Topic: Gold collapsing. Bitcoin UP. - page 785. (Read 2032266 times)

My two cents: you guys are getting way ahead of yourselves with the whole sidechains business. It's going to be at least a year or two before we have any idea what the effect of (actually useful) sidechains have on Bitcoin.

My two cents: you guys are getting way ahead of yourselves with the whole sidechains business. It's going to be at least a year or two before we have any idea what the effect of (actually useful) sidechains have on Bitcoin.

It is economically naive to fail to consider that a feature that adds value in one economic condition, may subtract it in another, and that movement of money may follow this with a lag, sometimes a very significant lag due to practical constraints.
Further naivete would be in imaging that this is not happening all the time, and that this effect is commonly exploited.  "Economists" here are contemplating only static ideal cases, and implementing regulatory changes in spite of these concerns.  Changing the code is changing what ultimately regulates Bitcoin.

With this particular change, it is not so easy to undo it if it turns out to be a mistake.  Many Bitcoin may be destroyed.  People will make mistakes of trust.

There are many new risks with SC.  Lets address them rather than pretend that they don't exist.

The way I read brg444's comments are; Since SC's only add functionality to the BTC main chain, that functionality can only be beneficial to the main chain and increase the main chain's value. If a SC was created who's functionality was not useful and does not add value, then that SC does nothing for the main chain but also does not have a negative effect. It just simply has no impact.

In that sense SC's can only add value to the main chain. If their features are useful then they add value, if they are not then they have no impact.

You can agree or disagree with that, but it's not economically naive.

SC are an horrible hybrid, imagine creating an assent you want like a house and when you buy it your BTC get locked away. sure you get your BTC back when you destroy your house, but why exchange back if you want your house more then the BTC.  If SC are allowed on the prototypical level BTC won't be used as an exchange of value the SC will.

that's not but what is: is failing to understanding that a feature that is more valuable will have an impact.

what if that value is laundering stolen coins? the arb opportunity will be 0ver 10% and there are about 1,000,000 stolen BTC out there.

what if some nation state: whats to use blockchain technology, and invests a failing fiat system or there gold reserves in a SC that is inflationary but comes with demurrage if saving in a private wallet and interest when held with a CB or some other feature that appeals to the 99% that is not Bitcoin. it is a great opportunity for Bitcoiners to arb initially until the arb gap is closed.  the goale here is to make Bitcoin attractive to Nation-State's note there isn't a Nation-State that should feel safe with bitcoin growing as it is. 

it is important to distinguish between bitcoin the asset and the blockchain as a programmable distributed trust infrastructure.  And we are interested in blockchain 2.0 and blockchain 2.0 using Bitcoin as a neutral transactional currency we believe is a great, offers great promise but I want to build a blockchain that could support a nation-state putting its national currency and phasing out paper dollars.

isnt there already "decentralized exchanges" as in OTC channels?
I cant wrap my mind as to how such decentralized exchange would be implemented otherwise.
People keep invoking such concept as the holy grail but i find it hard to imagine how it should work. what am i missing

ps: SCs.. yuck.

The way I read brg444's comments are; Since SC's only add functionality to the BTC main chain, that functionality can only be beneficial to the main chain and increase the main chain's value. If a SC was created who's functionality was not useful and does not add value, then that SC does nothing for the main chain but also does not have a negative effect. It just simply has no impact.

In that sense SC's can only add value to the main chain. If their features are useful then they add value, if they are not then they have no impact.

You can agree or disagree with that, but it's not economically naive.

I agree with all that you have said.

Maybe I need to expand on my thoughts one last time in an effort to have you guys consider where I'm coming from.

I believe that Bitcoin, as is, is the closest form of perfect money we have ever seen.

Its shortcomings, or areas for improvement, in my opinion are as follow :

1. Long confirmation time
2. Privacy (anonymity) option not native as a user-defined option
3. Block size for scaling
4. Possibility that a better mining algorithm exist that could improve decentralization

Aside from the obvious scaling concern, Bitcoin could very well survive as digital gold without seeing any of the improvements I have mentioned. Its fundamentals are THAT strong.

For a long time I envisioned that my previous concerns would be addressed in more centralized type of schemes, or, as some would call it, through off-blockchain transactions.

Now with sidechains, we are provided with the possibility to create these chains that are attached to BTC's mainchain and function in an interoperable way using BTC as their transacting unit, effectively maintaining the ledger.

There, I believe, is our opportunity to create a certain number of sidechains that will work in synergy with the main chain and add considerable value to it.

We do NOT need a BILLION of sidechains.

I am in agreement with Adam that it is likely only a relatively small number of them will get the proper developer support and most importantly, miners support. In that regard, I think a lot of people fool themselves into thinking that because the security model proposed in the sidechains paper is merged-mining then all of the sidechains will get this benefit.

This is a grave mistake and is exactly why I have been adamant in saying that altcoins booted on top of a sidechain are not, in any way whatsoever, a greater risk to Bitcoin than regular alts are. For this reason, ANY concern that has for a premise the creation of a sidecoin is irrelevant to the discussion as it is NOT enabled by the sidechain proposition.

What we should be discussing and perhaps trying to poke hole in is the use of sidechains as utility features using a unit that is pegged 1:1 with BTC. This, the two-way peg, is the innovation behind the sidechain concept. Everything else has been possible before.

What could these utilities be? Well allow me to return to my list of Bitcoin as money shortcomings :

1. A sidechain allowing for faster transaction times.
2. A sidechain enabling anonymous transactions

My interest in this exercise is Bitcoin as money : store of value, means-of-exchange and unit of account. Traditionally we're looking for these characteristics : scarcity, divisibility, portability, verifiability, recognizability and fungibility. Now, with the proposed sidechains we improve the characteristic of portability (faster transactions) and enable the user-defined additional feature of privacy.

Now cypher here argues that the anonymous sidechain creates a risk for it to potentially to take over as the mainchain. I disagree with that as I see anonymity as a niche market in this world's current settings but I can certainly envision a day where this is no longer true and everyone has a need for 100% private transactions but the day is not now and so that point is moot. Meanwhile the two markets, black and white both can work in synergy and create value for each other.

The same could be said about faster transactions times. At a certain point we might have the technology to make this happen without any security tradeoff but at the moment I believe sidechains is the best decentralized way to go about it.

In this setting, transactions are plentiful in all three chains and miners have an incentive to mine all three of them. The ledger is preserved and there is no dilution or loss of value

Having said all of that, what exactly is the "risk created"? If it is that an innovative new sidechain makes Bitcoin obsolete then should we really call that a risk? Is it a risk to create a better form of money? Is Bitcoin a risk? I guess you could say it is but I think all of us here agree that its added value to society is worth the risk.

You will finally understand it. When you will see how  decentralized Exchange works you will want to use it. You will see what is added value -> new functionality (not new currency)

“By this means the government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”

You will finally understand it. When you will see how  decentralized Exchange works you will want to use it. You will see what is added value -> new functionality (not new currency)

so first you tell us to trust the results of a Federated pegging server system as evidence that a SC is working, then, you tell us to adopt the SC innovation into the MC because you can't trust the Federated peg.

uh huh.

That is a feature of SC. You do need to add it in the Bitcoin protocol.
 - you will see, when first Federated peg will be created and bitcoinSC will be created for testing purposes. (will work same as Bitcoin + SC suport)
 - then inside bitcoinSC will be created decentralized exchangeSC and decentralized webWalletSC
 - and then you will want to adopt SC feature into MC b/c you will not trust Federated peg

That is a feature of SC. You do need to add it in the Bitcoin protocol.
 - you will see, when first Federated peg will be created and bitcoinSC will be created for testing purposes. (will work same as Bitcoin + SC suport)
 - then inside bitcoinSC will be created decentralized exchangeSC and decentralized webWalletSC
 - and then you will want to adopt SC feature into MC b/c you will not trust Federated peg

I agree with all that you have said.

Maybe I need to expand on my thoughts one last time in an effort to have you guys consider where I'm coming from.

I believe that Bitcoin, as is, is the closest form of perfect money we have ever seen.

Its shortcomings, or areas for improvement, in my opinion are as follow :

1. Long confirmation time
2. Privacy (anonymity) option not native as a user-defined option
3. Block size for scaling
4. Possibility that a better mining algorithm exist that could improve decentralization

Aside from the obvious scaling concern, Bitcoin could very well survive as digital gold without seeing any of the improvements I have mentioned. Its fundamentals are THAT strong.

For a long time I envisioned that my previous concerns would be addressed in more centralized type of schemes, or, as some would call it, through off-blockchain transactions.

Now with sidechains, we are provided with the possibility to create these chains that are attached to BTC's mainchain and function in an interoperable way using BTC as their transacting unit, effectively maintaining the ledger.

There, I believe, is our opportunity to create a certain number of sidechains that will work in synergy with the main chain and add considerable value to it.

We do NOT need a BILLION of sidechains. I am in agreement with Adam that it is likely only a relatively small number of them will get the proper developer support and most importantly, miners support. In that regard, I think a lot of people fool themselves into thinking that because the security model proposed in the sidechains paper is merged-mining then all of the sidechains will get this benefit. This is a grave mistake and is exactly why I have been adamant in saying that altcoins booted on top of a sidechain are not, in any way whatsoever, a greater risk to Bitcoin than regular alts are. For this reason, ANY concern that has for a premise the creation of a sidecoin is irrelevant to the discussion as it is NOT enabled by the sidechain proposition.

What we should be discussing and perhaps trying to poke hole in is the use of sidechains as utility features using a unit that is pegged 1:1 with BTC. This, the two-way peg, is the innovation behind the sidechain concept. Everything else has been possible before.

What could these utilities be? Well allow me to return to my list of Bitcoin as money shortcomings :

1. A sidechain allowing for faster transaction times.
2. A sidechain enabling anonymous transactions

My interest in this exercise is Bitcoin as money : store of value, means-of-exchange and unit of account. Traditionally we're looking for these characteristics : scarcity, divisibility, portability, verifiability, recognizability and fungibility. Now, with the proposed sidechains we improve the characteristic of portability (faster transactions) and enable the user-defined additional feature of privacy.

Now cypher here argues that the anonymous sidechain creates a risk for it to potentially to take over as the mainchain. I disagree with that as I see anonymity as a niche market in this world's current settings but I can certainly envision a day where this is no longer true and everyone has a need for 100% private transactions but the day is not now and so that point is moot. Meanwhile the two markets, black and white both can work in synergy and create value for each other.

The same could be said about faster transactions times. At a certain point we might have the technology to make this happen without any security tradeoff but at the moment I believe sidechains is the best decentralized way to go about it.

In this setting, transactions are plentiful in all three chains and miners have an incentive to mine all three of them. The ledger is preserved and there is no dilution or loss of value
 
Having said all of that, what exactly is the "risk created"? If it is that an innovative new sidechain makes Bitcoin obsolete then should we really call that a risk? Is it a risk to create a better form of money? Is Bitcoin a risk? I guess you could say it is but I think all of us here agree that its added value to society is worth the risk.

this is so blatantly economically naive that i am forced to give brg444 a pass; after all, he's a 24 yo kid with a self admitted shitty job. 

otoh, please explain to all of us in detail how SC's, real or scam, can only make the BTC price go up?