Topic: Gold collapsing. Bitcoin UP. - page 782. (Read 2032266 times)

"irrelevant quote" FYI those were examples of inflation.

a chunk of the assets != ALL of the assets

tx fees will come from miners mining all chains producing holding significant value

You make many sensible comments and let me insist I am not trying to downplay the potential risks of sidechains.

My problem is that most of sidechains opponents in this thread are justifying their risk-case with a proposition that involves the creation of coins booted on sidechains.

To my knowledge, coins booted on sidechains are the economic equivalent of altcoins and in no way are sidecoins advantaged over altcoins. So in essence, sidecoins are not responsible for that problem and it is misguided to suggest that they are.

 

I know that you can create altcoins on top of sidechains.

My argument is they don't enable them to succeed any more than traditional altcoin.

And please don't bring up the "yes they will be merged mined" argument.... I would be very disappointed.

OK, how about a real problem with sidechains for a change?

Sidechains rely on Bitcoin since it is their reserve currency.  They will need to support it as a subsidized entity if it is not profitable to support by itself (and the design of Bitcoin ensures that we will always approach this condition.)

A sidechain, however, relies on Bitcoin being healthy for them.  That is to say, Bitcoin operates on the transactions which impact the sidechain and the rest of the transactions can go pound sand.  If a sidechain is subsidizing Bitcoin by mining it (or even if it's not) what would be the mechanism to deter them from prioritizing transactions which benefit themselves?  Or, for that matter, neglecting all other transactions?  Perhaps 'user pressure' or 'the goodness of their hearts', but this always makes me uncomfortable.

Now it is the case (I believe) that miners are autonomous and not necessarily tied to one sidechain or another.  But in design one must consider miners (and everyone else) to be completely predatory.  In many scenarios, however, a sidechain could induce them enough to consider the miner (pool) to be of a particular sidechain I would expect.

I was surprised and disappointed by Back's anticipation that there would be a small number of sidechains.  I'd like to see 1000's of them.  Now I am starting to visualize some of the dynamics which might be playing into his calculations.

In the end it all comes back to transaction fees I guess.  One of the huge appeals of sidechains, to me, is that they produce the possibility of sizable transaction fees on the Bitcoin blockchain and thus support the network without small-fry spam.

It would appear to be the case that sidechains in the presence of anything like pressure on the block capacity will indeed chase out the smaller individual players on Bitcoin proper since they'll be priced out by entities who are able to aggregate value flows.  I personally think this is a good thing but I can simpithize with those who see it as the opposite.  Three years ago I myself did as well.  My philosophy shifted suddenly (three years ago) when some of the economic and infrastructure ideas clicked.  By that time, however, I had envisioned the future as being something like sidechains so those who are chased out of Bitcoin proper would have a place to go.

(Also three years ago I was pretty fully vested in BTC...how much that had to do with my philosophy is unknown...)

What if ? Well 1,000,000 in, laundry time, 1,000,000 laundered coin out to the main chain.

Are you serious when asking these questions? Do you seriously believe that there are an incentive for someone to leave their coins on a potentially less secure Sidechain when it's only feature is to launder coin and that somehow this feature is more valuable than the whole Bitcoin mainchain?

Here you go again with your GOVcoin argument   You know what's the problem with this paranoiac idea, other than paranoia itself, is that GOVcoin is... guess what? An altcoin! And altcoin, well... they already exist.

Sidechains did not create altcoins
Sidechains do not enable altcoins

why is it so hard for you to read?:

5.2 Issued assets
To this point, we have mostly been thinking about sidechains which do not need their own native
currency: all coins on the sidechain are initially locked, until they are activated by a transfer from
some other sidechain. However, it is possible for sidechains to produce their own tokens, or
issued
assets
, which carry their own semantics. These can be transferred to other sidechains and traded for
other assets and currencies, all without trusting a central party, even if a trusted party is needed for
future redemption.
440
Issued asset chains have many applications, including traditional financial instruments such
as shares, bonds, vouchers, and IOUs. This allows external protocols to delegate ownership and
transfer tracking to the sidechain on which the ownership shares were issued. Issued asset chains
may also support more innovative instruments such as smart property.
These technologies can also be used in
complementary currencies
[Lie01]. Examples of
complementary currencies include community currencies, which are designed to preferentially
boost local businesses; business barter associations, which support social programs like education
or elderly care; and limited-purpose tokens which are used within organisations such as massive
15
multiplayer games, loyalty programs, and online communities
12
.
A suitably extended scripting system and an asset-aware transaction format would allow the
450
creation of useful transactions from well-audited components, such as the merger of a bid and
an ask to form an exchange transaction, enabling the creation of completely trustless peer-to-peer
marketplaces for asset exchange and more complex contracts such as trustless options[FT13]. These
contracts could, for example, help reduce the volatility of bitcoin itself.

Did you read through my comment or just skim through it? I'm interested in the money function of Bitcoin and its subset in sidechains.

"Why not create a billion altcoins if you can attract valuable BTC to altchain while possibly securing MM". Well what do you know? We've seen that already and not much damage was caused to Bitcoin afaik.


  you really can't get it through your head heh. I will repeat it again in hope that you eventually get it. Miners can decide to merge mine any altcoin already RIGHT NOW if they find it profitable. There exists plenty of speculative ALTcoins. Evidently miners do not find any value in these speculative altcoins because they are NOT merge mining them.

Now, by what kind of strech of the imagination do you propose that if SC's were implemented tomorrow, a gang of sidecoins would be created that would create any incentive for the miners to merge mine them.

What is the sidecoins' value proposition for the miners that doesn't exist in current altcoins? Answer me that.


Again, let's compare with altcoins shall we? Altcoins introduce blockrewards in addition to tx fees paid. Why are miners not merge mining altcoins right now then?


There is NO risk free put in the creation of issued assets on a sidechain (sidecoins). The only "risk free put" is in utility sidechains.


BTC climbs in price with the realization of added value in a utility sidechain (1:1 peg). That said, if innovation in a utility sidechain appears to gain significant market traction then it will be considered whether or not it should be implemented in the mainchain. It might necessitate a hardfork and the devs might simply decide it should be left as is : a sidechain working in synergy with the mainchain. Remember that we are only considering 1:1 pegged SC. Others are simply altcoins in disguise.


And that is precisely why it will not happen and sidechain will be used as UTILITY chains where coins will be sent only when their particular feature is necessary. It has been 6 years now since Bitcoin was published. Assuming it was created with sidechains, how many sidechains do your foresee would attract considerable market capital? What are their features? Is there any that would entice you to crack open your cold wallets to migrate all of you coins to it?

Altcoins are not inflationary, the innovators grow the total market cap. The failure are bad investments, BTC just changes hands no inflation.

A SideChain token is a Bitcoin substitute it can be used as an alternative.

Growth in a SC that creates an arbitrage opportunity that exceeds the Bitcoin market cap would be inflationary.

i've brought up a number of times that this SPV proof is unproven and untested no matter what you call it.  they can vet it all they want but no one knows it will work until it's been tested live under market conditions.

Call me paranoid but that's how I feel about wallet that generate my private keys.
Why would it be bad for Bitcoin? How would it be destroyed?

I can see how the BTC price would drop but wouldn't this be like other scams in the past? When people clue in it would be like a run on the bank SideChain?

 


Open source

 

This makes so little sense I don't know where to begin.

A sidechain taking over Bitcoin that has less desirable qualities than Bitcoin provides? I... I just can't

SC does not allow inflation. Altcoins allow inflation. SC does not enable altcoin.

Why is it so hard for you people to understand this

People keep talking about a peg.
As if there were such a thing.


One of these days there will be an SC with some very useful feature, but the devs used compromised cryptographic primitives, and can factor out SC private keys and run off with all the BTC that moved into that chain.
If this is done as a long enough con, it could become an existential risk to bitcoin, yes?  (both the SC and Bitcoin could be essentially destroyed).

that is how i understand it.  but as far as you pumping the Federated server model, this is from the paper itself pg 7:

Although it is possible to use a simple trust-based solution involving fixed signers
(see Appendix A) to verify locking of coins, there are important reasons to avoid the introduction
of single points of failure:

Trusting individual signers does not only mean expecting them to behave honestly; they must
also never be compromised, never leak secret key material, never be coerced, and never stop
participating in the network.

Because digital assets are long-lived, any trust requirements must be as well. Experience has
shown that trust requirements are dangerous expectations even for timespans on the order of
months, let alone the generational timespans we expect financial systems to last.
180

Digital currencies were unable to gain traction until Bitcoin was able to eliminate single
points of failure, and the community is strongly averse to the introduction of such weaknesses.
Community mistrust is reinforced by financial events since 2007; public trust in the financial
system and other public institutions is likewise at historical lows.

This will happen a lot sooner if we get the level of transactions that Gavin is anticipating.
Currently TX fees are 1/300th of the total reward.
If we get 40x the transactions in a decade, the fees with be anywhere from equivalent to as low as 1/3 the reward (the coinbase block reward will go down twice - maybe thrice by then so 1/4 or 1/8).
This would be about 80 TX per second.
Visa does about 2000/second on average today.

However if we get accompanying price appreciation for BTC along with such adoption, we may likely have fee reduction by an order of magnitude or two, which could put us back to only fees = 1/100th the block reward.

why wouldn't a SC with an innovation like faster tx times attract all the tx's?  and why wouldn't the scBTC stay scBTC with the perceived risk free put (2wp)?  and if i'm right, they will be rewarded by staying on the SC b/c the price of scBTC on that SC will start to rise faster in fiat terms than BTC itself as the SC becomes more and more successful.

Nobody ever imagined that SC's would "attract all the tx's".  Just the opposite else the two-way peg is meaningless.

In my mind there is significant concern that 500k transactions per day would satisfy even the peg transactions (given that I would like to see it be realistic for a reasonable swath of individual-class users store value on the primary chain.)  That is why I'm not opposed to some expansion of the transaction rate, but I am fiercely protective of keeping Bitcoin at a size that it can be both maintained by smaller players AND defended in the case of a broad attack by core global internet infrastructure providers.

I think Satosi envisioned blockchain to blockchain transactions for sure, not sure he flushed out pegging them.

I believe he saw the decentralized exchanges using OpenTransaction trust free servers and backing new featured tokens with smart contracts.

Who knows I'm sure he's hands off.

Personally I am considerably less worried about the effect of sidechains on Bitcoin, than I am about their effect on Bitcoiners.

However, I do not appreciate wanton ignoring of risks and claiming "don't worry it will be fine"
Whenever I hear that it is a good reason to hold my wallet tight and walk the other direction.