Topic: Gold collapsing. Bitcoin UP. - page 839. (Read 2032266 times)

Two thoughts:

What would Satoshi think of sidechains?

(Hint: I suspect he likes them ... )

What if someone(s) involved with Blockstream is Satoshi?

Now it is all out in the open, like the source code, which for sidechains, does not even exist yet.

the SC doesn't have to be rogue.  it just has to be better.

once it's determined the SC is better, the scBTC become more valuable than BTC.  the arb can't work b/c the SC chain is superior and therefore the scBTC are worth more than the BTC. those who moved first will be in a better position. once other BTC holders detect this, they will start to migrate to scBTC.  but the catch is:  there's a cost to do so. mining fees.

once miners detect this migration they will raise their fees to extortionist levels. they have to b/c accepting a devaluing BTC is risky. 

the reason this is more dangerous than simple altcoins is that you're building a system where there is a temptation for miners to merge mine these SC's thus providing them with the security they need to get up and running.  we know from Peter Todd that Hill has been aggressively attempting to get mining pools to support SC's.

Why don't miners jack txn fees today?  Its actually a small "issue" in the protocol.  Miners that search for a zero txn block have a tiny advantage.  But miners would not want to block movement from BTC to SCBTC.  It can only enhance the value of BTC since a BTC is convertible to an SCBTC at any time (and back).

Aside: This idea of a "rush" to scBTC does not make sense.  People "rush" to get a better deal.  But the deal will always be the same, so no need to rush.


But this "pre-mine" will be visible on the sidechain.  So I suppose if you want to move your BTC to a chain that is not fully backed that is your choice.  But no matter what happens you'll never be able to move more BTC back the the bitcoin blockchain than was put in because remember BTC is not actually "moved" it is "locked" on the bitcoin blockchain.



It depends on what you mean by "hurt".  Remember Peter R and how he was saying that the true value of BTC is the memory -- the blockchain history.  And so he was threatening to fork any altcoin project and "pre-mine" it to exactly match the bitcoin blockchain.

Sidechains will preserve the bitcoin "memory" -- the value of the blockchain history.  This will happen because you can move value on a N for M (constant) basis from the bitcoin blockchain to the sidechain, so the value ON the bitcoin blockchain will always be relevant.  In contrast, a wildly successful altcoin (personally I don't think it'll happen, but if it could happen on a sidechain it could happen on an altcoin) would drain value from the bitcoin blockchain.

Yes, a wildly successful sidechain could "hurt" bitcoin in the sense that the # of transactions on the bitcoin ledger goes down (moved to the sidechain).  But I don't classify this as "hurt".  In fact, some would see this as an advantage.  Bitcoin could hold huge value denominations of coins (1 or 2 BTC :-)) more safely than the high transaction speed, application specific side-chains.  And note the bitcoin will be a popular mining destination for our lifetimes at least because of the block reward -- every BTC mined is exchangeable N for M with scBTC on the sidechain.

Yes it is.  BTC and SCbtc are not necessarily fungible because they are on separate chains with separate tech and the market may value them differently.  The spread I gave was wide to illustrate the point.  Spreads will likely be much smaller.

+1

This is not even a possibility.

500$ in BTC = 500$ in SCbtc.

scBTC has almost same value as BTC (but there is little more risk. BTC == scBTC + riskOfConversion )

Here is your arb channel:

BTC -> SCbtc ->USD -> BTC

rinse and repeat


So if BTC=$500 and SCbtc=$1000:

I buy BTC for $500, convert to SCbtc, sell SCbtc for $1000, pocket $500, take the other $500 and buy BTC that can then be converted to SCbtc and be sold for $1000, ect, ect, ect


As you said, the waiting periods and tx fees come into play.

I'm sorry but it is not a plausible scenario.

This is open source software. Even considering stealth development of a rogue sidechain, the moment they commit the code to a sidechain, the code is out there for everyone to see.

You propose that once this happen, the traction and network effect of this sidechain is so fast that Bitcoin core can not adapt in face of a supposedly paradigm shifting implementation of crypto. Again, I'm sorry but this is a losing bet.

There is already ENORMOUS money to be made by Blockstream while behaving in a community-minded, responsible way. Surely Hill is not trying to rule the world. Imagine Blockstream becomes some kind of RedHat for Bitcoin. Well my guess is he doesn't even dream of this measure of success.

The economic interest you are putting forward in your previous post is a considerable RISK considering the open source aspect of crypto. They stand to lose their credibility, their carreer, and more if they even attempt such scheme. In reality, apart from a couple more million in their bank account, there is NO incentive for anyone in this group to behave like you suggest. Considering they already stand to make millions by having a stake in and improving the Bitcoin economy your scenario is a most farfetched one.

If you are talking about a 1:1 peg I don't see this, really. If it persists then people will just flee the SC and it will become irrelevant (absent some short term uses like paying for coffee perhaps).

If you are talking about a non-1:1 peg then it isn't clear to me that scBTC need necessarily be worth less than BTC. For example scBTC could pay dividends in some non-convertable asset.

They cannot "pre-positioned themselves in some pre-existing SC asset"
a) scBTC have less value than BTC
b) they have advantage in building scAssets infrastructure (this is part, they can make lot of money)

i've given you a very plausible path to a scenario that could hurt Bitcoin.  you can choose to hand wave it away, but i know human nature and if there is money to be made, ppl will go for it.  especially since they are in a for-profit company with a financial guy like Hill.  that's not a personal knock against him; it's his job to go for it.

this thread isn't for sticking your head in the sand.  we flush things out here.

I agree with the principle of it, but in practice it would be hard to increase the amount of fillibustering.

EDIT: To be fair over at least the past six months the conflict has already existed in secret, so perhaps one could argue that that the status quo is not a good baseline. But this state of things goes back for years really.

but you haven't addressed JR's complaint in this scenario.  b/c 5 of the devs who can commit (2 of which can write)  are part of Blockstream, they have a financial incentive to perhaps surreptitiously dissuade thru fillibuster any SC innovations that might ported to Bitcoin Core while continuing to nurture the SC. the economic interest to do this would be if they pre-positioned themselves in some pre-existing SC asset.  and you would never know since ownership would be anonymous.

my point is you can't just say "they would never do this".  history is riddled with such flawed reasoning.

that's right. sidechains are essentially a laboratory of innovation akin to altcoins but supported by and supporting Bitcoin's network effect

I've avoided it for the reasons I have stated : I cannot envision that scenario unfolding.

The ONLY killer function you could add is indeed, anonymity. And by killer I mean it would steal part of Bitcoin's market share but nevertheless you would still be left two economies : a white market and a black market.

Of course their value will not be the same because the sidechains in effect are apart of Bitcoin's economy. The value of Bitcoin will be represented by the value of all sidechains combined and of the standalone BTC blockchain.

It seems you are putting forward a scenario that has mostly been dismissed ever since it existed from the presence of altcoins only because of your pessimism about sidechains.

Using SC, bitcoin can adapt ANY feature instantly. Bitcoin can test this feature in sandbox (SC) and make result
a) must to have -> feature is implemented
b) nice to have -> let's wait we will see latter, SC works good
c) scam -> feature RIP

It is one of 1,000 ...  advantages of SC

that's true but then why should we duplicate that exposure via SC's?  in fact, this is worse b/c of all the other conflicts of interest involving core devs i've mentioned in this discussion.

you've avoided my question though.

besides, if you've ever did controlled studies, the best way to implement one of these SC's is to duplicate everything about Bitcoin and then add one killer function/variable, like anonymity, to definitively prove a difference.  that's the whole purpose of these SC's as Erdogan says above, to create better features.  and since both BTC and scBTC will be traded 24/7 they will reach their equilibrium values which WON'T be the same as the chains are by design different.  your above theory of equal value doesn't apply b/c of mining fees to convert.

in fact, if there is a rush to get out of BTC and into scBTC, miners are going to HAVE TO charge extortionist tx fees b/c it would be clear that BTC will be going to zero so their risk of mining an SPV proof while being paid in BTC is high.

I guess I'll reread the paper again and skim a bit less the third time.

In any case, there is no economic reason exercise such a call option. You'd have to fear the main chain failing catastrophically.