Gold collapsing. Bitcoin UP. - page 807.

Adrian-x

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Quote from: brg444 on October 30, 2014, 06:39:23 PM

Quote from: Adrian-x on October 30, 2014, 06:29:39 PM

mining must also go through a market evolution, it must stop growing as some point. locking in to PoW MM for ever is not evolution it is manipulation, who knows the bitcoin killer may use proof of Bandwidth or proof of Block Archiving. if you do that with a SC I think Bitcoin would become obsolete as the value will leak into the SC as fast as rewards diminish.

so essentially your concern is now that Bitcoin gets replaced because a better technology came along Huh

its not better technology that will replace bitcoin its better propaganda and consumer confidence keepers, some improvment i can see implemented in SC adjusting the fixed supply to a constant 3% economic growth stimulates (because economists think moderate monetary growth is good) increasing the tx fees, we need more miners for security, and teh proponents saying you the people, listen up, we have embraced bitcoin's blockchain technology its been improved and is safe for consumer adoption, were moving our national currency into the blockchain.

and in the blink of an eye Bitcoins tiny billion dollar market cap is absorbed and assimilated and usurped. Replaced not by better tech but by confidence spinning.

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Quote from: brg444 on October 30, 2014, 06:36:27 PM

Quote from: Adrian-x on October 30, 2014, 06:29:39 PM

Quote from: brg444 on October 30, 2014, 06:17:57 PM

Quote from: Adrian-x on October 30, 2014, 05:59:13 PM

Bitcoin block rewards shrink as we know, but soon like 6 years it would be feasible to consider the transaction fee making up a significant part of the block reward. moving those fees to a SC would degrade Bitcoin.

Miners mine both chains. They profit no matter where the transactions take place.

I mine, i used to MM NameCoin, i dropped it because it wasn't worth the effort and the 2% pool fee i sacrificed on by BTC. nameCoin's fate could happen to Bitcoin, also 14 years form now we may choose to drop bitcoin altogether because its not needed anymore, it worked as a seed for the SC's.

I'm sorry but this is a very, very shaky parallel to make.

If Bitcoin is not needed it is only because a better store of value will have appeared. If it is so then let it be, but I don't find it likely since Bitcoin has worked exceptionnaly well so far, benefits from a considerable network effect and has very sound fundamentals.

I'm going to quote Justus again

Quote from: justusranvier on October 30, 2014, 05:25:09 PM

Currencies only have value if people use them, so there is no way for Bitcoin to have / behave as a store of value in the long term except as a direct consequence of its use as a medium of exchange.
.... Bitcoin would lose out to a competing currency with less/no rationing that would be less expensive to use for settlements.
High transaction rates on the main chain are the only way for Bitcoin to survive.

Metcalfe's law was my way of thinking about it, I'm happy for something better to come along, i believe bitcoin is a better store of value because the the economic energy maintaining the ledger stays in the ecosystem. as soon as bitcoins move into a SC the SC benefits with no downside risk, the locked scBTC has no value as the value is in the SC tokens. if it goes bad just get a computer to refund your BTC, if it succeeds then the value is gone for good it resided in the SC, theoretically you can convert it back but why? it seems to me the more SC grow the less valuable BTC becomes.

brg444

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Bitcoin replaces central, not commercial, banks

Quote from: DonDev on October 30, 2014, 06:43:23 PM

Nothing can replace bitcoin.
Bitcoin for life Wink

who knows. before 2009 no one thought we could replace gold as a store of value.

DonDev

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Nothing can replace bitcoin.
Bitcoin for life Wink

brg444

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Quote from: Adrian-x on October 30, 2014, 06:29:39 PM

mining must also go through a market evolution, it must stop growing as some point. locking in to PoW MM for ever is not evolution it is manipulation, who knows the bitcoin killer may use proof of Bandwidth or proof of Block Archiving. if you do that with a SC I think Bitcoin would become obsolete as the value will leak into the SC as fast as rewards diminish.

so essentially your concern is now that Bitcoin gets replaced because a better technology came along Huh

brg444

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Bitcoin replaces central, not commercial, banks

Quote from: Adrian-x on October 30, 2014, 06:29:39 PM

Quote from: brg444 on October 30, 2014, 06:17:57 PM

Quote from: Adrian-x on October 30, 2014, 05:59:13 PM

Bitcoin block rewards shrink as we know, but soon like 6 years it would be feasible to consider the transaction fee making up a significant part of the block reward. moving those fees to a SC would degrade Bitcoin.

Miners mine both chains. They profit no matter where the transactions take place.

I mine, i used to MM NameCoin, i dropped it because it wasn't worth the effort and the 2% pool fee i sacrificed on by BTC. nameCoin's fate could happen to Bitcoin, also 14 years form now we may choose to drop bitcoin altogether because its not needed anymore, it worked as a seed for the SC's.

I'm sorry but this is a very, very shaky parallel to make.

If Bitcoin is not needed it is only because a better store of value will have appeared. If it is so then let it be, but I don't find it likely since Bitcoin has worked exceptionnaly well so far, benefits from a considerable network effect and has very sound fundamentals.

Adrian-x

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Quote from: Adrian-x on October 30, 2014, 05:59:13 PM

Bitcoin block rewards shrink as we know, but soon like 6 years it would be feasible to consider the transaction fee making up a significant part of the block reward. moving those fees to a SC would degrade Bitcoin.

Miners mine both chains. They profit no matter where the transactions take place.
[/quote]

I mine, i used to MM NameCoin, i dropped it because it wasn't worth the effort and the 2% pool fee i sacrificed on by BTC. nameCoin's fate could happen to Bitcoin, also 14 years form now we may choose to drop bitcoin altogether because its not needed anymore, it worked as a seed for the SC's.

edit:

Quote from: brg444 on October 30, 2014, 06:17:57 PM

I agree 100% with your comments on transparency and anonymity but I take problem with your "value leaking" theory. There is no value leaking, it is an essentially an ecosystem sharing value in a synergic manner.

mining must also go through a market evolution, it must stop growing as some point. locking in to PoW MM for ever is not evolution it is manipulation, who knows the bitcoin killer may use proof of Bandwidth or proof of Block Archiving. if you do that with a SC I think Bitcoin would become obsolete as the value will leak into the SC as fast as rewards diminish.

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Quote from: Adrian-x on October 30, 2014, 02:53:26 PM

well said, the problem isn't technical its adoption of the idea or cryptocurrency, everything flows from faith in Bitcoin.

Exactly. That is why I don't want to see Bitcoin balloon to the point where it is impractical for smaller players to be full peers. Preferably individuals if possible. More than that, I want to see core Bitcoin be small enough so that it could use non-corporate communications channels if the solution is attacked by that sector which I see as a high probability event in the case of the next economic crisis.

Even the threat of eventually just saying 'fuck it' with respect to pruning and making a simplistic tweak to just expand the transaction rate (block size) has been enough to make me that much more inclined to sell out, and I did a fair amount of that at the beginning of the year. Even if Bitcoin can be pretty big riding on the backs of the large corporate players it's just not a very interesting solution to me at that point.

Sidechains, or seeing some real progress toward them before it's to late, has been most inspiring to me indeed and has reinvigorated my hopes for Bitcoin.

The race now seems to be between the Bitcoin Foundation guys trying to get Gavin's exponential growth in place and the blockstream guys trying to save Bitcoin to be something similar to what it was advertised to be when I first took a position.

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Quote from: justusranvier on October 30, 2014, 05:25:09 PM

People have been proposing this because they are economically ignorant.

There is no such thing as intrinsic value. Currencies only have value if people use them, so there is no way for Bitcoin to have behave as a store of value in the long term except as a direct consequence of its use as a medium of exchange.

Before you start talking about gold - no, it won't work that way.

Prior to central banks, gold behaved as a store of value because it was used as a medium of exchange.

After central banks, gold behaved as a store of value because of taxation.

Bitcoin could never survive as a high-fee settlement currency because high fees would arise due to block size rationing, not because transactions should naturally cost that much for technical reasons. Bitcoin would lose out to a competing currency with less/no rationing that would be less expensive to use for settlements.

High transaction rates on the main chain are the only way for Bitcoin to survive. Yes, getting there is a difficult technical problem to solve. Deal with it.

Just quoting this because it distills my understanding further, with a cupped hands and raised voice in bold. thanks,

brg444

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Quote from: Adrian-x on October 30, 2014, 05:59:13 PM

Bitcoin block rewards shrink as we know, but soon like 6 years it would be feasible to consider the transaction fee making up a significant part of the block reward. moving those fees to a SC would degrade Bitcoin.

Miners mine both chains. They profit no matter where the transactions take place.

Quote from: Adrian-x on October 30, 2014, 05:59:13 PM

and bitcoins move into the side chain, and the Bitcoin network shrivels, and stop growing because miners cant make a profit from the transaction fees.

Again, miners don't have to choose one chain to mine. They can and will profit from mining the two.

Quote from: Adrian-x on October 30, 2014, 05:59:13 PM

your vision of bitcoin being the backing for all of chain growth is only viable so long as Bitcoin is the MC, when it stops being the MC due to the Metacafe's law the SC will absorb and shake themselves of it, the SC may have an inflation sachem that rewards miners in a more favorably, be better amalgamated with the Banking carrells and it is not a stretch to see bitcoin being abandoned, or even needed.

SC that take improve on bitcoins utility do it by inflating value off chain, and bitcoin dosn't grow the SC grows.

I'm not convinced by your theory that Bitcoins locked on 1:1 peg creates a new network that competes with Bitcoin's. As for the second part of your comment, it defeats logic to suggest Bitcoin would be defeated by an inflationary sidechain with closer ties to the banking cartels. It is straight up ridiculous in fact.

Quote from: Adrian-x on October 30, 2014, 05:59:13 PM

the issue is you get the value leaking problem if the SC are beneficial. anonymity isn't so great when you want to prove you made a payment. at this point in time it is the No. 1 Killer app as there are lots of stolen coins wanting to come out, and it would help Bitcoin grow like in silk road commerce.

but ultimately Bitcoins Pseudonymity is forcing decentralized trust free serves like OpenBazaar and OT exchanges where your identity is never revealed, or if it is you chose which one. Decentralized and trust free everything is much more valuable then anonymous BTC, in a decentralized trust free world Pseudonymity is anonymity

I agree 100% with your comments on transparency and anonymity but I take problem with your "value leaking" theory. There is no value leaking, it is an essentially an ecosystem sharing value in a synergic manner.

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Quote from: brg444 on October 30, 2014, 05:10:15 PM

Then Bitcoin becomes the central clearing house, reserve & store of value chain while other chains are left to operate daily transactions for better efficiency.

People have been proposing this very idea for awhile but assumed the transactions would be handled off-chain by semi-centralized entities. Sidechain removes the need for that.

Miners can mine BTC & the sidechain. I'm not sure where you get the idea they have to choose between the two.

OT servers can do the same thing and give all alts a chance, let it be a market need driven innovation.

in my view Blockstream have an advantage, but aside from that changing the SC protocol to exclude MM could happen,

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Quote from: justusranvier on October 30, 2014, 05:25:09 PM

People have been proposing this because they are economically ignorant.

There is no such thing as intrinsic value. Currencies only have value if people use them, so there is no way for Bitcoin to have behave as a store of value in the long term except as a direct consequence of its use as a medium of exchange.

Before you start talking about gold - no, it won't work that way.

Prior to central banks, gold behaved as a store of value because it was used as a medium of exchange.

After central banks, gold behaved as a store of value because of taxation.

Bitcoin could never survive as a high-fee settlement currency because high fees would arise due to block size rationing, not because transactions should naturally cost that much for technical reasons. Bitcoin would lose out to a competing currency with less/no rationing that would be less expensive to use for settlements.

High transaction rates on the main chain are the only way for Bitcoin to survive. Yes, getting there is a difficult technical problem to solve. Deal with it.

Where did you get the idea of intrinsic value? I can't find it in my comments.

I don't agree with your comments. Bitcoin will be used as a medium-of-exchange, only, by proxy, through a BTC-pegged unit on a more efficient sidechain. I know you will say money doesn't require backing but in the case of Bitcoin it does not matter.

On the contrary, I find the comparison to gold to be excellent. I know we all hate fiat for what it has become but the fiat technology was a fantastic idea and for a moment a great advancement for our society. It came out of necessity for a more transportable and convenient mean of exchange. Much like gold, Bitcoin's transportation property suffers from some shortcomings : confirmation time & transparency.

On the other hand, unlike gold-backing Bitcoin-backing is fundamentally different in that there is no counterparty risks. The pegging can not be abused by the backers. For this reason Bitcoin is the perfect reserve currency.

Quote from: justusranvier on October 30, 2014, 05:25:09 PM

Bitcoin could never survive as a high-fee settlement currency because high fees would arise due to block size rationing, not because transactions should naturally cost that much for technical reasons. Bitcoin would lose out to a competing currency with less/no rationing that would be less expensive to use for settlements.

High transaction rates on the main chain are the only way for Bitcoin to survive. Yes, getting there is a difficult technical problem to solve. Deal with it.

High-fee? This is not what I am suggesting, more like high-volume. Block size rationing are a whole different debate.

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Quote from: brg444 on October 30, 2014, 04:22:36 PM

Quote

The result is lower block rewards, and less incentive to mine, all the while bitcoin holders can exchange into the new network further reducing Bitcoins value.

How do you explain lower block reward? My understanding is block reward remains the same no matter the size of the mining infrastructure.

Bitcoin block rewards shrink as we know, but soon like 6 years it would be feasible to consider the transaction fee making up a significant part of the block reward. moving those fees to a SC would degrade Bitcoin.

Quote from: brg444 on October 30, 2014, 04:22:36 PM

Also, I don't see how 1:1 peg drains the ~~lift~~ life out of the host. Think of the main chain as a reserve account and sidechains as checking account. A well designed, 1:1 peg of Bitcoin that works in synergy with the main chain does not diminish the network IMO. These chains are effectively sub-chains.

at the moment you are growing the network if you invest in Alts, here is one eg. during the peek of DarkCoin, i was looking to see what the fuss was about and checking for an exit point. The biggest stall to the exponential growth was the KYC rules in place with Bitcoin gate keepers, manly it was diffident to buy Dark because people interested couldn't be hassled with going through BTC.

BTC may always be a bit geeky and not suitable for the masses, (still suitable for a reserve currency though) but imagine we do through a crises and you can transfer from your bank account directly into a SC and you can avoid the whole bitcoin exchange experiences with all the benefits of a 1:1 backing. you would use the better option, in that scenario the SC has a hider demand than bitcoin and speculators take advantage of arbitration. and bitcoins move into the side chain, and the Bitcoin network shrivels, and stop growing because miners cant make a profit from the transaction fees.

your vision of bitcoin being the backing for all of chain growth is only viable so long as Bitcoin is the MC, when it stops being the MC due to the Metacafe's law the SC will absorb and shake themselves of it, the SC may have an inflation sachem that rewards miners in a more favorably, be better amalgamated with the Banking carrells and it is not a stretch to see bitcoin being abandoned, or even needed.

SC that take improve on bitcoins utility do it by inflating value off chain, and bitcoin dosn't grow the SC grows.

Quote from: brg444 on October 30, 2014, 04:22:36 PM

Here is a rational proposition :

You have the Bitcoin main-chain and two sidechains : one for privacy and one for micro-transactions. Do you not agree that these can work in synergy and ultimately add value to the network by being supported by the same underlying currency (or technically BTC and BTC-peg). In fact, there is more incentives more miners to mine considering the expected increase in transactions and effective use of the network.

From my point of view it certainly is more beneficial to BTC than having Bitcoin and two other alt-coins that serve these features. I also fail to understand your arguments that these chains (in my example) would work as "for-profit" ideas.

micro-transactions are mute, Ive seen trust free technical solutions for this innovation with micro payment channels and potential with OT.

its not so much that the user case for SC to enable anonymity is not beneficial, the issue is you get the value leaking problem if the SC are beneficial. anonymity isn't so great when you want to prove you made a payment. at this point in time it is the No. 1 Killer app as there are lots of stolen coins wanting to come out, and it would help Bitcoin grow like in silk road commerce.

but ultimately Bitcoins Pseudonymity is forcing decentralized trust free serves like OpenBazaar and OT exchanges where your identity is never revealed, or if it is you chose which one. Decentralized and trust free everything is much more valuable then anonymous BTC, in a decentralized trust free world Pseudonymity is anonymity

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Quote from: cypherdoc on October 30, 2014, 05:19:04 PM

how do you propose the Bitcoin miners get paid over the long run on the MC when the block rewards have been diminished and all the tx's are occurring on the SC's?

Miners will continue mining both chains. The much larger transactions not requiring privacy and/or instant confirmation will be taking place on the more secure mainchain. Miners will be paid from processing transactions on every chain working in synergy.

Quote from: cypherdoc on October 30, 2014, 05:19:04 PM

over the long run they will have to as block rewards diminish and all tx's are occurring on SC's

Stop using hyperboles, no not all of the transactions will occur on the sidechains. Moreover, no they will not have to choose between the two. They can continue mining both. I really fail to see your argument here.

Quote from: cypherdoc on October 30, 2014, 05:19:04 PM

if they were neutral, they wouldn't be insisting on a change in the source code which uniquely benefits their for profit business model.

Insisting? I have read a proposition but have not seen sign of insistence. Their business model is innovation on top of the sidechain "protocol". They have no incentive to compete with Bitcoin since by all account they are planning to leverage it. Bitcoin is vital to their business model.

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Quote from: brg444 on October 30, 2014, 05:10:15 PM

Then Bitcoin becomes the central clearing house, reserve & store of value chain while other chains are left to operate daily transactions for better efficiency.

People have been proposing this very idea for awhile but assumed the transactions would be handled off-chain by semi-centralized entities.

People have been proposing this because they are economically ignorant.

There is no such thing as intrinsic value. Currencies only have value if people use them, so there is no way for Bitcoin to have behave as a store of value in the long term except as a direct consequence of its use as a medium of exchange.

Before you start talking about gold - no, it won't work that way.

Prior to central banks, gold behaved as a store of value because it was used as a medium of exchange.

After central banks, gold behaved as a store of value because of taxation.

Bitcoin could never survive as a high-fee settlement currency because high fees would arise due to block size rationing, not because transactions should naturally cost that much for technical reasons. Bitcoin would lose out to a competing currency with less/no rationing that would be less expensive to use for settlements.

High transaction rates on the main chain are the only way for Bitcoin to survive. Yes, getting there is a difficult technical problem to solve. Deal with it.

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Quote from: brg444 on October 30, 2014, 05:10:15 PM

Quote from: cypherdoc on October 30, 2014, 04:55:36 PM

those who actually use BTC on a daily basis, as opposed to those hodling, will be encouraged to move to the SC's to perform their tx's b/c of the innovations of privacy and microtransactions. those miners on the SC's will be the one's getting paid the tx fees from these users instead of the miners who elect to stay behind on the BTC MC. that's not good for Bitcoin. that's where the draining the life out of Bitcoin comes from as miners will have to defect to the SC to get paid over time.

...

i think he's saying, and correct me if i'm wrong, that it's unethical for Blockstream to capitalize on Bitcoin's success by creating SC's as a competitor effectively. especially when the SC's have the chance to destroy the MC.

Then Bitcoin becomes the central clearing house, reserve & store of value chain while other chains are left to operate daily transactions for better efficiency.

how do you propose the Bitcoin miners get paid over the long run on the MC when the block rewards have been diminished and all the tx's are occurring on the SC's?

Quote

People have been proposing this very idea for awhile but assumed the transactions would be handled off-chain by semi-centralized entities. Sidechain removes the need for that.

actually, SC's will exacerbate the problem of tx fees moving off the MC due to the risk free put. at least when they're handled at a centralizaed entity like Coinbase, there is some fear their accts may be seized along with all their BTC, like what happened with Silk Road. at least we have a dampener effect there.

Quote

Miners can mine BTC & the sidechain. I'm not sure where you get the idea they have to choose between the two.

over the long run they will have to as block rewards diminish and all tx's are occurring on SC's

Quote

As for your last point, I categorically disagree. Sidechains are a neutral, technological proposition. If Blockstream profit from them it is because they will have shown to be considerably useful for the development of blockchain platforms, not because it competes with Bitcoin, this makes no sense.

if they were neutral, they wouldn't be insisting on a change in the source code which uniquely benefits their for profit business model.

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Quote from: cypherdoc on October 30, 2014, 04:55:36 PM

those who actually use BTC on a daily basis, as opposed to those hodling, will be encouraged to move to the SC's to perform their tx's b/c of the innovations of privacy and microtransactions. those miners on the SC's will be the one's getting paid the tx fees from these users instead of the miners who elect to stay behind on the BTC MC. that's not good for Bitcoin. that's where the draining the life out of Bitcoin comes from as miners will have to defect to the SC to get paid over time.

...

i think he's saying, and correct me if i'm wrong, that it's unethical for Blockstream to capitalize on Bitcoin's success by creating SC's as a competitor effectively. especially when the SC's have the chance to destroy the MC.

Then Bitcoin becomes the central clearing house, reserve & store of value chain while other chains are left to operate daily transactions for better efficiency.

People have been proposing this very idea for awhile but assumed the transactions would be handled off-chain by semi-centralized entities. Sidechain removes the need for that.

Miners can mine BTC & the sidechain. I'm not sure where you get the idea they have to choose between the two.

As for your last point, I categorically disagree. Sidechains are a neutral, technological proposition. If Blockstream profit from them it is because they will have shown to be considerably useful for the development of blockchain platforms, not because it competes with Bitcoin, this makes no sense.

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Quote from: brg444 on October 30, 2014, 04:22:36 PM

Quote from: Adrian-x on October 30, 2014, 02:40:37 PM

above is the reason, I disagree with what you are suggesting, bitcoin is the asset ledger, money is not the token but memory, you don't own bitcoin, you control a % of the asset ledger. Balance in value and security is maintained by miners making economic value judgments. For PoW to be rewarded appropriately to preserve the network and the distributed allocated of control, miners need to be incentivised . Nodes are incentivised to preserve the ledger because they have value in it, Miners are incentivised to wright to that ledger in lieu of a Block rewards.

this is a dynamic equilibrium but in general if the Bitcoin network grows (number of users) one can expect the utility to grow as it has, (thanks Peter-R) according to Metacafe's law if it grows faster then the mining reward diminishes, then one expects competition in mining to produce coins (miners - create "credit" in the immutable memory ledger called the block reward). What is expected to happen is: 1) innovation in mining efficiency to make better use of the limited and costly resources and energy; 2) miners will use any increase in efficiency to consume all available resource - Jevons paradox gives us a hit of what could be. if not for diminishing rewards to eventual just the cost of writing tx.

in short efficiency in mining innovation is responsible for the hashrate, and the price of bitcoin is reasonable for the amount of energy burned. (energy being important as it is the root of all economic activity and productivity) PoW efficiency is a highly contentious issue among many in other threads, and there too the economics is also not well understood as opponents argue the energy burned and wasted while its clear to those who see it it is is not wasted and the dynamic and economics are sound.

If you tie other assets to the blockchain, by locking bitcoin in, you in effect are reducing bitcoins network and growing another network the SC, what happens then is the value grows in the other network, according to Metacafe's law, and the Bitcoin network is diminished. The result is lower block rewards, and less incentive to mine, all the while bitcoin holders can exchange into the new network further reducing Bitcoins value.

Bitcoin is a success precisely for all the reasons that make it, but a AltChain that leverages the value out of bitcoin, by differentiating bitcoin the currency form bitcoin the ledger, is created not as a competing innovation but as a for profit idea. truly competing ideas compete 1:1 head to head like alts, they dont peg 1:1 and drain the life out of the host.

We have the tech to do secure trust less off Blockchain micro transaction with technologies like micro payment channels, and we have the ability to create secured trust free BTC funds in an exchange or contract environment.

Now, that, is a well opinionated, sensible and valid argument for the danger of SC. I had never considered it from that angle and it does make a lot of sense. None of that conspiracy theory, whale speculative attack, developer collusion tinfoil hat type of stuff.

I do have some questions though

Quote

The result is lower block rewards, and less incentive to mine, all the while bitcoin holders can exchange into the new network further reducing Bitcoins value.

How do you explain lower block reward? My understanding is block reward remains the same no matter the size of the mining infrastructure.

what he's saying is that over the long run, Bitcoin miners will have to make the transition from depending on block rewards to that of being paid in tx fees. that is b/c of he block reward halving every 4 yrs. this dynamic has a chance of avoiding the Tragedy of the Commons if Bitcoin can attract enough users in the future to increase tx fees in aggregate to compensate for the block reward halvings.

Quote

Also, I don't see how 1:1 peg drains the lift out of the host. Think of the main chain as a reserve account and sidechains as checking account. A well designed, 1:1 peg of Bitcoin that works in synergy with the main chain does not diminish the network IMO. These chains are effectively sub-chains.

Here is a rational proposition :

You have the Bitcoin main-chain and two sidechains : one for privacy and one for micro-transactions. Do you not agree that these can work in synergy and ultimately add value to the network by being supported by the same underlying currency (or technically BTC and BTC-peg). In fact, there is more incentives more miners to mine considering the expected increase in transactions and effective use of the network.

those who actually use BTC on a daily basis, as opposed to those hodling, will be encouraged to move to the SC's to perform their tx's b/c of the innovations of privacy and microtransactions. those miners on the SC's will be the one's getting paid the tx fees from these users instead of the miners who elect to stay behind on the BTC MC. that's not good for Bitcoin or those miners as the block rewards diminish. that's where the draining the life out of Bitcoin comes from as miners will have to defect to the SC to get paid over time.

Quote

From my point of view it certainly is more beneficial to BTC than having Bitcoin and two other alt-coins that serve these features. I also fail to understand your arguments that these chains (in my example) would work as "for-profit" ideas.

i think he's saying, and correct me if i'm wrong, that it's unethical for Blockstream to capitalize on Bitcoin's success and their privileged position as maintainers of the source code to create SC's as a competitor. especially when the SC's have the chance to destroy the MC.

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Quote from: cypherdoc on October 30, 2014, 04:22:07 PM

Quote from: HeliKopterBen on October 30, 2014, 03:36:26 PM

Quote from: cypherdoc on October 30, 2014, 02:45:49 PM

Quote from: HeliKopterBen on October 30, 2014, 02:39:37 PM

Of course the only thing protecting bitcoin from losing its MC status is the block subsidy, so there is real risk that over time bitcoin could cease to be the main chain.

so then you're effectively saying we have to have inflation in BTC for the Bitcoin MC to survive/compete over the long run when put up against a SC issuing a sidecoin and accepting scBTC.

i don't desire that and i certainly don't want to be moving my BTC to a SC.

You either risk a side chain overtaking bitcoin or an alt coin overtaking bitcoin. With the side chain you have the risk free put to take advantage of if the side chain wins out. The alt coin would have a harder time winning without the risk free put, but it could happen. Pick your poison.

you're presuming it is impossible for Bitcoin to upgrade itself. that's incorrect. we've seen it upgraded many times in the past several years.

Gavin and Wladimir are working on some very valuable upgrades as we speak. what's the rush to implement something that could destroy the whole system?

Future upgrades won't be easy and potentially pose just as much risk, especially as the stakes get higher, and some upgrades may be impossible without sidechains. This side chains proposal will be difficult enough to push through. If it works, then innovation can be pushed out to the side chains, which won't pose as much risk to bitcoin. Changes to the Bitcoin core protocol will pose signifiCanty more risk than changes to side chains.

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Bitcoin replaces central, not commercial, banks

Quote from: Adrian-x on October 30, 2014, 02:40:37 PM

above is the reason, I disagree with what you are suggesting, bitcoin is the asset ledger, money is not the token but memory, you don't own bitcoin, you control a % of the asset ledger. Balance in value and security is maintained by miners making economic value judgments. For PoW to be rewarded appropriately to preserve the network and the distributed allocated of control, miners need to be incentivised . Nodes are incentivised to preserve the ledger because they have value in it, Miners are incentivised to wright to that ledger in lieu of a Block rewards.

this is a dynamic equilibrium but in general if the Bitcoin network grows (number of users) one can expect the utility to grow as it has, (thanks Peter-R) according to Metacafe's law if it grows faster then the mining reward diminishes, then one expects competition in mining to produce coins (miners - create "credit" in the immutable memory ledger called the block reward). What is expected to happen is: 1) innovation in mining efficiency to make better use of the limited and costly resources and energy; 2) miners will use any increase in efficiency to consume all available resource - Jevons paradox gives us a hit of what could be. if not for diminishing rewards to eventual just the cost of writing tx.

in short efficiency in mining innovation is responsible for the hashrate, and the price of bitcoin is reasonable for the amount of energy burned. (energy being important as it is the root of all economic activity and productivity) PoW efficiency is a highly contentious issue among many in other threads, and there too the economics is also not well understood as opponents argue the energy burned and wasted while its clear to those who see it it is is not wasted and the dynamic and economics are sound.

If you tie other assets to the blockchain, by locking bitcoin in, you in effect are reducing bitcoins network and growing another network the SC, what happens then is the value grows in the other network, according to Metacafe's law, and the Bitcoin network is diminished. The result is lower block rewards, and less incentive to mine, all the while bitcoin holders can exchange into the new network further reducing Bitcoins value.

Bitcoin is a success precisely for all the reasons that make it, but a AltChain that leverages the value out of bitcoin, by differentiating bitcoin the currency form bitcoin the ledger, is created not as a competing innovation but as a for profit idea. truly competing ideas compete 1:1 head to head like alts, they dont peg 1:1 and drain the life out of the host.

We have the tech to do secure trust less off Blockchain micro transaction with technologies like micro payment channels, and we have the ability to create secured trust free BTC funds in an exchange or contract environment.

Now, that, is a well opinionated, sensible and valid argument for the danger of SC. I had never considered it from that angle and it does make a lot of sense. None of that conspiracy theory, whale speculative attack, developer collusion tinfoil hat type of stuff.

I do have some questions though

Quote

The result is lower block rewards, and less incentive to mine, all the while bitcoin holders can exchange into the new network further reducing Bitcoins value.

How do you explain lower block reward? My understanding is block reward remains the same no matter the size of the mining infrastructure.

Also, I don't see how 1:1 peg drains the lift out of the host. Think of the main chain as a reserve account and sidechains as checking account. A well designed, 1:1 peg of Bitcoin that works in synergy with the main chain does not diminish the network IMO. These chains are effectively sub-chains.

Here is a rational proposition :

You have the Bitcoin main-chain and two sidechains : one for privacy and one for micro-transactions. Do you not agree that these can work in synergy and ultimately add value to the network by being supported by the same underlying currency (or technically BTC and BTC-peg). In fact, there is more incentives more miners to mine considering the expected increase in transactions and effective use of the network.

From my point of view it certainly is more beneficial to BTC than having Bitcoin and two other alt-coins that serve these features. I also fail to understand your arguments that these chains (in my example) would work as "for-profit" ideas.

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