Gold collapsing. Bitcoin UP.

[cypherdoc]

Remember I posted /u/rassah's response to my inquiry about what happened to Oleg Andreev in regards to Mycelium? Well, looks like it's catching up to him:

 

[Dusty]

I would do it like ChangeTip do it today.
1. The user send bitcoin to the layer 2 system's bitcoin address and loose the direct control over the funds. (A ChangeTip address, a two way pegged sidechain address, opening a lightning payment channel.)

Not in all layers 2 you lose control of your funds.
In your example you mix two very different "layers": with changetip you hand over your bitcoins to a third party and he may do whatever it wants with them, while with a payment channel you are still in control of them.

The difference is quite big
It's the difference between an IOU and the real thing.

2. The user use that other system to perform transactions. (Give tips, send sidecoins, perform a lightning transaction.)
3. Settle back to bitcoin from the other system (if needed).

Again, while in both cases you have to do settling on the blockchain at the end, the difference lies in how you perform offchain transactions, with full trust of another party, or not.

The conversion from layer one to layer two (and back) is trivial, as bitcoin is programmable money. ShapeShift do this all day long, and you don't have to trust them very much because they hold your cash for a split second. And the day they start to steal, nobody will use them anymore.

Yes, Shapeshift and services like coinbase do it all day along, but you have to trust them, even if for just an instant.
Instead, in a payment channel you never leave the control of your coins to another party, even for a fraction of a second.

The enormous difference between these two different scenarios is the same that passes between the traditional bank system and bitcoin. One is trustless, the other is not.

You have to trust that second layer, just like you trust the bitcoin layer. That's the point.

The point is exactly the opposite, you just have to do your homeworks

Of course a payment channel is just an example of offline transaction system in which you do not have to trust a third party (like coinbase), but ideally with sidechains you can implement many others. And probably other schemes could and will be implemented.

*IF* bitcoin has a way to send its coins offchain and then get them back then people will use bitcoins to use those services, giving value to bitcoin (since they'll need to buy them first), otherwise they'll give value to whatever other altcoin they will be using (for example ethereum, storj, etc).

 

[Peter R]

"*IF* bitcoin has a way to send its coins offchain and then get them back..." -- @Dusty

It's been a year and a half since the sidechain white paper that, in Appendix B, discussed the feasibility of efficient SPV proofs to move sidechain coins back to the main chain. Has there been any progress towards a workable implementation of this? I'm beginning to wonder if non-federated sidechains are actually possible.

 

[Dusty]

Has there been any progress towards a workable implementation of this?

I haven't seen any, that's why I wrote a big "if".
I was told that with new opcodes like op_ctlv and op_csv a two way peg could be implemented in a more efficient way, but I'm not sure this is true.
Any info on the subject is highly appreciated.

 

[Zangelbert Bingledack]

I'm not sure the 2-way peg even makes sense at the conceptual level. Can anyone walk me through an actual example where this both (a) functions as indicated and (b) is useful?

Say you wanted to bet on tomorrow's weather in London in Paul Sztorc's Hivemind prediction market. You lock 1 BTC to produce 1 hivecoin and place your bet. You win the bet and now have 2 hivecoins. You want to cash in your winnings in BTC. How do you get 2 BTC back? I guess you still have the 1 hivecoin that can unlock your original 1 BTC, plus you have someone else's 1 hivecoin that they at some point locked 1 BTC to obtain, so you can use those to unlock that guy's original 1 BTC to send to yourself and now you have 2 BTC.

So far so good, but a 2wp means it is impossible to mine hivecoins as such, because they can only be made by locking up a set amount of BTC that never changes. If hivecoins could *also* be made by mining them, there is no way to ensure the 1 hivecoin you won on the prediction market would allow you to unlock a full 1 BTC, since there would be more hivecoins than locked BTC. Where is the incentive to mine the sidechain? Perhaps there needn't be one?

 

[freetrader]

Recently this image of Bitcoin actual price vs. expected price according to Metcalfe's Law has been circulating: http://i.imgur.com/n7pP5BN.png

I came across an interesting paper titled: "The Flip Side of Metcalfe’s Law: Multiple and Growing Costs of Network Exclusion", which seems relevant to the situation developing with the Bitcoin network (forced fee market, settlement network etc.)

Abstract:

The study of networks has grown recently, but most existing models fail to capture the
costs or loss of value of exclusion from the network. Intuitively, as a network grows in
size and value, those outside the network face growing disparities. We present a new
framework for modeling network exclusion, showing that costs of exclusion can be
absolute, and might, at the extreme, eventually grow exponentially, regardless of
underlying network structure. We find that costs of exclusion can also be spread to the
“included” through several mechanisms such as parallel networks, and we also highlight
how future research needs to capture the interaction of alternate or parallel networks to
the network at hand. Backed by empirical evidence, this will have wide-reaching policy
and design implications, particularly for the role of subsidies or direct intervention for
network access and inclusion.

 

[Christoph Bergmann]

"*IF* bitcoin has a way to send its coins offchain and then get them back..." -- @Dusty

It's been a year and a half since the sidechain white paper that, in Appendix B, discussed the feasibility of efficient SPV proofs to move sidechain coins back to the main chain. Has there been any progress towards a workable implementation of this? I'm beginning to wonder if non-federated sidechains are actually possible.

There is no concept. Rootstock tries with merged mining, but that is inferior secure, like onenames drop of namecoin demonstrated. There have been times when f2pool had 75% of the hashing power of namecoin. Not a good base for trusting sidechains.

The concept of federated chains, be them sidechains or blockchains, seems to be the new best practice. BigchainDB does it, Blockstream does it (with every sidechain that is working), and I'm sure hyperledger will do it. Also Lisk, the new well funded blockchain-startup, enables some kind of federated sidechains.

The only real sidechains of Bitcoin would be forkchains like @rocks is building.

 

[Norway]

@Dusty
With all due respect, I don't think you understand what I'm saying.
First of all. Do you agree that you have to trust the bitcoin system to use it?
If your answer to this question is "No, I don't have to. Bitcoin is a trustless system.", I don't think I can make you understand my point.

I would never use bitcoin personally if I didn't trust in it to some degree.

If you want to use bitcoin (an IOU of bitcoin) in another transaction system, you have to submit the direct control of your bitcoins to that system. Let's call it System B. It doesn't matter if System B is centralized or distributed. It doesn't matter if it's ChangeTip, an alt coin via ShapeShift, a sidechain or lightning network. You do not control the private bitcoin key of your bitcoins anymore. System B does. And you have to trust System B, just like you trust bitcoin.

If someone build a good System B that can handle more transactions than the bitcoin system, it could become a popular system. The lightning network is an effort in this direction. AFAIK, Blockstream is having just one guy working full time on this project.

So what are the other Core/Blockstream devs working on? They are not making a System B. They are working on ways to transfer bitcoin between the bitcoin system and a System B by changing and bloating the bitcoin code.

Their work is not needed. Because bitcoin already has this basic mechanism. It's called a transaction. And it can be done by computers.

The problem isn't moving the control over bitcoin between the bitcoin system and System B. It's trivial and easy. The problem is to build a good System B.

Personally, I believe bitcoin will scale just fine on chain to cover the global need if we just get rid of Core for a while.

And please don't tell me to do my homework anymore. No hard feelings

 

[albin]

I'm not a software development professional, but even I know that trying to jam in a bunch of features at once is not what you're supposed to do!

 

[satoshis_sockpuppet]

Up to 29 soft-fork features deployable in parallel. Now we just need more developers to implement more!

Please wake me up.

I don't want no more fucking features you idiots. I want god damn decentralized p2p cash. Adam Back is a complete failure in regards to digital cash.

Bitcoin is working nearly perfect without all this bullshit. Fuck this devs gotta dev attitude. Get your slimy fingers of my money you fuckheads.

 

[Dusty]

[...]
Say you wanted to bet on tomorrow's weather in London in Paul Sztorc's Hivemind prediction market. You lock 1 BTC to produce 1 hivecoin and place your bet. You win the bet and now have 2 hivecoins. You want to cash in your winnings in BTC. How do you get 2 BTC back? I guess you still have the 1 hivecoin that can unlock your original 1 BTC, plus you have someone else's 1 hivecoin that they at some point locked 1 BTC to obtain, so you can use those to unlock that guy's original 1 BTC to send to yourself and now you have 2 BTC.
[...]

That's not how it (should) work.
It's not really useful to do only one transaction on the other chain, a typical scenario would be: I change 1 bitcoin for 1 million storj, then I rent space on the (storj) network, or I rent my space, doing (potentially) thousands of transactions and after some time (maybe 1 week, or maybe one year), if you don't need any more the storj services, or if you gained many side-coins, you take them back on the bitcoin chain.

That (should) be the way LN works: you lock some btcs on your channel and then you do a lot of little transactions on the LN itself and when you empty your channel (or when you have too much money on it) you close it and settle on the blockchain.

That already works in practice, if you limit the payment channel: the big challenge for the LN is to make it work for many people running a p2p network.
Even if that could work in theory there are many assumptions and the outcome it's certainly unsure.

 

[freetrader]

Can someone confirm whether this comment holds some truth?
It sounds like a bad reaction of the difficulty adjustment of that SegWit test version...

 

[Dusty]

And please don't tell me to do my homework anymore. No hard feelings

You are right, I had a rough day and I was not polite, please forgive me

@Dusty
With all due respect, I don't think you understand what I'm saying.
First of all. Do you agree that you have to trust the bitcoin system to use it?

Yes of course, and the bitcoin system is designed in such a way that you don't need to trust a third party, you trust the majority of the network where there is not a direct link from the miners to the users. That's a very, very different model of working.
In fact, it's the very one thing that brought bitcoin to be the very first internet cash system.

If your answer to this question is "No, I don't have to. Bitcoin is a trustless system.", I don't think I can make you understand my point.

A client that is bootstrapping his node find the peers in some way and does not need to trust any of them because of the proof of work. He trusts the PoW and not the peers.
In that way the Bitcoin network is said to be trustless (you trust no specific peer/entity).

I would never use bitcoin personally if I didn't trust in it to some degree.

Of course I trust the math that is behind his inner workings.

If you want to use bitcoin (an IOU of bitcoin) in another transaction system, you have to submit the direct control of your bitcoins to that system. Let's call it System B. It doesn't matter if System B is centralized or distributed. It doesn't matter if it's ChangeTip, an alt coin via ShapeShift, a sidechain or lightning network. You do not control the private bitcoin key of your bitcoins anymore.

No.
That's where you are wrong, and that's why I wrote "do your homework" (sorry again).
There is a big difference between using changetip and a sidechain: in the first case, as you correctly asserted, you do not control your private keys, while in the others (e.g.: LN), you still control them and you do not have to trust a third party.

In fact, LN transactions are just normal bitcoin transactions, the only difference is that you produce (potentially) thousands of them but you broadcast only the last one of them on the bitcoin blockchain, the settling one.

 

[cypherdoc]

@Dusty

I don't think that's true. I have given the example before where multiples of the initial deposit value can change hands bidirectionally before the closing tx. It seems easy to spam attack a closing tx when blocks are full. That's like leverage and is certainly not secure.

If can be a big 0 conf tx.

 

[Norway]

@Dusty
If you have one bitcoin and send it to the lightning network (open a channel), you may not spend that coin on chain at the same time. It's locked down on the blockchain by the lightning network. You don't control it. The lightning network do. (Same as ChangeTip.)

And you do have to trust the lightning network itself. Just like you trust bitcoin.

In fact, LN transactions are just normal bitcoin transactions, the only difference is that you produce (potentially) thousands of them but you broadcast only the last one of them on the bitcoin blockchain, the settling one.

LN transactions are not normal bitcoin transactions, as they don't happen on the blockchain. They are just transactions on a separate network (with bitcoin IOUs). Except off course the on- and offramp, opening/closing of channel, settlement or whatever you want to call it.

Tip of advice: Don't get too hung up on the details. Take a step back and look at what's actually happening. That way, you don't risk getting the Greg Maxwell technical tunnel vision

 

[Christoph Bergmann]

I'm not a software development professional, but even I know that trying to jam in a bunch of features at once is not what you're supposed to do!

I know, it's maybe unfair and prejudicing, but I can't help myself to think that this becomes a big gate for trojan horses. Just put 29 softforks at the same time, propagate crazy ideas about everything, and wait untill the miners implement something they don't understand.

 

[cypherdoc]

@Christoph Bergmann

Yes, I've been warning about the wide open script versioning system that these clowns are chomping at the bit to get their hands on. Look at Adam's call for more devs. Talk about a populist take over of sound money by nerds...

Yes, step back and look at the big picture of what is happening. Bitcoins strict rules and Forth like scripting system prevents changes to monetary policy through tinkering by corrupt devs. They hate this. Especially the ones like Adam and Greg who missed the boat due to unfounded pessimism of the economics of Bitcoin.

Its going to be a long hard fight.

 

[Norway]

@cypherdoc : "Its going to be a long hard fight."

No problem.

 

[freetrader]

@Norway, I hope that's not the 300 (Core devs) ;-)

@cypherdoc : I object to using 'nerds' in a derogatory fashion. Let's just stick with 'corrupt devs'.

 

[lunar]

The minute the sound money properties of bitcoin change I'm off.

It's quite simple having digital P2P cash on a sound money ledger is fundamentally earth shattering in its properties. The implications to the worlds financial system and the benefits for humanity of finally having a level playing field, thus escaping from the fallout of 500 years of manipulated, centralised, fractionally reserved concepts of House of Medici would be the biggest and best revolution the globe has ever seen.

How can we get the mining community to see this slippery slope attack for what it is? An attempted monopoly on the future of the bitcoin development process at the expense of present and future users.

We urgently need 30% of the hashing power to be on the Classic path. Not becasue everyone should be using classic software but becasue a single development team has lead to intellectually corrupted group think agendas. Negotiating from a position of veto power is the only way to get a compromise from these power hungry muppets.

Dr Stab in the Back has asked for collaboration on protocol development. During the German occupation of Europe the sort of collaborators he's asking for would have been routed out, never to be seen again after a brief walk at dawn.

You want real collabortation? how about showing some sign of compromise.

*prohashing

/rant