out of Bitcoin, the market locks it in. I'd only consider the growth inflationary because that is value on top of Bitcoin in that scenario Bitcoin is dragged up but it's not the source of the growth.

If either scenario gets a stronghold you can expect the incentive to become exaggerated, neither is good for Bitcoin.

Entertaining  

I think one thing that Cypher is worried about is that your cake party turns out to be unchaperoned.  Several of the grownups see the little ones having so much fun making a creative mess with their cake that they all join in.  Next thing you know it's a food fight, the cake ends up splattered on faces and across walls, that cat gets sick, and the few adults who kept their pieces pristine lose out because everyone else stumbles home never wanting cake again.  



My hunch is that the people controlling the largest pieces of cake won't be taking any chances.  

half-jokingly: oh! I think I got why cypher and other seem to be opposed to sidechains: they can be viewed a bit like rehypthecation of assets, like paper gold!

I'm not sure I'm understanding you or we even have opposing views, as far as the essence of the code is conserved I'm not experienced enough to evaluate it, but rather I'd like to asses what are likely outcomes if it's implemented, of concern would be the unfavorable ones. Non the less yes this looks like Pandora's box, and lacking the context for your GPS reference, I'd say to a hammer every problem looks like a nail, and programmers are going to program, and investor...

Still there are many nefarious SC scams that could be used to garner trust or adoption, obviously theses are in my view infinite but if one understand the essence one may be able to avoid them, I just what to know where that leaves me.

I think this might be an answer to my previous question, but I don't understand the part "this would be like monetary inflation, as high value SC networks grow sucking up Bitcoin". Are you saying because the SC draws mining power away from the main chain, this is also sucking value from the mainchain tokens?

I'm not a crypto expert, but I think this can be done and no: the private key doesn't need to be constructed on a single machine. I think its possible to generate n public/private key pairs pub_i/priv_i (i 1..n) and then use some operation on the public keys to produce pub_aggragated the matching private key of which (priv_aggregated) can in the future be constructed exactly if all individual priv_i keys are known.

Good analogy

I have a question, too. It's not necessarily directed at cypher. It's an honest question and I assume its already answered in this thread.

Are you saying there's the danger of indirectly inflating the bitcoin monetary base through the application of 2-way-pegged sidechains and if so, can you point out the flaw in the following analogy:

The grownups have a party. It's all about a cake. A quarter of the precious cake is cut off and given to the little ones to play with. They make small cakes from the material, some in form of little kittens. They also throw it around a lot and maybe lose parts of it under the sofa or to the cat. They also mix part of the original stuff with more flower and eggs they find in the kitchen, also some frog shit.

Some of the kids decide they want to be part of "the big cake party" again and request re-integration of their little cake into the big one. The grownups look at the piece of cake offered and decide wether it consist purely of "the original stuff". If so the piece is reintegrated and the little one gets to be part of the real party again. If additional ingredients are detected, the piece is rejected or only partly accepted. Hence the grownup cake isn't being inflated.

Some of the kids lost all their little cakes and are shut out from the grownup party, because they have nothing valid to buy themselves back in. Some other kids managed to accumulate more than their original share of cake and managed to keep it uncontiminated. They play a bigger role in the grownup party now.

In the end there's less grownup cake, because some ended up in the cats stomach and a lot got contaminated. The grownups are happy, because their share of the cake is worth more. Some of the grownups also lost cake to the cat and some lost it to their own stomachs, but that's another story.

So... stupid analogy? What am I missing?

Thanks, so if I understand you correctly one possibility is SC2 is still viable with all keys but only any 60% of SC3 keys from SC2 would be convertible back ultimately to BTC.

To sprinkle some salt in the wounds (since I have not yet been counter-attacked   ), it reminds me of the early days of computing, where folks thought that anything was possible (we just need to have the data in machine readable form, then we can do magic). The system lacks fundamentals, words are badly defined, imagination is unrestricted... to the moon. It is the general problem solver once again http://ai-su13.artifice.cc/gps.html.

Really, a more specific system has to be described, before it is possible to consider the viability of it. An please, inventors, cut the crap, write about the essence.

 

- all keys form SC1 are lost
- new owners of SC2 pkeys (60 % of SC3 volume) can return into SC3 -> it depends on SC2 rules -> whitepaper describes all possibilities.
 

I'm a little unclear as to what happens if 60% of SC1+ 60%SC3 pKeys transfer into SC2. Then SC1 has a catastrophic failure.
Can SC3 be used to recover SC1 (pegged BTC)?

There is not force that can take SC1 pKey and SC3 pKey and move scBTC into SC2.
Only owners of SC1+SC3 pKeys can transfer into SC2.

FWIW my Mom also thought I was quite bright. Looking at Odalv post I assume it's possible, I was just reviewing some of the macro economic risks, and trying to understand if SC are a good idea or not, on a technical level it's a notable achievement. In reality I'd rather see some other trust free multisig solutions to the problems SC solve.

I had to go back to the paper to assess the volume of math, and I find far less than 20 pages of math. To be honest, I find the paper to describe history, some vision, using bad terms, bad economics. Basically, it could be written by the tailors in the story about the low confidence emperor and his new habit. What I found somewhat useful, is the idea of the atomic swap. You might think I am arrogant by saying this, but according to my mom I am quite bright, and I could easily understand the brilliance of the bitcoin whitepaper, but not this.

Lol'ed at your tl;dr

Let's assume the 20 page maths proof proves it can be done. Now is it a good idea to change the Bitcoin protocol to make this happen, what are the risks if any.

I see a few long-term outcomes:
First is Bitcoin is largely safe so long as there is a high block reward.
Competition for transaction fees on other chains  will come at the cost of security leaving the higher cost networks vulnerable to attack.
Unless we see growth outside the Bitcoin network, this would be like monetary inflation, as high value SC networks grow sucking up Bitcoin. (Also environmental impact of mining could be an issue if a dogecoin type scenario attracts BTC.)

The above assumes that SC don't have a corruption failure where BTC becomes "decapitated", or or malfeasance where Bitcoin takes the blame for a protocol error instead of say an entity like MtGox.

Other than the above SC all good.

I think, there is no need to create ANY change into current Bitcoin to create SC with decentralized 2wp. There is only 1 limitation, every transaction in SC what changes ownership in SC will require BTC transaction in MC too.  But it is not problem if you have old BTC that are locked for long enough in both chains. We can return in time if bitcoin block-chain will be our clock. I know it is too abstract, but very simple.

If you have BTC and scBTC locked for example 5000 blocks long, then we can make a lot of sidechain transaction. (count is unlimited)

Let's start:

Let A is standard bitcoin address what holds A amount of BTCs and  A' is address in SC with same amount scBTC. (and user-a hold both pKeys). And A' is only address in SC so it holds ALL scBTC.

Now user-B with address B wants scBTC to use SC service.  

Using atomic swap:
1. user-a split A into B1(user-b owns private key) and the rest he will send into new A1(user-a owns pKey) and will do same in SC => user-a now own A1=A-B1 BTC  and same amount A1'=A'-B1' in SC. So user-a  created B1' shares in SC for user-b.

A(peg) -> B1(peg) + A1(peg)
A' -> B1' + A1'

2. at the same time user-b split B into A2(user-a owns pKey) and the rest into B2  => he still own B1,B1' and B2 private keys. Until user-b spend B1 he own B1' shares in SC

B -> A2 + B2 ... this BTCs are not used as 2wp (and never were)

result:
1. user-a control same amount of BTC A1(peg)+A2 and less amount of scBTC A'-B1' in A1'
2. user-b control same amount of BTC B1(peg)+B2 and he has shares in SC b/c he owns B1' pKeys
3. there is new transaction in SC =>  A' was split into A1' + B1'

It can be repeated as many times as required.
result:
we created decentralized 2wp -> everyone hold some BTC in Bitcoin and same amount of scBTC in SC

Step 2
Let's wait 1 days and we will be able to make transactions in SC

We all knows, no one withdrawn during 144 block
 - if somebody withdrawn NP b/c we only have smaller market cap.
 - if somebody split his shares NP b/c we will activate his scBTC again after 144 blocks are mined in MC and he can use our service.

What SC is offering you ?
 - really zero risk b/c you own your private keys (in MC and in SC) => the only risk is if Bitcoin main-chain will reorg 144 block
 - you can hold longer before you will create/accept first SC transaction (you own both MC and SC pKyes) => you can wait 10 days  1440 blocks
 - you can forget/lose your SC private keys b/c you own MC keys (u can spend your BTC in MC .. you will only not be able to make more transaction in SC)
 - ... to be continue :-)