Thanks for the reply.  My understanding is obviously quite limited.    My first difficulty is this:


I would appreciate comments on the point above.  Namely, that trying to focus on what the "sidechains" are and what they can do or cannot do internally is neither desirable (because it would restrict innovation) nor possible (because a service that depends on bitcoin but does not qualify as a "sidechain", if it is useful, would be implemented anyway, and would use the BCN anyway). 

Instead, I think that what the "sidechains project" can and should do is to design a small set of basic BCN-BDS interaction mechanisms, that can be used by any BDS as it sees fit; that is, a very general and simple "API" for the bitcoin network. 

I would compare designing these mechanisms to designing a programming language, and trying to specify or constrain the "sidechains" to trying to specify or constrain what programs could be write in that language.

What would you say to this view? Is the "sidechain project" gong in this direction -- a "bitcoin network API"? 

Is that why women are claimed to inflict frequent double-spending attacks?

Could it have something to do with this query:
http://www.reddit.com/r/Bitcoin/comments/2rdb4u/whats_going_on_with_this_address/
about this address
https://blockchain.info/address/1JoktQJhCzuCQkt3GnQ8Xddcq4mUgNyXEa

Probably a lot less than there were in November 2013.  But maybe still enough to set the price.

One reason I think so is that the price still does not react much to Western news (like "Microsoft accepts bitcoin" or "California makes bitcoin legal tender") but reacts to Chinese news ("A 3 G€ hedge fund will trade in OKCoin's platform", 2014-11-12).  By the way, the  Chinese stock market had a freak 20% rise in december; it may explain bitcoin's crash.

Wouldn't it be answering the questions above with questions?

Wouldn't we be off-topic if we did?

Sorry, I was not clear.  The three items I listed are not alternative views of "sidechains", but three independent interaction mechanisms that would together comprise the "sidechains proposal".  (Or perhaps only 1+2, or 1+3 if 2 is superfluous once one has 3).

My understanding is that interactions of type 1 and 2 do not require a change in protocol or in the mining software, and in fact the bitcoin network cannot prevent them.  I suppose that interactions of type 3 (merged mining) would require restructuring of the BCN but no change in the BCP, and each miner would be free to choose which "sidechains" it wants to merge-mine.

Why, yes, thanks; why didn't you quote the image too?

Hm, I suppose that a model that included speculation would have to be much more complicated.  Right now, for example, we would need to know how many BTC have been last purchased at each price level, which I don't see how to get (see discussion a couple of pages ago), and then develop a stochastic model for the decisions of the typical investor.  These decisions in turn may have to depend on the past price history. (I believe that the market as a whole only cares about the current price, but some individual traders believe in TA.)

Weren't we disquising about ducks several pages ago?

Yes! Great movie...

Please let me try again to spread my ignorance about sidechains.  

Perhaps the sidechains project could be renamed "ways in which the bitcoin network (BCN) can interact with other internet services, and how the bitcoin protocol (BCP) would have to be modified to allow them".  These "other services" being the "sidechains".

Different people have different ideas of what sort of services would qualify for "sidechains", but let's not focus on that, focus instead on the interactions.  In order to exclude those variable assumptions, I will use the term "bitcoin-dependent service" (BDS) instead of "sidechain".

I gather that there are at least three kinds of interactions that are being discussed:

1. Bitcoins may be somehow be "moved"  from the BTC blockchain to the BDS, who would handle them in some way, and eventually "return" them to the BTC blockchain.  

   This kind of interaction does not seem to require any change in the BCP
   or the BCN, and in fact is routinely used by exchanges
   and other similar services.   It would suffice to move the coins
   to BTC addresses whose private keys are known and
   managed by the BDS. To "return" the coins, the BDS
   would have only to sign transactions out of those
   addresses.
  
   The BDS is free to manage the private keys of its
   addresses any way it sees fit. The BDS may allow its
   users to generate those addresses and keep the keys, or
   it may keep the keys in its central servers, or it may
   use the standard bitcoin multisig mechanism, etc.
  
   Thus the bitcoin network does not even need to know that
   the BDS exists; and this use of the BCN by the BDS is
   "fair use" by tradition and design.

2. The BDS may exploit the power of the BCN to secure its data structures against tampering or rewind

   This interaction too does not seem to require any
   additional mechanism in the BCN or the BCP. The BDS
   computes a SHA hash of the data it wants to secure, and
   sends to the BCN a transaction request containing that
   hash, possibly disguised.  Once the transaction is
   included in the bitcoin blockchain, anyone can detect if
   the original data is posted by the BDS and has
   not been tampered with.
  
   The BDS could do this operation at a rate higher than the
   bitcoin block rate, in which case each bitcoin block will
   contain several of those hashes. However, BDS users wishing
   to verify the hashes would still have to wait for the
   next bitcoin block, and possibly several blocks. These
   BDS hashes may be Merkle-chained and combined with any
   Byzantine generals mechanism by the BDS to achieve other
   kinds of security.  The BCN does not need to know that.
  
   One thing "morally wrong" with this solution is that it
   is "parasitic": the BDS would enjoy, almost for free,
   the same level of  security against tampering that would
   otherwise require a separate network with the same power
   of the BCN. The BDS would have to pay a transaction fee
   to the BCN for each stamp, but the fees currently are
   negligible compared to  the cost of the BCN. That is an
   unfortunate consequence of the BCP, that offloads
   the cost of the BCN to the the buyers of new bitcoins.
  
3. The BDS could use the full power of the BCN to implement its own PoW mechanisms by merged mining

   I don't understand enough of the discussion to tell
   whether this kind of interaction would provide more
   utility to the BDS than item 2 above, but let's suppose
   it does.  On the other hand, it would provide more
   incentives to the BCN, though which may be important
   if the rewards and fees derived from bitcoin mining
   were to dwindle.
  
   If I understood correctly, in the simplest scheme each
   node in the BCN would collect work requests from the
   affiliated BDSes. Each request would contain a hash of some
   arbitrary data that the BDS wants to secure. The node
   assembles a bitcoin block containing some bitcoin
   transactions and those BDS hashes, and then tries to solve
   the PoW puzzle for that block, as in the current
   protocol.

   Each work request would also specify an
   associated difficulty level and a reward value, either in
   bitcoins or in some tokens defined by the BDS. The bitcoin block
   itself would be one of those requests. As the node keeps
   working, its best solution will satisfy an increasing
   subset of the work requests. At any moment the node may
   decide to stop, collect the rewards it has won, and start
   all over, or continue trying to find a better solution.
   To claim the rewards the node sends the whole bitcoin
   block, with the best nonce, to each BDS in that subset.
  
   Is this a vaguely correct description of merged mining?
  
   If so, I suppose that some nontrivial mechanism/protocol
   would be needed to ensure that the affiliated BDSes pay
   the promised rewards, either in BTC or in their own
   tokens.  Would this require a change in the BCP?
  
   Merged mining would proveide an incentive for miners to service
   all BDSes that pay enough rewards.  The BDSes, in turn, would again
   get the power of the full BCN for a fraction of the cost.
   Indeed, merge mining would support a larger network than
   could be supported by bitcoin alone.  

   A BDS could get faster turnaround than bitcoin's (say 1 request
   every 10 seconds) by specifying a lower difficulty and
   proportionally lower reward.
  
   A possible "danger" that I see in this idea is that
   bitcoin itself would be just a BDS like any other
   (except that it dictates the format of the solved block,
   which the other BDSs would have to accept). Thus the
   miners may eventually abandon bitcoin if it is not
   profitable enough compared with the other BDSes.
  
Does this make any sense?

Wait, but why are you looking only at the last year?  If you look at, say, the last 4 years, the picture is quite different.
If that is the way we should look at the bitcoin price... 

If there was no speculation (including long-term hoarding), only use for e-payments, customers (buyers of stuff or services) would buy BTC just for payments, and give them to merchants (suppliers) or payment processors, who would then sell those BTC to other customers. 

Let V be the total volume of such payments expressed in USD/day.  Let T be the average time in days between the purchase of some BTC by one customer and its re-purchase by another customer, after going through a merchant or processor.   Let N be the total number of coins available, and P the market price of one BTC.  Then, the total volume of payments, in BTC/day, is  N / T.  Therfore, we musthave in we must have P *N / T = V, or P = V * T / N.

Today, N = 13.5 M BTC.  BitPay currently processes ~1 million USD per day of payments; let's guess that V is ten times that, 10 M USD/day.  Let's also guess T = 30 days.  (Note, we are assuming that no one is hoarding, so that everybody passes the coins on as soon as pratical.)  Then we get P = 10 * 30 / 13.6 = 22 USD.

That "total received" is misleading, it is the sum of all inputs (WITHOUT subtracting the outputs) since you started watching that address. 

That address has ~35 BTC now and was spitting out small amounts to other addresses, one by one.  Each time, the "change" (still about ~35 BTC) was returned to the same address.  Thus that bogus total increased by ~35 BTC each time.

UGH! I meant Firefox, sorry.

But not lame parodies of trolls? 

Note that the most recent transaction may not be when the coins last changed hands.

If the price had been increasing all the time, the output amount X in an UTXO times the price P(t) at that time would be only an upper bound to the purchase price of those coins.   However, because of the subtantial drops in price, and the large trade volumes during price drops, not even that is true.   Moreover, coins that are deposited on the exchanges are changing hands without a corresponding record in the blockchain. 

Well, my question above was not rhetorical.  Is the fact that the ETF is listed on NASDAQ sufficient to enable those restricted investments?  Or are there other conditions that depend on the nature of the fund and its assets?

*ahem*