Topic: Gold collapsing. Bitcoin UP. - page 821. (Read 2032266 times)

So in your opinion, does this mean everyone can get their BTC back in the event of a SC failure with just a larger tx fee?

A simpler version of this is described in the paper. Simply pay miners in a new altcoin that is distinct and can't be used to unlock Bitcoins at all. But still tradeable and valuable if has demand and scarcity.

You then have the benefit of two different types of coins on the same chain and can do atomic cross-coin trades easily without the need for slower and more complicated cross-chain trades.

Anyone who thinks this won't spawn a new explosion of altcoins is delusional.

As I've said before, if an alt ever started to threaten bitcoin's market-cap dominance, it would severely risk undermining bitcoin's scarcity argument, therefore drastically reducing people's willingness to hold crypto-currency for any longer than they need in order to use it as a payment network or what have you. Clearly there's still be some value (potentially large, given enough usage), but it'd be a lot less, at least near/medium-term, than if people want to hold it as a long-term store of value or inflation-hedge type asset.

As I've said before, if an alt ever started to threaten bitcoin's market-cap dominance, it would severely risk undermining bitcoin's scarcity argument, therefore drastically reducing people's willingness to hold crypto-currency for any longer than they need in order to use it as a payment network or what have you. Clearly there's still be some value (potentially large, given enough usage), but it'd be a lot less, at least near/medium-term, than if people want to hold it as a long-term store of value or inflation-hedge type asset.

There's some flexibility in that depiction, of course, but I think that's the "bias" being exposed when people promote bitcoin over alts.

http://www.reddit.com/r/IAmA/comments/2k3u97/we_are_bitcoin_sidechain_paper_authors_adam_back/clhpcke

But if some implementation of SC (I do not think SC as idea) become scam or there is a bug then bitcoins may be lost.

Not sure I understand this part... If you do a straight 1:1 peg you don't need mining of the sidechain right? The movement of assets between that chain is basically fit into transactions that goes into BTC blocks is it not?

As for the rest, they're free to do whatever they want, but I find I have every reason to have a BTC bias.

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The question "Why do you need to create a new currency?" exposes a bias. From a neutral perspective, one might just as easily ask "Why should I use BTC or BTC backing as my currency?" If you set aside the bias, there is no technical necessity to use BTC or exclusively BTC on a side chain.
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You can't pay for mining with BTC. That alone is a reason. In fact that's the original reason BTC exists at all. From the point of view of a sidechain, BTC is an external currency. If you could use BTC to secure a sidechain, you can use USD to secure a standalone blockchain. You can't.

Other people will probably want to do proof-of-stake (used for most new altcoins today, I think) or other things with different monetary properties. That also can't be done BTC, because you can't stake BTC into existence on the side chain.

Finally there are people who will simply not want to be associated with BTC for reasons of branding, marketing, distinctiveness, dislike or suspicion of BTC, etc. They won't use BTC backing simply because they can, at least not in a straight 1:1 form.

The question "Why do you need to create a new currency?" exposes a bias. From a neutral perspective, one might just as easily ask "Why should I use BTC or BTC backing as my currency?" If you set aside the bias, there is no technical necessity to use BTC or exclusively BTC on a side chain.

These may all sounds dumb to you, and perhaps they all are, but they can and will be done anyway.

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Other people will probably want to do proof-of-stake (used for most new altcoins today, I think) or other things with different monetary properties. That also can't be done BTC, because you can't stake BTC into existence on the side chain.
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You can't pay for mining with BTC.

it might, the argument is : why do you need to create a new currency to support your altchain? what is your motive? can you not use BTC as a 1:1 peg?

it is an handicap for alt scammers

Bitcoin may take a knock if 10% of the coins go missing. But that would actually simply increase the value of everyone else's holdings.

A simpler version of this is described in the paper. Simply pay miners in a new altcoin that is distinct and can't be used to unlock Bitcoins at all. But still tradeable and valuable if has demand and scarcity.

You then have the benefit of two different types of coins on the same chain and can do atomic cross-coin trades easily without the need for slower and more complicated cross-chain trades.

Anyone who thinks this won't spawn a new explosion of altcoins is delusional.

To Bitcoin there would be basically zero difference (between a sidechain crashing and burning and an individual losing their private keys.)

I don't know about you-all, but my interest in sidechains is nearly 100% about preserving Bitcoin and that is where my focus is.  Sidechains allow Bitcoin to freeze in it's current fairly reliable, predictable, and defensible state while not hampering the ability of it to server as the 'everything to everyone' value foundation.  That is the big appeal to me.

I'm not worried that a failure in a given sidechain will rub off on Bitcoin.  If anything I think that people will see that with sidechains,  failures are not catastrophic to Bitcoin proper.  I'll bet that there are a lot of people who are, like me, deeply concerned that Bitcoin itself is a single point of failure and efforts to grow it into the single currency for the world's masses are almost certain to trigger one failure or another and more likely than not a catastrophic one.

I'm looking forward to the new worlds that will open up as various sidechain efforts occur, and I hope to eventually use some of them for things I cannot do with Bitcoin right now, but that's pretty secondary.

Perhaps cypher's concern is that everyone moves their BTC over to the sidechain, then the sidechain fails in such a way that it's not possible to reconvert them to BTC, and the whole Bitcoin ledger is destroyed.

let him (brg444) answer since he's the resident shill.

so, remember that the working example here is one where we have a Bitcoin fork plus perfect anonymity added on top as an innovation.  i believe the vast majority of BTC holders value anonymity.  therefore perfect anonymity should be better than pseudonymity.

since that's the case, why wouldn't you then move ALL your BTC into scBTC?

... if a sidechain's feature becomes so obviously superior that the whole market wants it then it is much more likely this feature is implemented into the Bitcoin main chain, either as a soft fork OR a hardfork. This makes much more sense for every market participant than having them all switch to the sidechain. In that scenario, hard fork are still a very tricky proposition but with the help of experimentation and beta implementation within a sidechain, the risk is considerably mitigated and consensus much easier to obtain.

I tend to think this is a bit unlikely, though, simply because I can't see "everyone moves their BTC over to the sidechain" until it is absolutely solidly established that it is no more dangerous than Bitcoin is. That could take years, if it ever happens.

wonderful.  so we (you) have concluded that a rise in the price of scBTC relative to BTC AND a movement of significant #'s of BTC into scBTC would be validation that a SC is working.

so, remember that the working example here is one where we have a Bitcoin fork plus perfect anonymity added on top as an innovation.  i believe the vast majority of BTC holders value anonymity.  therefore perfect anonymity should be better than pseudonymity.

since that's the case, why wouldn't you then move ALL your BTC into scBTC?

Perhaps cypher's concern is that everyone moves their BTC over to the sidechain, then the sidechain fails in such a way that it's not possible to reconvert them to BTC, and the whole Bitcoin ledger is destroyed.

To fully comprehend whether this is a concern requires some terminological cleanup. I think there's a basic misguided focus in the term "sidechain." It's not the chain but the peg that matters.

Imagine if Counterparty had delayed their launch a year. Instead of proof of burn where provably destroying 1 BTC gave you 1200 XCP, they set up a 2-way peg where locking 1 BTC gives you access to 1200 XCP (and the reverse: locking 1200 XCP gives you access to 1 BTC) in perpetuity. Why does that make XCP a "sidechain," whereas proof of burn makes it an "altcoin"? The key thing that's happening is some assets are being pegged to bitcoins. Insofar as the market was confident that you could always very easily convert between the two, forever, at 1 BTC = 1200 XCP, the price of 1200 XCP should be very close to 1 BTC. If someone sent you 1200 XCP, after all, you could easily convert them to 1 BTC and sell them for the same amount of dollars as if you had held 1 BTC from the start (and vice versa). So in theory you should be agnostic about which form you get paid in, and wallet software may not even show the end user which currency they are technically holding, i.e., whether they have 2 BTC or 2400 XCP, since it can be converted any time depending on the user's needs.

Now let's suppose everyone but you converted their BTC to XCP. You are the last BTC holder. Assuming convertibility remains, miners would still mine BTC for the block reward - since they could simply convert to XCP and sell for fiat. And you could still convert at any time. Theoretically your investment would never be at risk and you would only stand to gain if XCP were better since the value of XCP - and hence to the same degree BTC - would rise. If the peg lasts, the value of you coins can only grow if XCP is all around better.

One might even conceive that it's possible to do this without a protocol change, just using timelocks and one chain as the other's oracle. In the example, a kind of smart contract in Counterparty that issues you 1200 XCP when the oracle (trustless data directly from the Bitcoin blockchain) says that 1 BTC has been locked in a certain way, and similar smart contract in Bitcoin being set up simultaneously that unlocks the 1 BTC when the oracle (data directly from Counterparty's system) says that 1200 XCP has been locked in a certain way.

If it were done that way, it would look a lot more benign, but it may be the same in effect. Or it may not. But it's important to characterize the proponents' side correctly first in order to properly argue about any possible dangerous edge cases and have those arguments be understood by the proponents.

But if some implementation of SC (I do not think SC as idea) become scam or there is a bug then bitcoins may be lost.

I just had a thought. If you wanted to have a sidechain that itself used proof of work mining (peg a PoW altchain to Bitcoin), how could it really work? The miners would have to get paid, and they surely can't be paid in bitcoins so they would get newly issued altcoins. But those particular altcoins would not be convertible to bitcoins,

I don't interpret it that way.

Before you can get your BTC back, you've got to perform burn transaction on the sidechain.

So if the sidechain ceases to function entirely, you have no way to generate the SPV proof that lets you claim your BTC.

Atomic swaps allow transfer to happen without waiting on the peg... a result of this means that a single 2wp transfer can basically exit all the people at once.

It does effectively mean that a sidechain abandoned by miners may end up costing more in transaction fees to exit than you'd like. The situation is much brighter than being left with altcoins no one wants, and also ignores the possible (likely?) existance of altruistic miners that continue to mine along just because.