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Author Topic: the success of sidechain and the price of bitcoin?  (Read 626 times)
honeysyd
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January 03, 2016, 04:53:00 AM
Last edit: January 03, 2016, 05:04:29 AM by honeysyd
 #1

Some promising sidechain projects (using Bitcoin blockchain as a main blockchain) are going on, such as counterparty, blockstream, factom and rootstock.

These projects do not directly use Bitcoin, but use own currencies that are pegged with Bitcoin. I am wondering if any of these projects achieves a great success and becomes a global company, how it affects the price of Bitcoin.

Will it have a small indirect effect on the price of Bitcoin or large direct effect on the price of Bitcoin?

It would be appreciate if you would be able to give a basis of your prediction (rather than saying "Bitcoin price will be sky high (or will be 40k)" without mentioning rational reasons).

Any comments on this topic are also welcome.
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January 03, 2016, 09:22:30 AM
 #2

This is an interesting question but I don't think anybody can give you a quantitative model for bitcoin valuation which seems what you're looking for.
In any case the effect on prices can only be positive as these projects create new application layers and therefore add value to the underlying asset. Put it in other words they create new demand for bitcoins and the blockchain. Keep in mind however that the only proven and tested application for Bitcoin is as a cryptocurrency and it is yet to be seen whether all these sidechain projects and smart contract platforms will ever deliver the value they are promising. Leaving aside applications in the cryptocurrency realm the road for smart contract implementation is going to be very long as significant changes would have to be adopted in many countries' legal systems to make smartcontracts (or any other cryptographic representation of an asset) legally enforceable. Some people may argue using the notion of "smart property" but I think that is more science fiction than reality right now and in any case the current paper based black on white notion of property would prevail over any cryptographic notion of property simply because that is how the law is written right now. It is going to take a long time until we start to see changes in legislation in this respect. As a matter of fact cryptocurrency regulation is still pending in virtually all jurisdictions so smart contacts have still a long way to go before they are worth something. To summarize I wouldn't expect any significant impact at all during the reminder of this decade at least.

The game taught me the game. And it didn’t spare the rod while teaching. Jesse Livermore.
honeysyd
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January 03, 2016, 10:32:31 AM
 #3

Thank you for the comments. Yes, I agree that it may take a long journey to obtain legal enforcement on the smart contracts and it would not happen in at least this decade. Smiley

However, in the longer term, I believe that we will eventually see the blockchain technology with smart contracts (or other forms of applications) everywhere sooner or later this decade.

Big companies are currently building up own private blockchains, but sidechain projects will provide platforms for many ordinary programmers with good ideas to develop blockchain-based solutions and I am expecting that some of them would achieve a great success (like Facebook these days).

In this situations, I am wondering if the success of applications based on the sidechain will drive the price of Bitcoin. I am not clear about the relationship between the huge demand on sidechain currencies and the price of Bitcoin. I understand no one can provide clear quantitative analysis on this topic. But, I am seeking rough (but rational) explanation or prediction on this topic.
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January 03, 2016, 12:21:06 PM
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No one of such coins will be a world currency. The design does not fit to this case. But those coins can play a big role in various field cases like FACTOM for managing data for authorities.
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January 03, 2016, 12:25:55 PM
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It sounds like they all are altcoins, i can't find anything new in them to be a global company. I think world will only treat them as altcoin rather than company or something.

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January 03, 2016, 01:41:26 PM
 #6

I think that Bitcoin's true value is block chain, some people know that already that some will learn that in the future.
But  by blockchain I mean bitcoin's blockchain alone - sidechains are not bitcoin anymore, instead are fork of original bitcoin with less value than original or as we call them altcoin.
It doesn't matter if their origin is the same as one point data of the these blockchains will be different. As for impact on the price of bitcoin I think it will the same as any other altcoin had up to date.
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January 04, 2016, 04:38:50 PM
 #7

In my understanding, transactions in those sidechains must be somehow validated with the main blockchain (which is Bitcoin Blockchain). This may drive up the price of Bitcoin, but I am not sure how these are related nor theories behind this.

It would be appreciated if anyone can explain this. Thank you for all the valuable comments.
cellard
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January 04, 2016, 04:50:58 PM
 #8

It adds value objectively.. this is not a discussion to be honest. Those underlying layers (sidechains) will work and will work nicely... but why? because they run under the Bitcoin blockchain. The Bitcoin blockchain is the biggest network in the planet, no other blockchain can give you this level of security. Ethereum blockchain only can dream of gaining Bitcoin's blockchain network effect so to speak. That's why even big projects like Ethereum are at a danger of being deprecated by a sidechain alternative (in this case Rootstock). To future is extremely bright for Bitcoin, in the next 2 to 3 years we are going to see some serious stuff going on.
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January 04, 2016, 05:00:21 PM
 #9

some of them that are designed to help some pesky problems like confirmation time, may directly impact the value in the future yes, since this is somehow related to the acceptance and therefore adoption
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