Quote from: adam3us on November 01, 2014, 06:15:56 PM

Quote from: Kupsi on November 01, 2014, 05:20:06 PM

Quote from: Blitz on November 01, 2014, 05:11:45 PM

I read it but I feel like I'm missing something:

Quote

its a 2 way peg, so both BTC and scBTC can move freely back and forth.

Can you elaborate? How are the both to be pegged? How is the peg rate determined, and does it float?

Since you are free to move coins between BTC and scBTC, the price will be the same. You don't sell scBTC for a lower price when you can transfer it back to BTC and sell it for the full price.

Correct. I think its worth clarifying that the peg is algorithmic, because its seems from the thread that some people may not understand that. You, personally, can ask the network automatically to swap unlimited quantities of BTC on the sidechain for BTC on the main bitcoin chain.

The only reason to swap with users using atomic swaps or trades is to do that faster. No one is going to take anything other than a negligible price difference because they can click a button and move the coins between chains themselves.

Further because that 2wp backstop is there, and anyone and his dog can do arbitrage, with full confidence that they'll be able to exercise the 2wp and capitalise on the small time-preference, the will be small. It seems just as likely that the sidechain coins sell at a small premium for the time-preference access to side-chain features. (Time-preference means someones preference to gain access to something sooner rather than waiting eg 24hrs, and they'll sometimes be willing to pay a small fee to get it earlier, eg check advances or such things).

I dont think it realistic that we would see anyone willing to sell sidechain BTC at anything significantly below par in either direction, to do so is to burn money needlessly. People will arbitrage it and its open to anyone to arbitrage. So unless someone wants to burn money (and bitcoin already supports proof of burn or pay to miners if you're into burning money or donating to miners), no one will be offering to swap sidechain BTC for BTC at anything far below or above $350 (assuming current market price of $350). eg $349.50 to $350.50 might be an example which is 15 basis points, that'd give someone a 15% return on an annual basis with steady arbitrage for a 2 day clearance time on the peg. They can maybe get a higher return (and hence be willing to offer even lower margins) by holding a float on both sides and cancelling some trades against others as those happen faster so they get more than one arbitrage fee per exercise of the 2wp.

Obviously no one is encouraging anyone to put real money into untested or buggy sidechains. I dont think there will be lots of sidechains and the main sidechains will be extremely well tested and coded to the same rigor as bitcoin itself.

Adam

we already know from your paper that there will be at least a delay (2d?) due to the contest/confirmation time. also, the SPV proof is untested, unless you want to claim it's perfect/unhackable right here and now, which would be foolish. these factors alone will ensure that there is a difference btwn the BTC and scBTC fiat price. its not an instantaneous transfer.