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414 sats \ 3 replies \ @justin_shocknet 4h \ on: It's not a layer 2, it's a stablecoin pegged to bitcoin bitcoin
They cost more though, not less, so that's ruled out.
They're a market response to Bitcoin/crypto being a growing industry that attracts investment in time/money just for the chance to get a piece of that growth. But the industry is quite literally based on the obsolescence of middlemen and services. The few services that can offer value-add are largely commoditized because they're digital and therefore scalable.
This growing market is therefore simple, and when a market is simple, it leaves merchants nothing to offer but complexity.
Enter the maxim "Complexity is fraud" - PJ O'Rourke
It's why Fake L2's are shitcoins 2.0, fraudulent complexity is literally the only idea the middling growth chaser can come up with.
This is a mis-use of the word pegged, that implies some mechanical linkage, stables and ecash are credit. The word collateralized might be applicable, but that's typically a legal construct if not mechanical, which wouldn't apply except with regulated ones where the judicial system and a monopoly on violence is the peg.
I think so much of the fundamental mis-understanding of Bitcoin as money is its use-case as collateral, probably because collateral doesn't make for tantalizing marketing and the NSA did such a great job weaponizing anarcho sentiment.
They cost more though, not less.
Let's assume by altcoins we are talking about coins that at least fit the broad description in the Bitcoin whitepaper, so Litecoin seems like a good example. Why do you consider it more expensive to transact on Litecoin?
Someone using Litecoin certainly doesn't receive anywhere near the same doublespend security of BTC, nor do they receive the same censorship resistance, yet it might be cheaper to use litecoin for a transaction than onchain bitcoin when fees aren't as dirt low as they are (It's definitely not cheaper than Lightning).
This is a mis-use of the word pegged.
Sure, I probably should have used the word "backed" but I'm not sure that is much better. I agree that collateralized is a good way of describing it, but I think people have a pretty good sense that pegged means "trying to keep at the same value as" and at least for rme, my most immediate association with "pegged" is "losing its peg."
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That was in the Fake L2 section so I was specifically referring to that
I don't know what the fee market or dust level looks like on Litecoin, but since it has 4x the supply, i'd think with all else being equal (we're already at sub-sat fee rates so block space isn't a consideration) it'd be roughly 75% cheaper on a per transaction basis because it can be more granular.
Litecoin certainly doesn't receive anywhere near the same double-spend security of BTC
If we introduce time as a cost then it could.
With 1 confirmation on Bitcoin being ~10 minutes, to get similar hashrate securing your Litecoin transaction would take 100 minutes assuming Bitcoin had 10x the hash (which is think it is approximately).
Their faster blocks are similar to supply, more granular, but less valuable. You can get some security in 2.5 minutes on Litecoin.
Assuming the 10x hashrate differential is accurate, and 4x blocks rate, you'd need 400 Litecoin blocks to equal 1 Bitcoin block in terms of security.
Confs on Litecoin are spewed from the mouth for being lukewarm though in pretty much any use-case, since its not as secure as a Bitcoin confirmation, but not as fast as zero-conf or Lightning.
IIRC Litecoin's big niche, and this was before the complexity fraudsters got in, was using a different algo for mining. Seems dumb in retrospect, they could probably have similar security if it were merge mined.
Litecoin was actually ahead of Bitcoin for awhile with Lightning, and it kind of makes sense when you consider that channels get old and will easily live past that 400 block confirmation.
All that aside though, Litecoin's real cost is the cost of crossing networks. Litecoin users will inevitably incur Bitcoin costs as its users at some point have to swap in/out of Bitcoin to have any meaningful purchasing power. What percentage of Litecoin's transactions this turns out to be may never be known, but it's not 0, and you have to consider that cost as a percentage of each transaction when looking at its true cost of use.
Everything in the universe transfers its energy to Bitcoin's gravity.
my most immediate association with "pegged" is "losing its peg."
I think you're right to do so, I think of it in terms of central banks pegging their fiats to other fiats, which makes it all the more hilarious scammers use it in crypto.
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40 blocks not 400
:facepalm:
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