The comparison would be if everyone lost their private keys. That'd pretty well kill Bitcoin the ledger as it stands.
If just some people lose coins locked in sidechains, I agree that's not a problem. Investor beware, as with anything new an experimental.
Topic: Gold collapsing. Bitcoin UP. - page 822. (Read 2032266 times)
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.
Probably not else he would not have studiously ignored my question about how that differs from one simply losing a private key in Bicoin which has happened a zillion times already. Bitcoin designers saw no reason to address this 'weakness' because, in simple terms, it is no big deal.
This is a little different: It's like people switching over to a "better" alter-ego of Bitcoin only to realize they made a grave error and all their money is lost, destroying confidence in Bitcoin and ruining the ledger that has been built up over the all these years. We'd have to start from scratch, which isn't the end of the world but it's a lot worse that just losing some private keys. 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.
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.
Probably not else he would not have studiously ignored my question about how that differs from one simply losing a private key in Bicoin which has happened a zillion times already. Bitcoin designers saw no reason to address this 'weakness' because, in simple terms, it is no big deal.
This is a little different: It's like people switching over to a "better" alter-ego of Bitcoin only to realize they made a grave error and all their money is lost, destroying confidence in Bitcoin and ruining the ledger that has been built up over the all these years. We'd have to start from scratch, which isn't the end of the world but it's a lot worse that just losing some private keys. 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.
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, in spite of any so-called 2-way peg, or if they were perfectly fungible you would still end up with whatever percentage of the coins that had been mined constituting an inconvertible set of coins.
That is, say you kickstarted a new, clean-slate version of Monero by setting up a peg where locking 1 BTC brought 500 XMR into existence for you to hold, and locking the 500 XMR would release the 1 BTC back to you. But to keep the chain secure, you also set of PoW mining that issued some number of new XMR for each solved block. Now let's say at some point in time a million XMR have been created by locking BTC and a million have been created by mining. In the event that half of these XMR were converted back to BTC, there would be no more BTC to unlock, so the rest of the XMR would be inconvertible.
This means the 2-way peg only covers as much XMR as is created by BTC-locking. Not all XMR are finally convertible to BTC.
What are the implications of this? For one thing, it seems that mining for the sidechain would not really benefit from Bitcoin's network effect except insofar as - and for as long as - plenty of BTC were locked into that chain. If there were relatively few BTC, miners (and perhaps anyone who didn't have an immediate, pressing, get-in-and-get-out-quick use for XMR) would race to convert their XMR to BTC while there were still BTC up for grabs at the peg rate.
Actually, it depends on whether locked BTC can only be reclaimed by the original locker. If they can be reclaimed by anyone and the XMR are perfectly fungible, then things get quite dicey as you can't even be sure you get your BTC back (despite the peg!). However, it may be that locked BTC can only be unlocked by whoever locked them, in which case maybe you might get miners making deals with BTC lockers for their coins. However, in that case again there might be little or no benefit from Bitcoin's network effect, since the miners couldn't directly convert their block rewards for BTC in general anyway.
/cursory thoughts, there a lot of variables to consider here
That is, say you kickstarted a new, clean-slate version of Monero by setting up a peg where locking 1 BTC brought 500 XMR into existence for you to hold, and locking the 500 XMR would release the 1 BTC back to you. But to keep the chain secure, you also set of PoW mining that issued some number of new XMR for each solved block. Now let's say at some point in time a million XMR have been created by locking BTC and a million have been created by mining. In the event that half of these XMR were converted back to BTC, there would be no more BTC to unlock, so the rest of the XMR would be inconvertible.
This means the 2-way peg only covers as much XMR as is created by BTC-locking. Not all XMR are finally convertible to BTC.
What are the implications of this? For one thing, it seems that mining for the sidechain would not really benefit from Bitcoin's network effect except insofar as - and for as long as - plenty of BTC were locked into that chain. If there were relatively few BTC, miners (and perhaps anyone who didn't have an immediate, pressing, get-in-and-get-out-quick use for XMR) would race to convert their XMR to BTC while there were still BTC up for grabs at the peg rate.
Actually, it depends on whether locked BTC can only be reclaimed by the original locker. If they can be reclaimed by anyone and the XMR are perfectly fungible, then things get quite dicey as you can't even be sure you get your BTC back (despite the peg!). However, it may be that locked BTC can only be unlocked by whoever locked them, in which case maybe you might get miners making deals with BTC lockers for their coins. However, in that case again there might be little or no benefit from Bitcoin's network effect, since the miners couldn't directly convert their block rewards for BTC in general anyway.
/cursory thoughts, there a lot of variables to consider here
https://twitter.com/M_Gauche/status/526849966674026496
Quote
James King @M_Gauche
Calling it right now: #Bitcoin will be irrelevant in 5 years. Cash out now to beat the rush. cc @balajis
Calling it right now: #Bitcoin will be irrelevant in 5 years. Cash out now to beat the rush. cc @balajis
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.
Probably not else he would not have studiously ignored my question about how that differs from one simply losing a private key in Bicoin which has happened a zillion times already. Bitcoin designers saw no reason to address this 'weakness' because, in simple terms, it is no big deal.
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.
...
...
'Terminological cleanup'? How about 'basic critical thinking'?
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).
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.
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.
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).
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.
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.
let him (brg444) answer since he's the resident shill.
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.
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.
ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not? for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
Correct, stability in their correlation could be one indication of a well designed and useful application.
As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.
Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.
If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.
Like all things BTC, it is a matter of trust.
and you may not have the luxury of a practical example.
for instance, one of the first SC's i'd expect to pop up is a SC with perfect anonymity added as an innovation to a simple fork of Bitcoin with no initial coins and a 1:1 peg in place to accept incoming transfers of BTC to scBTC.
the question for you is, what if you saw significant #'s of BTC start moving into scBTC, what would you conclude?
I would conclude the market has voted in favor of such a sidechain and with time, would feel comfortable using it?
Where are you trying to lead me? Stop beating around the bush
Funny but my first conclusion (when I first read about SC) was foundation members past and present laundering stolen coins.
Like all things BTC, it is a matter of trust.
FTFU: like "investing in" all things "related to" BTC, it is a matter of trust.
With BTC as complicated as it is you have to trust no one but the miners and society to work in their best interest, regards of everything else. And all actors define what their best interests are, it's still experimental, and way too early to mess with, we still don't know if it'll work on a large scale.
I am not supportive of changing that at the protocol level, ie. miners supporting and enforcing protocol rules defined by the interests of others. At the moment it's the node / protocol programmer, under guidance of for profit vultures capitalists, debating changes to leverage the work done by the miners. SC may have value but I'm not keen to see the Bitcoin formula messed with until it has some serious market traction.
ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not? for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
Correct, stability in their correlation could be one indication of a well designed and useful application.
As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.
Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.
If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.
Like all things BTC, it is a matter of trust.
and you may not have the luxury of a practical example.
for instance, one of the first SC's i'd expect to pop up is a SC with perfect anonymity added as an innovation to a simple fork of Bitcoin with no initial coins and a 1:1 peg in place to accept incoming transfers of BTC to scBTC.
the question for you is, what if you saw significant #'s of BTC start moving into scBTC, what would you conclude?
I would conclude the market has voted in favor of such a sidechain and with time, would feel comfortable using it?
Where are you trying to lead me? Stop beating around the bush
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?
i disagree.
when Satoshi created Bitcoin, a BTC was worth $0. there was literally nothing to warn us about.
when Maxwell proposes a technical change to the source code of a market worth $5 Billion, i think heshould be expected has a duty to warn us of all possibilities, negative or not.
you and i may be able to distinguish what's going on here in terms of a potential SC failure, but certainly the avg investor might not be. and simply b/c there will be a market price for scBTC, one can assume uneducated investors will be tempted to buy them on an exchange.
when Satoshi created Bitcoin, a BTC was worth $0. there was literally nothing to warn us about.
when Maxwell proposes a technical change to the source code of a market worth $5 Billion, i think he
you and i may be able to distinguish what's going on here in terms of a potential SC failure, but certainly the avg investor might not be. and simply b/c there will be a market price for scBTC, one can assume uneducated investors will be tempted to buy them on an exchange.
Fair enough.
Although I don't see exactly how the danger differs much from altcoins. I also fail to see how GMaxwell warning the community of the dangers of sidechain scam will stop scammers from creating them and suckers from investing.. but yes maybe they should have been more straightforward regarding this possibility.
thank you.
Maxwell has great standing within the community. if the community were to listen to anyone, they would to him. an open and honest warning from him would go a long way to helping us justify his desire to profit from the entire SC proposal. anything less than that justifies guys like me talking.
and of course, scammers are going to be creating SC's left & right with a variety of deterministic pegs which invalidates the claim that SC's will somehow kill off altscams.
ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not? for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
Correct, stability in their correlation could be one indication of a well designed and useful application.
As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.
Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.
If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.
Like all things BTC, it is a matter of trust.
rofl. isnt there enough malicious intents on bitcoin itself already?
ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not? for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
Correct, stability in their correlation could be one indication of a well designed and useful application.
As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.
Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.
If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.
Like all things BTC, it is a matter of trust.
and you may not have the luxury of a practical example.
for instance, one of the first SC's i'd expect to pop up is a SC with perfect anonymity added as an innovation to a simple fork of Bitcoin with no initial coins and a 1:1 peg in place to accept incoming transfers of BTC to scBTC.
the question for you is, what if you saw significant #'s of BTC start moving into scBTC, what would you conclude?
I would conclude the market has voted in favor of such a sidechain and with time, would feel comfortable using it?
Where are you trying to lead me? Stop beating around the bush
Lets say we have a 1:1 sidecoin with properties that is good for microtransactions. To simplify, first consider the sidechain to be a company, where customers are the news suppliers, who should receive the money, and the readers, who should pay the money. In this first model, the company must be trusted. A reader sends amount-a to an address addr-a controlled by the company. We call it tx-a. Microtransactions ensue with multiple customers, and at some later time, the company sends addr-a containing amount-a to a new address controlled by the receiving news source.
The bitcoin protocol is ok with this, as long as all transactions are valid.
Now we enhance the example, where the company is replaced by the sidechain. The sidechain logic must create a receiving bitcoin address where the unlocking key is known by noone, and at the same time create a sidecoin address where the unlocking key is given to the news reader in the example. Microtransactions ensue, and after a while a news producer has the amount-a in the form of sxBTC. He then wants to destroy the scBTC and receive his BTC. Let's just say it is a corresponding amount, it makes the example easier.
The problem of the sidechain logic is now to construct the hidden unlocking key of the output address addr-a of tx-a or another tx with the same amount. A new bitcoin transaction is created with address-a as input, and with a news-producer address as output. So seen from the bitcoin blockchain point of view, this is only two normal transactions. It has to be so, because bitcoin can not contain rules to validate transactions in the sidechain, that would be the same as extending the bitcoin protocol with the sidechain funtionality.
Is it possible to hide the bitcoin unlocking key in the sidechain like this? That is the question.
The bitcoin protocol is ok with this, as long as all transactions are valid.
Now we enhance the example, where the company is replaced by the sidechain. The sidechain logic must create a receiving bitcoin address where the unlocking key is known by noone, and at the same time create a sidecoin address where the unlocking key is given to the news reader in the example. Microtransactions ensue, and after a while a news producer has the amount-a in the form of sxBTC. He then wants to destroy the scBTC and receive his BTC. Let's just say it is a corresponding amount, it makes the example easier.
The problem of the sidechain logic is now to construct the hidden unlocking key of the output address addr-a of tx-a or another tx with the same amount. A new bitcoin transaction is created with address-a as input, and with a news-producer address as output. So seen from the bitcoin blockchain point of view, this is only two normal transactions. It has to be so, because bitcoin can not contain rules to validate transactions in the sidechain, that would be the same as extending the bitcoin protocol with the sidechain funtionality.
Is it possible to hide the bitcoin unlocking key in the sidechain like this? That is the question.
i disagree.
when Satoshi created Bitcoin, a BTC was worth $0. there was literally nothing to warn us about.
when Maxwell proposes a technical change to the source code of a market worth $5 Billion, i think heshould be expected has a duty to warn us of all possibilities, negative or not.
you and i may be able to distinguish what's going on here in terms of a potential SC failure, but certainly the avg investor might not be. and simply b/c there will be a market price for scBTC, one can assume uneducated investors will be tempted to buy them on an exchange.
when Satoshi created Bitcoin, a BTC was worth $0. there was literally nothing to warn us about.
when Maxwell proposes a technical change to the source code of a market worth $5 Billion, i think he
you and i may be able to distinguish what's going on here in terms of a potential SC failure, but certainly the avg investor might not be. and simply b/c there will be a market price for scBTC, one can assume uneducated investors will be tempted to buy them on an exchange.
Fair enough.
Although I don't see exactly how the danger differs much from altcoins. I also fail to see how GMaxwell warning the community of the dangers of sidechain scam will stop scammers from creating them and suckers from investing.. but yes maybe they should have been more straightforward regarding this possibility.
ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not? for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
Correct, stability in their correlation could be one indication of a well designed and useful application.
As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.
Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.
If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.
Like all things BTC, it is a matter of trust.
and you may not have the luxury of a practical example.
for instance, one of the first SC's i'd expect to pop up is a SC with perfect anonymity added as an innovation to a simple fork of Bitcoin with no initial coins and a 1:1 peg in place to accept incoming transfers of BTC to scBTC.
the question for you is, what if you saw significant #'s of BTC start moving into scBTC, what would you conclude?
ok, so if i understand your answer, relative market price btwn a BTC and a scBTC will aid in the assessment of whether a SC is succeeding or not? for example, if the price of scBTC is rising and leading the price of BTC, that might be an indicator that the innovation related to the SC is valid?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
second question, would transfer of a "significant number" of BTC to scBTC mean anything to you?
Correct, stability in their correlation could be one indication of a well designed and useful application.
As for your second question, I'm sorry but this is too early to answer considering I have no practical example to consider.
Of course, I would be extremely careful in considering the transfer of a significant amount of BTC to scBTC to as I have stated above this is the same approach I would take with an altcoin.
If the particular sidechain gains traction, offers a particularly interesting use case and has properly implemented code that is vetted by the community, is safe and protected from any malicious intent then if need be I could eventually feel safe doing so.
Like all things BTC, it is a matter of trust.
Speaking of economics (or, more fundamentally, system analysis), one of the biggest issues of sidechains that I see has to do with the latency in exercising the two-way peg.
Sidechains can be assumed to be fairly small in total value relative to the total in BTC. The distribution of wealth in Bitcoin means that there are plenty of whales. If (or when) these folks decide to game things, they might be able to get some interesting oscillations riding on on the various sidechain pegs going.
In order to defend itself a sidechain is going to need to be able to anticipate these potentially significant threats and figure out buffering mechanism to isolate themselves. Those who fail to do so in a proactive manner, or who implement ineffective protections, may be under very unwelcome influences.
The relatively high latency(theorized) of the two-way pegs may act as a natural buffer or be able to be leveraged as such. One way or another I'll be paying some attention to how well the designers of a given sidechain have thought about this nature of attack mode.
You are being really disingenous again.
Did Satoshi warn about the dangers of altscams in the Bitcoin white paper?
and you're just being a shill again trying to discredit anyone who is asking good questions.
what does Satoshi have to do with what i would believe to be an expected
If you return to the AMA I believe there is one instance of one of the devs essentially recognizing the possibility of malicious implementations of sidechains.
My point is this should be obvious to most that are even considering the technology of sidechain at this stage.
A fool and his money are soon parted, whether it's in BTC, sBTC or altscam. There is no reason for Gmaxwell to specifically go out of his way to *disclaim* the possibility of malicious uses of sidechains.
It'd just be a gift from suckers investing in unstable sidechain schemes to the rest of the bitcoin holders. Same as Counterparty's burning of bitcoins for XCP, except with Counterparty it was known that there was no way to get the coins back in the first place.
exactly
i disagree.
when Satoshi created Bitcoin, a BTC was worth $0. there was literally nothing to warn us about.
when Maxwell proposes a technical change to the source code of a market worth $5 Billion, i think he
you and i may be able to distinguish what's going on here in terms of a potential SC failure, but certainly the avg investor might not be. and simply b/c there will be a market price for scBTC, one can assume uneducated investors will be tempted to buy them on an exchange.
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