OKCoin's LTC:CNY chart is still broken.

Happy New Year even to you.

Japan News / Yomiuri Shimbun 2015-01-01
Fraud causes disappearance of 99% of Mt. Gox bitcoins
http://the-japan-news.com/news/article/0001825662

I am not so sure... If the change to the protocol means not having their revenue cut 50%, I bet that most miners, even those who are not in the cartel, would eagerly support it.

Merchants who "accept bitcoin" would not care and would not take sides, since they receive dollars and, at worst, may lose some customers if bitcoin collapses.  Payment processors, exchanges, and the like would have to choose a side, but since siding against the cartel could mean losing their income for months, they will probably upgrade before the deadline; and that will force their clients to upgrade, either before the deadline or before accessing their services again.  Note that, up to the deadline, users and miners who choose to upgrade will continue to interoperate with those who don't.

I seems that when people discuss a 51% attack they assume some entity that wants to either destroy bitcoin, or pull some quick scam (like double-spending) and run away.  But cartels usually employ their power to maximize net revenue over the long run, and are careful not to kill their cash cow.

At the current BTC price, the change I described would mean 600 k$/day for 2 years for the whole network, which is ~440 M$.  If the cartel has >50% of the power, that means >220 M$ of extra revenue just for the cartel.

Depending of their costs, that could mean the difference between making 100 M$ profit (say) if they try and succeed, or having to turn off their equipment and lose all their capital, as a reward for their "good behavior", if they do nothing.   At worst, if they try and fail, they will lose only a few weeks of revenue; and from then on they would get the same "reward" they would get if they did nothing.

Moreover, I don't believe that many people would want to leave bitcoin just because of that change.  Not even the long-term holders should change their minds about bitcoin's future because of a change to a parameter that was clearly chosen quite arbitrarily.  (People in countries with high inflation or bank deposit haircuts do not stop accepting their currency; they just try to spend it as fast as they can, or convert it to investments that are resistant to inflation.) The price may even go up, if the change is properly marketed as preserving the network's unique strength etc.

The cartel would have to change the difficulty level and the difficulty adjustment algorithm to keep the new chain flowing at an acceptable rate during the transition period.   The cartel can move its power back and forth between the two chains, according to what the non-cartel miners are doing, in order to always have 51% of cooperating hashpower on both chains.  As noted above, most of the non-cartel miners would have strong incentive to cooperate with the cartel, and upgrade to the cartel's protocol, before  the deadline; they would then put any rebel miners at an even bigger disadvantage.


I still do not understand what sort of "big red button" could do that.  Changing the protocol to make the ASICS useless would force any remaining rebel miners to give in to the cartel, and would require that the rebel users upgrade to a different protocol (which is supposed to be a catastrophe) leaving them on a junk coin with a minuscule network, no service infrastructure, and a minority of the former users.  But they would still have the option to upgrade to the cartel protocol and find all their coins waiting for them in the cartel chain, apart from any transactions that they made in the junk chain after the deadline.


I must be missing some essential detail.  I understood that each sidechain would be just a black box from the viewpoint of the bitcoin protocol, and its designers/developers would be free to choose whether and how to peg its operations to the bitcoin chain -- without the bitcoin network having to know about it.   Is there more to the 'sidechain' concept than that?

Could a sidechain be a BTC/USD exchange providing sub-second trades with cryptographic certificates? It would not be possible to peg every such trade to the blockchain, right?

Well, to me bitcoin looks like the Ptolemaic system of spheres with axles mounted eccentically on other spheres etc.  An impressive technical tour-de-force an a working solution to a difficult problem, but clearly not quite the best solution yet.

We do not know whether the SEC suggested anything.  The Winkles may have decided to change the state of incorporation and many legal details, so they absolutely had to amend their filing just because of that.  I don't know if the other changes, about the current state of the bitcoin economy, would have made much difference to the SEC, or if the Winkles would have felt it worth amend the filing just because of them.

News about the amended filing were been posted several times to on the /r/bitcoin sub-reddit.  In one of those threads, someone observed that the SEC has more than 1000 ETF proposals waiting for approval, some for over a year; and that the longer a proposal sits on the queue, the less likely it is to be approved.

The proposal says they will offer 1'000'000 shares, each representing 0.20 BTC held by teh fund.  If the ETF is approved, presumably the Winkles will sell their estimated 200'000 BTC to the fund (indirectly, to the people who will but shares of the fund).

They also changed the name of the fund's company.  Another comment on that thread notes that the acronym of "Math-Based Asset Services, LLC" - MBASL -- could be pronounced as "embezzle".   

Here is a diff of this latest amended proposal (version 5) and the previous one (version 4):
http://www.reddit.com/r/Bitcoin/comments/2qxgah/diff_of_the_newest_winklevoss_filing_here/

They update some data about the state of bitcoin (e.g. adoption) and change the State where the fund is incorporated, from New York to Delaware.  Would this change improve the chances of approval?

The plan is still to trade the fund on NASDAQ anyway.

Of course one can easily protect against that risk -- if one is aware of it.

Happy new year to you too. 

Another contribution of Blockhead Blockchain.info to that P(software is buggy) factor:
https://bitcointalk.org/index.php?topic=40264.msg8891379#msg8891379

Perhaps I did not explain myself clearly.  Here is a more detailed scenario:
http://www.reddit.com/r/Bitcoin/comments/2qdfat/without_downvoting_me_to_hell_can_someone_explain/cn5s41z

Is there anything wrong with that, technically or economically?


That button is not MAD but SAD, assured self-destruction. Or not even that,  It would just create another junk coin, with a minuscule network, that bitcoin users could start using -- if they would rather use a junk coin than give in to the cartel.  By definition, the faithful miners would not be able to mine it.  Meanwhile, the cartel's fork would continue working as before, with at least 51% of the original hashrate; and the only option for users and miners to keep using bitcoin would be to upgrade to the cartel's protocol.

Putting it more simply: an entity that can jam some process for sufficiently long time can force the people who depend on that process to accept changes to it, as long as the changes are not as bad as the jamming itself.


That is my understanding, and that is I why I cannot see any technical content in the sidechains proposal.  Unless it specifies some things that every sidechain must do (or must not do), with a mechanism to enforce those constraints, it will not bring any new tools or ideas to cryptocurrency technology.  So far it is only a nomenclature proposal: "let's use the word 'sidechain' for any project or entity that could 'own' some bitcoins for some time".

Why wouldn't Bitstamp be already a sidechain, for example?

EDIT: not worse --> not as bad as

You are aware of the Eyal and Sirer paper on this, right?  As I understant, a majority coalition of miners can force users to change the protocol, by sabotaging the "orthodox" chain.  Then it would be in the interest of uses and any "orthodox" miners to upgrade to the protocol chosen by the cartel.

If the change is minor (e.g., "postpone the next reward halving to 2018"), most bitcoin users will not mind.  Only ideological purists will be upset, but all they could do is create yet another fork, with a PoW that cannot be mined by the current equipment.  But then no orthodox miners could mine this new "true bitcoin reborn" chain either, so it would start out with a minuscule CPU-based network.


What would prevent a sidechain from being a scam?  Sidechains will not be cleared, audited, or reulated, by Blockstream or anyone else.  Their protocols cannot be constrained in any significant way, without destroying their presumed merits.  Or is there anything in the whitepaper and other literature that I have missed?

PS. The sidechains project may have also another goal:

(3) give hope to those who own large quantities of bitcoins that, if bitcoin is to be superseded by some other cryptocoin, there will be a way to move their fortune to that cryptocoin, at a fixed exchange rate.

OK, since this is the "de facto" sidechain thread, here is some serious trolling:

Having read the whitepaper, the grayblogpost, and several lightblueforumposts, I am currently convinced that the sidechains "project" is 100% marketing, with no technical contents whatsoever.  

Specifically, I claim that there is no functionality that sidechains would enable that could not be provided by a project totally independent of the blockchain.  The only (possible, far from certain) advantage of implementing something as a  sidechain would be the transfer of prestige from the bitcoin project to that something.

I am very skeptical of the future of bitcoin as investment and as a currency for e-commerce, but I admit that the bitcoin protocol provides some non-trivial and interesting functionality.    However, paradoxically, its value lies not so much in what one can do to the blockchain, but in what one cannot do (unless one has 51% of the hashing power):

* One cannot insert a transaction with an input that is not an output of an earlier trasaction, or a coinbase;
* One cannot use the output of a transaction more than once as input to another transaction;
* One cannot insert a transaction whose output total is greater than the input total;
* One cannot insert a transaction whose inputs are not properly signed;
* One cannot add a new block that does not have the crypto signature of the previous block and the required proof of work;

and so on.  It is because of these "cannots"  that the blockchain has a non-trivial functionality.

Now, the sidechains proposal describes many wonderful things that one could do with them.  But it does not specify a single thing that a sidechain protocol cannot do, other than the trivial constraint that it cannot return more bitcoins to the blockchain than it took from it.  

The process of transfering bitcoins between the main chain and the side chain is formally equivalent to sending the bitcoins to a blockchain address owned by the sidechain admins, and later from that address to some other address specified by the sidechain admins.  Thus the only constraint above is trivially enforced by the bitcoin protocol as it is (which the proponents seem to admit).

As far as I can tell, since there is no clearing or overseeing of the sidechains by any entity, the sidechain can do absolutely anything at all,  even immediately destroy the keys that would allow "return" of the bitcoins to the blockchain.  It can create its own tokens from nothing,  rewite its operations history, impose arbitrary fees, steal from its clients, use broken cryptography, whatever.  Nothing prevents the "sidechain" from being centrally managed.  Nothing prevents it from being a reincarnation of MtGOX, with Willy and all.  Nothing prevents it from being, by all objective criteria, an altcoin totally independent from the blockchain.

I propose the following experiment: take the whitepaper, or any paper that discusses sidechains, and replace the word 'sidechain' everywhere by the word 'something'.  Would it make any difference?

I see this project as a desperate attempt by faithful bitcoiners to save the "bitcoin industry" from looming collapse, in two ways:

(1) by trying to co-opt the best altcoin projects, so that instead of them saying "bitcoin is broken and cannot be fixed, use our coin instead" they will say "use our coin, which, among other advantages, builds on and is backed by bitcoin, the 'gold of the internet'"  

(2) by trying to convince investors that bitcoin is worth investing in, even if it is failing as a payment system and may be superseded by other altcoins, because it will be the 'gold of the internet'.

I believe that this marketing effort is 'evil' because it is trying to make people think that bitcoin will be contributing functionality to the sidechains, when in fact it is only contributing prestige.  Just as every nation that issued a paper currency found that pegging it to gold or silver was only a marketing gimmick, more a nuisance and embarassment than a concrete advatage, any successful project that starts as a sidechain will almost certainly detach from bitcoin, for the same reasons.

So, fire away.[/troll]

Arbitrage was how BitcoinRain, the first Brazilian bitcoin investment fund, made money to pay 10% interest per month on the clients' BTC deposits.  Until a client asked to withdraw his ~1000 BTC, at which moment the site was (bit)coincidentally hacked and sorry folks but all your coins are gone.

Thanks.  Indeed, I found a couple of threads with more pertinent titles, but they seem to be dead, nothing like this one.

Should this thread be split and moved to develpment perhaps?

I am trying to find a thread or forum with a currently active discussion of sidechains.  Is this thread the only one?

You should ask, of course, formally and with all the order details, and listing the dates of your previous requests.  Then save whatever proof you can that you did.  It may not have any effect now, but it will be a stone in your sling in any future litigation.

if you have a lawyer, ask him to write the letter and mail it on paper, with the suitable legal warnings. 

This thread seems to be dead.  Is there a live discussion of sidechains anywhere?  On reddit or other forum perhaps?

According to this site, by 2014-09-10 there were less than 650'000 addresses in the blockchain with 0.1 BTC or more:

BTC balance          ! Num.addresses ! % of addresses !        Tot BTC ! % of all BTC
---------------------+---------------+----------------+----------------+-------------
0 - 0.001            |    44,917,388 |          96.47 |        288.600 |          .  
0.001 - 0.01         |       468,390 |           1.01 |      1,815.552 |         0.01
0.01 - 0.1           |       545,136 |           1.17 |     16,415.880 |         0.12
---------------------+---------------+----------------+----------------+-------------
SUBTOTAL             |    45,930,914 |          98.65 |     18,520.032 |         0.13
---------------------+---------------+----------------+----------------+-------------
0.1 - 1              |       300,665 |           0.65 |    104,450.810 |         0.79
1 - 10               |       214,170 |           0.46 |    605,575.673 |         4.57
---------------------+---------------+----------------+----------------+-------------
SUBTOTAL             |       514,835 |           1.11 |    710,026.483 |         5.36
---------------------+---------------+----------------+----------------+-------------
10 - 100             |        99,925 |           0.21 |  3,557,378.156 |        26.85
100 - 1,000          |        13,813 |           0.03 |  3,145,684.530 |        23.75
---------------------+---------------+----------------+----------------+-------------
SUBTOTAL             |       113,738 |           0.24 |  6,703,062.686 |        50.60
---------------------+---------------+----------------+----------------+-------------
1,000 - 10,000       |         1,445 |            .   |  3,210,486.390 |        24.23
10,000 - 100,000     |            95 |            .   |  2,178,395.722 |        16.44
100,000 - 21,000,000 |             3 |            .   |    426,872.355 |         3.22
---------------------+---------------+----------------+----------------+-------------
SUBTOTAL             |         1,543 |            .   |  5,815,754.467 |        43.89
---------------------+---------------+----------------+----------------+-------------
TOTAL                |    46,561,030 |         100.00 | 13,247,363.668 |        99.98
---------------------+---------------+----------------+----------------+-------------

Addresses are not persons, of course; but I believe that this number is a plausible upper bound for the number of "bitcoiners" (excluding people who just tried it but did not "adopt" or invest in it).

(A pity that the list is not upto-date.  It seems to be recomputed only every 40'000 blocks; so the next one should be at block 360'000, and we are now at 336'707.)

Don't try to push the blame around.  You have been posting here more than usual, too.