Topic: Side Chains: The How, The Challenges, And The Potential by Vitalik Buterin (Read 2321 times)

I had not thought about this either, but it is really fascinating. Since the idea of distributing a new altcoin on the basis of Bitcoin ownership has come out, Satoshi has the power to endorse whichever one/ones he thinks are worthy by acting to claim his share of the new altcoin. The instant he acted the new altcoin would explode in value. As you say, that is indeed a tremendous amount of power. I think almost everyone would trust Satoshi's judgment. He should just wait a few more years, then act, if it is necessary.

"The Promise

If the technical issues around side-chains can be addressed, what is the promise that they bring? Right now, cryptocurrency development can essentially be classified into four quadrants. The first quadrant consists of projects that use the Bitcoin currency and the Bitcoin blockchain – essentially, Bitcoin itself. The second quadrant is protocols that use the Bitcoin blockchain but not the Bitcoin currency; Mastercoin, colored coins and Counterparty are excellent examples of this. The third quadrant uses both an independent currency and an independent blockchain; this contains applications like (to take widely disparate examples) Ripple, Litecoin and NXT. Now, with sidechains the last quadrant has also been filled: using an independent network but using Bitcoin as the underlying currency.

It will be interesting to see what applications that niche works best for..."

Really good explanation, I'm glad to have found this thread.
Also, there is no reason to think all alt coins will be obsolete.

I love this type of mental exercise.  I come to similar conclusions as you, but you thought it out much more clearly.  The way I look at it is this.  Why did Satoshi create bitcoin?  Is he satisfied with his creation?  If not, will he still be trying to create a solution to the problem he long ago tried to solve?  Basically, will he be driven to continue to try to solve the problem he started to solve long ago, or will he be satisfied with his half creation?  

I think that Satoshi can be reasonably happy with his creation.  It has done quite well for itself and in that way he can be quite satisfied.  But how satisfied?  Will he be happy with the flaws that have arisen and the direction that bitcoin is going?  I think in someways bitcoin has become a system that in many aspects mirrors the system he hated so much in the first place.  A system that drove him to make bitcoin.  If you read his posts, he is constantly concerned with how things are running.  He reminds me of a genius car mechanic that just keeps on modifying his car, addicted to making it run better in a way.  He hated how the traditional system was running and I think we wouldn't be happy with how bitcoin is running today.  I think it wants something that is 100% decentralized, 100% transparent, 100% safe, something that is very fast, very easy, and very efficient.  Bitcoin isn't that.  I think he loves what he has created, but the mechanic in him greatly wants to see it run better.  To that extent, yes, if a better system comes along and he sees the potential and he wants to go all in, he has the will, the means, the drive and conviction to do so and realistically if he plans it well (and he is a planner) there isn't anything anybody can do about it except follow.  

Satoshi among many things is an inventor at heart.  Inventors don't stop inventing after they get one thing right one time.  Sooner or later an inventor always moves on to the next big thing.

I told it ...I told it, but none listened => https://bitcointalksearch.org/topic/block-mined-with-1-transaction-allowed-551616

Bitcoin functions as both a means of exchange and a store of value.  What I think many people fail to realize is that these are two seperate things: bitcoin as the network of nodes, miners and associated source code is the "means of exchange," whereas bitcoin as the entries in the unforgeable global ledger known as the blockchain is the "store of value."

The free market will naturally choose the best payment network (means of exchange) run from the most legitimate ledger (store of value)¹.  I expect that for the forseeable future, the market will decide:

     best payment network = bitcoin's network
     most legitimate ledger = bitcoin's blockchain

But now let's perform a thought experiment by considering a future where the community no longer perceives that the bitcoin network is the best payment network.  My intent here is to show that it does not logically follow that the community will abandon the most legitimate ledger at the same time--in fact, the economic majority will strongly favour retaining the same ledger as it is already perceived as legitimate and that is where their wealth and records are stored. 

For our thought experiment, consider a Turing-complete system like NXT or Ethereum.  Image somehow that one of these systems demonstrates to the cryptocurrency community that Turing completeness is both highly robust and useful².  So how would this play out?

The community will be overflowing with clones and spin-offs, several of them trying to redistribute value from the blockchain ledger in a way that they perceive to be "more fair."  There will be a great deal of confusion and the market cap of NXT, Ethereum and the clones will be small. 

Let's assume that Satoshi is (a) alive, (b) has all his keys, (c) is a rational individual that works for his enlightened self-interest.  What could he do?

And herein lies the other thing I think many people fail to realize: Satoshi has more economic power than any of us. 

It is in Satoshi's best interest to get behind one of the spin-offs that uses the bitcoin ledger, because he will retain the same % of wealth and the ledger is already perceived as legitimate by the economic majority.  If a certain spin-off looks like it already has a head start, he can get behind that, or he could simply launch his own.  But at some point, there will be discussion in the community that Spin-off Y based on Block XXXXX is preferable.   

Satoshi puts up a bid-wall at say, 1 : 10,000 and a few people dump to him (perhaps those in favour of deleting Satoshi's coins).  He then moves the bid-wall up to 1 : 1,000 and a few more people dump to him (those who favour deleting Satoshi's coins go "all in.")  The rest of us start to realize the dynamics at play.  Spin-off Y is about to become legitimate.

Now every one who didn't dump has a risk-free way to try an increase their percentage of the pie.  Speculators scramble to purchase coins of Spin-off Y and very quickly Spin-off Y becomes legitimized. 

The only re-distribution of wealth was as follows: those who tried to redistribute wealth from "bitcoin whales" by dumping the spin-off the economic majority supported would lose.  Those that realized what was happening and purchased spin-offs from those in favor of re-distribution would gain.  And very importantly, the vast majority of the community who remained impartial and did nothing retain the exact same % of wealth. 

Remember, Satoshi has a lot of coins.  If the "stampede" into Spin-off Y doesn't occur at 1 : 1,000, Satoshi can keep moving up the "peg" until it does.  The longer this process takes, the richer Satoshi becomes and the poorer become those who fought the process in favour of re-distribution.   

Also note that just the fact that Satoshi could do this means that he may not even have to.  We will all do it for him.

TL/DR: The blockchain will be preserved.

¹My definition of the terms "best payment network" and "most legitimate ledger" are not subjective or ambiguous.   I am defining the term "best payment network" to mean the one most adopted by the community, and the term "most legitimate ledger" to be the ledger that actually gets used by the economic majority.

²Something I personally doubt will ever happen.

I agree that bitcoin has a serious mining problem.  I can't really put the blame on the miners.  They are just playing the game set before them.  I don't think the system of bitcoin was designed well enough.  I think bitcoin was designed this way so that it could just be proven that this kind of technology could work.  In the beginning the miners needed serious incentive to mine and maintain the network.  Without them, there would not have ever been a bitcoin.  The catch is now, once bitcoin gets big enough the miners are ruining it.  Too much control with the miners.  Gone are the days when anybody could mine on their home computer.  That is what bitcoin needs, a hard fork and CPU only farming, but good luck with that. 

bitcoin does not have a problem with transaction volume. infact each block is on average only a few percent full. the problem is that people such as Luke JR are trying to hinder the transactions available in these ways

1. forcing people to use new addresses per transaction. to make a new output require listing multiple inputs (excess data which discourages sending out as it incurs higher fee's)
2. adding the satoshi dust limit to stop large transaction volume. imagine if satoshidice was walmart instead. and the devs just cut off walmart from making microtransactions because it filled blocks.
3. mining pool owners do not want transactions as it causes their miners to actually do work. instead they prefer empty blocks.(greed for reward instead of ethics of minings actual purpose)

if mining pool devs stopped with their greedy practices and actually allowed transactions through freely, without excessive fee's or demanding certain criteria. then the blocks would have alot more potential to allow merchants to trade easier using bitcoin.

i see mining as no longer for people to transact between peers, but to being empty blocks where transactions are discouraged by miners, purely for them to have an easy life. imagine it another way. imagine the memory company Crucial, sold 16GB ram. but coded the chips to only allow 1GB of data to access the ram, and then charged a fee for allowing gamers to then access more of the ram chips, by paying a fee per game they wanted the ram to work with.

if only miners seen their purpose in life and actually worked towards that purpose instead of greed then bitcoin would grow more motivation for merchants to adopt.

currently due to the fe being 5c and the satoshi dust limits. the value of bitcoin wont get into the multiple thousands. as those limits prevent measurements of 1c to be transacted.

the fee and dust limit need to be lowered by a couple more decimals (atleast 6 decimals instead of 4) to allow for expansion.

i know i know im going to get replies that these limits are to prevent exploiters trying to DDos the blockchain by sending millions of cheap tx's.. but the point your missing is that the cost of btc is not $6-30 anymore, its $500-$1000 and the cost to ddos has increased atleast 10 fold since the limits were introduced. and as such the limits should now be reduced aleast 10 fold to account for this.

If a bitcoin side chain can be extremely flexible, then there isn't any need for Ethereum.  Ethereum was suppose to answer Bitcoins limitations.  If side chains are developed that are extremely flexible, then there need be no Ethereum.  But lets really see what they are going to do.  Talking a big game, even having a big bank roll is one thing (I am talking about you Mastercoin), but actually delivering on the goods is another. 

ethereum combined with sidechains would be ideal

Great article: http://bitcoinmagazine.com/12349/side-chains-challenges-potential/