Author Topic: What does Blockchain 2.0 mean for Bitshares X and other Invictus DACs?  (Read 16955 times)

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Offline Stan

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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.   :)
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Offline fuzzy

'...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. 
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Offline lynx

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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.

Offline tonyk

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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.
« Last Edit: April 13, 2014, 04:54:35 am by tonyk »
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline werneo

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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?

Offline tonyk

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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…
:))))))
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline werneo

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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.

« Last Edit: April 13, 2014, 03:53:58 am by werneo »

Offline bytemaster

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.



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


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Offline luckybit

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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.


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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.
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Offline luckybit

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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.

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Offline luckybit

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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.


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Offline Empirical1

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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. 

Offline gamey

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@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.
« Last Edit: April 11, 2014, 07:29:14 pm by gamey »
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Offline JoeyD

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.
« Last Edit: April 11, 2014, 04:11:29 pm by JoeyD »

Offline gamey

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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. 

« Last Edit: April 11, 2014, 07:17:35 pm by gamey »
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