Quote from: brg444 on October 30, 2014, 09:22:36 PM

Quote from: Adrian-x on October 30, 2014, 07:40:37 PM

above is the reason, I disagree with what you are suggesting, bitcoin is the asset ledger, money is not the token but memory, you don't own bitcoin, you control a % of the asset ledger. Balance in value and security is maintained by miners making economic value judgments. For PoW to be rewarded appropriately to preserve the network and the distributed allocated of control, miners need to be incentivised . Nodes are incentivised to preserve the ledger because they have value in it, Miners are incentivised to wright to that ledger in lieu of a Block rewards.

this is a dynamic equilibrium but in general if the Bitcoin network grows (number of users) one can expect the utility to grow as it has, (thanks Peter-R) according to Metacafe's law if it grows faster then the mining reward diminishes, then one expects competition in mining to produce coins (miners - create "credit" in the immutable memory ledger called the block reward). What is expected to happen is: 1) innovation in mining efficiency to make better use of the limited and costly resources and energy; 2) miners will use any increase in efficiency to consume all available resource - Jevons paradox gives us a hit of what could be. if not for diminishing rewards to eventual just the cost of writing tx.

in short efficiency in mining innovation is responsible for the hashrate, and the price of bitcoin is reasonable for the amount of energy burned. (energy being important as it is the root of all economic activity and productivity) PoW efficiency is a highly contentious issue among many in other threads, and there too the economics is also not well understood as opponents argue the energy burned and wasted while its clear to those who see it it is is not wasted and the dynamic and economics are sound.

If you tie other assets to the blockchain, by locking bitcoin in, you in effect are reducing bitcoins network and growing another network the SC, what happens then is the value grows in the other network, according to Metacafe's law, and the Bitcoin network is diminished. The result is lower block rewards, and less incentive to mine, all the while bitcoin holders can exchange into the new network further reducing Bitcoins value.

Bitcoin is a success precisely for all the reasons that make it, but a AltChain that leverages the value out of bitcoin, by differentiating bitcoin the currency form bitcoin the ledger, is created not as a competing innovation but as a for profit idea. truly competing ideas compete 1:1 head to head like alts, they dont peg 1:1 and drain the life out of the host.

We have the tech to do secure trust less off Blockchain micro transaction with technologies like micro payment channels, and we have the ability to create secured trust free BTC funds in an exchange or contract environment.

Now, that, is a well opinionated, sensible and valid argument for the danger of SC. I had never considered it from that angle and it does make a lot of sense. None of that conspiracy theory, whale speculative attack, developer collusion tinfoil hat type of stuff.

I do have some questions though

Quote

The result is lower block rewards, and less incentive to mine, all the while bitcoin holders can exchange into the new network further reducing Bitcoins value.

How do you explain lower block reward? My understanding is block reward remains the same no matter the size of the mining infrastructure.

what he's saying is that over the long run, Bitcoin miners will have to make the transition from depending on block rewards to that of being paid in tx fees. that is b/c of he block reward halving every 4 yrs. this dynamic has a chance of avoiding the Tragedy of the Commons if Bitcoin can attract enough users in the future to increase tx fees in aggregate to compensate for the block reward halvings.

Quote

Also, I don't see how 1:1 peg drains the lift out of the host. Think of the main chain as a reserve account and sidechains as checking account. A well designed, 1:1 peg of Bitcoin that works in synergy with the main chain does not diminish the network IMO. These chains are effectively sub-chains.

Here is a rational proposition :

You have the Bitcoin main-chain and two sidechains : one for privacy and one for micro-transactions. Do you not agree that these can work in synergy and ultimately add value to the network by being supported by the same underlying currency (or technically BTC and BTC-peg). In fact, there is more incentives more miners to mine considering the expected increase in transactions and effective use of the network.

those who actually use BTC on a daily basis, as opposed to those hodling, will be encouraged to move to the SC's to perform their tx's b/c of the innovations of privacy and microtransactions. those miners on the SC's will be the one's getting paid the tx fees from these users instead of the miners who elect to stay behind on the BTC MC. that's not good for Bitcoin or those miners as the block rewards diminish. that's where the draining the life out of Bitcoin comes from as miners will have to defect to the SC to get paid over time.

Quote

From my point of view it certainly is more beneficial to BTC than having Bitcoin and two other alt-coins that serve these features. I also fail to understand your arguments that these chains (in my example) would work as "for-profit" ideas.

i think he's saying, and correct me if i'm wrong, that it's unethical for Blockstream to capitalize on Bitcoin's success and their privileged position as maintainers of the source code to create SC's as a competitor. especially when the SC's have the chance to destroy the MC.