Topic: Gold collapsing. Bitcoin UP. - page 838. (Read 2032266 times)

Maybe I should have said expire.  So you are saying the exchange rate can cease to exist after a certain time/block N for the entire side chain?  Or, once you convert a coin, that coin cannot be exchanged back after a certain time/block N?

Not sure I follow. If there's no way to move bitcoin to the sidechain, the arb channel is closed, and bitcoin cannot benefit from increased purchasing power of the sidecoin. This is only relevant after all the sidecoins have been created/unlocked/whatever. Is that what you mean by "matured"?

Then I suppose bitcoin would be lost, only affecting users of the side chain.  Arb could still be done with micros that hadn't matured.  As long as the exchange rate is deterministic and not stochastic.

tvbcof, can you take the tinfoil hat off now?

Sidechains may work brilliantly, and deliver lots of 2.0 applications, but this tech will not appear overnight. What is the point of star-ship Enterprise quality sidechains working off the MySpace of cryptocurrency?


Absolutely.

No matter how good SC are, they are not a substitute for allowing the existing system to scale at the rate of the slowest improving computing technology: bandwidth.

What if the exchange function specified that after time/block N, the exchange rate is 1 BTC = 0 Micros ? No more arb.

Not to be pedantic, but the point is that the exchange rate can be defined by "any deterministic function". Seems to me that there are probably many classes of deterministic functions which could prevent value from moving back to bitcoin.

That is a bold assumption, pun intended.  If I had a satoshi for every time someone said the price of bitcoin could go to 0, then I would be rich... as I said before, if the technology of SCbtc is that great, then it deserves to win.

No that doesn't work once all the BTC are converted. The only ones you could possibly find to buy for conversion would be newly mined coins, and miners would have no reason to sell them to you. They can just convert themselves (which is what they would do).

The arbitrage you is exactly what would happen, but it would quickly convert all the BTC until there were none left, then the main chain would simply die (other than for mining purposes).

Arbitrage.  For example:  All 1000 bitcoin are transferred and micros increase in value to the point that:

1 million micros = $800
1 bitcoin = $400

Anyone wanting to arb this spread can sell 1 million micros for $800, buy 1 bitcoin for $400, pocket $400, convert that 1 bitcoin to 1 million micros, rinse and repeat.  Most likely, one billion micros will never be in circulation at any point in time because of arbitrage.

if i were setting up a SC, i'd just fork Bitcoin, add an anonymity function, then let it run.  there'd be a good chance i could get a full on rush into my SC.

Sidechains seem to have no downsides for Bitcoin that I can see, and solve a bunch of really thorny problems.  As long as they are defensible it should have huge value for a greatly expanded Bitcoin userbase.  Probably for us BTC hodlers as well in monetary terms as well as for more philosophical aspects.  Some sidechains could be totally 'licensed' to the government's satisfaction so all of the big names could jump on board.

My guess is that there will be some who try desperately to yank out Satoshi's 1MB cap ASAP before it's to late.  As long as the cap is in place the system will be much more difficult to subvert or monopolize and that has been driving some clued in people crazy for as long as I've been watching things.

Yes there is reason to convert back.  You sell the scBTC at a profit and take the profit and buy more BTC to convert.  Rinse and repeat.

Cool a speculation thread with people talking about SC, I read the paper the other day and almost cried. This is truly a thing of beauty, I remember writing on my notes: 21Million BTC | ∞  SC Assets

Alot of smart people working on that team/with, likely he has been involved at some stage unbeknownst to all or most.

That sound pretty legendary dude

Are these statements actually true? You are both assuming that bitcoin is perpetually transferrable to the sidechain at some perpetually fixed exchange rate.

But, IIRC, the Blockstream crew said in the AMA that the exchange rate can be "any deterministic function", with the constraint that no more BTC can get transferred back to the bitcoin blockchain than got transferred out to begin with. That basically means anything. The rate can change with time, or any other input...as long as it's deterministic. For example:

Say a microtransactions sidechain is developed with a fixed supply of one-billion Micros, and an exchange rate of 1 BTC = 1 million Micros. That means that 1000BTC *total* will ever be able to move to the sidechain. Say the sidechain is very successful; ie, Micros work really well and start to gain a lot of real-world economic traction and value. So the 1000BTC gets transferred over.

Now say that Micros continue to see more use. Their purchasing power goes up, but this has no effect whatsoever on the purchasing power of bitcoin because the max has already moved in. Now all we have is another alt that *used to* have an easy decentralized way of buying it with bitcoin.

I'm frankly struggling to see how sidechains are anything more than an optional decentralized exchange mechanism between BTC and alts.

Based on what evidence


Evidence?

Why would this make any difference?

He'd need to prove his case to, just like everybody else.

People would certainly buy BTC if scBTC were worth more, but only at something less than the scBTC value in order to convert it and make a profit. There would be no reason to convert back, since you couldn't do that profitably and then sell to someone who wants to buy-and-convert, and no other demand would exist.

An objectively better chain would certainly rapidly replace an objectively worse one.

What would be peculiar in this case is if it happens while mining rewards still exist, since under the proposed side chain scheme, those are permanently tied to the main chain. In that case people will mine BTC solely for the purpose of converting it. There would be minimal transactions on the main chain (just conversions), so rewards would be the sole reason to mine. They would also merge mine scBTC for the transaction fees.

Once rewards go away, mining on the main chain would stop, and mining for fees would only happen on the side chain. A few stragglers might mine themselves (at relatively low difficulty) in order to process their own conversion transactions, or possibly everyone (other than lost coins) would have already converted.

(I don't believe mining-for-fees is workable, but that's independent of side chain vs. main chain.)

I feel you and I agree with you.

That would only work if ALL users decided to move to SCbtc and no user wanted to buy BTC under any circumstances, even with spreads in the thousands of dollars or more.  If the tech were that far superior then SCbtc deserves to win out.  In reality, there will most likely be debate over which system is better and not all users will convert, resulting in normal arbitration.


Most likely processing power would leave the main chain and fees would stay relatively sane because at some point users would refuse to pay the fees.

No the correct equation is BTC == scBTC + riskOfConversion - added value of being able to buy coffee with 1 second blocks.

The market will determine the difference in value. Given convertibility the difference, +/-, will be small or the side chain (or possibly the main chain) will be abandoned, at which point there is no theoretical bound on the price. (Convertibility in theory doesn't matter if you run out of coins to convert.)