Topic: One opportunity no one in Bitcoin universe talks about (Read 6151 times)

This is useful case history feedback. I like data. Thanks.

I don't think it would be possible to put monetary value in each side-chain. Naturally the market would want to consolidate value because it reduces risk (except for the long-tail risk such as censorship of one chain, but markets don't usually place much value on long-tail risk).

Rather I advocate the programmable aspects be in side-chains, and be paid for with the main chain economic unit. The miners will mine them because they are incentivized with payment on a competing basis. This reduces risk of otherwise forcing all miners to process all experiments in programmability.



Yes these are important functions of a programmable block chain.

Bitshares actually started out as groups competing application-specific blockchains but all minor chains were abandoned in favor of pushing BTSX (branded just "BTS") adoption to get bitUSD network effect.

BTS delegate nodes provide a way to create ephemeral bridges between distinct chains while letting each retain their sovereignty.

Realistically the application-specific chains that should emerge soonest are voting and DNS which both have BTS sidechain projects already underway.

Merged-mining was my recent idea of how to do the programmable block chain correctly, not Ethereum nor Bitshares.

how do side chains fit in to this scenario of derivatives

Well it is mutual. I think you are fools. And one side will be doing the laughing at the end.

let's not pick on the guy, he just wants some good conversation / debate.

Seems I have to bring this out of retirement:

*Disclaimer* This is an AnonyMint UnunoctiumTesticles thread likely to contain unrealistic and purely hypothetical scenarios that may be closer to fiction than any semblance of reality, along with false logic and copious amounts of clutching at straws.

Every single sentence in this post is so profoundly daft that I think UnobtaniumBollocks might actually be a real life economist.

Yes, that's the logic short circuit that he can't seem to see "OMG banking system has huge faults which make it inevitable it will blow up any time..blah blah.. blah.. lets replicate them in detail in bitcoin."

Where the blah blahs are ever decreasing circles of irrelevance devoted to trying to confuse people with average IQ into reverence for his fantasy rooted "superior knowledge".

I can't believe he's ever been in charge of anything more consequential than a mail cart by the way he can't put forward a concise, well delineated proposal. What we get is a halfassed vague solution that he spends the next several pages scratching up badly defined and dubious problems for it to solve.

If you don't present a suggestion for improving bitcoin in a way that can't be easily implemented, you will face a "reality rejection wall" from bitcoin fans.

OP you should really look into Bitshares, we are addressing the fact that basic financial instruments on a blockchain are both beneficial for everyone involved and critical for widespread adoption.

Fools don't understand that we would have radically reduced level and efficiency of farming without derivatives.

It is not about cramming artificial value, rather businesses can't function without derivatives.

Anyone who disagrees has never run a large corporation.

Everyday you use a derivative. It is called the dollar or Euro. Your unit-of-account protects you from exchange rate timing risk, which enables you to budget and plan.

Shorts provide liquidity to the market (because they have to cover, i.e. buy back in) that prevents waterfall panic crashes and enable price discovery (valuation) to be less volatile.

Your first problem there is that you seem to believe there is any meaningful difference between government and the banking system. Your second is your belief that convoluted imaginary structures to facilitate the breeding of yet more paper currency out of existing paper currency while bleeding the general population dry are 'good and needed.'



Think about this paragraph for a minute. "Let's cram shitloads of (someone elses) money into something without making it worth any more, so we can gamble with much bigger amounts!" 

Deratives are OK? Really? What is your opinion on deratives which toy with the global foodmarket, still ok?

It's sad that 6 years after financial crisis people still blame imaginary objects for problems. The problems aren't derivatives, the problem is the government, but the main problem is YOU who believe in every shit someone tells you about. Governemt is their to create moral hazard and lure people into hell.

Derivatives are OK, they are good and needed in this world. Peoples and companies need to hedge to save their asses from unexpected things.

One has not fully grasped the stupidity of the the whole financial sector until one has understood derivatives. It's howling mad nonsense like derivatives that are responsible for the current worldwide economic shambles.

I am respectful to those who accord me the same respect. You can review the following threads which immediately preceded this one, to ascertain how I was disrespected which induced me to give a warning this thread about spewing hatred and ignorance (the two seem to go together, and you are an example because your ignorance of what transpired causes you to spew inappropriate hatred).

https://bitcointalksearch.org/topic/is-bitcoin-good-enough-there-arent-critically-important-improvements-needed-880088

https://bitcointalksearch.org/topic/decentrally-mined-currency-has-failed-so-far-877398

The fact that you think holding some knowledge makes you better then N00bs, is hilarious, you were one too, show some fucking respect to others...

Thank for those who have more knowledge about derivatives taking the time to make some explanations. Admittedly my patience was too short to elaborate sufficiently.

It doesn't really matter that some people are ignorant of the utility of derivatives, because they will always gravitate to what is succeeding.

And derivatives boost the ecosystem by orders-of-magnitude, because a large portion of the business world can't participate without them. No hedging, sorry they can't do Bitcoin.

well explained, thank you.

No financial or advanced economic system can function without derivatives. I suspect that what you're alluding to is *toxic* derivatives which are obviously a special case. But most uses are genuine and essential to the smooth running of the world. Derivatives weren't invented for speculators, they were invented for real world uses:

 - if a motor car manufacturer wants to source materials months in advance and have their production line come in on budget so they purchase materials futures contracts to lock their budget prices in and enable them to plan a pricing strategy that's less exposed to fluctuations in cost of manufacture

 - then they want to hedge their future export sales against foreign devaluations so they purchase currency swaps to offset their losses in that event

The examples are endless - not least the entire insurance industry which is designed to spread risk amongst society so that the misfortune of the few are borne by the many.

It's not the *use* of these things thats a problem, it's the *abuse*.


Again - there's nothing wrong with the credit creation process - it's needed to absorb fluctuations in the GDP of the economy. What happens if there's a bumper coffee crop in Brazil one year and their GDP takes off but there's no spare liquidity in the financial system to accommodate it without massive price inflation ?

What you're alluding to here is *ridiculously over-levered, centralised, fractional reserve credit creation* which is obviously prone to collapses and losses.

An equally useful but much more sane version of the credit creation process is now emerging in the crypto-currency world smart contracts world such as the Bitshares example I cited above.

What happens there is that holders of Bitshares are able to borrow new assets into existence - such as BitUSD - but they have to put up twice the collateral of their shares to do so. So lets say I am a Bitshares owner and I want to provide liquidity for the booming Brazil coffee market. I can for example:

 - lock up $1 million of my Bitshares on the blockchain
 - borrow half a million new BitUSD dollars into existence backed by that collateral
 - sell the BitUSD it into the economy
 - as the economy grows and adoption of this blockchain-based liquidity increases the BitUSD value stays pegged to the dollar but the value of my Bitshares increases
 - if I think the coffee season's over and it looks like demand for dollars is going to go down, I can buy back my BitUSD and repay the loan to the blockchain thereby extinguishing that liquidity from the economy as it's no loger needed

If it worked out then everybody has gained:

 - the coffee traders got the liquidity they needed to grow and transport their products to market without having to charge extortionate prices for it and make themselves uncompetitive

 - I got compensated for the use of my collateral by means of its associated accrual in value