[2019-10-22] Bitcoin Sidechains To Send Altcoins Prices to ZERO?

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I was specifically talking about drivechains being insecure.

I understand that there are two threats: an increased incentive for double-spending 51% attacks (stealing sidechain funds) and inflation attacks on the sidechain.

But isn't this comment true, that the 51% attack, to create an invalid sidechain withdrawal to the main chain would need a fake chain of thousands of blocks (13,150 to be precise) and thus, a really big and stable cartel of miners to be achieved?

And regarding inflation attacks: I meant to have understood Paul Sztorc addressed such "on-sidechain" attacks and thinks they are not a threat to the main chain because they should only affect weak sidechains which are not "worthy" to be saved. Their peg simply would fail and they would die (or become a non-pegged "standard altcoin"). See here for his argumentation. Main chain would not be affected; for main chain a withdrawal "to the sidechain" is like a normal transaction.

Particularly, I'm referring to this argument:

In other words, if a particular sidechain is holding Bitcoin’s exchange rate down, we would HOPE that miners steal from it, and quickly! In the same way that we would hope oncologists would assassinate our cancer cells; or that poorly-run businesses will fall apart and free up capital for better entrepreneurs.

The only threat I can understand from my layman's perspective is that a failing sidechain could lead, psychologically, to the belief that "Bitcoin" has failed and thus create market convulsions.

Anyway, I would like to see Drivechains first to be implemented in some altcoin - this would even help because then we very likely _will_ see failing and weak sidechains and the effect they could have on the main chain and its security.

There is also a second option: a "pegged coin" in the style of BitShares or DAI (which may be what Carlton Banks wrote about), over-collateralized by another "base" token to be used as a sidechain for BTC (well, it already exists with BitBTC, albeit with a semi-centralized base layer). However, this would have as a consequence the existence of strong altcoins serving as a base for these "peggedchains", and thus would not necessarily boost Bitcoin's dominance. (I'm however convinced that a BTC monopoly is impossible, even if we wanted it, because incentives to run altcoins are too strong.)

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But isn't this comment true, that the 51% attack, to create an invalid sidechain withdrawal to the main chain would need a fake chain of thousands of blocks (13,150 to be precise) and thus, a really big and stable cartel of miners to be achieved?

I don't know. What is the basis for those numbers?

Either way, he still highlights the major problem -- a majority of miners can collectively decide to steal the bitcoins locked into any sidechain. The more value amassed in sidechains, the worse the incentives become.

Remember the Segwit anyone-can-spend FUD? It becomes a reality with drivechains because there is no network of full nodes to stop miners.

And regarding inflation attacks: I meant to have understood Paul Sztorc addressed such "on-sidechain" attacks and thinks they are not a threat to the main chain because they should only affect weak sidechains which are not "worthy" to be saved. Their peg simply would fail and they would die (or become a non-pegged "standard altcoin"). See here for his argumentation. Main chain would not be affected; for main chain a withdrawal "to the sidechain" is like a normal transaction.

I believe that's correct. The crux of the issue here is that sidechains are fundamentally insecure, not that they are a major threat to Bitcoin.

However, merge mining will definitely encourage mining centralization in Bitcoin, since mining sidechains carries additional overhead costs. That skews profitability towards larger pools. Arguably, this design also means that miners are effectively implementing soft fork block size increases:

Unfortunately, SPV proof sidechains and drivechains both turn the mainchain into an automated SPV client of the sidechain. In particular, under drivechains, mainchain miners are forced to pay attention to the sidechain in order to determine which way to vote. In effect, it requires that mainchain miners run sidechain fullnodes for all existing sidechains in order to prevent inflation attacks on any sidechain. This also means that sidechains translate directly into softforked block size increases, with the same results as other block size increases: increased pressure for mainchain miners to collocate in order to improve transmission of both mainchain and sidechain block data.

Anyway, I would like to see Drivechains first to be implemented in some altcoin - this would even help because then we very likely _will_ see failing and weak sidechains and the effect they could have on the main chain and its security.

Same here.

[chaoscoinz]

Tomorrow (a few hours from now), it will have been exactly five years since the original white paper on Bitcoin sidechains (PDF) was released. The basic idea explained in the paper was that Bitcoin users would be allowed to move their coins between multiple, completely different blockchains that could enable a wide range of new cryptocurrency features.

The end result of this functionality would theoretically be an end to the many altcoins that existed on the market at the time, as there would no longer be a legitimate reason to create a new cryptocurrency in an effort to experiment with new features. Instead, new features that were sufficiently complex could come to Bitcoin by way of sidechains.

Today, sidechains do exist, but they come with trade-offs in the areas of centralization and censorship resistance – at least for now. At the recent Transylvania Crypto Conference, a panel of experts on the topic, including Blockstream CEO and sidechains white paper co-author Adam Back, discussed the current state and future potential of sidechains for Bitcoin.

The source is here for more reading...





The claim is that Bitcoin Sidechains can eventually make all altcoins lose value and purpose as this functionally can easily adopt all the features that altcoins may have rendering them, in essence, very worthless and inutile. "...new features that were sufficiently complex could come to Bitcoin by way of sidechains."


Now, whether this claim can happen or not depends a lot if Sidechains can be implemented soon and if the market will be reacting in the way it is expected.

Do you think that Sidechains has this potential or maybe the guys behind this proposition is just imagining things? Please share here what you may know about this Sidechains...

Sounds like a lot of fear, uncertainty and doubt here based upon a bunch of what-if scenarios. Who is to say that by the time that they finally figure out a way to implement this feature Bitcoin will still be ahead of all the other altcoins?
    What happens when Blockchain generation 4.0 comes with some crazy new innovative consensus algorithm that makes it a Bitcoin killer? It's all speculation. Kind of like when Einstein wrote down the mathematical formula that described L.A.S.E.R's, but a laser wasn't actual built until decades later.
   Or that time he invented Paper towels!