First off SC's are inflationary
How? I thought all sidechains are pegged using any ratio and must be backed by bitcoin. Even if 1 BTC = 100 Sidecoins the Sidecoins are still valued at 1/100 of a BTC and supply of BTC was never increased.
One of SC proponents described the BTC peg as part of a pie, if the side chain pays transaction fees for eg. then the BTC pie peg shrinks, followed by this won't be a problem because the ratio or scheme will be known upfront. (Can't find the quote but that's what I understood)
But the fees come from the sidechain coins and are able to be converted back to BTC if you wish.
Turns out that it'd damn difficult for off-chain stuff NOT to develop. That's why we have in late 2014 a fair amount of interest in Bitcoin worldwide and a pretty significant 'market cap' yet we are still not really pushing into the 7 TPS rate in a threatening way.
These reasonably high valuations have resulted in amazingly fast growth in the mining side of infrastructure. Pretty much only the mining side, unfortunately, because that is where the designer(s) saw fit to provide a reward. When I first read about Bitcoin I was under the misconception that transferring transactions was rewarded. Then I thought that there was a mechanism imagined for it but it just was not implemented yet. Now I see no sign of it. Oh well.
The problem with the high hashing capacity which has developed in conjunction with the low TPS, is that it is costing someone something like $30 per transaction. (The high valuations are a factor as well since I've switched to $.) The 'someone' is not the user. Inflation is picking up the tab, but the inflation rate is, as we know, a declining feature. It is somewhat concerning that there could be a lot of excess sha256 mining capacity with nothing to do when it is no longer profitable to mine. 'An idle min[e|d] is the devil's workshop' so they say.
A solution would be monster transaction fees. But who (besides whacko's like me who already pay $10 transaction fees) want to pay them?
Sidechains to the rescue. They could (almost not help but) create a situation where hundreds or thousands of user's Bitcon activity are aggregated into a single blockchain transaction. This means that the transaction fee could be split that many ways and thus be felt as a very tiny and reasonable amount by individual users while the fee the miner gets would be quite generous indeed.
I don't see it like that, the blockchain is maintained by the nodes, the nodes are the ones paying the price for included transactions, they pay for bandwidth and storage. As a result they hold the ability to propagate the protocol that is used (including mining fees). Miners on the other hand are competing for the fees, they have the ability to charge, but not at the expense of exclusion from acceptance by the nodes.
There is excess mining now and will be most likely untill the latter half of 2016, but they won't be able to sustain themselves with high fees, (effectively they want huge transaction (in data size) not value to earn more while nodes want less.
SC take advantage of excess mining capacity and security today but will not allow mining power to scale to the appropriate size to protect the value stored on the blockchain in say 1 or 2 halvings. As the miners won't secure it if the value isn't reflected in there reward and fees. (SC depend on Bitcoin, boasting that they take the load off the network, adding value elsewhere at the protocol level) - seems like a blockchain cancer to me when I project 6 years ahead.
