BitShares Forum

Main => General Discussion => Topic started by: xxeyes on April 09, 2014, 11:45:23 pm

Title: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: xxeyes on April 09, 2014, 11:45:23 pm
I'm interested to hear people's opinions regarding this new development and how it will affect Bitshares X and other Invictus DACs:
http://letstalkbitcoin.com/blockchain-2-0-let-a-thousand-chains-blossom/#.U0XZZMcnguc

It is being suggested on reddit that two-way pegging will be the downfall of alt coins:
http://www.reddit.com/r/Bitcoin/comments/22m063/blockchain_20_let_a_thousand_chains_blossom/
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 12:30:42 am
Lol that is a funny project made irrelevant as it still depends on mining.  It will not make bitcoin profitable nor decentralized.   It will add more centralization. 

No details were provided about the two way peg. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: xxeyes on April 10, 2014, 01:11:19 am
Lol that is a funny project made irrelevant as it still depends on mining.  It will not make bitcoin profitable nor decentralized.   It will add more centralization. 

No details were provided about the two way peg. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

From what I understand, it allows for experimental chains to be created and backed by the Bitcoin currency.  You can move Bitcoin between these experimental chains and Bitcoin proper without risk of loosing Bitcoin.  The successful chains will extend Bitcoin's functionality or lead the evolution of the Bitcoin protocol itself.  I think that is how it works.

If I understand correctly, this means that any alt coin can be replicated as a side chain, backed by Bitcoin.  I'm wondering if it is possible that Bitshares X or other future Invictus DACs could fall victim to this.  That is, could Bitshares X be replicated and backed by Bitcoin as one of these 2-way pegged side chains?  If so, I guess the benefits of profitability and greater decentralization inherent to Bitshares X would not be replicated since Bitcoin (and its POW structure) is still the backing currency.  However, the true Bitshares X chain would have to compete with the much greater user base of Bitcoin and its only advantage would be its POS base structure since the functionality can be replicated.

Presumably, the threat of this will be enough to slow or stop the development of alt coins that can be two-way pegged.  I'm still trying to wrap my head around this, but it is making me reconsider my investments in alt projects.  I think it is a good thing, as it will theoretically consolidate the innovation going into all these alts and focus it back into a singular Bitcoin ecosystem.  The strengthening of the Bitcoin protocol will return as the primary incentive for innovation rather than get rich quick schemes.

Of course, there will be projects that the market will decide work better on their own rather than as a Bitcoin side chain.  I wonder what characteristics might distinguish such projects and if the planned Invictus DACs possess such characteristics.  This might be worth discussing

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 02:01:52 am
Transaction speed is the deal breaker. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 02:16:16 am
If they have a solution for this based on sound economics then it may be applicable. 

I will look closer.  Bitcoin will have to move away from pow to survive. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 02:38:48 am
They didn't outline the pegging system, but I suspect it is kind of like bit btc. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: Empirical1 on April 10, 2014, 02:48:40 am
The problem is you that you can insulate Bitcoin from the flaws of new linked-blockchains but none of the new blockchains will be insulated from the flaws of Bitcoin. 

So any new Blockchain will have at least Bitcoin's circa 10% current inflation & be exposed to Bitcoin's centralisation of mining problem.

Also won't the ROI of investing in Bitcoin linked-blockchains be extremely limited? Because any value gain will be dispersed among all bitcoin holders, disincentivesing innovation and investment in new projects?
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: Empirical1 on April 10, 2014, 03:39:05 am
It seems to me a bitcoin 2.0 blockchain can only offer investors/users a share of transaction fees while a separate blockchain can offer investors/users that as well as capital appreciation of their stake if the blockchain is popular?

Given that both can be made to interact seamlessly and indistinguishably* to a Bitcoin holding customer this means the separate blockchain should always win, considering that the Bitshares X is also a superior blockchain, I can't see a threat at first glance.

(* The separate blockchain may need to absorb currency conversion cost?)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: xxeyes on April 10, 2014, 05:41:28 am
The problem is you that you can insulate Bitcoin from the flaws of new linked-blockchains but none of the new blockchains will be insulated from the flaws of Bitcoin. 

So any new Blockchain will have at least Bitcoin's circa 10% current inflation & be exposed to Bitcoin's centralisation of mining problem.

Also won't the ROI of investing in Bitcoin linked-blockchains be extremely limited? Because any value gain will be dispersed among all bitcoin holders, disincentivesing innovation and investment in new projects?

I'm not sure how it works, but I think that if a side chain is two-way pegged, 1 side chain unit of currency will always equal 1 Bitcoin unit of currency.  Consequently, you would not "invest" in a side chain.  You would move your Bitcoins into one side chain or another to take advantage of its functionality, such as faster transactions or zerocoin-like anonymity.  Perhaps even Bitcoin 2.0 (maybe POS based) could begin as a side chain onto which Bitcoin 1.0 users could migrate as it proves itself stable and superior.

This development appears to enable Bitcoin to act like the TCP/IP of the internet of money.  I expect people will innovate for the purpose of improving/increasing the financial instruments available within the Bitcoin ecosystem, which in turn will increase the value of Bitcoin through network effect.  If I understand correctly, there is no financial risk in moving coins into these side chains as they can always be moved back into Bitcoin proper at a 1:1 ratio.  For this reason, people will support features out of curiosity/necessity rather than as an investment in the system.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: xxeyes on April 10, 2014, 05:51:58 am
Here is a description of how the two-way pegging works quoted from Thorbinator on reddit:

A side chain holds no value of it's own, it uses whatever novel tech it has and the bitcoin market value.

How 2 way pegging works, the short version: magic, you can just use bitcoin or the alt chain interchangably.

The long version quoted:

To maintain the 21m coins promise, you start a side-chain with no in-chain mining subsidy, all bitcoin creation happens on bitcoin chain (as with 1-way peg). Reach a reasonable hash rate. (Other semantics than 1:1 peg should be possible, but this is the base case).

You move coins to the side-chain by spending them to a fancy script, which suspends them, and allows them to be reanimated by the production of an SPV proof of burn on the side-chain.

The side-chain has no mining reward, but it allows you to mint coins at no mining cost by providing an SPV proof that the coin has been suspended as in 2 on bitcoin. The SPV proof must be buried significantly before being used to reduce risk of reorganization. The side-chain is an SPV client to the bitcoin network, and so maintains a view of the bitcoin hash chain (but not the block data).

The bitcoin chain is firewalled from security bugs on the side chain, because bitcoin imposes the rule that no more coins can be reanimated than are currently suspend (with respect to a given chain).

To simplify what they hypothetical bitcoin change would need to consider and understand, after a coin is reanimated there is a maturity period imposed (say same as fresh mined coins). During the maturity period the reanimation script allows a fraud proof to spend the coins back. A fraud bounty fee (equal to the reanimate fee) can be offered by the mover to incentivize side-chain full nodes to watch reanimations and search for fraud proofs.

A fraud proof is an SPV proof with a longer chain showing that the proof of burn was orphaned.

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: fuzzy on April 10, 2014, 11:09:22 am
Lol that is a funny project made irrelevant as it still depends on mining.  It will not make bitcoin profitable nor decentralized.   It will add more centralization. 

No details were provided about the two way peg. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

What is sad to me is that so many people (including someone I highly admire, Adam B Levine) still seem biased toward mining.  This is a HUGE group of potential adversaries in this industry and until the general population understands that mining (especially POW Asic mining) is not necessary and potentially destructive to society and Freedom in general, I am afraid mined coins are going to have a leg up with regard to marketing and buzz. 

Though I wholely appreciate your opinion on this point (and agree with it, btw), I am not so certain we should "lol" about it...because most people who know about crypto are learning about it from people with a vested interest in the status quo of "mining".  I mean, I am certain there are better, more scalable forms of energy-production but due to the vested interests and their monopoly on Oil...we are still largely living 100 years behind schedule with regard to the mass adoption of cheap/free energy and largely devoid of funding for innovation in this space. 
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: unimercio on April 10, 2014, 11:45:37 am
Lol that is a funny project made irrelevant as it still depends on mining.  It will not make bitcoin profitable nor decentralized.   It will add more centralization. 

No details were provided about the two way peg. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

What is sad to me is that so many people (including someone I highly admire, Adam B Levine) still seem biased toward mining.  This is a HUGE group of potential adversaries in this industry and until the general population understands that mining (especially POW Asic mining) is not necessary and potentially destructive to society and Freedom in general, I am afraid mined coins are going to have a leg up with regard to marketing and buzz. 

Though I wholely appreciate your opinion on this point (and agree with it, btw), I am not so certain we should "lol" about it...because most people who know about crypto are learning about it from people with a vested interest in the status quo of "mining".  I mean, I am certain there are better, more scalable forms of energy-production but due to the vested interests and their monopoly on Oil...we are still largely living 100 years behind schedule with regard to the mass adoption of cheap/free energy and largely devoid of funding for innovation in this space.

 +5% Fuzz, well put. Sadly, greed and conflict prevail far too often over reason and cooperation.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: JoeyD on April 10, 2014, 12:01:34 pm
I don't know if any technical details have been divulged, but this solution as described in the interview did not seem to be bound by the limitation of bitcoins' blockchain and mining. It sounded like effectively moving bitcoins freely to and from other blockchain-solutions and allow bitcoins to do everything any alt-coin could possibly do. I got the impression that the blockchains did not need to be merge-mined, but that merge mining would allow instant access to the security of the enormous Bitcoin-network-hashrate, without having to start from scratch.

We'll have to wait for more details, but even with asic-mining in place this does sound like an incredible boost to bitcoins functionality and could make all alt-coins obsolete, even projects like Ethereum will look like a joke in comparison. If transitioning really works as seamless as suggested, it might even provide a smooth way out to a less centralized blockchain, where miners would have to prove their worth to the average bitcoin users.

EDIT
If this project actually works as described in the interview, then not only should everyone get out of all alt-coins asap, but I3/Bitshares will have some really really though competition in the form of bitcoinX(meaning bitcoin-anything).
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: santaclause102 on April 10, 2014, 12:20:47 pm
Quote
I am not so certain we should "lol" about it...because most people who know about crypto are learning about it from people with a vested interest in the status quo of "mining". 
+5%
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: G1ng3rBr34dM4n on April 10, 2014, 01:41:54 pm
I did find comfort in the fact that "it will takes 12, 18, or 24 months" to implement any new "moderately risky" changes on the bitcoin blockchain.  With that kind of timeline - they'll be left behind before they can get any consensus to upgrade bitcoin.  In my opinion core devs are still too staunchly conservative when it comes to implementing changes to the code (rightly so) - and I think this will be their downfall.  The free market will provide a solution much faster.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: G1ng3rBr34dM4n on April 10, 2014, 01:45:25 pm
If they have a solution for this based on sound economics then it may be applicable. 

I will look closer.  Bitcoin will have to move away from pow to survive. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

 +5% "If it's not profitable, it's not sustainable."
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: wasthatawolf on April 10, 2014, 01:49:02 pm
I see this as hugely beneficial to Bitshares X.  If Bitshares X was implemented as a side chain, the functional difference would be that all BitAssets are backed by bitcoin instead of bitshares.  Wouldn't this only help strengthen the Bitshares X model by allowing a much lower barrier to entry (direct transfer of bitcoin into the Bitshares X side chain) and a much more stable base asset?
Title: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bitbro on April 10, 2014, 01:52:45 pm
Honestly, can't wait for Dan to digest this and let us know we're okay.  I don't believe blockchain 2.0 is a long term threat to us because of dependence on a deflationary asset, but my thought processing is not at Bytemaster level.  However, if anything this makes me think the race is really on to get out our minimum viable products and start marketing our profitability platform really hard, yeeehaw!
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: xxeyes on April 10, 2014, 02:34:48 pm
I see this as hugely beneficial to Bitshares X.  If Bitshares X was implemented as a side chain, the functional difference would be that all BitAssets are backed by bitcoin instead of bitshares.  Wouldn't this only help strengthen the Bitshares X model by allowing a much lower barrier to entry (direct transfer of bitcoin into the Bitshares X side chain) and a much more stable base asset?

What you are suggesting is actually why this could be a threat to Bitshares X.  If Bitshares X was implemented as a side chain, it wouldn't be Bitshares X; it would be a competitor to Bitshares X that replicates its features (except those inherent in its POS structure) and has the benefits you speak of.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 03:33:54 pm
Based on this description it works just like a system I designed last fall in my effort to create parallel chains with shared supply.  The problem is that when using pow the side chain funds can be completely robbed because the main chain cannot validate anything but the existence of the trx on the side chain.  So to do this the btc miners still have to do full validation on all side chains. 

This major security risk has not been mitigated.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: Empirical1 on April 10, 2014, 03:38:02 pm
It seems to me a bitcoin 2.0 blockchain can only offer investors/users a share of transaction fees while a separate blockchain can offer investors/users that as well as capital appreciation of their stake if the blockchain is popular?

Given that both can be made to interact seamlessly and indistinguishably* to a Bitcoin holding customer this means the separate blockchain should always win, considering that the Bitshares X is also a superior blockchain, I can't see a threat at first glance.

(* The separate blockchain may need to absorb currency conversion cost?)

This idea of mine seems to be wrong. I guess on a linked block chain you could issue X shares and the more Bitcoin that flowed into them the more each share would be worth. (So you would get capital appreciation too.)

-------

However all Bitcoin 2.0 seems to do, is create unnecessary dependency on Bitcoin. Why would you tie yourself to the fate of Bitcoin when you can have a separate blockchain that, other blockchains, fiat currencies and exchanges can interact with independently? This seems to create a huge amount of unnecessary risk that doesn't justify the benefits at all.

Edit: Adam back says...

Quote
He is not convinced that some other alts have a strong technical ground to build from as they “start a new scarcity race that creates an interoperability silo […] in order to get into to it you have to swap coins.”  Thus, Back sees the extensibility as adding “direct support for issued assets, extended smart contracts, all while using Bitcoin itself as the transactional currency.

Woopty doo, if the main hassle you're saving me from is swapping coins once, I'll probably choose to keep various interests on bitcoin independent blockchains every day of the week.   
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 03:39:06 pm
In other words 51% attack on side chain allows attacker to steal full balance of side chain by transferring 100 % of it back to btc chain under their control.   Btc miners would see the transaction exists on the side chain but have no way of knowing it was invalid because they blindly trust the hash power. 

This makes new side chains very vulnerable unless all btc miners merge mine it.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 03:40:43 pm
In effect btc mining pools would own the whole industry and decide which side chains live or die.   Such centralization will not be accepted by most.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: liondani on April 10, 2014, 03:43:03 pm
Transaction speed is the deal breaker. 


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

and if they make the exact same think with litecoin or another altcoin that is faster and ofcourse wide accepted ?
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: liondani on April 10, 2014, 03:58:06 pm
In effect btc mining pools would own the whole industry and decide which side chains live or die.   Such centralization will not be accepted by most.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

Thats a nightmare! And to be really honest I wouldn't be suprised if for some reason the "most" would accept such centralization at the "end"... because of GREED of course... give them money and you see how ethical barriers will collapse... YES I am not optimistic and all conspiracy theories come to my mind again...  :(
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: JoeyD on April 10, 2014, 05:02:46 pm
In effect btc mining pools would own the whole industry and decide which side chains live or die.   Such centralization will not be accepted by most.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

Thats a nightmare! And to be really honest I wouldn't be suprised if for some reason the "most" would accept such centralization at the "end"... because of GREED of course... give them money and you see how ethical barriers will collapse... YES I am not optimistic and all conspiracy theories come to my mind again...  :(

I don't think this proposal should be taken lightly and indeed the fear of mining centralization might not be enough of a selling point to put bitcoin to sleep permanently. If this projects succeeds it will probably add huge value to bitcoin, apart from mining-centralization (majority might not even care about that) this would solve just about any critique anyone could have against Bitcoin.

I've been reading some comments of Dr. Adam and others on reddit on this topic, but the majority does not seem to believe that this will give too much power to miners. Actually I got the impression that apart from them not really seeing mining centralization as a large problem (because of current generation asics are no longer profitable enough), they also see it as a way to hedge against miner-centralization as well, because the side chain can apparently be in any other POW/POS form and possibly over a way out of the current mining-model. For the short term they consider the danger of 51% attacks negligible given enough confirmation-time for the migration.

Dr. Adam even mentions being able to implement things like Ethereum or Ripple as a side-chain without the premine and also lists just about every coin distribution-model and POW/S-model as doable on a sidechain. On top of all this Dr. Adam does have quite a track-record in the cryptocurrency space (inventor of bitcoins POW plus he seems to already have funding, cypherpunk contacts and the attention of the bitcoin core-devs) and thinking back the discussion thread on bitcointalk between Counterparty/Mastercoin and btc-core-devs, the latter were doing their utmost to point people to this solution as well. So I'm expecting quite some developer lifting power from the industry being put behind this idea.

Again I don't think this project should be dismissed lightly, this has the potential to be a very big deal. It does not have to be negative either, since this adds value to the btc-AGS-funds as well, provided the supply lasts through the current dip.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: sumantso on April 10, 2014, 05:10:24 pm
Some discussion here https://bitcointalk.org/index.php?topic=395761.msg6148769#msg6148769

Personally, I feel our first mover advantage should be enough. Of course, that depends on how quickly we can have a user friendly and attarctive product along with proper marketing.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: Empirical1 on April 10, 2014, 05:31:04 pm
Maybe a dumb question, assuming the Bitcoin 2.0 blockchain did work as described...

If Bitshares X wanted to hedge by having a Bitcoin 2.0 linked-blockchain too. Couldn't we take a snapshot of Bitshares X? Then give BTS X holders (Via current private keys) their current BTS X share in the new BTS X Bitcoin 2.0 Blockchain in exchange for Bitcoin dust.

Now all Bitshares X holders have their same BTS X share in the Bitcoin 2.0 linked-blockchain so the market can choose and we won't be affected?

Of course someone could start a clone from scratch but that is pretty hard as you'd need a development & marketing team, industry connection, + targeted community to compete with BTS X bitcoin 2.0 blockchain that honoured BTS X holders.)

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: smiley35 on April 10, 2014, 05:38:31 pm
Maybe a dumb question, assuming the Bitcoin 2.0 blockchain did work as described...

If Bitshares X wanted to hedge by having a Bitcoin 2.0 linked-blockchain too. Couldn't we take a snapshot of Bitshares X? Then give BTS X holders (Via current private keys) their current BTS X share in the new BTS X Bitcoin 2.0 Blockchain in exchange for Bitcoin dust.

Now all Bitshares X holders have their same BTS X share in the Bitcoin 2.0 linked-blockchain so the market can choose and we won't be affected?

Of course someone could start a clone from scratch but that is pretty hard as you'd need a development & marketing team, industry connection, + targeted community to compete with BTS X bitcoin 2.0 blockchain that honoured BTS X holders.)

From what I understand no. If you wanted to have a stake in the BTS-BTC chain the best you could do is buy more bitcoin.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 10, 2014, 05:39:45 pm
In effect btc mining pools would own the whole industry and decide which side chains live or die.   Such centralization will not be accepted by most.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

Thats a nightmare! And to be really honest I wouldn't be suprised if for some reason the "most" would accept such centralization at the "end"... because of GREED of course... give them money and you see how ethical barriers will collapse... YES I am not optimistic and all conspiracy theories come to my mind again...  :(

I don't think this proposal should be taken lightly and indeed the fear of mining centralization might not be enough of a selling point to put bitcoin to sleep permanently. If this projects succeeds it will probably add huge value to bitcoin, apart from mining-centralization (majority might not even care about that) this would solve just about any critique anyone could have against Bitcoin.

I've been reading some comments of Dr. Adam and others on reddit on this topic, but the majority does not seem to believe that this will give too much power to miners. Actually I got the impression that apart from them not really seeing mining centralization as a large problem (because of current generation asics are no longer profitable enough), they also see it as a way to hedge against miner-centralization as well, because the side chain can apparently be in any other POW/POS form and possibly over a way out of the current mining-model. For the short term they consider the danger of 51% attacks negligible given enough confirmation-time for the migration.

Dr. Adam even mentions being able to implement things like Ethereum or Ripple as a side-chain without the premine and also lists just about every coin distribution-model and POW/S-model as doable on a sidechain. On top of all this Dr. Adam does have quite a track-record in the cryptocurrency space (inventor of bitcoins POW plus he seems to already have funding, cypherpunk contacts and the attention of the bitcoin core-devs) and thinking back the discussion thread on bitcointalk between Counterparty/Mastercoin and btc-core-devs, the latter were doing their utmost to point people to this solution as well. So I'm expecting quite some developer lifting power from the industry being put behind this idea.

Again I don't think this project should be dismissed lightly, this has the potential to be a very big deal. It does not have to be negative either, since this adds value to the btc-AGS-funds as well, provided the supply lasts through the current dip.

Lets assume for a second that the government officially blessed Bitcoin as a currency and then grew the blockchain to support.  They keep it fair and open and suck a lot of people in.  Then they pass a law that requires accounts to be frozen.  The major pool operators and mining operations comply because they have all been subverted and because the blockchain size has grown so large and the network effect is so great no one can setup a new pool without being exposed to the regulators.

There is no reason to fear blockchain 2.0 because market competition will continue to exist as people compete on efficiency, fees, and privacy. 

Additionally once our DPOS system is in place and proven we can propose an upgrade to bitcoin to replace Proof of Work.   Once we have BitUSD then it doesn't matter how big the chain is as long as it has a minimum amount of support.         

They are so focused on proof of work they are missing the obvious.  The entire premise of their innovation is that we need this large centralized proof of work system to be secure against government... once it becomes clear that you cannot outspend government on hash power things will change and people will flood to DPOS systems.  Perhaps bitcoin will upgrade.

I still contend that the security vulnerability on the side chains is a non-starter.

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: wasthatawolf on April 10, 2014, 05:56:19 pm
I see this as hugely beneficial to Bitshares X.  If Bitshares X was implemented as a side chain, the functional difference would be that all BitAssets are backed by bitcoin instead of bitshares.  Wouldn't this only help strengthen the Bitshares X model by allowing a much lower barrier to entry (direct transfer of bitcoin into the Bitshares X side chain) and a much more stable base asset?

What you are suggesting is actually why this could be a threat to Bitshares X.  If Bitshares X was implemented as a side chain, it wouldn't be Bitshares X; it would be a competitor to Bitshares X that replicates its features (except those inherent in its POS structure) and has the benefits you speak of.

The only way Bitshares X even works is by having a significant external trade volume of Bitshares themselves to USD, bitcoin, etc. in order to establish the margin requirements for the various BitAssets within the chain.  The total value of all BitAssets is limited to a fraction of the total value of Bitshares.  I see this is one of the biggest challenges Bitshares will have to overcome because with the volatility of altcoins we currently see in the market, automatic margin calls could be triggered often enough to turn people off to the whole idea.  If it was backed by Bitcoin, there would be less volatility and a much higher ceiling for total BitAsset value.

So you're right, in a sense, because Bitshares X would essentially become Bitcoin X.  I just don't know if that's necessarily a bad thing. 
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: mint chocolate chip on April 10, 2014, 06:06:10 pm
Regardless of the merits of this particular idea, the fact that this idea has seemingly come out of left field is what we should be concerned about. The reality is that there is in all likelihood a great number of ambitious projects being developed which are unknown. It is not going to be the Mastercoin, Counterparty, Ethereum etc. competition that we know about that are going to give BitShares a run for its money, its going to be the unheard of at this moment ideas/projects/products that burst onto the scene that will. It has been almost a month since the Ides of March, most of us have been waiting patiently since then. It is going to get increasingly more worrisome that at some point in the near future, we are going to be faced with many competing ideas.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: CWEvans on April 10, 2014, 06:48:04 pm
They are so focused on proof of work they are missing the obvious.  The entire premise of their innovation is that we need this large centralized proof of work system to be secure against government... once it becomes clear that you cannot outspend government on hash power things will change and people will flood to DPOS systems.  Perhaps bitcoin will upgrade.

I still contend that the security vulnerability on the side chains is a non-starter.

One of the reasons for the fixation on POW is that it is proven technology, while POS—even though one-vote-per-share has a much longer history—is still a novelty. This is driven by the pervasiveness of the 'coin' metaphor. Breaking through that, I expect, will involve recruiting a new generation to this field and spinning them up on the share metaphor, rather than relying on bitcoiners to convert. Thus, BitShares could be the 'MacOS' to Bitcoin's 'MS-DOS'.

With regard to side chains, per se, if the units issued on the side chains are pegged to bitcoins in whatever proportion, then the side chains have to be justified by their technical merits. That pretty much puts an end to the altcoin market as we know it now.

The vast majority of altcoins are just legal replacements for pyramid schemes. Get in early, pump up the price, and hope that you get out before the thing crashes. Some have non-trivial features that set them apart from the rest. Some, like dogecoin take on a life of their own, and no harm done.

Put the altclones on sidechains, and their prices are tied to bitcoin prices, removing the whole point of their existence.


The only way Bitshares X even works is by having a significant external trade volume of Bitshares themselves to USD, bitcoin, etc. in order to establish the margin requirements for the various BitAssets within the chain.  The total value of all BitAssets is limited to a fraction of the total value of Bitshares.  I see this is one of the biggest challenges Bitshares will have to overcome because with the volatility of altcoins we currently see in the market, automatic margin calls could be triggered often enough to turn people off to the whole idea.  If it was backed by Bitcoin, there would be less volatility and a much higher ceiling for total BitAsset value.

So you're right, in a sense, because Bitshares X would essentially become Bitcoin X.  I just don't know if that's necessarily a bad thing.

One difference here, is that demand for BTS could be driven by demand for the BitAssets, whereas side chains work the other way around.

If someone wants BitUSD, he or she will need to buy some or buy some BTS and create some. With side chains, one most likely already has bitcoins, otherwise why all the hoopla?

Regardless of the merits of this particular idea, the fact that this idea has seemingly come out of left field is what we should be concerned about.

That belongs on a billboard.

It isn't your pieces or your opponent's pieces on the chessboard that you should worry most about; it's the invisible pieces that get you, when you aren't looking.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: JoeyD on April 10, 2014, 07:18:24 pm
With regard to side chains, per se, if the units issued on the side chains are pegged to bitcoins in whatever proportion, then the side chains have to be justified by their technical merits. That pretty much puts an end to the altcoin market as we know it now.

The vast majority of altcoins are just legal replacements for pyramid schemes. Get in early, pump up the price, and hope that you get out before the thing crashes. Some have non-trivial features that set them apart from the rest. Some, like dogecoin take on a life of their own, and no harm done.

Put the altclones on sidechains, and their prices are tied to bitcoin prices, removing the whole point of their existence.

If I disregard the POW-dependency and the fact that this might hurt me plenty financially (I did mine and buy some alt-coins) I gotta admit I find the concept itself rather brilliant and can't help myself grinning at the idea. I rather like the fact that this lowers the barriers for complete freedom of choice and innovation and can't help having a bit of admiration for the idea. It also puts to shame a number of people I've heard complaining how all alt-coins were diluting the bitcoin space and then proposing an alt-coin of their own.

Sorry if I sound a bit sadistic, but the bitcoin-price crashing and openssl-bug locking me out of my altcoin-exchange while this news gets out apparently is effecting me more than I expected. Apparently I'm not as rationalistic as I thought I was.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: wasthatawolf on April 10, 2014, 07:50:52 pm


The only way Bitshares X even works is by having a significant external trade volume of Bitshares themselves to USD, bitcoin, etc. in order to establish the margin requirements for the various BitAssets within the chain.  The total value of all BitAssets is limited to a fraction of the total value of Bitshares.  I see this is one of the biggest challenges Bitshares will have to overcome because with the volatility of altcoins we currently see in the market, automatic margin calls could be triggered often enough to turn people off to the whole idea.  If it was backed by Bitcoin, there would be less volatility and a much higher ceiling for total BitAsset value.

So you're right, in a sense, because Bitshares X would essentially become Bitcoin X.  I just don't know if that's necessarily a bad thing.

One difference here, is that demand for BTS could be driven by demand for the BitAssets, whereas side chains work the other way around.

If someone wants BitUSD, he or she will need to buy some or buy some BTS and create some. With side chains, one most likely already has bitcoins, otherwise why all the hoopla?

The only thing that changes here is that Bitshares are replaced by Bitcoin.  I don't see how BitAssets driving demand for either really affects my previous statement. 

Once Bitshares X is availabe, price discovery of Bitshares will have a major effect on the BitAsset market as it will likely be extremely volatile.  Bitcoin, while volatile in its own right, is still the most stable and universally accepted cryptocurrency.  Using Bitcoin as the base asset should provide enough price stability to allow this asset market the opportunity to succeed right out of the gate.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bitbro on April 10, 2014, 07:56:00 pm
So ... are we screwed?


Sent from my iPhone using Tapatalk
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: tonyk on April 10, 2014, 08:04:01 pm
So ... are we screwed?


Sent from my iPhone using Tapatalk

If you have just come up with the best beer in the world and 1 mo. before you have actually produced it for all of your 500 customers in your local pub to try it, Budweiser comes with a bear that is 75% of what you offer but will be available in 20Mil stores for 1Bil customers –what do you do? Stop and do not deliver your beer? No you just mention the 25% difference in your favor and go on hoping what will eventually matter is the 25% better quality not the smaller exposure you will initially get.
In other words only time will tell what matters more – better product or better initial market position…

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bitbro on April 10, 2014, 08:07:37 pm
As a beer snob I really like the metaphor.  Seems we will be the Sam Adams of the crypto market


Sent from my iPhone using Tapatalk
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: sumantso on April 10, 2014, 08:18:15 pm
If the side chain business with 2 way movement really works out, I guess it can be implemented here too which would mean there won't be a different share unit for every different DAC. Who knows, if Bitshares can use the early mover advantage and get big, that unit may rival Bitcoin.

Btw, maaku seems to be one of the devs and is answering questions in the counterparty thready I posted earlier. Maybe I3 can poach him ;)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: CLains on April 10, 2014, 10:05:40 pm
From coindesk, Bitcoin Core Developers Weigh in on Side Chain Proposal (http://www.coindesk.com/bitcoin-core-developers-bitcoin-side-chains/).

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: fuzzy on April 11, 2014, 05:49:31 am
In effect btc mining pools would own the whole industry and decide which side chains live or die.   Such centralization will not be accepted by most.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

Thats a nightmare! And to be really honest I wouldn't be suprised if for some reason the "most" would accept such centralization at the "end"... because of GREED of course... give them money and you see how ethical barriers will collapse... YES I am not optimistic and all conspiracy theories come to my mind again...  :(

Are you related to me or something?
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: liondani on April 11, 2014, 06:01:24 am
If the side chain business with 2 way movement really works out, I guess it can be implemented here too which would mean there won't be a different share unit for every different DAC. Who knows, if Bitshares can use the early mover advantage and get big, that unit may rival Bitcoin.

Btw, maaku seems to be one of the devs and is answering questions in the counterparty thready I posted earlier. Maybe I3 can poach him ;)

Practical you mean it could be implemented on BTS blockchain with the andvantage of DPOS and not POW like BTC so it would be a really strong competitor...
The side effect  in this case(and not only) is that Bitshares-PTS will be uselles? Price of PTS will decline  so we the investors  will loose money? Am I missing something?
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: gamey on April 11, 2014, 06:18:55 am
Blockchain 2.0 really kills any incentive for innovation for the sidechains.   I guess the market grows,  but by # of coins instead of value per coin.  All growth relative to fiat will be absorbed through btc.   Sha256 miners have to love this idea.

One thing that bytemaster pointed out as a killer is confirmation times.  It seems sidechains could be something akin to merge mined which could provide security that was tested and verified on sidechain side.  As far as confirmation times, I assume miners could be made to present POWs with lower diffs for sidechains to increase the confirmation rate.

Edit - The more I think about this, this is effectively a premine for any btc holders.  At the end of it, I don't see any big reason why anyone would ever create a sidechain ? Why not just stick with btc?  Either they create something cool but where the pegging can be manipulated, or it is just btc rebranded as an altcoin x 100. 
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: JoeyD on April 11, 2014, 08:20:46 am
First we'll have to wait and see if this can be done, but judging from the reddit posts by Dr. A. Back they are well past that point. He apparently organized a "Bitcoin mansion" with a lot of btc-devs to work out if it could be done. He also seems to be in discussion with a large number of mining-pool operators plus he already has massive funding partners. All in all I don't think it would be wise to bet against this getting implemented.

The reddit discussion also mentions that there is no limit to what type of sidechain can be pegged onto the bitcoin-main-chain even other POW/POS ones, but preferred merge-mining over inferior solutions like scrypt if you just want things like faster block-confirmations.

Closest analogy to I3 projects would be that bitcoin works like PTS, but without snapshots, so you can freely opt in or out of your stake anytime you want. The lag of getting BTC in and out of the sidechains is only required for liquidity and interchain btc-trading would probably be faster. To me this makes all alt-coins plus things like Ethereum in their current form irrelevant and Bitcoin into a giant Hydra of the crypto-space with transforming heads.

I share the concerns of Bytemaster around bitcoins mining centralization, however sidechains also offers an easy way out for bitcoin, as this essentially makes bitcoin entirely liquid and blockchain independent.

All in all I think I3 and Bitshares should add the btc-sidechains into their considerations for future (or even short term) projects. I know I3 associates itself with the virtual giants fighting knight, but even chivalrous idealists have to eat. If btc-sidechains can absorb our DACS it might be wise to be doing the absorbing ourselves and offer a more gradual and incentivized way out of bitcoins centralized mining. A bit of strategic and tactical readjustment might be advisable.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: sumantso on April 11, 2014, 09:44:34 am
If the side chain business with 2 way movement really works out, I guess it can be implemented here too which would mean there won't be a different share unit for every different DAC. Who knows, if Bitshares can use the early mover advantage and get big, that unit may rival Bitcoin.

Btw, maaku seems to be one of the devs and is answering questions in the counterparty thready I posted earlier. Maybe I3 can poach him ;)

Practical you mean it could be implemented on BTS blockchain with the andvantage of DPOS and not POW like BTC so it would be a really strong competitor...
The side effect  in this case(and not only) is that Bitshares-PTS will be uselles? Price of PTS will decline  so we the investors  will loose money? Am I missing something?

PTS can be the Bitcoin equivalent, or not. Maybe PTS, AGS and BTS XT will be combined into a single unit. Anyways, its not that important as by the time when it gets implemented (if ever), you will have got stake in several DACs from your PTS. You have to realise its a 'go big or go home' situation with I3 DACs. The price you are paying for paying for PTS/AGS should be a pittance when compared to the value you will receive.

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: sumantso on April 11, 2014, 09:45:55 am
All in all I think I3 and Bitshares should add the btc-sidechains into their considerations for future (or even short term) projects. I know I3 associates itself with the virtual giants fighting knight, but even chivalrous idealists have to eat. If btc-sidechains can absorb our DACS it might be wise to be doing the absorbing ourselves and offer a more gradual and incentivized way out of bitcoins centralized mining. A bit of strategic and tactical readjustment might be advisable.

If this really works out, innovations will just move to a closed source approach. Why spend all the time and effort to create something useful and give it away to Bitcoin holders.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: JoeyD on April 11, 2014, 10:07:04 am
If this really works out, innovations will just move to a closed source approach. Why spend all the time and effort to create something useful and give it away to Bitcoin holders.

Closed source is not an option any more, not in this space. The same argument about time and effort and giving to others could be made from bitcoin-holders perspective as well. You could argue that bitcoin bootstrapped the entire industry, so why should they not reap the benefits. I think that way of thinking is an uphill battle on a slippery slope.

I think energy would be better spent trying to use these developments to our advantage instead of trying to fight it. Maybe we can create an easy onramp to bitshares-DACs via these pegged-sidechains. With some creative thinking these developments could be beneficial to bitshares as much as to bitcoin holders.  Thinking big Bytemaster might come up with a sidechain exodus to more rational, decentralized and economical crypto-lands.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: sumantso on April 11, 2014, 10:15:58 am
If this really works out, innovations will just move to a closed source approach. Why spend all the time and effort to create something useful and give it away to Bitcoin holders.

Closed source is not an option any more, not in this space. The same argument about time and effort and giving to others could be made from bitcoin-holders perspective as well. You could argue that bitcoin bootstrapped the entire industry, so why should they not reap the benefits. I think that way of thinking is an uphill battle on a slippery slope.

I think energy would be better spent trying to use these developments to our advantage instead of trying to fight it. Maybe we can create an easy onramp to bitshares-DACs via these pegged-sidechains. With some creative thinking these developments could be beneficial to bitshares as much as to bitcoin holders.  Thinking big Bytemaster might come up with a sidechain exodus to more rational, decentralized and economical crypto-lands.

I am not suggesting thats what I3 should do; I am predicting thats what will going to happen in this crypto space.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: Empirical1 on April 11, 2014, 10:26:31 am
If this really works out, innovations will just move to a closed source approach. Why spend all the time and effort to create something useful and give it away to Bitcoin holders.

Closed source is not an option any more, not in this space. The same argument about time and effort and giving to others could be made from bitcoin-holders perspective as well. You could argue that bitcoin bootstrapped the entire industry, so why should they not reap the benefits. I think that way of thinking is an uphill battle on a slippery slope.


Yeah, absolutely, I've been saying for ages new tech companies/innovations shouldn't really have shareholders who benefit, they should give most of their returns to Apple/Microsoft/Google shareholders  :P

I don't think it will work  :)  If it is a challenge, I think people will close source for X period/X market size which will be unfortunate. (But new investors and communities will support that vs. making Bitcoin incumbents richer.)
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: JoeyD on April 11, 2014, 11:05:48 am
I'm not saying we should stop developing profitable business ideas and give everything to patent trolls, but that does not mean we should adopt the patent troll modus operandi.

One idea for example for bitsharesX might be to try and 2-way-peg bitbtc as a sidechain to bitcoin and allow easy access from bitcoin to bitsharesX.

Just throwing some ideas out there, I think there must be ways to use this as a means for easier access to bitshares projects, lowering barriers to entry, instead of going the walled garden route, while still maintaining the business model and profiting from the network effect.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: liondani on April 11, 2014, 12:53:23 pm

One idea for example for bitsharesX might be to try and 2-way-peg bitbtc as a sidechain to bitcoin and allow easy access from bitcoin to bitsharesX.


sounds brilliant!
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: CLains on April 11, 2014, 02:12:33 pm
Someone bend the cause-effect space-time probability-cone to our advantage!
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: gamey on April 11, 2014, 04:04:54 pm
The thing about blockchain 2.0 is that the # of people benefiting from it are limited.

Start looking at the various business models of altcoins and you realize a lot become unworkable.  (and to be fair most were unworkable without blockchain 2.0)

To allow a certain set of innovations the sidechain's transactions will be not verified by the main btc network.  If this is allowed, people will be able to steal equity from other owners of the sidechain.

One might think, "but you could do this with regular altcoins".

In a normal market, you would have to sell the stolen shares to realize your ill gotten gains.  With the pegged system you don't.  Just grab your BTC and run.  With altcoins you would have to find buyers first. 

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: JoeyD on April 11, 2014, 04:06:44 pm
Someone bend the cause-effect space-time probability-cone to our advantage!
For that don't we first need to achieve a relative speed of close to but not quite 90 mph?

EDIT
@gamey I don't quite get what you're trying to say. Are you talking about security issues on the side chain? I'm not really seeing the difference with someone stealing litecoins and running compared to someone stealing btc and running, only that the latter has happened to me more than once now.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: gamey on April 11, 2014, 07:26:29 pm

@gamey I don't quite get what you're trying to say. Are you talking about security issues on the side chain? I'm not really seeing the difference with someone stealing litecoins and running compared to someone stealing btc and running, only that the latter has happened to me more than once now.

bytemaster pointed out that there are security issues with this pegging.  If you can trick the pegging mechanism to think you have valid coins on the sidechain, then you can instantly transfer those into BTC.  Previously, if I wrote some sort of hack to give me too any altcoins I would have to then turn around and sell them. This somewhat limits the possible damage because I have to attack the blockchain while still being able to sell the coins of that blockchain.  With the pegging system, all you need to do is trick the underlying mechanism that allows you to transfer the coins to btc and then proceed to do that. 

 (For example CENTS had a huge stake bug that paid out people 10x in their stake. I would then have been able to cash out all those coins instantly without crashing any market. )

The way for sidechains to mitigate this is for the btc network to verify the sidechains themselves.  However, once you do that, you are severely limiting the level of innovation in the sidechains.

Stealing coins through wallets is not the same as attacking a blockchain.   Pegging allows a different type of attack.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: Empirical1 on April 11, 2014, 07:50:02 pm
Just a thought, maybe dumb again, is it possible Bitcoin 2.0 will also never work because making the transactional currency for your product/service be your own shares is just too lucrative?

I'm not great at maths but I have a feeling that having the trading volume coming into a 0% inflation share system starting from a low cap, while the product/service is in it's growth cycle (which could last years) is > than a lot/all of 1% transaction fees.

Example: Truthcoin is planning to let people bet in Bitcoin but charge 1% transaction fees which gets paid to Truthcoin holders. 

But I'm wondering whether if they had $100 million in trading volume going into Truthcoin instead over the course of the year (which would start from a low market cap) how much of the $1 million in fees they were planning to charge they could offset?

The only incentive for offering a Bitcoin-linked-blockchain service is the fees so if the Truthcoin blockchain not linked to Bitcoin could offset the fees or make them free Bitcoin 2.0 couldn't compete. 
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: luckybit on April 11, 2014, 09:38:36 pm
I'm interested to hear people's opinions regarding this new development and how it will affect Bitshares X and other Invictus DACs:
http://letstalkbitcoin.com/blockchain-2-0-let-a-thousand-chains-blossom/#.U0XZZMcnguc

It is being suggested on reddit that two-way pegging will be the downfall of alt coins:
http://www.reddit.com/r/Bitcoin/comments/22m063/blockchain_20_let_a_thousand_chains_blossom/

I don't think it's a good idea. I think Bitcoin mining is centralized and this will only make the situation worse as whoever has the most Bitcoins gets rewarded just for having the most Bitcoins and not for having built anything or having crowd funded anything.

Where is this mysterious money coming from? Who benefits from centralizing the development process, the infrastructure and the crypto-industry?

One of the main reasons to have many different blockchains is because Bitcoin with it's asics and mining cartel are already becoming part of the problem. These sorts of moves are similar to the moves central banks have done by putting regulatory barriers up to prevent competition.

Bitcoin in my opinion needs market competition whether it be from Litecoin, Dogecoin, Bitshares or the many altcoins. If I were an early adopter with a lot of Bitcoins I would still prefer a world where there are altcoins in competition with Bitcoin and I would just buy some of the altcoins. To centralize power into Bitcoin in my opinion is exactly the wrong mistake to make.

If this could be done in a way where it's not centralized, so that Bitcoin mining cartels don't have an unfair advantage and free lunch then it would be okay.

The way things work now the Bitcoin miners can just buy the altcoin and this fuels development of many different technologies and keeps it decentralized. The way things would work if its changed to side chains seems to be that core developers and miners in some sort of political clique would gain a lot of power over the future direction of crypto.

I think the end result of all of this will be negative. The reason is because if we view it as democratic, then having one central group of miners and developers deciding everything is a terrible direction to go. It's going to result in an increase in politicization, it may result in slowed innovation as well, because if people want to make an alt coin there will be less incentive to do it in the future.

The final result of all of this is that it while Bitcoin might be able to survive slightly longer as a brand, it in my opinion shouldn't be about the Bitcoin brand. It should be about the technology itself and I don't think side chains make much sense to people who come into the industry a few years from now.


Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: luckybit on April 11, 2014, 09:52:01 pm
The thing about blockchain 2.0 is that the # of people benefiting from it are limited.

Start looking at the various business models of altcoins and you realize a lot become unworkable.  (and to be fair most were unworkable without blockchain 2.0)

To allow a certain set of innovations the sidechain's transactions will be not verified by the main btc network.  If this is allowed, people will be able to steal equity from other owners of the sidechain.

One might think, "but you could do this with regular altcoins".

In a normal market, you would have to sell the stolen shares to realize your ill gotten gains.  With the pegged system you don't.  Just grab your BTC and run.  With altcoins you would have to find buyers first.

You know, I almost see "blockchain 2.0" as I see vendor lock in. I think it's actually going to be bad for the industry for similar reasons.

People should be able to innovate in new blockchains. I also think it's good to reset the race continuously because that is better for the crypto equity industry.

Perhaps Bitcoin shares may not be $1 million each, but if you have 20 different altcoins with shares of $100,000+ each that's more money in total than just having it be Bitcoin.

The problem with centralizing around Bitcoin is the only thing it does is make the Bitcoin early adopters very rich while centralizing control around that set of developers. This might be fine for people who built up the Bitcoin industry but I don't see how this is any different than a central bank trying everything it can to make it harder for some start up to get past the regulations.

I think we should go in the opposite direction. It should be easy to make new coins, make new blockchains. I don't think we need more shitcoins, but true innovation should be crowd funded or supported somehow.

And I don't think all the funding should come from people who own Bitcoins. There could be a day where Bitcoin is politically untouchable because of some incident or decisions of the development team. Having a diversity of different altcoins actually allows you to have more redundancy in the industry, for sustainable long term growth of crypto markets.

Why is it that we are usually for decentralization, but then we think it's just fine if we see the hints of centralization and control motivation around the Bitcoin blockchain or mining industry?

It's this simple. Some people like the idea of cryptocurrency, and the idea of what it represents politically, but are not going to want to make the Bitcoin early adopters rich.

There are many reasons for this opinion. Such as the fact that millions of coins have been stolen rather than earned. Such as the fact that the mining companies and chip makers are highly specialized and centralized. Bitcoin is becoming too centralized to live up to many of it's ideals and unless they can do this side chain thing in a way which is democratic and not centralized it's not going to work long term.

In my opinion we need competing chains. Bitcoin isn't going to be for everyone. For people who got hacked, lost coins in MtGox, or who tried to mine but lost money because of chip makers hoarding chips, these people might decide they don't want to make Bitcoiners rich and they should have the right to go to a different chain which they consider to be more fair and decentralized.

We always need the right to change from one hierarchy to another if we want to be free. This way if we don't agree with how one is going there can be another. Without the altcoins I don't think Bitcoin will ever become as mainstream as it could become.

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: luckybit on April 11, 2014, 10:46:36 pm
In effect btc mining pools would own the whole industry and decide which side chains live or die.   Such centralization will not be accepted by most.


Sent from my iPhone using Tapatalk (http://tapatalk.com/m?id=1)

Thats a nightmare! And to be really honest I wouldn't be suprised if for some reason the "most" would accept such centralization at the "end"... because of GREED of course... give them money and you see how ethical barriers will collapse... YES I am not optimistic and all conspiracy theories come to my mind again...  :(

I don't think this proposal should be taken lightly and indeed the fear of mining centralization might not be enough of a selling point to put bitcoin to sleep permanently. If this projects succeeds it will probably add huge value to bitcoin, apart from mining-centralization (majority might not even care about that) this would solve just about any critique anyone could have against Bitcoin.

I've been reading some comments of Dr. Adam and others on reddit on this topic, but the majority does not seem to believe that this will give too much power to miners. Actually I got the impression that apart from them not really seeing mining centralization as a large problem (because of current generation asics are no longer profitable enough), they also see it as a way to hedge against miner-centralization as well, because the side chain can apparently be in any other POW/POS form and possibly over a way out of the current mining-model. For the short term they consider the danger of 51% attacks negligible given enough confirmation-time for the migration.

Dr. Adam even mentions being able to implement things like Ethereum or Ripple as a side-chain without the premine and also lists just about every coin distribution-model and POW/S-model as doable on a sidechain. On top of all this Dr. Adam does have quite a track-record in the cryptocurrency space (inventor of bitcoins POW plus he seems to already have funding, cypherpunk contacts and the attention of the bitcoin core-devs) and thinking back the discussion thread on bitcointalk between Counterparty/Mastercoin and btc-core-devs, the latter were doing their utmost to point people to this solution as well. So I'm expecting quite some developer lifting power from the industry being put behind this idea.

Again I don't think this project should be dismissed lightly, this has the potential to be a very big deal. It does not have to be negative either, since this adds value to the btc-AGS-funds as well, provided the supply lasts through the current dip.

Lets assume for a second that the government officially blessed Bitcoin as a currency and then grew the blockchain to support.  They keep it fair and open and suck a lot of people in.  Then they pass a law that requires accounts to be frozen.  The major pool operators and mining operations comply because they have all been subverted and because the blockchain size has grown so large and the network effect is so great no one can setup a new pool without being exposed to the regulators.

There is no reason to fear blockchain 2.0 because market competition will continue to exist as people compete on efficiency, fees, and privacy. 

Additionally once our DPOS system is in place and proven we can propose an upgrade to bitcoin to replace Proof of Work.   Once we have BitUSD then it doesn't matter how big the chain is as long as it has a minimum amount of support.         

They are so focused on proof of work they are missing the obvious.  The entire premise of their innovation is that we need this large centralized proof of work system to be secure against government... once it becomes clear that you cannot outspend government on hash power things will change and people will flood to DPOS systems.  Perhaps bitcoin will upgrade.

I still contend that the security vulnerability on the side chains is a non-starter.

The one thing I see missing in what they propose is where are they supposed to find all these developers to do this? Or are they planning on forking other peoples work to reward Bitcoin miners?

The concern is that it could remove a very important incentive for developers to write software and innovate in the first place and give it to miners.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: bytemaster on April 11, 2014, 11:11:56 pm
Blockchain 2.0 is based upon an economic fallacy of a 'scarcity race', the security fallacy of hash power, and has a giant security hole that would compromise entire side chains.  It has embraced a concept of centralization in a one-world currency, one block chain, etc.  It has embraced barriers to entry by not enabling support for cross-chain-trading.

If you eliminate the contrived idea of a scarcity race and the false security of hash power there is nothing to this Blockchain 2.0.   

Integrating a technology like BTS X into a side chain would require significant R&D... the ideas behind BTS X are easy, implementing them is much harder.  Assuming BitBTC works then we have achieved a peg with BTC already without needing their system.  Cross-chain-trading is all that Bitcoin needs to support, could be implemented today without any modifications.  You do not see Bitcoin developers / mining pool operators working to enable this support which would literally be a few lines of code to add it to the standard transaction type.

The bitcoin elite (pool operators and miners) *own* the sha256 space and thus want to expand their monopoly.  Bitcoin has a network effect, but with cross-chain-trading that network effect can quickly and easily benefit all alt-chains... but their behavior demonstrates that they have been corrupted by the ring of power.  Like the elite before them they are inventing economic concepts (scarcity race) just like the fed invents terms (QE, disinflation, paradox of thrift, etc) to justify their moves.  They are working with regulators already which means they will likely support moves to freeze accounts so that they can continue the gravy train.

(http://www.astrologybylauren.com/gollum-n-the-ring.jpg)

These factors demonstrate to me that regardless of how large the BTC network effect is, they will not be able to out compete everyone.


Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: werneo on April 13, 2014, 03:40:50 am
First we'll have to wait and see if this can be done, but judging from the reddit posts by Dr. A. Back they are well past that point. He apparently organized a "Bitcoin mansion" with a lot of btc-devs to work out if it could be done. He also seems to be in discussion with a large number of mining-pool operators plus he already has massive funding partners. All in all I don't think it would be wise to bet against this getting implemented.

The reddit discussion also mentions that there is no limit to what type of sidechain can be pegged onto the bitcoin-main-chain even other POW/POS ones, but preferred merge-mining over inferior solutions like scrypt if you just want things like faster block-confirmations.

Closest analogy to I3 projects would be that bitcoin works like PTS, but without snapshots, so you can freely opt in or out of your stake anytime you want. The lag of getting BTC in and out of the sidechains is only required for liquidity and interchain btc-trading would probably be faster. To me this makes all alt-coins plus things like Ethereum in their current form irrelevant and Bitcoin into a giant Hydra of the crypto-space with transforming heads.

I share the concerns of Bytemaster around bitcoins mining centralization, however sidechains also offers an easy way out for bitcoin, as this essentially makes bitcoin entirely liquid and blockchain independent.

All in all I think I3 and Bitshares should add the btc-sidechains into their considerations for future (or even short term) projects. I know I3 associates itself with the virtual giants fighting knight, but even chivalrous idealists have to eat. If btc-sidechains can absorb our DACS it might be wise to be doing the absorbing ourselves and offer a more gradual and incentivized way out of bitcoins centralized mining. A bit of strategic and tactical readjustment might be advisable.

 +5%

It's hubris to dismiss Aethereum.

http://www.reddit.com/r/Bitcoin/comments/22na59/sidechains_the_coming_death_of_altcoins_and/
https://bitcointalk.org/index.php?topic=563925.0
https://www.youtube.com/watch?v=cbLvun4hU1A
https://www.youtube.com/watch?v=tvaAiBMdGt8

I think that, along with all the plans and ideas floating around I3 headquarters, there should be a plan to address the challenge posed by Aethereum: I3 should develop a contingency plan to make Bitshares forward compatible with sidechains. If sidechains take off in the next few years, Bitshares should be ready to adapt.

Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: tonyk on April 13, 2014, 03:55:03 am
Let’s put it simply,
In the meat world 99% of the population does not understands what the central banker is talking about.
In the crypto world 98% does not know (or do not have the time to research) the protocol.
So in this particular venue, we believe when bytemaster tells us ‘side chains will be/are  unsecure’
 SO!!!
We do not need forward/backward or sideway compatibility with anyone… OK
So shut up… and listen…
:))))))
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: werneo on April 13, 2014, 04:34:55 am
Let’s put it simply,
In the meat world 99% of the population does not understands what the central banker is talking about.
In the crypto world 98% does not know (or do not have the time to research) the protocol.
So in this particular venue, we believe when bytemaster tells us ‘side chains will be/are  unsecure’
 SO!!!
We do not need forward/backward or sideway compatibility with anyone… OK
So shut up… and listen…
:))))))

As a reminder, the topic of the thread is, "What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?"

Note this interview with Adam Back and Austin Hill: https://www.youtube.com/watch?v=tvaAiBMdGt8
beginning @8:55 or so. Adam B. Levine asks the essential question about security. Austin Hill's response was that the bitcoin protocol itself needed to be changed to secure sidechains inside the bitcoin network.  These people are at the professional heart of cryptography. Right now bitcoin is in version 0.9x. These guys have announced plans to work with the core bitcoin developers so that by the time bitcion 2.0 comes out 2 or 3 years from now, sidechains will be fully secured by the hashing power of the network. Part of the narrative is that bitcoin has effectively crowdfunded an ASIC hashing infrastructure currently valued at $250,000,000 and growing. 

Look, I am all for dPoS. But to date it's untested. If it works flawlessly, then dpos will go into history and bytemaster will be more celebrated than Satoshi. But if the first missle blows up on the launch pad, I3 would be well-advised to have a thought-through contingency plan.

Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: tonyk on April 13, 2014, 04:45:37 am
I was kidding that bytemaster does not takes it seriously enough... after your post I guess I can too..

These people are at the professional heart of cryptography
These guys have announced plans to work with the core bitcoin developers so that by the time bitcion 2.0 comes out 2 or 3 years from now, sidechains will be fully secured by the hashing power of the network”


And what this :"Part of the narrative is that bitcoin has effectively crowdfunded an ASIC hashing infrastructure currently valued at $250,000,000 and growing. " have to do with anything?????

If anything it is concerning that  decentralizations idols of 2-3 years ago are proud to announce enormous investment in specifically centralization oriented hardware.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: lynx on April 13, 2014, 05:11:53 am
It's good for cryptocurrencies in general that Bitcoin can innovate and remain relevant. Many people have viewed Bitcoin as THE currency of the future, many people believe that Bitcoin's first mover advantage matters and that it will be capable to evolve and adopt cool new features. That is the reason Bitcoin's market cap is that high compared to all newer coins. If Bitcoin gets outcompeted in the long term, that should be because of inherent economic flaws in its philosophy, not because it lacks a killer feature X or because it has slow confirmations, etc. If Bitcoin fails due to lack of innovation, it can seriously undermine public image of cryptocurrencies and give impression that every cryptocurrency becomes obsolete in a few years. It's important to insist that there is place for economically sound alternatives to Bitcoin, it's important to insist that Bitcoin's monopoly is problematic, but explicitly having the goal to become bigger than BTC and make BTC obsolete isn't the best approach.
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: fuzzy on April 13, 2014, 08:04:38 am
'...That is the reason Bitcoin's market cap is that high compared to all newer coins..."

Actually there is no reason why BTC market cap is ~18x the cap of LTC not ~4x.

There is...its called First Mover Advantage and Adoption.  Though the wind blows strong in one direction, however, it can alter course in a split second given a change in atmospheric pressure.  This is precisely the reason we do more for ourselves by attempting to bring in and develop on top of proven altcoins rather than Bitcoin. 

Most people who think Bitcoin is the only show worth going to tend to forget that Bitcoin took a long time to get where it is today.  Their time-horizon is too short.  Give some of these solid altcoins (Peercoin, for example) a few more years and you will see what I'm talking about. 
Title: Re: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?
Post by: Stan on April 13, 2014, 12:35:31 pm
It's good for cryptocurrencies in general that Bitcoin can innovate and remain relevant. Many people have viewed Bitcoin as THE currency of the future, many people believe that Bitcoin's first mover advantage matters and that it will be capable to evolve and adopt cool new features. That is the reason Bitcoin's market cap is that high compared to all newer coins. If Bitcoin gets outcompeted in the long term, that should be because of inherent economic flaws in its philosophy, not because it lacks a killer feature X or because it has slow confirmations, etc. If Bitcoin fails due to lack of innovation, it can seriously undermine public image of cryptocurrencies and give impression that every cryptocurrency becomes obsolete in a few years. It's important to insist that there is place for economically sound alternatives to Bitcoin, it's important to insist that Bitcoin's monopoly is problematic, but explicitly having the goal to become bigger than BTC and make BTC obsolete isn't the best approach.

But if new currencies honor old currencies then there is a graceful upgrade path.  I don't worry about the current top currency becoming obsolete because I know that its successor will have to honor it in order to move into the top spot.

So at any time I might own the top currency and the same amount of several successors that I received at their genesis.  At any time I can gradually sell the ones I don't believe in to buy more of the one I expect to win.  If I don't know, then I continue to hold all of them and watch and wait.

Eventually, it will become clear which the market has chosen.  Snapshots that honor the incumbent tend to reduce the friction and let the market make a choice based on the merits.

That's my theory anyway.   :)