Re: [bitcoin-dev] Blockchain Voluntary Fork (Split) Proposal

From: Eric Voskuil <eric@voskuil•org>
To: Erik Aronesty <erik@q32•com>,
	Bitcoin Protocol Discussion
	<bitcoin-dev@lists•linuxfoundation.org>
Cc: Chaofan Li <li3939108@gmail•com>
Subject: Re: [bitcoin-dev] Blockchain Voluntary Fork (Split) Proposal
Date: Mon, 22 Jan 2018 14:43:22 -0800	[thread overview]
Message-ID: <DFE3C3DB-1DFE-44B4-8A42-2F11AEFE3A02@voskuil.org> (raw)
In-Reply-To: <CAJowKgLJ2QmCGAwhUgW8foy-=8FK4FwzMxXYCNZoLaS=DXMCTg@mail.gmail.com>

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All other things being equal, the money with the larger network is more useful due to the cost of exchange between them, which can only be eliminated by one absorbing the network of the other. According the Thiers’ law (i.e. in the absence of currency controls), the more useful money will get used. It is not the case that they will just become the same value.

However, all other things are not equal. As a Bitcoin becomes more useful its use rises. Rising use implies rising fees, which in turn reduces usefulness (stability property). While the better money prices out certain scenarios, they remain viable in the lesser money. But eventually this will happen there as well, and the better money will absorb the lesser.

The perpetual creation of new monies with exchange between them and the best money (largest network) could certainly exist, but layering proposes an approach that doesn’t require all merchants to perpetually be accepting different monies. It has a similar security trade-off (lower security for transacting off of the better money), which is the source of decreased transaction cost. But without the exchange and overhead cost the layered money can be better than multiple monies.

Also, all splits are voluntary.

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> On Jan 22, 2018, at 12:40, Erik Aronesty via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org> wrote:
> 
> Without enforcement liquidity will diverge.   
> 
>> On Mon, Jan 22, 2018 at 1:46 PM, Chaofan Li via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org> wrote:
>> Hi ZmnSCPxj
>> 
>> I dont think they need to be ENFORCED to be worth the same. 
>> If the two chains’ algorithms are the same , except some identifiers (eg. btc.0 btc.1）, they have no reason to have different value. If so, the market will adjust the value.
>> 
>> Also, the total supply can be the same. The amount in blockchains  is just some numbers. The  wallet can display correct amount, according to the identifiers.
>> 
>> The voluntary split is also backward compatible with old version transactions, they can be treated as tx for both chains and included in both chains later. For new version Tx after fork, some identifiers must be added , to mark the tx is for that chain only. The miners need to choose one chain to mine.
>> 
>> After several voluntary splits , the Blockchain basically become a blocktree, new blocks are added to the leaves(eg. btc.00 btc.01 btc.10 btc.11 ), providing even more capacity. 
>> 
>> Chaofan
>> 
>> 
>>> On Mon, Jan 22, 2018 at 5:13 AM ZmnSCPxj <ZmnSCPxj@protonmail•com> wrote:
>>> Good morning Chaofan Li,
>>> 
>>> What enforces that bitcoin A is worth the same as bitcoin B?  Or are they allowed to eventually diverge in price?  If they diverge in price, how is that different from the current situation with Bitcoin, BCash, Bitcoin Gold, Bitcoin Hardfork-of-the-week, and so on?
>>> 
>>> Regards,
>>> ZmnSCPxj
>>> 
>>> 
>>> Sent with ProtonMail Secure Email.
>>> 
>>> -------- Original Message --------
>>>> On January 17, 2018 3:55 PM, Chaofan Li via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org> wrote:
>>>> 
>>>> 
>>>> 
>>>> Here I propose a simple method to solve the scalability issue of blockchain.
>>>> It is more like a financial trick rather than a technical solution. 
>>>> 
>>>> The technical part is very simple: 
>>>> Split ( hard fork ) the blockchain into two or more blockchains (e.g. two blockchain A and B), voluntarily. 
>>>> The two blockchains are the same except for some identifiers to distinguish the two blockchains.
>>>> The coins on one blockchains cannot be sent to the other one or interfered by the other blockchain (  considering so many hard forks in the last year, the replay protection should work in this situation)
>>>> Everyone get double bitcoins. Each has half  value of original one bitcoin. 
>>>> Then, we have two almost same blockchains and the capacity of the original blockchain is doubled theoretically.
>>>> When sending coin, the wallet should select one blockchain randomly and try to send through only  one blockchain (If there is enough bitcoins)
>>>> I think it is a  possible solution, if the community realize  no previously owned asset value  is lost.
>>>> 
>>>> The method is inspired by the stock split.
>>>> When a stock share is split, for example into two shares, the price halves.
>>>> The market capitalization remains the same.
>>>> There is no dilution of every shareholders' total assets.
>>>> 
>>>> The bitcoin often emphasizes that the total coin supply should not be changed.
>>>> If the total supply increases, the value of a single coin will be diluted.
>>>> That is true.
>>>> However, the bad part of inflation of fiat money is not  diluted value of every unit of fiat money caused by total supply increase.
>>>> The problem is the increased supply is not delivered to everyone proportional to their previously owned money.
>>>> The increased supply is released through debt expansion.
>>>> The people that can borrow more money with low interest ratio (during QE, it was nearly 0) can invest  and get profit.
>>>> Or they don't even need to pay back the debt. The debt is left to government, which might never pay back the debt, and some  get more money from government.
>>>> Others' money are diluted.
>>>> 
>>>> With voluntary split of bitcoin, dilution of anyone's bitcoin assets won't happen.
>>>> 
>>>> 
>>>> 
>>>> 
>>>> 
>>> 
>> 
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> 
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