Sidechains should be a priority for bitshares.

[vegolino]

Ha! Nice pictures guys...

But think of this. What would you say about a banking system that only allows its products and loans to be backed by shares in itself? Why shouldn't that banking system be open to accepting any form of good collateral, as in modern finance? Who is on the horse then?

What I'm leading toward is open architecture, not promoting any specific coin or philosophy. Anyway, this conversation is a bit ahead of its time as its not really possible yet. So I'm comfortable taking the jibes for now! 

 

[starspirit]

Ha! Nice pictures guys...

But think of this. What would you say about a banking system that only allows its products and loans to be backed by shares in itself? Why shouldn't that banking system be open to accepting any form of good collateral, as in modern finance? Who is on the horse then?

What I'm leading toward is open architecture, not promoting any specific coin or philosophy. Anyway, this conversation is a bit ahead of its time as its not really possible yet. So I'm comfortable taking the jibes for now! 

[speedy]

Someone else will make a bitcoin collateralised BitUSD if bitshares doesn't.
That will be the one people use.

So you are saying that everything this community has been trying to do since day 1 is pointless, because bitcoin is the one true chain and its useless to make any other cryptocurrency.  Everyone should do everything with bitcoin instead because it was first.

Its not pointless to make another cryptocurrency, only because the BTC core developers are too comfortable with being the incumbent. As soon as the core developers realise how tying up BTC collateral in BitAssets could be huge for Bitcoin, they will rush to implement BitAssets into the BTC protocol too (I would).

I personally hope they do, because Bitcoin is not going away - check out its growth in transactions: https://blockchain.info/charts/n-transactions?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

[Ander]

Do we really need something like this? is this analogy wrong?

LOL... perhaps if the car was a Tesla. 

LOL... perhaps if the car was a Tesla SpaceX Rocket. 

LOL... perhaps if the car was a Tesla SpaceX Rocket Delorean Time Machine. 

[Method-X]

You can't make bitshares a side chain of bitcoin without accepting all the bad design decisions they made - POW, 10 minute block times etc...

Not true. It takes 10 minutes to get the BTC on the sidechain, at which point the coins have the same properties as the sidechains coins. In other words, BTC would have all the properties of BTS until you "withdraw" the BTC.

That's having BTC as a sidechain of BTS, which isn't possible, since BTS does not have side chains.

That's good news. I'll definitely have to look into how sidechains work when I've got more free time. So what you're saying is, nobody can just fork Graphene and use it as a sidechain because the sidechain would be insecure (no financial incentive to protect the network)?

[fuzzy]

starspirit & arhag make my head spin.  My contribution to this can only be on a conceptual level.....bitcoin's network is tiny compared to the internet wherein lies the true potential.  Bitshares can gain network effect that dwarfs bitcoin's simply by innovating and getting the product right.  There's no need to add complexity to the objective by attempting to find a technical solution to patch in a less advanced network.  The lag we are seeing is because people are only just getting their heads around bitcoin, let alone bitshares, but they will.  The economics of the bitshares system is carfully built around BTS as collateral.  The trust built around what bitshares/BTS stands for can only be maintained via DPOS on the Bitshares network.  That is an important anchor to people.

I will love and respect Satoshi & Bitcoin forever, but they were only the beginning.

^this.

[JA]

Do we really need something like this? is this analogy wrong?

LOL... perhaps if the car was a Tesla. 

LOL... perhaps if the car was a Tesla SpaceX Rocket. 

[Ben Mason]

starspirit & arhag make my head spin.  My contribution to this can only be on a conceptual level.....bitcoin's network is tiny compared to the internet wherein lies the true potential.  Bitshares can gain network effect that dwarfs bitcoin's simply by innovating and getting the product right.  There's no need to add complexity to the objective by attempting to find a technical solution to patch in a less advanced network.  The lag we are seeing is because people are only just getting their heads around bitcoin, let alone bitshares, but they will.  The economics of the bitshares system is carfully built around BTS as collateral.  The trust built around what bitshares/BTS stands for can only be maintained via DPOS on the Bitshares network.  That is an important anchor to people.

I will love and respect Satoshi & Bitcoin forever, but they were only the beginning.   

[bytemaster]

Do we really need something like this? is this analogy wrong?

LOL... perhaps if the car was a Tesla. 

[chryspano]

Do we really need something like this? is this analogy wrong?

[starspirit]

By the way starspirit, I don't see how the BitAssets backed by a mix of collateral types would be fungible unless a fixed mix ratio was specified as part of the BitAsset definition that all shorts of that privatized BitAsset had to satisfy. And in that case, I would imagine the only practical way to short new BitAssets with mixed backing collateral into existence would be through a self-short. The logic for margin calls would also get more complicated with mixed collateral.

Correct. With self-shorting and self-cancellation, shorts get to control the mix of collateral they want. I've been working on just such a structure. Collateral can then be completely independent of the markets in which the token trades. Also margin calls could be satisfied by applying each collateral token in sequence to covering the debt until it is satisfied, and then returning the residual collateral tokens to the short. This sequence could even be determined by the short.

Also, in case it wasn't clear in my answer, no, you don't require a fixed mix ratio. The shorts could change the mix of collateral as they please, as long as they met the minimum coverage conditions.

[starspirit]

But I can imagine it might be possible to create UIAs on the bitShares block-chain that are backed by BTC, LTC, NXT, you-name it, as long as there are ways to minimise counter-party risk through appropriate operations like multi-sig, escrow or the like. To be honest I don't know if side-chains help with that or not, I'm naive in that area, though I've asked the question before.

Yes, UIA gateway assets (like GATEBTC) + the new privatized BitAssets should make this possible. The only question is if the trust can be decentralized out to many parties to keep the counterparty risk is low enough for people to use it for more than just a means of quickly getting value in an out of the system to/from assets without counterparty risk. On the BitShares side, the new multisig features provide a lot of flexibility for managing the UIA properly (e.g. not diluting its value). The limiting factor is on the Bitcoin side. It doesn't make sense to have more decentralization on the BitShares side than on the Bitcoin side when the UIA could become worthless if the reserve is stolen. Ignoring advances in ECDSA threshold signatures (and assuming Bitcoin does not adopt new cryptography like EdDSA or radically increase the limits on their scripts), we are currently limited to an M-of-15 multisig for the BTC reserve backing the gateway UIA. You want M to be large to reduce the risk of compromise but obviously not too large that it dramatically increases the risk that the reserve holders get locked out of access to the reserve because some of them become unresponsive or disappear. Not sure what would be the ideal value for M, but the main question is if a well selected group of 15 individuals/organizations can be trusted to not collude to steal a potentially huge reserve. If not, very few people would trust holding the BTC-backed UIA for long term or holding BitAssets that derive their value from such UIA.

This is why its good to have you participating here again arhag! You clearly know better than many of us what's feasible here or not. Though I do think that there is some level of trust where people will be comfortable, and it's not necessary to have a trust-less system. That's clearly evident in that people give trust on a daily basis, to their financial advisors, fund managers, brokers, exchanges etc etc. All I need is a solution that everyone would agree is very low risk, not no risk.

By the way starspirit, I don't see how the BitAssets backed by a mix of collateral types would be fungible unless a fixed mix ratio was specified as part of the BitAsset definition that all shorts of that privatized BitAsset had to satisfy. And in that case, I would imagine the only practical way to short new BitAssets with mixed backing collateral into existence would be through a self-short. The logic for margin calls would also get more complicated with mixed collateral.

Correct. With self-shorting and self-cancellation, shorts get to control the mix of collateral they want. I've been working on just such a structure. Collateral can then be completely independent of the markets in which the token trades. Also margin calls could be satisfied by applying each collateral token in sequence to covering the debt until it is satisfied, and then returning the residual collateral tokens to the short. This sequence could even be determined by the short.

[arhag]

But I can imagine it might be possible to create UIAs on the bitShares block-chain that are backed by BTC, LTC, NXT, you-name it, as long as there are ways to minimise counter-party risk through appropriate operations like multi-sig, escrow or the like. To be honest I don't know if side-chains help with that or not, I'm naive in that area, though I've asked the question before.

Yes, UIA gateway assets (like GATEBTC) + the new privatized BitAssets should make this possible. The only question is if the trust can be decentralized out to many parties to keep the counterparty risk is low enough for people to use it for more than just a means of quickly getting value in an out of the system to/from assets without counterparty risk. On the BitShares side, the new multisig features provide a lot of flexibility for managing the UIA properly (e.g. not diluting its value). The limiting factor is on the Bitcoin side. It doesn't make sense to have more decentralization on the BitShares side than on the Bitcoin side when the UIA could become worthless if the reserve is stolen. Ignoring advances in ECDSA threshold signatures (and assuming Bitcoin does not adopt new cryptography like EdDSA or radically increase the limits on their scripts), we are currently limited to an M-of-15 multisig for the BTC reserve backing the gateway UIA. You want M to be large to reduce the risk of compromise but obviously not too large that it dramatically increases the risk that the reserve holders get locked out of access to the reserve because some of them become unresponsive or disappear. Not sure what would be the ideal value for M, but the main question is if a well selected group of 15 individuals/organizations can be trusted to not collude to steal a potentially huge reserve. If not, very few people would trust holding the BTC-backed UIA for long term or holding BitAssets that derive their value from such UIA.

By the way, I agree with others in this thread that side-chains are not the way to go (for technical reasons, e.g. PoW) to bring BTC tokens into the BitShares blockchain.

By the way starspirit, I don't see how the BitAssets backed by a mix of collateral types would be fungible unless a fixed mix ratio was specified as part of the BitAsset definition that all shorts of that privatized BitAsset had to satisfy. And in that case, I would imagine the only practical way to short new BitAssets with mixed backing collateral into existence would be through a self-short. The logic for margin calls would also get more complicated with mixed collateral.

[starspirit]

sorry but I have to say I'm a little bit disappointed that so many people support this idea...

what application will build based on a 10min confirmation and 7TPS system? forget the BTC Sidechains guys, it will not change anything

wake up, we will have a 100000TPS system!

I suspect that different people on this thread are potentially coming from quite different perspectives on how such a structure would be put together. Most debates are like that...
But I can imagine it might be possible to create UIAs on the bitShares block-chain that are backed by BTC, LTC, NXT, you-name it, as long as there are ways to minimise counter-party risk through appropriate operations like multi-sig, escrow or the like. To be honest I don't know if side-chains help with that or not, I'm naive in that area, though I've asked the question before.

Now imagine you have, on the bitShares block-chain, tokens physically backed by these outside assets. Not only might these be in high demand in their own right (given the relative benefits of our network), but they could serve as collateral behind other asset structures such as bitAssets. No need to change the properties of bitAssets - just simply plug in a new accepted collateral type.

These assets could then trade externally and be promoted as collateralised tokens, with all the same benefits as bitAssets, but without the market having to decide whether it likes BTS as collateral or not. It takes away the inclination to make any judgement on BTS at all, and focuses them on the security of the block-chain enforced collateral rules.

[wallace]

sorry but I have to say I'm a little bit disappointed that so many people support this idea...

what application will build based on a 10min confirmation and 7TPS system? forget the BTC Sidechains guys, it will not change anything

wake up, we will have a 100000TPS system!