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.

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. 


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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

Looks like the idea I had in mind is being implemented by the Mastercoin team.
http://www.coinvance.com/

I haven't had a time to look at the code but I hope to. I think for bounties it should be something similar to Coinvance . It should be a DAC of course.

This is off topic.  I've been seeing many web pages in the crypto world with a format similar to that used on coinvance.com, linked above.  Is there a template or some other simple website creation tool for creating sites like this?  I like the style.

Quote from: xxeyes on February 18, 2014, 01:09:39 pm

Quote from: bytemaster on February 18, 2014, 06:19:29 am

No actions to take on your part aside from making sure your PTS is in your local wallet (not on an exchange) prior to Feb 28th.   Once the snapshot is taken we will begin preparing for release.   After we have released the code you will be able to import your wallet at any time and you will be good to go. 

No extra steps.

Thanks bytemaster, but I'm still confused.  You say that "we have decided to recommend that all future chains based upon the concept behind BitShares X be initialized with a snapshot (100%) of the state of BitShares XT around the time of their launch".  It seems to me that there are two snapshots, one of AngelShares/ProtoShares around Feb. 28 in order to claim BitShares XT, then another of BitShares XT around launch time in order to claim my stake in future chains based on the concept behind BitShares X.  Is this the case, or is there only one snapshot, that of AngelShares/ProtoShares on Feb. 28, which the distribution of both BitShares XT and all future chains based on the concept behind BitShares X will be based?

If the latter is true, than I understand that there are no extra steps.  If the former is true, then does this not mean that I have to ensure that I have downloaded the bitshares client and claimed my bitshares (from AngelShares) before this snapshot of BitShares XT is taken in order to claim my stake in future chains based on the concept behind BitShares X?

There will be two snapshots.

The first one will copy all AGS/PTS addresses with a positive balance at that time and assign them their BTS balances. This copy will be in the first block (genesis block) of the BTS chain.
The second snapshot will then copy all BTS addresses with a positive balance at a later time to incorporate them in the genesis block of the new chain.

--> If you never touch your BTS before the second snapshot they will still be sitting in the genesis block of the first BTS chain. This balance will of course be copied in the second snapshot.

Thanks Marcus, I had assumed that I would need to "claim" my BTS within the BitShares Client in order to associate a wallet/private key to them before the second snapshot in order to ensure that my initial investment in AngelShares could be linked not only to the first, but also to all subsequent BitShares chains.  From your breakdown I gather that this is not the case.  My stake in future BitShares chains is somehow tied to me through the genesis block of the first BTS chain (which itself is based on a snapshot of AngelShares/ProtoShares) even without me accessing my BitShares before the Second snapshot.  Correct?

If our goal is to see the value of BitShares XT to grow then we need to future-proof peoples investment in BitShares XT after launch against being devalued by one of our planned upgrades or the flood of variants with different assets.   For this reason we have decided to recommend that all future chains based upon the concept behind BitShares X be initialized with a snapshot (100%) of the state of BitShares XT around the time of their launch.   Thus the primary vehicle for investing in future BitShares X chains will be to own BitShares XT.... likewise, chains that are variants of BitShares XI or XV should honor their parent with 100% stake.     

Bytemaster, would you please clarify how/when the snapshot of BitShares XT will occur.  It is my understanding that previous to this announcement, I could import the private key from the wallet from which I donated Bitcoin to AngelShares into the BitShares client sometime after launch to claim my Bitshares.  I presume this is still true.  However, I am not clear on when I have to do this in order to ensure that I am ready for the next snapshot - that of BitShares XT.  What if I (or another investor) is away on vacation around the February 28th launch of Bitshares?  I'm not terribly tech-savvy and sometimes I struggle to follow all this.  Now that we have an additional action to take before the snapshot that will define our stake in future BitShares chains, I am concerned I could somehow miss it...

Quote from: Anytime on February 05, 2014, 05:33:16 am

Can I sell my BTS when the bitshares will be released after 2\28?

The snapshot will be taken on 2/28, then early March we will launch the chain as soon assuming all goes according to plan.  At that point the BTS are yours to do as you like.   However, I would caution everyone that this is a test network so it should be valued accordingly.

Instead I would encourage everyone to speculate on chain with BitUSD.

Can you expand upon why you encourage everyone to speculate on chain with BitUSD?  I'm still trying to understand all of this.  What would be the benefit of doing so?

I just came across something called Counterparty, which appears to be a new competitor to Bitshares:
https://counterparty.co/about/

I would be interested to hear people's opinions about it.