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I agree with all that you have said.
Maybe I need to expand on my thoughts one last time in an effort to have you guys consider where I'm coming from.
I believe that Bitcoin, as is, is the closest form of perfect money we have ever seen.
Its shortcomings, or areas for improvement, in my opinion are as follow :
1. Long confirmation time
2. Privacy (anonymity) option not native as a user-defined option
3. Block size for scaling
4. Possibility that a better mining algorithm exist that could improve decentralization
Aside from the obvious scaling concern, Bitcoin could very well survive as digital gold without seeing any of the improvements I have mentioned. Its fundamentals are THAT strong.
For a long time I envisioned that my previous concerns would be addressed in more centralized type of schemes, or, as some would call it, through off-blockchain transactions.
Now with sidechains, we are provided with the possibility to create these chains that are attached to BTC's mainchain and function in an interoperable way using BTC as their transacting unit, effectively maintaining the ledger.
There, I believe, is our opportunity to create a certain number of sidechains that will work in synergy with the main chain and add considerable value to it.
We do NOT need a BILLION of sidechains.
and that would be to ignore what Odalv has said all along. he envisions billions. there certainly will be a lot as they are costless to implement. and why not if you can attract valuable BTC to scBTC while possibly securing MM?
I am in agreement with Adam that it is likely only a relatively small number of them will get the proper developer support and most importantly, miners support. In that regard, I think a lot of people fool themselves into thinking that because the security model proposed in the sidechains paper is merged-mining then all of the sidechains will get this benefit.
we would hope not. except with lots of miners losing money at this point, if SC's were implemented tomorrow even with a questionable innovation, speculative miners could be expected to support a speculative SC.
This is a grave mistake and is exactly why I have been adamant in saying that altcoins booted on top of a sidechain are not, in any way whatsoever, a greater risk to Bitcoin than regular alts are. For this reason, ANY concern that has for a premise the creation of a sidecoin is irrelevant to the discussion as it is NOT enabled by the sidechain proposition.
a sidecoin exacerbates the problem as i see it by introducing a block reward on the SC in addition to the tx fees paid. as Bitcoin's mining reward dwindles, the inequity in payout becomes even more stark in favor of the SC. we've been through this already, why ignore us?
What we should be discussing and perhaps trying to poke hole in is the use of sidechains as utility features using a unit that is pegged 1:1 with BTC. This, the two-way peg, is the innovation behind the sidechain concept. Everything else has been possible before.
What could these utilities be? Well allow me to return to my list of Bitcoin as money shortcomings :
1. A sidechain allowing for faster transaction times.
2. A sidechain enabling anonymous transactions
i disagree that these can ever be the only benefits that Bitcoin might ever derive from technological advancements. better security might be one. niche uses not dependent on MM are another huge source. all these have the potential to suck the life out of Bitcoin (decreased tx fees) especially when there exists this theoretical risk free put.
My interest in this exercise is Bitcoin as money : store of value, means-of-exchange and unit of account. Traditionally we're looking for these characteristics : scarcity, divisibility, portability, verifiability, recognizability and fungibility. Now, with the proposed sidechains we improve the characteristic of portability (faster transactions) and enable the user-defined additional feature of privacy.
Now cypher here argues that the anonymous sidechain creates a risk for it to potentially to take over as the mainchain. I disagree with that as I see anonymity as a niche market in this world's current settings but I can certainly envision a day where this is no longer true and everyone has a need for 100% private transactions but the day is not now and so that point is moot. Meanwhile the two markets, black and white both can work in synergy and create value for each other.
The same could be said about faster transactions times. At a certain point we might have the technology to make this happen without any security tradeoff but at the moment I believe sidechains is the best decentralized way to go about it.
In this setting, transactions are plentiful in all three chains and miners have an incentive to mine all three of them. The ledger is preserved and there is no dilution or loss of value
you're still ignoring that they could take over the MC especially if the scBTC start to climb in price and we see migration to the SC over time if the innovation appears valid and useful. you've never answered my Q about how and when will the core devs be willing to integrate a new innovation into the MC? maybe the Blockstream core devs don't want that to happen out of conflict of interest?
Having said all of that, what exactly is the "risk created"? If it is that an innovative new sidechain makes Bitcoin obsolete then should we really call that a risk? Is it a risk to create a better form of money? Is Bitcoin a risk? I guess you could say it is but I think all of us here agree that its added value to society is worth the risk.
it is a risk in the sense that if successive innovative SC's are introduced, which is to be expected, then forcing all BTC hodlers to crack open cold wallets to migrate each time this happens would introduce all sorts of risk which i've already identified.
we should be innovating on the MC to preserve the sanctity of the BTC to blockchain inextricable linkage of value. Bitcoin is hard. but we need miners to constantly struggle pushing security to it's maximum via hashrate on the MC (they might not like it but that is what Bitcoin needs), we need investors to struggle timing the inevitable bubble ramps and crashes, we need ALL tx's to happen on MC to pay those miners as block rewards decrease, we need devs that are willing to compete in a fair and non conflicted manner to advance Bitcoin from a public service perspective, we need devs who can come to a consensus to develop truly significant innovations on the MC. there is too much money involved to allow for-profit enterprise to take over the system. the public confidence depends on a fair, balanced, unconflicted system as Bitcoin is the first and only attempt at establishing a worldwide, people based, sound money standard that is not in the clutches of men.
